Milken 2014: Economists fret about trouble spots

LOS ANGELES -- Despite gains, potential trouble spots -- from Russia to Europe -- threaten to create trouble for the world economy, three top economists told the Milken Institute Global Conference on Tuesday.

On the positive side, there has been huge innovations that lift economies. Nouriel Roubini, chairman of Roubini global economics, points to gains from stem cell research, the rise of social media and advanced manufacturing as bright spots.

But on the negative side, the panel pointed to economies around the world with too much debt, overly adventuresome monetary policy and bubbles that threaten to burst. Income inequality is real, not just in the U.S. but elsewhere in the world, and may be eventually addressed through progressive taxation.

Best Rising Stocks To Buy Right Now

In the U.S., monetary policiy "has not been rooted," says Ken Rogoff, a Harvard University economics professor. "Experimental" policies have created uncertainty that more stable policy could help alleviate.

John Taylor, a Stanford University economist, says that now is the time for the Fed to return to more stable policies.

How they assess the world economy:

•Russia.

As the faceoff over Ukraine continues, risk rises and U.S. credibility is called again into question. "It's not a good thing," says it raisess the outside risk, raises u.s. crediblity again. it's not

a good thing," says Rogoff. "We would like to have Russia feel they are invested in the global economy. That relationship is important."

•China.

World economies will quake if China's economy slows down, Rogoff says. Despite China's reserves and controls over their economy, he says he's worried about a stumble. "It's hard to avoid some kind of rough landing in the next five years," he says.

•Europe

. "The debt ratios are still high," Taylor says and the fundamentals of the European economy is still an ! issue. Roubini says he believes the Euro is overvalued.

•Emerging markets.

Tailwinds that propelled emerging markets to big gains in recent years are becoming headwinds, Roubini says. Some growth rates, especially in China, are unsustainable.

Rogoff points out that while China's and India's economics have pulled millions out of poverty, wage inequality is a growing problem around the world.

Taylor says a focus should be on improving education. In the U.S., he says he points to huge disparities in the quality of education between states.