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The week's plunge in stock markets and the decline of the euro have created a perfect backdrop for Dr. Doom. In the midst of all the turmoil, Nouriel Roubini appeared on CNBC to issue fresh warnings of crises still to come. "From here on, I see things getting worse," said Mr. Roubini, predicting another 20% drop in stock prices, a double-dip recession and various national crises in Japan, China and elsewhere.
The timing is perfect for Mr. Roubini, whose new book-- Crisis Economics: A Crash Course in the Future of Finance -- is just hitting bookstores. If you're in the business of selling economic apocalypse as a staple, having what looks like an apocalypse at hand can only boost sales. Crisis Economics (co-authored with historian Stephen Mihm) is the perfect handbook for anyone who likes panics and market roller coasters dished up in glib summaries, sweeping generalizations, frequent bouts of self-congratulation and calls for massive doses of more government intervention.
The Dr. Doom nickname, Mr. Roubini said in a recent interview with the Financial Times, is one that he would now prefer to replace with something else. That can't really be true, since the opening chapter of Crisis Economics (presumably written by Mr. Roubini) begins with repeated and delighted third-person references to "Roubini" as the great doomster who predicted the subprime mortgage meltdown and the 2008 economic crisis. "Those disasters were bad enough," says Mr. Roubini about himself, "but Roubini offered up an even more terrifying scenario."
Once it gets past tooting Roubini's horn -- and knocking everybody else-- Crisis Economics moves on to Mr. Roubini's grand view of the global economy and the great economic ideas that he says animate his forecasting skills and guide his economic thinking and analysis. Through the opening sections of the book, Mr. Roubini and his co-author run through one of the slickest and glibbest summaries of the history of economic thought ever written. There is never any doubt as to where in the ideological spectrum Crisis Economics is heading. "Crises are the norm," they say in the opening pages. Crises are "hardwired into the capitalism genome."
"This book returns crises to the front and centre of economic inquiry: It is, in short, about crisis economics. It shows that far from being the exception, crises are the norm, not only in emerging but in advanced industrial economies. Crises -- unsustainable booms followed by calamitous busts--have always been with us, and with us they will always remain. Though they arguably predate the rise of capitalism, they have a particular relationship to it. Indeed, in many important ways, crises are hardwired into the capitalism genome."
That's on page 4. By the time we get to page 46, the conclusion that capitalism is fundamentally unstable and the cause of the world's economic problems has been nailed to the wall: "Capitalism IS crisis; it introduced a level of instability and uncertainty that had no precedent in human history. " To reach that conclusion, the Roubini thesis romps dismissively through Adam Smith and other champions of free markets and capitalism, including Milton Friedman and a group of economic thinkers known as the Austrian School. The Austrians, including Friedrich Hayek and Ludvig von Mises, argued that the main causes of wild economic swings were provided by governments, through creation of monetary monopolies, distorting spending regimes and major regulatory blunders.
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