A Greek default could trigger a global economic shock on the scale of that suffered after Lehman Brother Holdings Inc.’s 2008 failure, said Nouriel Roubini, chairman and co-founder of Roubini Global Economics LLC.
Roubini stated that default from a Eurozone member or an exit from the Eurozone could cause a shock “that would reverberate through the global economy”. The “problems of the Eurozone are chronic , won’t go away” he added.
Europe’s failure to rein in its debt crisis means the probability of a recession spreading through the region is now greater than 50 percent, according to Roubini.
Policy makers are running out of time to ring-fence Greece’s fiscal hemorrhaging, and the risk of a “self-fulfilling run” by debt investors on Italy and Spain is growing, he concluded, adding both countries are already viewed by markets as “insolvent”.
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