I had lunch with Nouriel on Friday at Mercer Kitchen in Soho, not too far from his NYU offices. We chatted about many things (he gave me a terrific insight into prior Housing Bailouts). I know the professor for quite a few years now — I was a guest blogger in the early days of RGE Monitor.
One of the things we chuckled over was our press coverage. A few years ago, we were the outliers, the perma-bears, the Cassandras. Now, various discussions of real estate issues, credit problems and recessions aren’t perceived quite so skeptically. I can take a teenytiny bit of credit for him being the media superstar he is these days, as it was I who introduced Roubini to Kudlow back in 2006.
He mentioned that a NYT interview he did should show up in the Sunday magazine this weekend. The paper came this morning, and there he was in all his glory: Dr. Doom.
NYT Magazine Ubiq-cerpt:™
“Over the past year, whenever optimists have declared the worst of the economic crisis behind us, Roubini has countered with steadfast pessimism. In February, when the conventional wisdom held that the venerable investment firms of Wall Street would weather the crisis, Roubini warned that one or more of them would go “belly up” — and six weeks later, Bear Stearns collapsed. Following the Fed’s further extraordinary actions in the spring — including making lines of credit available to selected investment banks and brokerage houses — many economists made note of the ensuing economic rally and proclaimed the credit crisis over and a recession averted.
Roubini, who dismissed the rally as nothing more than a “delusional complacency” encouraged by a “bunch of self-serving spinmasters,” stuck to his script of “nightmare” events: waves of corporate bankrupticies, collapses in markets like commercial real estate and municipal bonds and, most alarming, the possible bankruptcy of a large regional or national bank that would trigger a panic by depositors. Not all of these developments have come to pass (and perhaps never will), but the demise last month of the California bank IndyMac — one of the largest such failures in U.S. history — drew only more attention to Roubini’s seeming prescience.
As a result, Roubini, a respected but formerly obscure academic, has become a major figure in the public debate about the economy: the seer who saw it coming. He has been summoned to speak before Congress, the Council on Foreign Relations and the World Economic Forum at Davos. He is now a sought-after adviser, spending much of his time shuttling between meetings with central bank governors and finance ministers in Europe and Asia. Though he continues to issue colorful doomsday prophecies of a decidedly nonmainstream sort — especially on his popular and polemical blog, where he offers visions of “equity market slaughter” and the “Coming Systemic Bust of the U.S. Banking System” — the mainstream economic establishment appears to be moving closer, however fitfully, to his way of seeing things. “I have in the last few months become more pessimistic than the consensus,” the former Treasury secretary Lawrence Summers told me earlier this year. “Certainly, Nouriel’s writings have been a contributor to that.”
Another good piece of weekend reading that is well worth your time.
NYT, August 15, 2008