Nouriel Roubini, Wizard

In this financial crisis, only the most extreme doom-mongers have been consistently right, and only Nouriel Roubini has been consistently the most pessimistic, and thus the most accurate:

But let’s give economist Nouriel Roubini, whose track record predicting the crisis looks better every single day, the last word, for now. Roubini spent last week savaging the Paulson plan as insufficient to the task, and called for a much more radical approach to addressing the credit freeze. Turns out, getting the Fed involved in the short-term lending market was one of his key proposals.

This action follows closely one of the radical policy options that I recommended last week: “Direct lending to the business sector from the Fed … to the non financial corporate sector. This could include Fed purchases of commercial paper from corporations and other forms of financing of the short term liabilities of the Administration to small businesses secured in appropriate ways. Given the collapse of the corporate [commercial paper] market and the banking system reluctance to provide loans to the corporate sector (credits lines are being shut down) the only alternative to the Fed becoming directly the biggest emergency bank for the corporate sector would be to force the banking system to maintain its exposure to the corporate sector, possibly in exchange for further Fed provision of liquidity to the banking system. The former option may be better than the latter to deal with the looming illiquidity of the corporate sector.”