"On the fiscal side, Roubini thinks stimulus on a large scale would still work. However, the chances of that happening are slim. The U.S. budget deficit is already at 10 percent of GDP and debt is close to 95 percent of GDP. Plus, bond vigilantes are waking up and the U.S., like most advanced economies, are in "austerity mode" politically, said Roubini.
In light of this problem, Roubini expects financial market volatility to remain high; the downside risk is greater than the upside risk for equities."
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