Nouriel Roubini’s consulting firm has just said there will be around $100 billion in municipal bond defaults over the next 5-years, according to the Wall Street Journal.That’s much less than the near-cataclysmic calls Meredith Whitney made in the now infamous report she published last year, where she claimed hundreds of billions of defaults in 2011.
Roubini’s analyst team of David Nowakowski and Prajakta Bhide say that the problem isn’t big enough to crash the financial system. The report does say, however, that austerity cuts will be needed to prevent more defaults.
Whitney faced a lot of heat for her calls in that report, with everyone from PIMCO to the Congress attacking her. Now Roubini’s team have come up with a rebuttal of sorts, that certainly makes the crisis look a little less serious.