Roubini's Latest 'Dr. Doom' Prediction: More Than 400 Banks Will Fail

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Roubini's Latest 'Dr. Doom' Prediction: More Than 400 Banks Will FailIt didn't take long for Nouriel Roubini to come up with his next dire prediction: The New York University economics professor with the nickname "Dr. Doom," who recently said the chances of a double-dip recession are more than 40%, now says that even if the U.S. and European economies manage to avoid a double dip, it will still feel like a recession, and more than 400 U.S. banks will likely fail.

Speaking to CNBC, the renowned economist said the U.S. economy will remain weak in second half of the year, with growth below par at best. He reiterated what he has previously said -- that tailwinds will become headwinds. "We have to expect the new normal," he told CNBC. "We do not need a double dip for it to feel like recession."

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With no private sector jobs growth, and weak consumption, exports and housing, there are no final sales and no final demand, he explained. And if any world economies hoped to move forward unaffected by weak U.S. consumption, they will soon discover that they can't as the slowdown in the U.S. impacts China, Japan and the eurozone.

The deleveraging of governments and consumers in the developed world has to continue, Roubini said, and while the biggest banks have been supported, "800-plus small- and medium-sized banks in the U.S. remain on the critical list and half of those will go bust."

The economist repeated his previous statements that policymakers are out of moves to stimulate the economy, and that the U.S. is facing a liquidity trap and has insolvency problems. But, for a change, he suggested a plan: "What we need [are] credible spending plans over the medium term on health care, welfare and retirement age. This will create a fiscal constraint lasting well into next year."
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