Could not resist, had to post this from the dark side, lol

http://www.financialpost.com/news/Roubini+sees+double+hits/4401263/story.html

Nouriel Roubini, the economist who predicted the global financial crisis, said an increase in oil prices to US$140 a barrel will cause some advanced economies to slide back into recession.

Underlying how fragile the global economic recovery is, Roubini said the European Central Bank may be making a mistake by raising interest rates “too soon” when debt-ridden countries on the euro region’s periphery struggle to restore the competitiveness of exports.

“If you had the oil price going up to where it was in the summer of 2008, at US$140 a barrel, at that point some of the advanced economies will start to double dip,” he told reporters in Dubai today. “In the U.S., where growth is accelerating fast, a 15 to 20% increase in oil prices, there won’t be double dip but growth reaching a stalled speed again.”

Popular revolts sweeping the Middle East and North Africa, home to more than half of the world’s proven oil reserves, have pushed Brent crude-oil prices close to US$120. Goldman Sachs Group Inc. raised its forecast for Brent crude in the second quarter of the year to US$105 a barrel amid fighting in Libya between Muammar Qaddafi and rebels seeking to end his four-decade rule.

Crude for April delivery fell as much as US$2.11 to US$103.33 a barrel in electronic trading on the New York Mercantile Exchange, and was at US$104.02 at 4:25 p.m. Singapore time. Yesterday, the contract settled at US$105.44, the highest since Sept. 26, 2008. Prices are up 27% from a year ago.

Growth Forecast

In January, the International Monetary Fund revised its forecast for global economic growth this year to 4.4% from an earlier estimate of 4.2%, reflecting stronger U.S. output based on tax-cut extensions, while emerging nations lead the recovery.

Oil prices at their current levels probably won’t lead to a “significant” acceleration in advanced economies because they are recovering from a “severe recession” and still face high unemployment, Roubini, 52, told a conference on hedge funds in the Persian Gulf emirate earlier today.

“Workers don’t have much wage-bargaining power,” he said.

Joblessness in the U.S. unexpectedly dropped to 8.9% in February, according to a March 4 report from the Labor Department. The rate fell for a third straight month to the lowest level in almost two years as employers boosted payrolls by 192,000 amid growing confidence in the expansion.

The U.S. economy grew at a 2.8% annual rate in the fourth quarter, up from 2.6% in the previous three months, according to figures from the Commerce Department.

‘Barely Enough’

Still, Roubini said job creation this year in the U.S., the world’s biggest economy, is going to be “barely enough to satisfy the increase in labor supply.”

With unemployment keeping core inflation in check, raising interest rates in some advanced economies too soon would be a mistake, Roubini said.

ECB President Jean-Claude Trichet said on March 3 that policy makers may boost borrowing costs as soon as next month to fight increasing price pressures even as governments from Spain to Ireland struggle to lower their budget deficits and revive economic growth. Euro-region inflation quickened to 2.4% last month, the fastest since October 2008.

“My view of it is that the ECB is worrying too much about inflation,” Roubini said. A premature increase in interest rates by European policy makers may put “significant” pressure on the Bank of England to follow suit, he said.

U.K. Squeeze

The U.K. government is engaged in the country’s biggest fiscal squeeze since World War II as growth faltered and the economy shrank in the final quarter of 2010. With spending cuts due to take effect from next month, Prime Minister David Cameron is trying to drive growth in the private sector by easing planning restrictions, cutting business taxes and making it easier for small companies to bid for public contracts.

Soaring food and energy costs pushed inflation to 4% in January, twice the Bank of England’s target. While the central bank expects inflation to accelerate in the coming months, it has kept its benchmark interest rate unchanged. Still, three of the Bank of England’s nine policy makers last month voted for an increase.

“In the U.K., things are even more complicated because even before the monetary and fiscal tightening, fourth-quarter growth was negative,” Roubini said. “Monetary and fiscal tightening is coming to the U.K. at the worst of all times, when the economic activity is weak.”

Bloomberg.com