Roubini Says Greenback, Swiss Franc May Beat Gold in Recession

Nouriel Roubini, chairman and co-founder of Roubini Global Economics LLC, talks about the outlook for the global economy and the possible impact of a double-dip recession or an increase in risk aversion on gold and currencies. He talks with Francine Lacqua in Cernobbio, Italy, on Bloomberg Television’s “Countdown.”

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Here are the key highlights from the interview, courtesy of Bloomberg Television:

On the dollar, the yen and the Swiss franc as a better investment than gold:
“If there was a double-dip recession, and if there is going to increasing risk aversion, some assets are going to be preferred, and gold will be one of them, but in that situation, things like the dollar, the yen, the Swiss franc have more upside in a situation of rising risk aversion because they are much more liquid than the gold market is.”

On his outlook for the U.S. economy:
“ I expect today’s job creation to be very mediocre, barely any growth of jobs in the private sector, and all the data suggest that the second half of the year is going to be worse. All the tailwinds that were sustaining growth in the first half become headwinds. Even in the first half the second quarter was estimated originally at 2.4% (growth) revised to 1.6% and now based on the new data 1.2%. So we’re starting at 1.2% and in the second half and it is going to be worse because the tailwinds will become headwinds.”

“Cash for clunkers, investment tax credit, first time home buy tax credit, all those things were temporary and therefore the second half will be worse. So if you start at 1.2% in Q2 and the second half is worse, we’ll have growth below 1% in the second half of the year. That is stall speed for the U.S. economy where potential growth is closer to 3%. So it’s going to feel like a recession even if technically we’re not yet in a recession.”

“We can try to prevent maybe a double dip recession but the idea that we’re going to have a rapid recovery of growth in advanced economies, U.S., Europe, Japan, at this point is mission impossible.”