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.Helicopter Ben sure has printed a hell of a lot of money to help save the economy. Eventually that will come back to bite us in the ass, and the only reason it hasn't yet is the fact that the real estate collapse has taken trillions out of the economy in wealth.
"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.
The idea is that the recovery will be slow enough to allow the Fed to put on the brakes, but given the overly eager rate that the stock market is betting on a huge recovery, it may just jump the tracks and turn into another bubble bursting at a time when the economy is the most vulnerable to shock.
We'll see.
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