It's Saturday night. A stream of young fashionistas and other assorted Manhattan scenesters pours into a fashionable Tribeca building. They're all headed for the loft of a middle-aged economist-a man whose name would hardly have registered with anyone but the most obsessive CNBC watcher a few years ago. A doorman on duty surveys the scene and rolls his eyes. "Another Roubini party," he mutters.
Nouriel Roubini's thoughts about the economy in October 2008.
The host of the hour, Nouriel Roubini-the New York University professor credited with calling the current economic collapse and a ubiquitous presence on financial-news shows who continues to forecast gloom and doom-is looking positively upbeat this evening. He greets guest after guest with a kiss on both cheeks as music thumps at a volume loud enough to irritate the neighbors. Suspended from the ceiling, above the throngs of minglers, are dozens of small glass globes, resembling nothing so much as bubbles.
The decor is apt. As early as 2004, when other economists were proclaiming a new financial age, Roubini was predicting that the bubble buoying the United States economy was about to pop. At the time, he was derided as a crank. His downbeat message, combined with an accent reminiscent of a James Bond villain and a laugh that seems to kick in on a one-second tape delay, quickly earned him the sobriquet Doctor Doom.
Now the ridicule has turned into respect, not to mention countless TV appearances, speaking engagements, invitations to testify before Congress, new clients for the consulting firm he runs, and parties packed with young, beautiful admirers. But as the world searches desperately for signs of recovery, Doctor Doom faces his own potential doomsday scenario: If the economy turns up, he could go down as nothing more than a one-hit wonder. Unless he nails it again.
That might be tough. Not only has Roubini been a professional downer for years, his reasoning has frequently been off. He first predicted, incorrectly, that there would be a bust as a result of Hurricane Katrina, and later, again incorrectly, that the economy would tank as a result of trade imbalances. The collapse was initially triggered by subprime-credit problems, and he initially underestimated how devastating they would be. More than a few economists are convinced that Roubini's call was less a matter of his genius and more about the simple fact that if you forecast a recession often enough, sooner or later you'll be vindicated. "Nouriel Roubini has been singing the doom-and-gloom story for 10 years," says Nariman Behravesh, chief economist for IHS Global Insight. "Eventually something was going to be right."
Bad times have certainly been good for Roubini's social life. For years, he has been a manic host of everything from small dinner parties to big bashes. The soirees are more crowded of late, attracting everyone from members of the hedge-fund set to a former Miss Ukraine and propelling the bachelor economist onto the tabloid gossip pages. (He has become a New York Post regular, and CNBC often plays disco music when he appears on the air.)
Roubini's partying side may have remained below the media radar but for his energetic use of Facebook. He kept his profile on the social-networking site open to the general public until a few months ago, something more privacy-minded users typically choose not to do. On his profile, he said he was single and interested in meeting women, and he posted photos of himself hamming it up with females who look two or three decades younger than he is.
Among Roubini's Facebook friends is Sarah Austin, a pretty blond who is featured in a black minidress on the website she runs, Pop17.com, which posts interviews with internet "personalities." Austin says she received an unsolicited email from Roubini last fall-complete with links to articles about himself-praising her site and inviting her to a party. She has yet to take him up on the invitation, but the two are now regular correspondents. She assumes he approached her because he wanted to be written up on her website-and also because, she says, "I fit the criteria for his loft parties. There are a lot of women."
Roubini's Facebook presence brought the media-gossip blog Gawker into the Roubini story last fall. In a post called "The Secret Pleasures of Dr. Doom," Nick Denton, the site's founder, flagged what he saw as a disconnect between Roubini's "gloomy public image" and "his playboy lifestyle": "The 50-year-old Iranian-Jewish economist is a promiscuous Facebook friend who draws a cosmopolitan crowd to the frequent parties at his Tribeca loft-an apartment with walls indented with plaster vulvas, incidentally."
Nouriel Roubini's thoughts about the economy in October 2008.
The post would most likely have been forgotten if Roubini himself hadn't responded. He sent a series of rants in the middle of the night to Denton, including this one: "Nick Denton is trying to do a hatchet job on me in two pieces in his trashy junky Gawker; but he is just an ignorant anti-Semite with a Nazi mind and and [sic] a McCarthist [sic] bigot and hypocrite." Roubini defended the art in question as a "tasteful" piece by a noted Latin American artist. Roubini is, in fact, a serious art collector and a member of the Junior Associates program at the Museum of Modern Art in New York. The artist, Analia Segal, is a Guggenheim fellow.
