The economy’s chickens are coming home to roost, says Nouriel Roubini

The recent market turmoil has shaken quite a few investors. But one man who is probably quite pleased to see a threat to the bullish mood is permabear Nouriel Roubini.

Last year he predicted that 2013 would see "a global perfect storm" hit the financial system. And with the first clouds finally appearing on what's been a positively sunny financial year so far as the Federal Reserve threatens to tighten monetary policy - Roubini took to opinion column site Project Syndicate to give his view on the markets.

Since last summer, all sorts of risky financial assets have been performing strongly, says Roubini, 55. "But now the global economy's chickens may be coming home to roost."

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Roubini believes that for most of the year there has been a "gap between Wall Street and Main Street" ie a disconnect between financial markets and the real economy. In the real world, the situation is pretty bleak, says Roubini.

"Japan, struggling against two decades of stagnation and deflation, had to resort to Abenomics to avoid a quintuple-dip recession. In the United Kingdom, the debate since last summer has focused on the prospect of a triple-dip recession. Most of the eurozone remains mired in a severe recession now spreading from the periphery to parts of the core."

Of course Europe or Japan's problems are no secret. But Roubini, whose profile rose after he successfully predicted the US housing bust, reckons that even the better-performing parts of the world economy don't seem too impressive.

"In the United States, economic performance has remained mediocre" while even "the darlings of the world economy, emerging markets, have proved unable to reverse their own slowdowns". For example, "Russia, Brazil, and South Africa are growing at around 3%, and other emerging markets are slowing as well."

But for almost a year the markets papered over the cracks, as most assets continued to rise in spite of the gloomy reality, says Roubini. Investors remained hopeful that better data would emerge. Optimists told us that "this year is different". Central banks played their part by either pumping the system with freshly-created money or cutting interest rates.

For a while this worked, admits the man they call "Dr. Doom", but now it looks as if reality is starting to catch up. Given his high-profile call, with the year halfway through, one can't help suspecting that he's hoping he may finally be about to be proved right.