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Roubini Says “Perfect Storm” May Clobber Global Economy

NYU Professor Nouriel Roubini has seized the headlines again this morning, warning that a "perfect storm" of economic disasters may smash the global economy in 2013.

Roubini's perfect storm consists of four factors:

-The U.S.'s basket-case of an economy and budget deficit,
-A potential slowdown in China,
-European debt restructuring and
-Stagnation in Japan.

Roubini says there's a one-in-three chance that these factors will clobber growth in 2013.

Now, that sounds terrifying, but it all means there's a two-in-three chance that everything will be okay. (Roubini's other two possible scenarios are "anemic growth" and "accelerating growth.")

One problem that seems undeniable is the European debt crisis, which has defied all attempts to paper it over and kick the can down the road. Greece is broke, and no serious analyst that I know of thinks it will ever be able to pay back its debts. The logic underlying the endless bailouts and aid-packages, therefore, is to deal with the problem later and/or hope that it somehow resolves itself. In an FT editorial today Professor Roubini said that this hope was a hallucination and that the Euro-zone needs to break apart.

"There are already elements of fragility," Bloomberg quotes Roubini as saying. "Everybody's kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest."

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