Roubini: We’re Doomed
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Insights, analysis and must reads from CNN's Fareed Zakaria and the Global Public Square team, compiled by Global Briefing editor Chris Good
February 28, 2020
Roubini: We’re Doomed
Markets took their time reacting to the coronavirus—at The New York Times, Ruchir Sharma lamented the false predictions of Wall Street’s amateur epidemiologists that the crisis was “over”—but even before today’s continued plunge, Nouriel Roubini was warning of serious danger. The current NYU professor and former White House and US Treasury economist, whose history of gloomy predictions earned him the sobriquet “Dr. Doom,” wrote in a Financial Times column Wednesday that the coronavirus is a supply shock that can’t be fixed with economic stimulus, which governments would have a hard time deploying anyway, given low or negative interest rates.
In a Der Spiegel interview, his take gets hotter: “The markets are completely delusional,” Roubini warns. And: “The political response is a joke … this crisis will spill over and result in a disaster.” Lumping the virus in with US-Iran tensions, Roubini (perhaps unsurprisingly) sees the global economy heading toward a recession on these risks, and he sees President Trump losing reelection because of it. For good measure, Roubini suggests New Yorkers are already skittish about the virus and have vacated restaurants (the Global Briefing has yet to see evidence of this); if it comes to the city, Roubini surmises, “we are totally f*****d.”
Fareed on Bernie’s Scandinavian Fantasy
Bernie Sanders may point to Denmark, Norway, and Sweden as proof that his democratic-socialist policies can work, but Fareed writes in his latest Washington Post column that this is “an inaccurate and highly misleading description of those Northern European countries today.”
Sweden has almost twice as many billionaires per capita as the US, and the country has succeeded economically because a market-oriented government dialed things back in the 1990s. Northern Europe is home to “innovative market-friendly policies such as educational vouchers, health-care deductibles and co-pays, and light regulatory burdens,” Fareed writes. “None of these countries, for example, has a minimum wage.”
Scandinavia’s labor markets are flexible, regulation is kept light, and social benefits are paid for by value-added taxes that fall on the middle-class and poor. “If Sanders embraced all that,” Fareed writes, “it would be radical indeed.”
‘Disease X’ Is Here
As it turns out, we were warned: The coronavirus hews with surprising fidelity to characteristics listed by a group of health experts in 2018, when they warned the WHO that humanity was vulnerable to a pandemic of a hypothetical “Disease X.”
“Disease X, we said back then, would likely result from a virus originating in animals and would emerge somewhere on the planet where economic development drives people and wildlife together,” Peter Daszak, a disease ecologist on that team, writes in a New York Times op-ed. “Disease X would probably be confused with other diseases early in the outbreak and would spread quickly and silently; exploiting networks of human travel and trade, it would reach multiple countries and thwart containment. Disease X would have a mortality rate higher than a seasonal flu but would spread as easily as the flu. It would shake financial markets even before it achieved pandemic status.”
In other words, it would look just like this virus. As for how to protect ourselves in the future, Daszak writes that prevention efforts need to be sustained between headline-grabbing outbreaks, with efforts directed toward “disease surveillance.” In more immediate terms, The Economist warns that the virus is coming, and governments should heed lessons from China: that it’s best to communicate actively with the public, to try to slow the disease with quarantines, and to undertake the “painstaking” logistics of figuring out, for instance, how to set aside hospital beds and floors.
Can Iran Handle It?
Iran has faced its share of chaos lately—from November’s protests, to the downing of a Ukrainian airliner, to a low-turnout election this month that signaled public disenchantment—but The Atlantic’s Graeme Wood writes that the coronavirus could break Iran’s social-political order. Iranians are under economic and military pressure, and they already don’t trust the government, Wood writes. “The daily stress of worrying, literally every few minutes, whether you will accidentally kill yourself by picking your nose or opening a door may prove, additively, too much for a society to bear.”
The virus stands to harm Iran’s embattled economy, as Adnan Mazarei of the Peterson Institute for International Economics predicts lost tourism and trade, with weakened demand from China (a major buyer of Iranian oil) an even bigger cause for concern. Making matters worse, Wood writes, the government has reacted ineptly, with one local official encouraging visitors to continue flocking to religious-attraction-rich city of Qom. It’s as if Americans “found out that thousands of people at Disney World all had a highly contagious, sometimes fatal illness—and that vacationers had been coming and going, returning to their home city, for weeks,” as Wood puts it.
The Case for Détente With Russia and China
For America, the salad days of hegemony are gone, and in a Foreign Affairs essay, Jennifer Lind and Daryl G. Press suggest it’s time Washington recognize its limitations and seek rapprochement with Russia and China. They suggest two broad-based deals: With Russia, that could mean recognizing Russia’s security concerns in Eastern Europe in exchange for no more election interference from Moscow; in the case of China, the US could “refrain from adding new allies and military partners” in China’s sphere, in exchange for recognition of the status quo in Taiwan.
Hearkening back to the Cold War strategy of containment, which the US deployed successfully against the Soviet Union despite hawks’ complaints that it was unambitious, Lind and Press recommend Washington limit its ambitions again; détente, as they see it, is more realistic than pressing US interests aggressively across the board.
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