I like this part of Rubini's comments.
{{Elevated U.S. unemployment, a surge in oil and food prices, rising interest rates in Asia and trade disruption from Japan’s record earthquake threaten to sap the world economy. Stocks worldwide have lost more than $3.3 trillion since the beginning of May, and Roubini said financial markets by the middle of next year could start worrying about a convergence of risks in 2013.
The MSCI AC World Index has tumbled 4.9 percent this month on concern recent data, including an increase in the U.S. unemployment rate to 9.1 percent in May, signal the global economy is losing steam. U.S. Treasuries rose last week, pushing two-year note yields down for a ninth week in the longest stretch of decreases since February 2008, on bets the Federal Reserve will maintain monetary stimulus. Bond Market ‘Revolt’
World expansion may slow in the second half of 2011 as “the deleveraging process continues,” fiscal stimulus is withdrawn and confidence ebbs, Roubini also said.
Easing growth may spur demand for dollar assets as a “safe haven,” he said in response to questions after a speech in Singapore today. The Dollar Index, which gauges the U.S. currency’s value against a basket of six counterparts including the euro, yen and British pound, rose 0.1 percent as of 11:35 a.m. in Singapore, bound for a fourth straight daily increase. }}
Rubini seems contradictory as well as trying to cover all bases. So he says a surge in oil prices will sap the world economy. Then he says easing growth may spur demand for the US dollar as a flight to safety occurs. Oil is priced in dollars and is subject to at least some demand pressure. If the dollar strengthens, the price of oil will drop. If the world economy slows, demand will slow and the oil price should drop. If high oil prices trigger slow downs, then shouldn't lower oil prices stimulate growth?
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