This article is an excellent analysis by Dr. Roubini. However, there are several alternatives ( in my humble opinion ) to the situations in the U.S., China and the Euro Zone.

First of all, looking at 2012, I believe there is little likelihood that all 3 of these economies will become a disaster. First and foremost, the Euro Zone has little likelihood of dissolving in 2012, due to the ECB loans and debt to maturity of bonds in the Euro Zone. 2013 will be the REAL TEST for the Euro Zone, based on national presidential / prime ministerial elections in Germany, France and Spain.

Secondly, China is not likely to have a hard landing in 2012, due to its command economy's ability to rapidly adjust. Again 2013 and the medium term is a different, less certain story. Fortunately for the global financial system, China is in a position where it MUST continue to appreciate it's currency at a quicker pace than the last several years. It it likely to become a solid global reserve currency within the next 5-7 years or so, along with the US dollar and hopefully the Euro as well. This is a matter that I believe Dr. Roubini has failed to take into consideration in the short and medium term. This likely event would decrease the likelihood of a currency and trade "wars" in 2012. The prognosis for 2013 is another matter all together

Lastly, the probability of a double dip recession in the U.S. is no more than 50/50 at best, due to the historical ingenuity of the U. S. economy. It is also likely that medium and especially large U.S. banks will purchase ( at fire-sale prices ) assets off the banks in the Euro Zone that must continue to deleverage assets of its balance sheets.

To have a global financial meltdown (again in my humble opinion ) in 2012, at least 2 of the 3 economies in either ... China, the U.S. and the Euro Zone must falter in a dramatic fashion. The least likely disaster for 2012 is the Euro Zone, followed by the Chinese economy. The faltering of the U.S. economy in 2012 is the most likely scenario.

This is all a matter of timing. One disaster out of three in 2012 will very likely NOT spell financial Armageddon. 2 out of 3, or 3 out of 3 would be disastrous but EXTREMELY unlikely.

Neven Adam Strmski

For further relevent analysis please see ... www.nevensinvestmentanalysis.wordpress.com / www.nevensinvestmentanalysis.com

Restoring jobs and underemployment is one thing, but restoring ( increasing ) wages for U.S. workers is a VERY different ( yet somewhat indirectly related issue ). Any U.S. Domestic Jobs Policy initiatives / changes will not, by themselves, have much of an effect on U.S. wages. That is a more global issue and frankly much more complicated involving many more U.S. Domestic Policy issues as well; especially in our current economic and political state of turmoil.

I believe that jobs and wages will likely be on the 'back burner' for at least several weeks, while the EU Debt Crisis, talks of a possible QE3 as well as the U.S. Debt Ceiling are on both of the 'front burners'. Global monetary policy and debt issues must be better coordinated. ( It is usually not safe to cook 3 things on two burners, but necessity dictates it, What can you do ?) Rest assured that the Obama Administration will attempt to tackle unemployment / underemployment / wages. Only so many issues can be taken on at one time unfortunately.

I would personally love to hear more about what is being done by anyone to improve the U.S. residential housing market ... So far, I see so viable exit strategies and/or solutions. I believe U.S. residential housing market is still the big white elephant in the room for the U.S. Economy. It was a big reason, among others, why this global financial mess started and I see no comprehensive realistic strategies that are being discussed and/or implemented to improve things. Domestic residential housing still has many, many problems that will by itself, likely have a large negative effect on our U.S. economy for the next 6 months - 2 years. The timeline may depend on how fast we act. We shall see.

Nice article Dr. Roubini !

The European Union and the United States seem to be 'kicking the can down the road' and acting like someone who is living from paycheck to paycheck, by avoiding tough decisions and dealing with the issues only when necessary ( at at the end of a deadline. ) What happened to long term planning ?! These are nations and groups of nations, not someone trying to cover his or her monthly bills.

I especially agree with your point about a lack of cohesive policy, especially in the US. Both political parties have become so polarized in their ideology and policies that any long term economic, fiscal and financial policies will likely focus only on the short term ... which is a shame, in light of the lingering ( as well as new ) crises and the respective opportunities they present. There are a lot of very sharp, very bright people involved in policy decisions. However, not looking at the medium and especially long term consequences as well as waiting until the near a deadline to make many, if not most decisions, is a recipe for mediocrity at best. Let's hope this changes in the near future.

I can assure you all that Nouriel Roubini is an outstanding, internationally renown economist.

Very good post here !! I would also add that the residential housing market and health care policy issues DIRECTLY effect the unemployment / underemployment rate.

Health care, for most individuals and their dependents, is directly correlated to employment, i.e. ... most people get their health care through their employer. With many domestic US companies ( especially small businesses that historically speaking, are responsible for most of the growth in employment growth in the U.S. ) still somewhat unsure how much added cost they are taking on when providing benefits to employees. Domestic health care policy needs to be more thoroughly articulated for business owners to understand the TRUE costs of providing some level of health care insurance to employees.

The sorry state of the domestic residential housing market is yet another even more important matter that, in my opinion, is directly correlated to the general anemic recovery in unemployment ( as well as 'under-employment' in the United States ). How is someone able to easily relocate to a job in a different city, if they can't sell their house / condo ... or if they are 'underwater' on their mortgage? Granted residential housing is probably a more important and relavent issue than health care policy.

If you add the current health care policy cost uncertainty for employers ( especially small businesses ) to the anemic recovery and uncertainty in residential housing, I do not personally see how the U.S. can have a sustained recovery in unemployment and 'underemployment'. I'm not sure what the answers are, but I do know what, arguably, the two biggest problems affecting employment growth are. We will see what happens.

I would add that the end of QE2 has the possibility of stimulating global financial markets, especially equity markets. This may sound counter-intuitive and may not happen. My rationale is as follows. QE2 has had a positive short term effect on US equities thus far. There, were and are, consequences for such a blunt instrument as QE2. One of these consequences has been, and still is, an increase in the complexity of 'currency wars' and possibly international trade to a lesser extent. By hopefully avoiding any possible form of a QE3, currency wars ( and international trade to a lesser extent, possibly ) can better flourish in an international monetary ecosystem that is more predictable and therefore more stable. It is not a matter of right or wrong, good or bad. It is a matter of NECESSITY. International monetary policy NEEDS to be better coordinated globally, as most all countries and their respective economies and financial systems are becoming ever more intertwined and dependent on one another. In my opinion, this is one of the biggest lessons that should be learned from the last Great Recession. The ever increasing pace of communication and international business, not only requires, but demands better coordination and less volatility in regards to international monetary policy.

In my humble opinion, and as I have written over 1 year ago, there must be meaniful structural changes to the ECB. I would think and hope that as the big banks in France and especially Germany slowly deleverage out of the Euro Zone and it's debt, and as China likely continues to implement a slow diversification of it's sovereign wealth from US dollar to Euros, necessary ECB reform will become more of a reality.

I think the biggest threat to the Euro is wether it can sufficiently implement enough debt restructuring, institutional changes to the EU governing body and especially structural changes to the ECB before the next global financial & economic crisis / recession hits ( later rather than sooner for all of our sakes. )

Rest assured that the next global recession is likely to hit us all sooner that the historical average for recessions. If the EU can not get it's house in order within the next 3 years or so, it will be tempting the possibility of the collapse of the Euro and the European Union itself. But I believe that a three year window of time is sufficient, as long as there are no large, global, unforseen financial & economic crises in the meantime. One of the first tests we will all face will be how the U.S. Fed will handle the challenge of deleveraging the toxic U.S. mortages off of its balance sheet.

Storry tellyin ' is a lost art there boss ! :)

Cool stuff !