Greece is just the 'tip of the iceberg', Nouriel Roubini warns

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Roubini

Professor Roubini, the New York-based academic who was one of the few to anticipate the scale of the financial crisis, told a panel in California that the buildup of debt is likely to lead to countries defaulting or resorting to inflation to ease the burden on their populations.

“While today markets are worried about Greece, Greece is just the tip of the iceberg,” Roubini told the Milken Institute Global Conference in Beverly Hills, California. "The thing I worry about is the buildup of sovereign debt.”

Although Greece's misreporting of the scale of its own debt has helped shatter investors' faith, the southern European country is not alone in its struggle. The depth of the property bust in both Spain and Portugal has prompted the ratings agency Standard & Poor's to downgrade the creditworthiness of both.

European leaders, led by German chancellor Angela Merkel, the International Monetary Fund and Greece's leaders are scrambling to approve a bail-out for Greece as financial markets drive its borrowing costs higher.

"The ripple effects across the market are now more visible," said Ciaran O'Hagan, an analyst at Societe Generale. "Contagion is amplifying."

Greece is just the 'tip of the iceberg', Nouriel Roubini warns