Dr Doom- A profile of Nouriel Roubini

I came across this excellent profile of Nouriel Roubini (free subscription required). I had pointed his talk at IMF in September 2007 here. In Sep 2006 amidst the IMF audience he had predicted the subprime crisis and all laughed him off. In Sep 2007 in similar IMF setting , people listened to him with a lot of fanfare.

The entire article is very interesting and is a must read for all. It tracks his career, his early work, his influences and his work. His view of Keynes:

Roubinialso cites, as a more ideologically congenial example, the sweeping, cosmopolitan approach of the legendary economist John Maynard Keynes, whom Roubini, with only slight exaggeration, calls “the most brilliant economist who never wrote down an equation.”

Quite true. Keynes had so many ideas that he did not need to write an equation. His view on financial system:

For months Roubini has been arguing that the true cost of the housing crisis will not be a mere $300 billion — the amount allowed for by the housing legislation sponsored by Representative Barney Frank and Senator Christopher Dodd — but something between a trillion and a trillion and a half dollars.

But most important, in Roubini’s opinion, is to realize that the problem is deeper than the housing crisis. “Reckless people have deluded themselves that this was a subprime crisis,” he told me. “But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts.” All of these forms of debt, he argues, suffer from some or all of the same traits that first surfaced in the housing market: shoddy underwriting, securitization, negligence on the part of the credit-rating agencies and lax government oversight. “We have a subprime financial system,” he said, “not a subprime mortgage market.”

(Emphasis is mine).

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