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Roubini On Global Inflation Threats and Raising Taxes

January 26, 2011

As you can see the President shied away from talking about Davos WEF, global inflation and rising food prices, and unrest in Egypt. Economist Roubini reported today from Davos the seriousness of what is developing around the world and needed action to stave off inflation in the United States and abroad.

NEW YORK (CNNMoney) — Lawmakers need to stop “kicking the can down the road” and attack the massive national deficit from both the spending and revenue sides, celebrity economist Nouriel Roubini told CNNMoney’s Poppy Harlow in an exclusive interview Tuesday.

And that means taxes need to go up soon.

“You have to reduce defense spending, and raise taxes on the rich and taxes on the middle class,” Roubini told CNNMoney.

Roubini, a New York University economist nicknamed “Dr. Doom” for his famously bearish predictions, is in Davos, Switzerland this week, hobnobbing with other world elites at this year’s World Economic Forum.

While he said he agreed with some of the spending cuts President Obama laid out in his State of the Union address Monday evening, he’s also skeptical. Policymakers aren’t doing enough, he said.

From Bloomberg, he continues his tough talk:
A surge in food and energy costs is stoking inflation in emerging markets and causing riots that may topple governments, said Nouriel Roubini, the New York University economist who predicted the financial crisis.

Global food costs monitored by the United Nations jumped 25 percent last year, reaching a record in December, and crude oil traded in New York is at $86.38 a barrel, about 53 percent more than its average over the last decade. There have been protests in Algeria and Egypt, and Tunisia’s President Zine El Abidine Ben Ali fled the country on Jan. 14.

“In emerging markets, it’s leading to rising inflation, to reduction in disposable income, it’s leading to riots, demonstrations and political instability,” Roubini said in an interview in Davos, Switzerland, today with Tom Keene on Bloomberg Television’s “The Pulse.” “It’s really something that can topple regimes, as we have seen in the Middle East.”

No doubt this is true as just saw Tunisia government toppled and Egypt may be next would could cause regional upheaval.

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