Still, at the party I attended, occasional whispers could be heard among the guests: "Where are the vaginas?" Such chatter notwithstanding, the gathering was a friendly and civilized affair-no inappropriate behavior, not even a preponderance of booze; mostly scattered wine bottles and bubbly water. "I'm a serious professional economist. I live in New York and have a social life," Roubini says. "I have book parties and social dinners. And, you know, people will take pictures of you with your friends, and there are some attractive women. It doesn't mean I go out with them. They're my friends. I have nothing to hide." When I send him a thank-you email, I can't resist adding, "If you ask me, the deep mystery at the center of your life is why you would want to subject your apartment to that sort of abuse." He quickly wrote back, "I do not subject my apt. to abuse. It is nice to have friends over, and I have a housekeeper that cleans up everything afterward."
Still, Roubini can't help himself: After Gawker cheekily noted that both he and dating columnist Julia Allison were going to attend the World Economic Forum in Davos, he made sure to be photographed with her there. Gawker's dry comment: "Nouriel Roubini partying with intellectual peers." Roubini's response to me: "She's a very smart cookie. Very smart. She can intelligently discuss lots of things."
The first time I met Roubini, we had tea at the Algonquin Hotel in midtown Manhattan, a meeting he squeezed in between late-afternoon business engagements and a live CNBC appearance to discuss the economic crisis. He was wearing what I would soon come to recognize as his uniform: an open-collared blue shirt revealing a bit of chest hair (he buttons up for TV), blue slacks, and a jacket. He looks younger than his 51 years, in part because of his thick, dark hair but also because he is almost boyishly enthusiastic when it comes to the subjects he cares about, which include art and books as well as economics (but not sports). He had just spent the day at his consulting firm, Roubini Global Economics LLC, which began as a webpage for his students in the late 1990s and has since evolved into a 50-person enterprise with offices in London and Hong Kong as well as New York. It was Halloween, and the RGE staff had dressed up as their boss. Roubini was waving around a mask of his likeness they'd given him. "I am going to be Doctor Doom for Halloween," he declared, mentioning plans to stop off at a few parties after his TV appearance was finished.
Roubini doesn't come with an off switch. He speaks in paragraphs-plural. I once watched him twirl his eyeglasses for 45 minutes without a break. Emails arrive from him at all hours. When he teaches, he can't stop himself from telling his second-year MBA students-the folks who will be job hunting soon-how dismal their prospects are.
"There are no jobs in New York. There are no jobs in London," he proclaimed during a class I sat in on.
The son of an Oriental-rug distributor and the oldest of four children, Roubini was born in Istanbul, but by the time he was five, his family had moved several times, making quick stops in Tehran and Tel Aviv before settling permanently in Italy. Roubini speaks four languages: English, Italian, Hebrew, and Farsi. He says he gravitated to economics out of an interest in left-wing politics. He graduated from college in Italy in 1982 and went on to earn his PhD from Harvard, where he studied under Larry Summers, now President Obama's chief economic adviser. In 1998, Roubini left academia to work in the Clinton administration, and he has also served as a consultant to both the International Monetary Fund and the World Bank.
During his stint in Washington, Roubini's dour take on the U.S. economy began to gel. While following the Asian and Latin American monetary crises in the late 1990s, he saw similarities between developing countries and the U.S., arguing that they all fostered crony capitalists and tended to run huge current-account deficits. (In other words, they spent more money than they were taking in. In the case of the U.S., it's like we were using an in-store credit card at a retailer named China.) He became convinced that the U.S. had the potential to be the biggest bubble of all, and by 2004, he was speaking and writing about his belief that the country was facing economic catastrophe.
Roubini calls his economic approach "holistic." Instead of primarily studying mathematical models and formulas, he says he also draws his ideas from history, literature, and international politics. He maintains that this eclectic approach is what helped him be so prescient.
Perhaps appropriately for a modern media creature, Roubini has published some of his most notable theories and forecasts not in academic papers but in the form of blog posts. The article that arguably made his career, "The Rising Risk of a Systemic Financial Meltdown: The 12 Steps to Financial Disaster," was posted on February 5, 2008. It pegged the start of the recession to December 2007 (dead accurate, it turned out) and warned that the downturn would be extremely severe, thanks to the continuing housing bust and the bursting of the credit bubble, which would, in turn, lead to an intense credit contraction and a "serious and protracted" falloff in consumer spending. For good measure, he also predicted the failure of at least one bank with heavy exposure to mortgages and major problems in the shadow banking system, which would affect everything from hedge and money-market funds to investment banks and structured investment vehicles. Losses on credit default swaps, he predicted, could lead to the bankruptcy of a "large broker dealer," and the entire chain of sorry events would cause an inevitable downward spiral. Bear Stearns collapsed a little more than a month later.