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Sunday, October 26, 2008

Doctor Doom

When an unknown New York University Economics Professor made accurate predictions about the global meltdown over 12 months ago, Nouriel Roubini suddenly finds himself sought after by politicians and businessmen all around the world.

World economists scoffed at Roubini’s predictions that Fannie Mae and Freddie Mac would collapse and that investment banks would be in serious trouble. They all laughed at him but no one is laughing now.

In London last week, Roubini predicted that hundreds of hedge funds will go under and that stock markets may soon have to close, perhaps for as long as a week to stop panic selling.

Fluent in English, Italian, Hebrew, and Persian, Roubini 49, is single and lives in a loft in Manhattan and insists he’s not a geek.

He was nicknamed Dr Doom at a meeting of the International Monetary Fund (IMF) in September 2006 when he told fellow economists of his pessimistic predictions for the world economy.

He told them that a generational crisis was coming, a once-in-a-lifetime housing bust would lay waste to the US economy, and as oil prices soared, consumers would stop shopping and the country would go into a deep recession.

The collapse of the mortgage market would trigger a global meltdown, as trillions of dollars of mortgage-backed securities unravelled. The shockwaves would destroy banks and other big financial institutions such as Fannie Mae and Freddie Mac, America’s largest home loan lenders.

“I think perhaps we will need a stiff drink after that,” the moderator said. Members of the audience laughed. The London Times

So what’s the latest Doctor Doom? He says he can’t see an end in sight.