Roubini on The break up of the Eurozone

Nouriel Roubini : You have to assign probability to something disorderly happening in the Eurozone and you have to assign some probability to disorderly default and even a break up of the Eurozone not in the next six to eight months, but certainly over the next two or three years. If that break up of the Eurozone were to occur, the systemic effects of it could be much bigger than the disorderly default of Lehman Brothers in the fall of 2008. This is because Lehman Brothers was a $600 billion problem while the public debt of Italy and Spain alone are a 3 trillion euros or about 4 trillion dollars. Therefore, if there was a disorderly default by Italy and or Spain that will be a shock that will be systematically more important than even the disorderly collapse of the Lehman Brothers. I am not predicting that to happen in the next six to eight months, but you have a set of countries in the Eurozone, Greece, Ireland, Portugal, Italy and Spain of which each one of them with different probability could have a possible restructuring of their private and public debt. And one of them with different probability could eventually exit the Eurozone. If a combination of these events were to occur, the systematic facts on the global economy will be absolutely as severe or actually more severe than what happened in 2008. I am not saying that it is going to happen with probability 1, but you have to consider this is an important tail-risk that has a meaningful probability that would have a systematic effect on the global economy over the next few years.