In Italy today, Nouriel Roubini said today that Fed and ECB's "policy divide" may be destabilizing.
- He says covering the banking losses and putting them in balance sheet of governments does not make sense. The backs of the governments will be broken. There may be a sovereign crisis on top of a banking crisis.. Now that will damage the real economy.
- Says fundamental problems of Spain are serious. Danger of spreading to Spain, too big to fail, but too big to save.
- ECB will likely start raising rates in April, but 5 countries on the periphery where there is no growth and serious issues. Early hikes will worsen competitiveness.
- There are economic policy splits between ECB and U.S., they are on different paths, and also on fiscal policy (stimulus in US, austerity in Europe): Dangerous and destabilizing.