Europe needs $1 trillion in capital to shore up its banks, U.S. employment looks bleak thanks to languishing small businesses and China's growth may be due for a breather, according a key Goldman Sachs strategist.

"Solving a debt problem with more debt has not solved the underlying problem. In the U.S., Treasury debt growth financed the U.S. consumer but has not had enough of an impact on job growth. Can the U.S. continue to depreciate the world's base currency?" Goldman Sachs strategist Alan Brazil writes in a note to hedge fund clients, according to the Wall Street Journal.

According to the report, hedge funds should look for complicated trading opportunities to make money that include bearish plays on both the euro as well as indices of insurance contracts on the credit of European financial stocks, the Journal reports.

The memo is noteworthy in that Brazil is not part of the bank's research division but rather, works in the trading group.

"As a matter of course, financial institutions publish reports suggesting strategies to fit clients' needs. Whether clients want to hedge existing exposures or take long or short market positions, our goal is to help them meet the challenges the markets present," a Goldman Sachs spokesperson tells the newspaper.

Goldman Sachs isn't the only market watcher of note to grow increasingly gloomy over the world's economic outlook.
New York University economist Nouriel Roubini says the world is worse off now than in 2008, when financial crises gripped the world and credit markets froze.

"We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious," Roubini says, according to CNBC.

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