Nobel economics winner Fama says risk of global recession in 2014

Sat Dec 7, 2013 7:38am EST
 
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STOCKHOLM (Reuters) - One of the three Americans who won this year's Nobel prize for economics said bloated public deficits on both sides of the Atlantic meant that recession remained a real risk for 2014.

Eugene Fama, who shares this year's 8 million crown ($1.2 million) prize with Robert Shiller and Lars Peter Hansen, said on Saturday that highly indebted governments in the United States and Europe posed a constant threat to the global economy.

"There may come a point where the financial markets say none of their debt is credible anymore and they can't finance themselves," he told Reuters in the snow-covered Swedish capital, where he will receive his prize on Tuesday.

"If there is another recession, it is going to be worldwide."

Fama, who has been called the father of modern finance and shared the economics prize for research into market prices and asset bubbles, played down this week's strong U.S. labor market data.

"I am not reassured at all," he said.

The U.S. jobless rate fell to a five-year low of 7.0 percent in November, and employers hired more workers than expected.

"The jobs recovery has been awful. The only reason the unemployment rate is 7 percent, which is high by historical standards in the U.S., is that people gave up looking for jobs," he said.

"I just don't think we have come out of (recession) very well," he said.   Continued...

 
University of Chicago Professor Eugene Fama is pictured in his house with his wife Sally after finding out he won the 2013 Nobel Prize in Economics in Chicago, Illinois October 14, 2013. REUTERS/Jim Young