Prophets of doom see new bubbles

Two of the world's most influential investment gurus warned yesterday that financial markets were turning into "bubbles".

Nouriel Roubini, a New York University Professor nicknamed "Dr Doom", said: "Markets have gone up too much, too soon, too fast... In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets." Mr Roubini was joined by George Soros, who said the American recovery would be "very slow" because consumers were "overdebted" and the banks were "basically bankrupt".

The warnings undermined good news about UK business sentiment in the service sector, which comprises 70 per cent of the British economy, where confidence is back to pre-crisis levels. Yesterday, the Chartered Institute for Purchasing and Supply said sentiment had improved last month at its fastest rate for two years, boosting hopes the UK will emerge from recession this quarter.

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