Nouriel Roubini, who earned the nickname Dr. Gloom for his correct forecast of the current financial crisis, won't be looking for a new moniker anytime soon.
The economist says stocks are overvalued and the Obama administration will have to nationalize banks as the recession continues through year-end.
"The stock market is a bit ahead of the real macroeconomic and financial news," Roubini, a New York University professor, tells Bloomberg TV.
Investors and speculators are "way too optimistic" about the economy and earnings, he says.
The S&P 500 Index has gained almost 12 percent in March, its biggest monthly increase in 22 years. But to Roubini this is a "bear-market rally."
Meanwhile, he says Treasury yields will "remain relatively low," as investors seek a safe haven.
The Obama administration's plan to take toxic assets off banks' balance sheets won't be enough to save insolvent institutions, Roubini says. "We'll have some major banks going belly up that will need to be taken over."
Bottom line: "Some banks are going to have to be nationalized," he argues. "It's going to be bumpy ahead of us."
Some experts agree with Roubini that the government isn't taking the right steps to rescue the banking industry.
Jamie Dimon, chief executive of JPMorgan Chase, told The New York Times, "You don't want too big to fail," referring to banks. "You want a resolution process where the process doesn't damage the whole system."
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