The world economy still risks a double-dip recession if oil prices rise toward $100 per barrel and if huge U.S. government debts frighten investors, Nouriel Roubini, professor of economics and chairman of RGE Monitor, told CNBC.
"There is a risk, a low probability for a double dip," Roubini said on "Squawk Box."
Although the risk of a depression has been virtually eliminated by the massive monetary stimulus, "we are in the middle of the worst recession in 60 years" and the rallying stock market may have gotten ahead of itself, he added.
"Asset prices should go higher, the question is too much, too soon, too high? In my view there is the risk of a correction," Roubini said.
"I can still see downside risks for financial institutions," he said.
Because of the United States' large budget deficit—monetized by the Federal Reserve—investors may at some point next year begin to worry and pull out of government bonds, pushing yields higher, according to Roubini.
Another risk is that if the oil price goes toward $100 a barrel, the shock would be similar to the one felt last year when it went above $145, which was the tipping point for the world economy, he said.
"It could lead to a double dip. I'm not saying it's going to happen but it's a risk," Roubini added.
However, any correction in stocks would not be as severe as pushing the S&P 500 toward 666 unless there is a clear risk of a double-dip, he said.
On other issues, Roubini warned that China could see a slowdown and said emerging markets overall may not grow as quickly as some think.
The potential growth of emerging markets of 6 percent is higher than the 3 percent potential growth for developed countries, he said.
"But they're so dependent on net exports so far that until they switch their growth model … there will be something of a limit on how much emerging markets can grow," Roubini said. "I see weak economic growth, weak consumption, even if there will be a recovery."
Roubini's comments were buttressed by fellow "Dr. Doom" Marc Faber, who faulted policymakers for not reacting quickly enough to changing global economic conditions.
"Usually an economic and financial crisis leads to some fundamental changes. That is the purpose of a recession, of a depression, to clean the system," said Faber, who faulted Fed Chairman Ben Bernanke for bailing out the financial system and making transparency even worse.
"Let the derivatives players go bankrupt and the system is clean," he said. "The total breakdown of the system is ahead of us and it will devastate the global economy."
"My view is that the Fed and the other central bankers will leave interest rates far too low and far too long," Faber said.