New York University Professor of Economics Nouriel Roubini is extremely bearish on the US economy. And he didn’t just join the cause after the going got tough. Two years ago, he correctly predicted the collapse of the US housing market. So, when a bear like Roubini is bullish on emerging markets, investors should prick up their ears says Taipan Daily editor and fellow emerging-markets bull Justice Litle…

Nouriel Roubini is an economics professor at New York University. He is also a raging bear. Two years ago, when Wall Street had its head in the sand, Roubini was warning the world that a crash was coming. He foresaw the bursting of the housing bubble, a vicious credit crunch and looming disaster for the banks.

Those views are pretty mainstream today. But Roubini was pounding the table as far back as 2006, when the financials could still do no wrong. You might say he took a page from Clubber Lang, one of Stallone’s toughest opponents in Rocky III. When a reporter asked Clubber (played by Mr. T) his prediction for the big fight, Clubber growled and said, “My prediction? PAIN!”

Roubini’s harsh words fell on deaf ears for a long time. Now that he’s been proven dramatically right, however, his views are finally getting some respect.

So what does the most bearish man in America see moving forward from here, as we head into the fall of 2008? Unfortunately, he isn’t letting up.

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There is more pain ahead, Roubini says. Much more. He thinks the credit crunch is still in its early stages… that hundreds more banks could fail… that we could have another 18 months of “severe” recession to go… and that hundreds of millions in outstanding home equity loans could still be a “zero.”

In fact, Roubini thinks the U.S. taxpayer could be on the hook for a whopping $2 trillion when all is said and done.

That’s the grim side of things. The most bearish man in America, who predicted this train wreck well in advance, thinks the worst is yet to come.

The good news is, even this dyed-in-the-wool grizzly is a bull when it comes to emerging markets. In an interview with Barron’s, Roubini closes by saying, “I’m quite bullish about the state of the global economy, and I’m positive about the medium and long term.”

That’s quite a statement when you think about it. The same forecaster who isn’t afraid to talk about what could be “the worst recession since the Great Depression” is still “quite bullish” on the rest of the world, and “positive” about what’s ahead.

It sounds like a big contradiction, to be so bearish on the one hand yet bullish on the other. But in reality the two views make sense. It’s just a matter of brutal honesty and a willingness to dig into the real facts.

Roubini made his ultra-bearish call two years ago based on the phony foundation of the U.S. housing bubble. He looked below the surface and saw that the whole thing was a house of cards… a shaky tower of false confidence and bad assumptions fueled by paper money. He and a handful of others recognized that, when you got down to it, there was really only one way this party could end.

Looking at the global economy, though, leads to a different conclusion for a simple reason: The dynamics that underpin the emerging markets boom aren’t flim-flam; they are real. The addition of 3 billion new capitalists into the mix — China, India and ROW (analyst shorthand for “rest of the world”) — is a game changer like nothing we’ve ever seen before.

Most of what Wall Street says needs to be taken with a grain of salt. Or, heck, a 10-lb. bag of salt. The analysts’ rose-colored glasses are always getting them in trouble. But when a raging bear like Roubini takes a hard look at the facts and says he remains “quite bullish” on what’s happening beyond U.S. shores, you know there’s something powerful in the works.

Source: The Most Bearish Man in America