Nouriel Roubini: Prescient Prophet of Economics

Two years ago, when Nouriel Roubini spoke at the Davos World Economic Forum, many considered his dire assessment of the global economy as excessive and he was considered to be the latest Dr. Doom. Not any more! Now, because his forecasts have been so accurate, he is now vindicated. He has tremendous credibility because he has been so accurate. Here are excerpts from Bloomberg regarding his acceptance this week in Davos:

Even as he wins plaudits for his prescience, Roubini, 50, says worse lies ahead. Banks face bigger credit losses than they realize, more financial companies will require state takeovers and the world economy will keep shrinking throughout 2009, he says.

“The consensus is catching up with me, but it’s still behind,” Roubini said in an interview in Davos. “I don’t know what some people are smoking.”

“I was intellectually vindicated,” Roubini says. “But I was vindicated by having an economic disaster which has political and social consequences.”

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.”

Here is the entire article.