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We Cannot Know that 2009 will NOT Witness Start of a Recovery

Published in Editorial Page of Financial Times, 4 December 2008

Letter to the Editor

Dear Sir/Madame,

Professor Roubini’s fairly grim assessment of the 2009 global economic outlook (“How to avoid the horrors of ‘stag-deflation’”, 3 December) is a detailed analysis of why the horrors are, in fact, unavoidable. It is consistent with his unremittingly pessimistic views not only about the depth of the crisis, but also about the ineffectiveness of policy to mitigate its aftereffects. He speaks with considerable credibility on these issues, having anticipated the deleterious impact of the bursting of the U.S. housing bubble on the financial markets and the real economy. While he may well be right, I would like to suggest that, in fact, we do not know whether 2009 will not witness the beginnings of a recovery, in response to an unprecedented combination of looser monetary policies, fiscal stimuli and the whole battery of government-sponsored interventions which have taken place over the recent …