Daily VideoJune 17, 2010
Take Two on the Recession
Four years ago NewsHour economics correspondent Paul Solman sat down with two economists–Nouriel Roubini and Nassim Taleb–to discuss the state of the economy. The two revealed pessimistic views on the future of the economy and the housing markets. After their appearance, both received angry emails for questioning a basic capitalism belief that the free market can fix anything.
To the chagrin of many, their hypotheses of a devastating economic skid came true. Now, Solman revisits the two in lieu of their new books to discuss their thoughts on what lies ahead for the future.
As the economic recession slows and the economy looks to recover, Roubini and Taleb see light at the end of the tunnel. Still, they believe certain parameters must be met by the federal government in order for more Americans to feel the rebound. Roubini, for example, asserts that we must raise taxes and cut spending in order to place a dent in the country’s national debt. Views that could come across as controversial, as the country still faces an unemployment rate hovering around 10 percent. But then again, their predictions were strikingly accurate once before.
“Many people had no equity in their homes. Essentially, they had zero down payments, and now prices are falling, so they have negative equity. There will be lots of delinquencies, a lot of foreclosures.” -Nouriel Roubini (2006)
“The risks of debt are monstrous. And now we’re facing a future with even more debt.”-Nassim Taleb
“Well, the economy is starting to recover. And if we raise taxes and cut spending, in the short run, there might be a slowdown in growth.” -Nouriel Roubini
Warm Up Questions
1. Define the term “recession.”
2. What does an economist do?
3. How do we know if the economy is improving or getting worse?
1. What did you learn about the economy from this video?
2. What is a bell curve? What did the graph tell you about economic events?
3. What kind of skills does one need to become an economist?
4. Are you surprised at the anger that these two economists felt 4 years ago? Why or why not?
5. How can anyone predict future markets? How do you know who to trust?
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