In a worsening global economic climate, steps should be taken to avoid outright depression, said economist Nouriel Roubini, and among those steps are the postponement of austerity measures by nations able to do so and credit easing as well as quantitative easing.

In a Reuters blog piece on Monday titled “How to Prevent a Depression,” Roubini said that, according to the most recent economic data, recession is on its way back to “most advanced economies ... The risks of an economic and financial crisis even worse than the previous one—now involving not just the private sector, but also near-insolvent sovereigns—are significant.”

He suggested eight actions that should be pursued to avoid “not just . . . a mild double-dip recession, but . . . a severe contraction that could turn into Great Depression II, especially if the eurozone crisis becomes disorderly and leads to a global financial meltdown.” Those actions are:

1. Countries able to do so, such as the U.S., Germany, the U.K., and others, should postpone austerity measures in favor of short-term stimulus.
2. Credit easing should be employed in addition to quantitative easing, and the European Central Bank (ECB) should reverse its “mistaken decision to hike interest rates.”
3. Undercapitalized euro zone banks and banking systems should be strengthened with euro zone-wide public financing (Euro TARP).
4. Solvent governments need large-scale liquidity provisions.
5. Unsustainable debt must be restructured, reduced, or converted into equity—not just on a government level but down to households as well.
6. A return to competitiveness in the euro zone, which Roubini says means Greece’s exit from the euro zone.
7. Response to competitive emerging markets in the form of “massive new investments in high-quality education, job training and human-capital improvements, infrastructure, and alternative/renewable energy.”
8. Easing of monetary and fiscal policy by emerging market economies, and more rapid currency appreciation.

Roubini concluded by saying, “Wrong-headed policies during the first Great Depression led to trade and currency wars, disorderly debt defaults, deflation, rising income and wealth inequality, poverty, desperation, and social and political instability that eventually led to the rise of authoritarian regimes and World War II. The best way to avoid the risk of repeating such a sequence is bold and aggressive global policy action now.”