MercoPress. South Atlantic News Agency

‘Dr. Doom’ Roubini anticipates a ‘double-dip downturn’ and 20% fall in markets

The economist described Greece’s debt problem as “mission impossible”

With the Euro-zone crisis renewing fears over another financial crisis, economic pessimists have again regained stage, among them Nouriel Roubini professor at the Stern School of New York University (NYU).

Roubini, who forecast the US recession more than a year before it began, told CNBC Thursday that the stock markets would suffer a sharp 20% decline over the coming months amid concerns that the world economy will continue to weaken.

The Turkish born economist and academic said that Europe's crisis and the US slowdown along with the uncertainty of other industrialized economies would weigh down on investors in the coming months.

In addition, Roubini, also known as “Dr. Doom” for his dire economic outlook, warned of a double-dip downturn, meaning the economy will experience another nosedive following a mild recovery.

“There are some parts of the global economy that are now at the risk of a double-dip recession,” he said. “From here on, I see things getting worse.”

The 51-year-old said that hammering out the debt trouble in Greece and other European countries was “Mission Impossible” and called for tougher decisions.

“What needs to be done is clear. We need to raise taxes and cut spending. Otherwise we're going to get a fiscal train wreck,” he said. “It's going to take years of sacrifices.”

Recently, several major countries reported solid growth in the first quarter of this year: the US economy posted a 3.2% GDP growth in the first quarter and Asian economies enjoyed more robust growth than the United States during the same period ― Korea with 7.8%, Singapore 7.2% and China with a double digit rate.

“What's happening in Greece is just the tip of an iceberg of a broader range of sovereign debt issues, of deficit, in many advanced economies” said Roubini who added that the new crisis could occur “not just in the Euro zone but UK, US, or Japan”.

Roubini said there was an “economic recovery, but in many ways countries have not answered the real problem. The next stage of the crisis could be a sovereign debt crisis that could lead to a double-dip recession”.

And reiterated his view that “there is a possibility of a breakup of the EU monetary union: one or more countries of the Euro zone could default” said the New York University professor. “Some of the weaker members of the monetary union might decide they'll be better off exiting” the monetary union.

Roubini said that right now cash is the safest investment with the possible exception of short term bonds in relatively safe countries like Canada or Germany.

Nouriel Roubini has been warning of a “double dip” recession ever since government officials and economists have been saying the recession was over. Roubini warned also back in October that stocks moved too high, too fast and that a correction would come.