Nouriel Roubini still may not be a household name, but he's getting there. The NYU economics professor has received a bunch of airtime and newspaper space as the doomsday prognosticator who got it right. Nearly two years ago, when all seemed mostly right with the world, Roubini was predicting a once-in-a-lifetime housing bust, an oil shock, sharply lower consumer confidence and a deep recession. He said there would be trillions of dollars of mortgage-backed securities unraveling worldwide. He said investment banks and even goliaths like Fannie Mae and Freddie Mac would be crippled. Er, he seems to be on a winning streak. Now it's worth noting that every economic turning point has its prophets who made the right calls at the right time (and who often get demystified the next time around). But to predict the unraveling of mortgage-backed securities so early shows more than just good instincts. That, of course, is why Roubini has elicited so much interest - and worry. He gets an up close and personal look in this Sunday's NYT magazine, where he says, among other things, that "This might be the beginning of the end of the American empire." Oh.

Roubini argues that most of the losses from this bad debt have yet to be written off, and the toll from bad commercial real estate loans alone may help send hundreds of local banks into the arms of the Federal Deposit Insurance Corporation. “A good third of the regional banks won’t make it,” he predicted. In turn, these bailouts will add hundreds of billions of dollars to an already gargantuan federal debt, and someone, somewhere, is going to have to finance that debt, along with all the other debt accumulated by consumers and corporations. “Our biggest financiers are China, Russia and the gulf states,” Roubini noted. “These are rivals, not allies.” The United States, Roubini went on, will likely muddle through the crisis but will emerge from it a different nation, with a different place in the world. “Once you run current-account deficits, you depend on the kindness of strangers,” he said, pausing to let out a resigned sigh.

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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.

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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.”

What's really scary is that all this makes a lot of sense. Well before the housing crisis, Americans were taking on crazy amounts of debt and saving very little. The twin edge, of course, is a consumer-based economy that has become reliant on folks visiting the shopping mall or auto dealership. So it's one of those can't live with ’em, can't live without ’em situations. There are still plenty of skeptics who believe Roubini is more lucky than good (thank goodness!). Economist Anirvan Banerji points out that Roubini has been peddling pessimism for years. "Even a stopped clock is right twice a day," he told economics professor Stephen Mihm, who wrote the Times piece.