(April 11, 2012) — Nouriel Roubini, known as Dr Doom, thinks Spain’s recession is likely to continue, despite the European Commission’s protests that the country does not need a bail-out or outside help to recapitalize its banks.
“Spain’s industrial production is free falling and the draconian fiscal austerity will make its recession much worse,” says the outspoken and notoriously gloomy Nouriel Roubini, Chairman of Roubini Global Economics, on his Twitter page.
Roubini’s comments come as Spain has revealed an austerity budget to ward off the threat of the Eurozone crisis. Meanwhile, the rate demanded by investors to lend to Madrid has increased to a 6% level before backing down to 5.9%. The European Commission has asked for a “full picture” of Spain’s budget consolidation plan. According to the Commission, it is unable to offer any recommendation regarding the economy without information on regional budgets. It is requesting the additional information by the end of April.
In reference to a bailout, the Commission expressed support over Spain’s 2012 budget and said it believed Spain does not need the assistance. “We have a positive view regarding this first budget,” Olivier Bailly, a spokesman for the European Union’s executive arm, told a news conference, according to the Economic Times.
Earlier this month, Roubini wrote in the Financial Times that the Eurozone’s issues remain unresolved, suggesting that problems remain for Greece and other Eurozone countries, such as Portugal and Ireland. Roubini Global Economics’ Roubini and Arnab Das, managing director of market research and strategy at the firm, argued: “splitting up may be hard to do but it’s better than sticking to a bad marriage”. The issues, the duo said, stem from design flaws. Consequently, the best way to proceed would be a “divorce settlement” under which some countries (Portugal, Ireland, Italy, Greece and Spain) leave the union. Only a core group of countries would remain in the Eurozone, according to Roubini and Das.