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Roubini predicts eurozone collapse; world markets will follow

Published time: November 04, 2011 18:34
Edited time: November 04, 2011 22:34
Nouriel Roubini (AFP Photo / Tony Ashby)

Nouriel Roubini (AFP Photo / Tony Ashby)

Noted American economist Nouriel Roubini says the eurozone is in the midst of crumbling, and with the rest of the world’s future at stake with a potential collapse, they might want to listen up — Roubini has been right before.

Speaking privately at a get-together this week at his apartment, those in attendance have since leaked that Roubini, who manages the Roubini Global Economics firm, has low-expectations for resurgence in the eurozone. According to the economist, a collapse is imminent as the economy overseas gets more chaotic.

There is a “significant risk of a Eurozone breakup,” sources say Roubini told a handful of select party guests recently, reports the Business Insider. Adds the economist, if the Eurozone goes under, “everything around the world goes sour.”

Roubini has claimed that in the past he correctly predicted both the housing market crash and the worldwide recession, the aftermath of both is still evident in the crises across the globe. For his forecasting, Roubini has earned the title “Dr. Doom” from members of the media, who look to him for economic outlook and have been met with not-so-optimistic — and correct — assumptions from the analyst in the past. As the American economy continues to show slumping statistics and the unemployment rate stays at or above a stagnant 9 percent for months, a collapse across the pond could cause a catastrophe for the world economy.

Sources say Roubini announced, "If the Eurozone blows up, it all gets worse."

Less than two weeks ago, Roubini had predicted that the odds of a eurozone collapse were one-in-two.

“Unfortunately, in my view there is a risk, at least a 50 percent probability, that in the U.S., in the eurozone, in the United Kingdom, and in most advanced economies, the future in the next 12 months might suggest a recession, a downturn, rather than reacceleration of growth,” Roubini said on October 24 to Bloomberg.

According to The Jakarta Post, that same day Roubini hypothesized dire conditions for the Chinese economy, noting that most of their gross domestic product is made through exports. Beijing and Washington have been at odds in recent weeks about a tariff that could raise the price of Chinese goods coming into the States and could cause economic woes for both nations.

This week, the Business Insider reports that Roubini remains pessimistic about the future of China and says a build-up of non-performing loans at the banks and a large governmental debt will cause major problem in 2013, if not sooner.