(Bloomberg News) A Greek default could trigger a global economic shock on the scale of that suffered after Lehman Brother Holdings Inc.'s 2008 failure, said Nouriel Roubini, chairman and co-founder of Roubini Global Economics LLC.

A disorderly default by a member of the euro area or an exit from Europe's single currency bloc could cause a shock "that would reverberate through the global economy," Roubini said at a seminar in Helsinki today organized by Evli Bank Oyj.

Europe's failure to rein in its debt crisis means the risk of a recession spreading through the region is now greater than 50 percent, Roubini said. Policy makers are running out of time to ring-fence Greece's fiscal hemorrhaging and the risk of a "self-fulfilling run" by debt investors on Italy and Spain is growing, he said, adding both countries are already viewed by markets as "insolvent."

"The problems in the eurozone are chronic" and "won't go away," Roubini said. He repeated his view that the European Financial Stability Facility needs to be more than four times its current 440 billion euros ($606 billion) in size to be effective.

Italy and Spain will be deemed insolvent by markets because their austerity regimes will trigger recessions, depriving the two economies of the growth they need to service their debts, Roubini argued.

Roubini Predictions

Roubini, who predicted the U.S. housing bubble while failing to foresee a rebound in global stocks in 2009, also warned there is a high probability of a recession spreading through the world's advanced economies as the fallout of Europe's debt crisis chokes recovery prospects in the U.S.

The Sept. 15, 2008, collapse of Lehman sent the Standard & Poor's 500 Index plunging 43 percent through a trough in March in the following year. Financial institutions lost or wrote off close to $1 trillion. The credit event set the global economy lurching into a crisis from which it has yet to emerge.

Roubini predicted the bubble in U.S. housing prices before the market peaked in 2006. Still, when the Standard & Poor's 500 Index fell to a 12-year low of 677 on March 9, 2009, he said it probably would drop to 600 or lower by the end of that year. Instead, the U.S. equity benchmark gained 65 percent for the rest of 2009.

Germany said today European Union leaders won't provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit.

Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of an emerging plan to avoid a Greek default, bolster banks and curb contagion. They set the Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered.