In Sunday’s NYT magazine, a profile of NYU economics professor Nouriel Roubini opened with a prescient observation Roubini made back in 2006: An impending housing bust could cripple or destroy financial institutions like Fannie Mae and Freddie Mac.

Today, at his blog Global EconoMonitor, Roubini takes inventory of the worst financial crisis since the Great Depression: prime mortgages defaulting in record numbers; suburbia facing plight; a recession lasting more than a year; small banks and financial institutions collapsing; and an end to American empire as we know it. Registration for EconoMonitor is required, but it’s well worth it. Below are just a few of Roubini’s chilling predictions that spell an even longer road ahead for most Americans:

  1. At the end of the day this financial crisis will engender credit losses of at least $1 trillion and more likely $2 trillion. The financial and banking crisis will be severe and last several years, leading to a severe and persistent liquidity and credit crunch.
  2. This is not just a subprime mortgage crisis; this is the crisis of an entire subprime financial system. The losses are spreading from subprime to near-prime and prime mortgages, including hundreds of billions of dollars of home equity loans that are now worth little; to commercial real estate; to unsecured consumer credit (credit cards, student loans, auto loans); to leveraged loans that financed reckless debt-laden LBOs; to muni bonds that will go bust as hundred of municipalities go bust; to industrial and commercial loans; to corporate bonds whose default rate will jump from close to 0% to over 10%; to CDSs, where $62 trillion of nominal protection sits on top an outstanding stock of only $6 trillion of bonds and where counterparty risk – and the collapse of many counterparties – will lead to a systemic collapse of this market.
  3. Hundreds of small banks with massive exposure to real estate (the average small bank has 67 percent of its assets in real estate) will go bust.
  4. This will be the most severe U.S. recession in decades with the U.S. consumer being on the ropes and faltering big time as soon as the temporary effect of the tax rebates fade out by mid-summer (August). This U.S. consumer is shopped out, saving less, debt burdened and being hammered by falling home prices, falling equity prices, falling jobs and incomes, rising inflation and rising oil and energy prices
  5. This financial crisis signals the beginning of the decline of the American Empire; over time the relative economic, financial, military, geostrategic power of the US and reserve role of the US dollar will significantly decline
  6. This crisis also represents a Crisis of the Suburbian (“McMansions and Gas-Guzzling SUVs”) American Way of Life. The sharp rise in gasoline and energy prices and transportation costs, together with the sharp fall in home prices, will radically change the pattern of living of the typical American household.