Listen Up!

Yeah, they laughed when he sat down at the piano...

Back in January of 2007 at the annual conference of economic maharajas in Davos, Switzerland, an unknown associate professor of econ from NYU named Nouriel Roubini predicted that the high-flying U.S. and world economies were headed for disaster.

Nearly everyone at the conference disagreed at the time, and some ridiculed this glum forecast. But today Roubini is no longer unknown.

At the World Economic Forum two years ago, Nouriel Roubini warned that record profits and bonuses were obscuring a “hard landing” to come. “I really disagree,” countered Jacob Frenkel, the American International Group Inc. vice chairman and former Israeli central banker.

No more. “Roubini was intellectually courageous, and he called the shots correctly,” says Frenkel, whose AIG survives only on the basis of more than $100 billion of government loans. “He gained credibility, and he deserves it.”

This week, New York University’s Roubini returned to the WEF and the Swiss ski resort of Davos as the prophet of the worst economic and financial crisis since the Great Depression...

Actually, it's a stretch to call Roubini "the prophet." There were others making similar forecasts, most notably James Kunstler, who was predicting the catastrophic mortgage meltdown of 2007 as early as 2005.

So what's Roubini saying at this year's World Economic Forum? He's pessimistic, as usual.

Roubini remains more pessimistic than economists elsewhere. The IMF forecasts global growth of 0.5 percent this year and bank losses from toxic U.S.- originated assets of $2.2 trillion. By contrast, Roubini sees the global economy shrinking this year, and banks writing down at least $3.6 trillion -- compared to the $1.1 trillion disclosed so far.

While the U.S. government is resisting nationalizing its biggest banks, Roubini says it will have no choice because they are now “effectively insolvent.” And the outcome may be even worse than even he anticipates if governments fail to take aggressive steps to recapitalize banks and revive their economies, he says: “The risk of a near-depression shouldn’t be underestimated.”

Roubini, who’s now working on a book about the crisis, says he takes no particular pleasure in his role as Dr. Doom or the attention it brings him.

Two aspects of Roubini's commentary should jump off the page at any conscious reader. The first is that Obama and Tiny Tim the Tax Dodger ought to be preparing to nationalize the banks right now, because there's no way in the long run they can avoid it, and the sooner they do it the less damage will be inflicted on the lives of ordinary citizens.

The second is that those of us who are pessimistic about our current prospects don't take any pleasure in our point of view. I'm not at all reassured by what I believe, and I don't like the pain that's coming down the road at me better than anybody else does. There's a big difference between what I would like to see happen and what I think is going to happen.

The only pleasure to be got out of the situation comes with the opportunity to remind people who's been right in the past, and who's been wrong. It really makes absolutely no sense to pay the least attention to idiots who are wrong about everything all the time -- William Kristol for example. It's not magic -- Nouriel Roubini doesn't have some kind of mojo; he's just a calm, rational analyst, as opposed to a hysterical, shrieking cheerleader like the brain-dead Lawrence Kudlow, who for some reason is given massive air time on CNBC each day. Maybe it's because he tells people what they want to hear instead of the truth.

People often say, "I hate to say I told you so," but they're lying.