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Brad DeLong's Grasping Reality 2019-10-31 16:32:06

Summary:
There are remarkably good odds that the next global recession will be triggered by the miscalculations of politicians who have no business holding any office whatsoever. I have but one quibble with Nouiiel Roubini's argument here. The situation in Argentina is dire for Argentina and the southern cone, but it is not the kidn of thing that can provoke a global recession. Trump and Johnson, by contrast, might:  Nouriel Roubini: Four Collision Courses for the Global Econom https://www.project-syndicate.org/commentary/playing-chicken-with-global-economy-trump-china-iran-argentina-by-nouriel-roubini-2019-09: "Between US President Donald Trump's zero-sum disputes with China and Iran, UK Prime Minister Boris Johnson's brinkmanship with Parliament and the European Union, and Argentina's likely

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There are remarkably good odds that the next global recession will be triggered by the miscalculations of politicians who have no business holding any office whatsoever. I have but one quibble with Nouiiel Roubini's argument here. The situation in Argentina is dire for Argentina and the southern cone, but it is not the kidn of thing that can provoke a global recession. Trump and Johnson, by contrast, might: 

Nouriel Roubini: Four Collision Courses for the Global Econom https://www.project-syndicate.org/commentary/playing-chicken-with-global-economy-trump-china-iran-argentina-by-nouriel-roubini-2019-09: "Between US President Donald Trump's zero-sum disputes with China and Iran, UK Prime Minister Boris Johnson's brinkmanship with Parliament and the European Union, and Argentina's likely return to Peronist populism, the fate of the global economy is balancing on a knife edge. Any of these scenarios could lead to a crisis with rapid spillover effects.... In each case, failure to compromise would lead to a collision, most likely followed by a global recession and financial crisis.... The problem is that while compromise requires both parties to de-escalate, the tactical logic of chicken rewards crazy behavior. If I can make it look like I have removed my steering wheel, the other side will have no choice but to swerve. But if both sides throw out their steering wheels, a collision becomes unavoidable...


#noted #notebookmodernmacro #2019-10-31
Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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