Situation in Europe a ‘Slow Motion Train Wreck’: Roubini
Noted market bear Nouriel Roubini has called the ongoing political turmoil in Europe a “slow motion train wreck.” Speaking to CNBC in Las Vegas on Tuesday, Roubini said he expects Greece to leave the euro zone by next year.
Roubini’s comments come after Greek voters rejected pro-bailout parties in Sunday’s elections, raising the likelihood a new government will seek to restructure its debts and renege on the terms of its last bailout.
Alexis Tsipras, the leader of the Coalition of the Radical Left, a party which made big gains at the polls and came in second, has called the austerity measures agreed to by the previous government a “disaster.”
Coalition talks between the various parties have so far failed to come up with a unity government. Meanwhile, a leading German politician has warned Greece the country won’t receive a cent more in aid unless it fulfills all the conditions of its previous bailout.
Roubini, who warned last year that a perfect storm was coming for the global economy in 2013, said the euro zone will “eventually break up,” and expects two or three euro zone members to exit the bloc over the next few years.
“Europe will be lucky if it ends up in stagnation like Japan for the next 10 years,” he added.
While he’s worried about what’s taking place in Europe, Roubini hasn’t changed his investing strategy. He is 70 percent invested in global equities, with half of that sitting in U.S.-based indexes; the remaining 30 percent is kept in cash.
Roubini doesn’t expect U.S. equities to fall sharply this year. He said the economy would grow 2 percent for the rest of the year or “maybe less.” On Friday, the U.S. jobs report showed employers added only 115,000 jobs in April, well off from the pace earlier this year.
—CNBC’s Kate Kelly contributed to this report.