recovering world economy back into a double-dip recession." In August 2009, he predicted that the global economy would begin recovering near the end of 2009, but said the US economy was likely to grow only about 1% annually during the next two years, which would have been less than the three percent normal "trend." He said that the Fed was "now embarked on a policy in which they are in effect directly monetizing about half of the budget deficit," but that now "monetization is not inflationary," as banks were holding much of the money themselves and not relending it. When these attitudes reverse at the end of the recession, that would be time for an "exit strategy, of mopping up that liquidity" and taking some of the money back out of circulation, "so it doesn't just bid up house prices and stock values in a new bubble. And that will be 'very, very tricky indeed,'" he said. Global economy 2006 In the summer of 2006, Roubini wrote that the U.S. was headed into a long and "protracted" recession due to the "collapse" of house prices, which he noted were already in freefall. With regards to Europe, Roubini predicted that Italy, and possibly a series of other Eurozone countries (Portugal, Spain, Greece) might have to exit the eurozone if they did not implement "serious economic reforms." "[It] is not a foregone conclusion but, if Italy does not reform, an exit from EMU within 5 years is not totally unlikely. Indeed, like Argentina, Italy faces a growing competitiveness loss given an increasingly overvalued currency and the risk of falling exports and growing current account deficit. The growth slowdown will make the public deficit and debt worse and potentially unsustainable over time. And if a devaluation cannot be used to reduce real wages, the real exchange rate overvaluation will be undone via a slow and painful process of wage and price deflation." 2009 As of January 2009, he remained pessimistic about the U.S. and global economy. He said in September 2008, "we have a subprime financial system, not a subprime mortgage market". "As the U.S. economy shrinks, the entire global economy will go into recession. In Europe, Canada, Japan, and the other advanced economies, it will be severe. Nor will emerging market economies—linked to the developed world by trade in goods, finance, and currency—escape real pain." Roubini said that the subprime issues were