Clusterfuck Nation author James Howard Kunstler says “a cascading collapse of international finance is underway.” And it makes makes the 1929 crash and the events of the 1930s “look like an orderly small town auction of somebody’s grandmother’s effects.”

Economics professor, former Clinton advisor and perma-bear forecaster Nouriel Roubini says the “severe systemic financial crisis” ripping through the markets will get worse before it gets better.

He warned investors on Bloomberg TV that the US now faces a meltdown in financials that Hank Paulson’s bailout bill won’t fix. Roubini says the bill is merely a way of “privatizing gains and socializing losses.”

He also warned investors that stock prices could fall another 20% and trigger a period of severe deflation.

The market for credit default swaps is unregulated, untransparent, and highly dangerous. And its estimated worth is over three times the total value of US equities. “A CDS is a bit like a blind date,” says Andrew Snyder, “at first, they sound like a fantastic idea. But we all know differently.”

At 2pm New York time,the settlement auction for $400 billion of credit default swaps connected to bonds issued by Lehman Bros (NYSE:LEH) is due. This opaque derivatives market is a mystery to most investors. Dave Gonigam says the revelation of major losses is the last thing the market needs right now.

Nouriel Roubini - a professor of economics at NYU - says it is futile to think about avoiding a global recession now. We are already there. The only objective for governments and central bank now should be damage limitation.

This from rgemonitor.com:

“So we are now very close to the systemic financial meltdown that I outlined in my February paper. But radical action can be taken and should be taken to control the damage and prevent this meltdown from occurring. At this point the US, the advanced economies (and now most likely even some emerging market economies) will experience an ugly recession and an ugly financial and banking crisis regardless of what we do from now on. We are already now in a global recession that is getting worse by the day. What radical policy action can only do is preventing what will now be an ugly and nasty two-year recession and financial crisis from turning into a systemic meltdown and a decade long economic depression. The financial and economic conditions are extreme; thus extreme policy action is needed now to save the global economy from an ugly depression.”

Source: Revisiting my February paper “The Risk of a Systemic Financial Meltdown: The 12 Steps to Financial Disaster”…And Some New Policy Recommendations to Avoid the Meltdown