Roubini Says the Euro Zone is Destined to Fail

Nouriel “Dr. Doom” Roubini has long been in the limelight given some of his bold predictions on the economy. But what keeps him at the forefront is the accuracy of a number of his statements and forecasts for the future, so when Roubini gives an opinion on the future, people tend to listen. Aside from the fact that Roubini was prepared for and betting on QE3, he has also predicted a “perfect storm” for the global economy in 2013. He combined stalling U.S. growth, debt troubles in Europe, a military conflict in Iran, and a Chinese slowdown as the main culprits of what he feels is a coming recession [for more economic news and analysis subscribe to our free newsletter].

Roubini has now gone even further on the European facet of his perfect storm, stating that the nation bloc is destined to fail. As many economists feel, Roubini is on board with the idea that easing programs do nothing more than delay the inevitable and that the euro zone will eventually suffer from its massive debt crisis. There have been multiple packages put into place to help countries like Greece, Italy, and Spain, but with the troubles coming on multiple fronts, it seems that the euro crisis is a tough one to solve. Most look to Germany to lead the way through the fog as they have long been one of the most powerful economies in the world.

Instead, Mario Draghi has taken in the reins in a Bernanke-like fashion. To be fair, Draghi’s open-ended asset purchasing program came a few days before the Fed’s, but Helicopter Ben has long been a proponent of debt purchasing. For the time being, Roubini feels that the asset purchasing will prop up markets and economies but that they will have to suffer a contraction at some point in the future. Given that Dr. Doom has been frighteningly accurate with some of his past predictions, investors may be a bit more wary of the failing European nations [see also Will a Euro Collapse Wreck Your Commodities Allocation?].

For those who buy in to Roubini’s predictions, there are a number of commodity investments that can help you outpace global economic troubles. GLD and SLV offer unmatched liquidity for both gold and silver investing, as these two precious metals tend to outperform equities in times of struggle. Another interesting play comes from the tobacco world, as this consumer commodity is propped up by relatively inelastic demand. Stocks like PM and MO will be good plays.

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Disclosure: No positions at time of writing.

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4 Responses to “Roubini Says the Euro Zone is Destined to Fail”

  1. [...] Stoyan Bojinov: Major equity benchmarks logged another event in red domain as profit-taking stays a dominant theme on a week. Pessimism from Europe welcomed behind a bears as lawmakers abroad pronounced that Spain should bear a cost of problems as a recently due European Stability Mechanism would assume usually partial of a nation’s debt burden. At home, positive housing data went mostly unnoticed; new home sales dipped in August, nonetheless prices rose a record 11.2% bolstered by clever demand [see also Roubini Says The Eurozone Is Destined To Fail]. [...]

  2. [...] well for the next few months not for any reasons in the U.S., but simply because the euro is likely to weaken. Faber pointed out that Spain and Greece can only print to a certain extent, while the U.S. [...]

  3. [...] This article was originally written by Jared Cummans, and posted on CommodityHQ. [...]

  4. [...] his propensity for bearish sentiment. Roubini is also not afraid to speak his mind as he has been issuing warnings about the global economy for the past few years. Now, the Dr. has commented on the commodity [...]

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