To keep things from spiraling out of control, the United States government (along with other governments around the world) unleashed what Mr. Roubini calls an unprecedented “shock-and-awe campaign against the crisis.” The Fed “embraced its historic role as a lender of last resort,” he writes, “throwing lifelines of liquidity to one kind of financial institution after another,” and eventually became an investor “of last resort” as well, “wading into government debt markets to inject still more liquidity into the system via quantitative easing.” In addition the government “became a shareholder in a host of businesses, buying shares and injecting capital in exchange for an equity stake”; instituted “outright bailouts of individual banks, homeowners, and others”; and “even offered to subsidize the purchase of toxic assets, hoping this might restore faith.”

All these monetary and fiscal measures fell into place — awkwardly and imperfectly — over the course of the next two years. “The response to the financial crisis had all the grace and beauty of a battlefield retreat,” Mr. Roubini observes, “but in the end it seemed to work: capitalism did not collapse; the fate of particularly hard-hit Iceland was not the fate of the world at large.”

That, of course, was the good news. The bad news, Mr. Roubini says, is that stability was purchased at an enormous price: “Thanks to all the bailouts, guarantees, stimulus plans, and other costs of managing the crisis, the public debt of the United States will effectively double as a share of the nation’s gross domestic product, as deficits in the coming decade are expected to hit $9 trillion or more.”

As Mr. Roubini sees it, America’s soaring deficits (exacerbated by the recent bailouts and the tax cuts implemented by the administration of George W. Bush) and its borrowing of more and more money from abroad are dangerous and unsustainable, and could lead to decline of the dollar and the further erosion of American power on the international stage.

Much as the economist Joseph E. Stiglitz did in his recent book “Freefall,” Mr. Roubini argues in these pages that the United States must use the recent crisis as an opportunity to make deep and meaningful reforms to its financial system.

He declares that Too Big to Fail firms like Citigroup and Goldman Sachs should be broken up; that the crazy quilt of overlapping regulatory agencies (which creates all sorts of gaps and inefficiencies that can be exploited by banks) should give way to a more consolidated and centralized system of oversight; and that a “beefed-up version” of the Glass-Steagall Act (which separated commercial banking and investment banking) should be adopted.

Wholesale reform, Mr. Roubini concludes, is necessary “to bring the financial system to heel.” Merely tinkering with existing rules, he goes on, is absurd, given the serious illness of the patient. “As we’ve made clear throughout this book,” he writes, “the crisis was less a function of subprime mortgages than of a subprime financial system. Thanks to everything from warped compensation structures to corrupt ratings agencies, the global financial system rotted from the inside out. The financial crisis merely ripped the sleek and shiny skin off what had become, over the years, a gangrenous mess.”