'A u-shaped dynamic'

Economist Nouriel Roubini warns that a second global recession is possible if governments retreat too swiftly from their stimulus programs.

In an interview from Davos with Bloomberg Television today, Roubini, an economics professor at New York University, also warned that allowing stimulus programs to linger for too long could result in inflation and, ultimately, a “fiscal train wreck.”

Roubini, who accurately predicted a financial meltdown, is described as either “Mr.” or “Dr. Doom,” depending on the source.

Here’s a piece of the Roubini interview, in which he describes his hopes for a steady recovery, with a caveat:

“My main scenario is one of a U-shaped economic recovery rather than a double-dip W, so I see the high probability of a slow recovery in advanced economies. But I also see risk of a double-dip rising, especially if there’s a policy mistake like exiting too soon from the stimulus, or exiting too late, so that’s a tough choice for policymakers.”

The full interview:

• Jan 28, 2010 6:47 AM — Dirk Mathison
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• tags: Davos, WEF