Greece? Just The Tip of The Sovereign Debt Crisis Iceberg?

According to economist Nouriel Roubini, the sovereign debt crisis will get worse and bond vigilantes could move on to even bigger economies like the United States and Japan when they are done sweeping through vulnerable European nations.

"The recent problems faced by Greece are only the tip of a sovereign-debt iceberg in many advanced economies,” Roubini told readers of his RGE Monitor website. "Bond-market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.” “Eventually they may take aim at other countries – even Japan and the United States -- where fiscal policy is on an unsustainable path," he wrote.

Roubini said he fears failure to learn the lessons of the credit crisis will simply mean a bigger, more dangerous crisis is just around the corner. "There is a lot of talk about better regulation and supervision of the financial system but the financial industry is back to business as usual -- rebuilding leverage, engaging in prop trading and other risky behaviour, compensating bankers and traders with indecent bonuses -- and is lobbying against better regulation and supervision,” he said.

Roubini also says he believes that those who claim it is impossible to see an asset bubble coming are misguided. Bubbles are easy to see coming and have had similar characteristics since Tulip mania hit the Netherlands in the 17th century, he said.

"An asset bubble -- often in real estate or in stock markets or in a new industry -- leads to financial euphoria, excessive risk taking, an accumulation of excessive debt and leverage,” Roubini wrote. “So the signposts of this phase -- asset boom and bubble, followed by the eventual bust and crash - are highly predictable if one looks at the economic and financial indicators that show the build-up of such excesses."