Nouriel Roubini, the economist often known as "Dr. Doom," slapped a characteristic diagnosis on global markets on the turbulent trading day of Wednesday.
"Markets tend to be manic depressive, going from excessive optimism to excessive pessimism," he said at a panel discussion at the World Economic Forum in Davos, Switzerland.
Roubini, who chairs Roubini Global Economics, spoke before Wall Street had opened, when major European stock indexes traded more than 2 percent lower and Dow Jones industrial average futures were down more than 200 points. Asian markets also tumbled, after crude oil futures declined to a 13-year low of less than $27 per barrel and the Chinese economic slowdown — and the ability of policymakers in the country to handle it — remained in focus.
Dr. Doom said that markets had veered from undue optimism to exaggerated pessimism on the world's second biggest economy.
"A year ago they (markets) believed in this rhetoric of the Chinese government that China could achieve a soft landing; they could maintain growth at 7 percent; that the Chinese were a bunch of super heroic technocrats who could not do any wrong. And now they have gone to the other extreme, saying the policymakers are incompetent; they cannot stabilize growth, their currency, their stock market," he said.
Concerns about China's handling of its economy and financial sector were piqued last summer when authorities intervened in equity markets and devalued the currency amid a stock market rout.
The Shanghai Composite index declined by more than 1 percent on Wednesday and has fallen nearly 16 percent since the start of the year.
China posted 6.9 percent economic growth in 2015 on Tuesday, in line with economists' estimates in a Reuters poll. However, skepticism abounds about official Chinese economic data, which some say vastly inflates growth, casting doubt on China's targeting of at least 6.5 percent annual growth until 2020.
Roubini added that China's economy was heading for a "rocky landing" — rather than the much discussed "soft" or "hard" landing — forecasting growth "in the low 6 percent."
Raghuram Rajan, the governor of the Reserve Bank of India since 2013, told CNBC that one reason for the tumult in markets was uncertainty regarding Chinese policy.
"Part of it is wondering, what is really happening in China: Why did the renminbi start moving a little and is there more to come?" he said on Wednesday in Davos.