'Dr. Doom' Roubini to Synagogue Audience: Israeli Air Strike on Iran 'Would Lead to Another Global Recession'

With European economies on the brink and other emerging markets slowing down, is there any possible way things could get worse?

As if the public needed any more evidence we’re living in perilous times, Dr. Nouriel Roubini, professor of economics at New York University's Stern School of Business and co-author of “Crisis Economics: A Crash Course in the Future of Finance,” [1] warned that there is one single event that could push the global economy down even further.

Roubini, who was the economist that predicted the current economic crisis, spoke to an audience at the Sixth & I Synagogue in Washington, D.C. on May 13. He said that, should Israel or the United States initiate an attack on Iran, as it is attempting to procure nuclear weapons, the price of oil would skyrocket.

“And you know, on the issue of if there is a strike on Iran, the point I was making in the article was, if that were to occur, oil prices would double literally overnight and we would have another global recession.”

Roubini cited other historical events that impacted a fragile global economy.

“Oil spiked sharply in ’73 after the Yom Kippur War,” Roubini explained. “It doubled in ’79 after the Iranian Revolution, it spiked again in 1990 after the Iraqi invasion of Kuwait.”

He also explained the 2006 Israeli invasion of Lebanon was a spark for the current global financial crisis, a point he had made earlier for Forbes back on April 22 [2]. He advised policy makers to keep this in mind when it comes to dealing with the rogue power.

“So if an air strike were to occur, and I’m not making a statement whether Israel and/or the United States would be right – so I’m just pointing out that if that were to occur, the financial consequences would be a spike in the price of oil and that would lead to another global recession. So when it comes to some pros and cons that should be something we keep in mind.”

Roubini, who has been giving the name “Dr. Doom” for his predictions about asset bubbles and the downturn in the current economy that for the most have come, said sanctions would have a less detrimental effect on the global economy.

“I would say no, if there were sanctions against Iran, I would not expect that the oil prices to sharply rise as long as there isn’t any direct conflict,” he added.

However, he said if Iran were to attempt to block the Straits of Hormuz or instigate its proxies in Palestine or Iraq and cause instability, it could create risk aversion and thus spike in oil prices.