Nouriel Roubini, the once obscure New York University economics professor who two years ago predicted the current global financial crisis, now says the world's largest economy will need a large fiscal stimulus from the federal government to avoid a serious economic downturn.

Further, failure by Congress to pass a large fiscal stimulus, as well as undertake other measures, will lead to a 18 to 24 month recession, which will push unemployment above 9%, Roubini said on his website, the RGE Monitor.

Sees need for large fiscal stimulus

"Much more needs to be done including further monetary policy easing, a large fiscal stimulus program to boost demand at the time when private aggregate demand (consumption and investment) are sharply falling; and a plan to reduce the mortgage debt burden of millions of distressed households," Roubini said.

Further, Roubini said the U.S. government will have to double its purchase of bank stakes and require these banks to eliminate dividends to save them from bankruptcy. He also now sees bank/financial institution credit losses stemming from the collapse of the subprime mortgage market of about $3 trillion, up from his earlier estimate of $1-2 trillion.

The above statistics paint a sobering prospect/picture of economic contraction, but Roubini does see a ray of light:

Nouriel Roubini, the once obscure New York University economics professor who two years ago predicted the current global financial crisis, now says leaders of the world's major industrialized economies and developing countries must implement an 'all fronts' approach to avert a financial calamity and a global depression.

"It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging-market economies to avoid this economic and financial disaster," Roubini said on his web site, RGE Monitor.

Roubini urged that national policy makers take immediate action to end the crisis, which has dramatically tightened credit conditions worldwide, constraining the ability of corporations to undertake daily operations, which will hurt GDP growth rates in every region.

And, ironically or by coincidence, leaders will have an opportunity to dialogue and implement a common strategy: officials from the International Monetary Fund, World Bank, and Group of Seven (G-7) nations meet in Washington, D.C. this weekend for their previously-scheduled annual meeting.

One of the largest concerns about the economic downturn is that hundreds of banks might fail, putting stress on the resources of the FDIC. Yesterday, regulators shut Columbian Bank of Topeka, Kan. But, it is a small bank and the effects of the action should have almost no impact on the local economy.

According to the Associated Press, "It was the ninth failure this year of an FDIC-insured bank." Not many experts would have predicted that only nine banks would be gone as the calendar approaches labor day. Some analysts predicted that a thousand banks could go under. This group is lead by famous NYU economist Nouriel Roubini. Roubini expects total mortgage-related write-offs to hit $1.5 trillion.

While the predictions may be dire, where are the bank failures? There is no indication from the FDIC or any other federal government agency that the rate at which banks are going under will accelerate between now and the end of the year.

If there are supposed to be scores of more bank failures, the pace better pick up before the recession is over. The pessimists appear to have missed the mark.

Douglas A. McIntyre is an editor at 247wallst.com.

Nouriel Roubini, a professor at New York University, has recently been profiled in both Barron's and The New York Times. There may be nothing special about his training or methods, but what is fairly unique is his opinion that we are on the brink of a modern version of the Great Depression.

It is hard to say why the media wants to give his analysis voice, but he has become the object of almost endless fascination.

The foundation of his view of the economy is that the current housing disaster will get much, much worse and that banks will end up writing off almost $1.5 trillion in mortgage-related paper. That is about three times what they have taken as charges so far. The New York Times quotes Roubini as saying, "A good third of the regional banks won't make it."

While a number of experts believe that the recession could last a year, Roubini would he called an extremist by most measures. He foresees a downturn lasting 18 months.

The media does not like Roubini because he may be right. They like him because predictions of great economic collapse and mayhem sell papers. That is too bad. The public deserves a more balanced view.

Douglas A. McIntyre is an editor at 24/7 Wall St.

The ever-incisive FT columnist Martin Wolf offers a stark and sober analysis of the United States' current financial and economic predicament, but it's an analysis well-worth reviewing, if one has the time.

A synopsis is provided here, but first, full warning: read the analysis when you're feeling well and in a good mood, not during other times.

The ever-incisive FT columnist and economist Martin Wolf has some good news for investors, who are no doubt weighed down by the cacophony of pessimism permeating the U.S. stock and bond markets these days.

Wolf argues that the U.S. housing recession and accompanying credit market concerns are huge dangers, for the U.S. and for the rest of the world, and a bumpy road is ahead, but the public sector, led by the U.S. Federal Reserve, is now coming to the rescue.

Before offering his likely scenario for a return to economic health, Wolf summarizes a worst-case-scenario from Nouriel Roubini, economics professor at New York University and founder of RGE Monitor. (Fair warning: Roubini's scenario represents the bleakest of the bear views, hence it's best not to read it on a day when the Dow is down 300 points, etc.)

While recognizing that Roubini's scenario is plausible, Wolf argues that it's not likely to occur, at least not to the degree Roubini suggests.