Unless the U.S. addresses [its] fiscal problem, we’re going to see a train wreck, said Nouriel Roubini on Bloomberg TV.

Roubini, chairman of his economic consulting firm and a professor at NYU, famously predicted the subprime mortgage crisis.

 

He said the problem is very serious and the U.S. government isn't doing much to fix it. He warned that one day, the bond vigilantes will wake up and punish the U.S. similar to the way they punished Europe.

 

In Europe, the market sold off the government debt of several countries and pushed their borrowing costs to unsustainable levels. These countries then had to seek bailouts from the IMF/European Union and agree to harsh spending cut measures.

 

Roubini also said the developing countries are growing faster than the developed countries. However, food inflation is a serious issue and can lead to riots, demonstrations…political instability and the toppling of regimes.

 

A few weeks ago, Tunisia's President was overthrown by massive protests -- key issues there were high unemployment and rampant food inflation.

 

Today, the protests in Egypt are mounting. There also, food inflation is a source of discontent.