Nouriel Roubini, dubbed Dr. Doom for predicting hard times before the financial crisis began in 2008, said the euro area is better off than in the middle of last year, even though political risks remain.
Things are “less worse than they were last summer in the euro zone,” Roubini, a professor at New York University, said in a Bloomberg Television interview with Tom Keene in Davos, Switzerland. “The politics of Europe could worsen” as elections loom in countries including Italy and Germany.
The euro-area debt and fiscal crisis is showing signs of abating, with finance ministers blessing the latest disbursement of aid for Greece, a show of greater political confidence in the government in Athens. While the currency bloc remains in a recession, European Central Bank President Mario Draghi suggested this week that the worst may be over.
Roubini, who predicted the U.S. housing bubble while failing to foresee a rebound in global stocks in 2009, said record unemployment in Spain is a reminder that the euro-area economy still faces strong headwinds.
“The fundamental problems of lack of growth, continued recession, of debt sustainability, of lack of competitiveness, remain,” he said. “In the euro zone, the credit crunch in the banks of the periphery remains,” he said. “The transmission to the real economy is still broken.”