Nouriel Roubini, Economist, and Professor Emeritus at the Stern School of Business of New York University claims that the U.S. banking system, especially regional banks, will be struggling in the foreseeable future. This crisis is likely to push the economy towards a ‘hard landing’ and recession.
Roubini explained that problems lie with the regions. That being said, regional banks are critical lenders to households as far as mortgages, small businesses, and commercial real estate are concerned. And so we will be facing a credit crunch.
He also added that this credit crisis will increase the likelihood of a recession and hard landing even more than before. So, a significant portion of the American banking system is about to experience a major credit crunch.
When asked what indicates that the market has reached the bottom, Roubini said that we should expect the worst, as central banks along with the Fed are faced with a dilemma: they need to put in their best efforts to support economic growth and avoid recession while continuing to combat inflation. Against this backdrop, the potential for a hard landing remains high.
He emphasized that “we're waiting until we get this crash until we get something more severe. We're not going to be at the bottom for a while."
On the other hand, Roubini believes that inflation is high enough for the 6% interest rate to remain at this level for a year before we can talk about a decline.
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