What Leaders Need to Know About a Looming Recession – and Other Global Threats

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Podcast Notes Key Takeaways Megathreats are serious threats that are not only economic and financial, but social, political, environmental, technological, etc., and they are all interconnectedGlobal public debt to GDP was 100% in the 1970s, 200% in the 2000s, and 350% in 2021; these debt-to-GDP ratios are unsustainable Public debt builds up because every time there is a problem, we choose to steal growth from the future instead of experience pain in the presentZombie entities can survive when interest rates are near zero because the cost to service their debt is low; however, it becomes much more difficult to service debt when interest rates must increase to fight inflationClimate change affects energy prices; criminalizing the use of fossil fuels has led to underinvestment in the fossil fuel industryThe increased investment in the renewable energy industry is not sufficient to compensate for the underinvestment in the fossil fuel industryThe US has weaponized the dollar around the world, which may result in it not being the global reserve currency for much longerCentral banks are in a debt trap: they have to raise interest rates to combat rising inflation, but they cannot raise interest rates too high or for too long without risking an economic and financial crisis because of the all-time high levels of debt Today, we have the worst of the 1970s and the worst of the post-Great Financial Crisis (GFC) period: debt levels are at all-time highs and there are stagflationary supply shocksWe know that having a tight fiscal and monetary policy is needed to fight inflation, but there is so much debt in the system that central banks will be forced to pivot back to inflationary monetary policies to service the debt There will be a backlash against the private sector if the government doesn’t provide a sufficient amount of goods and services for those that have been left behind “Eventually, we need to have another major burst of technological innovation that increases productivity growth in order to start to address these problems in a more cooperative way.” – Nouriel Roubini Companies, countries, and sovereigns are incentivized to act in their own self-interest, and not necessarily in the self-interest of the rest of the world “The only way to survive a storm is to build a shield. And the shield has to be collective, rather than individual.” – Nouriel Roubini 

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Nouriel Roubini, professor emeritus at NYU’s Stern School of Business, says that a confluence of trends – from skyrocketing public and private debt and bad monetary policies to demographic shifts and the rise of AI – are pushing the world toward catastrophe. He warns of those interconnected threats, but also has suggestions for how political and business leaders can prepare for and navigate through these challenges. He draws on decades of economic research as well as his experience accurately predicting, advising on, and observing responses to the 2008 global financial crisis, and he's the author of "Megathreats: Ten Dangerous Trends that Imperil our Future, and How to Survive Them.”