On the 7 September 2006, Nouriel Roubini, a Professor in Economics at the University of New York, revealed to an assembly of economists at the International Monetary Fund, how a crisis was on the verge of happening. According to him, in "the coming months and years, the United States was at the risk of a serious recession", based on the following points: Home Owners defaulting on mortgages and billions of dollars of mortgage-backed securities bringing about the paralysis of the financial system.. These facts, continued the economist, had led to the failure of Hege Funds, of investment banks or other major financial instututions like Fannie Mae and Freddie Mac.

Evidently, the public was sceptical even derisive.The moderator at the conference invited the participants to have a drink and forget these alarmists opinions.

But in the Summer of 2007, Roubini’s predictions started to come true and when he returned to the IMF a second time in September 2006, no-one mocked him. Prakash Loungani, economist at the IMF who had invited Roubini several times, told the New York Times that "These opinions seemed to be those of a madman in 2006, but he had become something of a prophet when he had returned to give a conference at the IMF in 2007" Prakash added.

In February 2008 when a large number of analysts were thinking that the worst part of the storm had passed, Roubini was still one of those who predicted that at least one large investment bank was going to fall. Six weeks later, Bear Stearns collapsed. Even after the intervention and assistance of the FED to certain investment banks and brokerage firms, Roubini continued with his pessimistic scenario, saying that the failure of a large regional or national bank could lead to panic among the investors.

Not all the scenarios he predicted have yet ossured, perhaps never wll, but the recent collaple of the Californian bank IndyMac once again focused attention on him...

Following his predictions, Roubini, a respected economist in his circles, but not well known, became a public figure in the debate on political economics in the United States. The govenors of central banks, the ministers of Finance of European and Asiatic countries, as well as the committee of foreign relations of the congress where the World Economic Forum had indicated the desire to listen to him, are now all seeking his advice. At the age of 50, it is possibly the beginning of his glory for this economist, Doctor in economy from Harvard who denied the label of "pessimist" which was attributed to him by the New York Times. The economist Jeffrey Sachs is flattering when it comes to the subject of his collegue: " a mixture of competencies that is rarely found in one individual"

For Roubini, the best method to fight the crisis is to recognise it. When Jim Nussle, budget director for the White House declared last month that "the nation had avoided the recession" Roubini was astounded " We are in the middle of a recession and to deny it is nonsense" he confided to the New York Times.

He approved the action of the FED at the time of the demise of Bear Stearns, and according to him, either the American government must stand surety for more than 1000 billion dollars for high risk mortgage securities, or else the banks or the institutions which hold them, as well as the derivitives linked to them are going to sink. "The banks or the mortgage securities must be nationalised".

Evaluating the cost of the subprime crisis, he estimates that it is around 1000 to 1500 billion dollars, much more than the 300 billion dollars of aid offered as a plan by the American congress. He adds that the subprime crisis is no more than an indication of a crisis, which actually affects all types of credit (students, business loans, loans aimed at financing the LBO, housing loans, vehicle loans) suffering from the same problem: that of having been badly conceived, badly set up, badly guaranteed, badly valued. We have a "subprime" financial system. According to him, one third of the regional banks in the United States will not survive.

These losses amounting to billions of dollars are going to add to a colossal federal deficit, already immense, and there will have to be someone to finance that: " The largest financiers of the United States are China, Russia and the Gulf States. These are our rivals, not our allies.

The United States will definitely emerge from the crisis, predicts Roudini, "but it will depend upon the kindness of foreigners" which Roubini sees as a possible beginning "of the end of the American Empire"

On the subjects of the two last remaining investment banks, which are still independent: Goldman Sachs and Morgan Stanley, Roubini predicts the end of their kind of business model and sees them as either relying on bank deposits or collapsing like Merrill Lynch and Lehman Brothers