The following is a Project Syndicate excerpt from an op-ed written by NYU Stern Professor Nouriel Roubini on Project Syndicate:
A year or two ago, six main risks stood at center stage:
- A eurozone breakup (including a Greek exit and loss of access to capital markets for Italy and/or Spain).
- A fiscal crisis in the United States (owing to further political fights over the debt ceiling and another government shutdown).
- A public-debt crisis in Japan (as the combination of recession, deflation, and high deficits drove up the debt/GDP ratio).
- Deflation in many advanced economies.
- War between Israel and Iran over alleged Iranian nuclear proliferation.
- A wider breakdown of regional order in the Middle East.
These risks have now been reduced. Thanks to European Central Bank President Mario Draghi’s “whatever it takes” speech, new financial facilities to stabilize distressed sovereign debtors, and the beginning of a banking union, the eurozone is no longer on the verge of collapse. In the US, President Barack Obama and Congressional Republicans have for now agreed on a truce to avoid the threat of another government shutdown over the need to raise the debt ceiling.
Read the entire opinion piece here.