Current Status and road ahead on Recession

(Reuters) - The euro zone is facing a period of zero growth if not recession, and the United States is heading for financial trouble, U.S. economist Nouriel Roubini was quoted as saying on Saturday. There was a risk of renewed recession in Europe,Growth will fall toward zero. Even if that is perhaps not a real recession, it will feel like one. Greece was just the tip of the iceberg," he said. "And the Americans too will run into the wall at some point if the carry on the way they are," he said in the interview published in German. Roubini, known as Dr. Doom and best known for predicting the U.S. housing crisis, said there was a risk of a second financial crisis, with countries becoming insolvent and being forced out of the euro, and banks collapsing. Countries such as Spain and Greece were now under pressure to cut spending and raise taxes to retain access to the capital markets, even though they had no growth to speak of. "You're damned if you save and you're damned if you don't," he said. Roubini said it was "possible to square this circle" if governments committed to a credible medium-term plan to restore their budgets. Any resulting further decline in the euro would make European exports more competitive and allow Germany to raise wages and purchasing power at home to stimulate exports from other euro zone countries, he said. Roubini said that a Japanese-style period of deflation, stagnation and high unemployment was a much greater risk to Europe for the next two or three years than inflation.