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September 27, 2008

Clueless at the Top

By: Bernard Chazelle

To watch a bunch of economists predict the future is the perfect definition of a waste of time. Unless, that is, Nouriel Roubini is a panelist. The guy has been amazing. Not only he got his predictions right but his diagnosis, too. (Housing recession, sub-prime lending crisis trickling up the lending food chain, credit crunch and not just illiquidity, etc.) And he's done that against much of the establishment.

In this Jan 2007 WEF forum, world-class economists are being asked to forecast the next 18 months (which takes us almost to today). They are so optimistic that after their short presentation the moderator says almost in desperation:

Everyone sees nothing but blue skies ahead!

Then Roubini is asked to speak. Housing recession getting worse; credit crunch in mortgage market; hard landing ahead; lasting growth recession if not worse; spillover into consumption as people use their homes as ATM machines; etc.

The panel gangs up against him by telling him politely that he doesn't know what the hell he's talking about. There is Laura Tyson, former Clinton NEC chair, and Jacob Frenkel telling us all is well. Frenkel is the current vice-chairman of ... AIG!

I attach the video in case you're interested, but if I were you I'd skip. But do check out this classic by Bird and Fortune: oldie but....

— Bernard Chazelle

Posted at September 27, 2008 06:00 PM

LOL! The relatively pessimistic gent from India:

"If we have a problem, the banks won't suffer."

That said, you're a bit wrong. Rubini has been consistently negative. Following his advice starting in 2004 would have left you out of a lot of very lucrative markets. The stopped clock is right twice a day and all that. I like that he was so right about the current situation, but that mostly just boosts his credibility when he changes his tune. Let's see how well he calls the bottom.

Posted by: hedgehog at September 27, 2008 09:42 PM

er, Bernard. my apologies

Posted by: almostinfamous at September 28, 2008 12:32 AM

If YOU mean Max Sawasky(sp?) of Maxspeak then I must agree. That man would have good answers.

Posted by: Mike Meyer at September 28, 2008 01:25 AM


Posted by: Jonathan Versen at September 28, 2008 06:48 AM

Well I'd say Michael Hudson is where you go for enlightenment concerning the financial crisis. He's got the intellectual courage to call a spade a spade and the breadth of knowledge, economical and historical, to come at these problems from a long-term point of view, explaining the systemic fault lines of the current system. You can find much of his recent stuff over at Counterpunch.

Posted by: Paul at September 28, 2008 08:07 AM

To get you started on Michael Hudson you should read the lovely interview he gave to Acres USA (national journal for sustainable agriculture) called 'Debtor Nation', availabe over at his website For his view on the bailout as now proposed see this Counterpunch piece:

Posted by: Paul at September 28, 2008 08:32 AM

Not knowing which of the two clips was the comedy routine, I clicked on the second one. Not enough coffee, perhaps, but surely that "make greed pay" backdrop was a clue, and the florid pomposity of the emcee...

But then he mentioned Laura Tyson, and the camera shifted enough for me to see that the slogan was "make green pay". Ah. Davos.

If there were any actual belt-tightening in prospect for that crowd of plutocrats and their shills, they could always save a bit of money by keeping the backdrop for future Davoses, just replacing 'green' with, say, 'hunger' or 'Them' --
and by 'Them' they'd mean us.

Posted by: Nell at September 28, 2008 11:38 AM

Accurately fitting Eliot Spitzer into this high-contrast four-dimensional wreckage might be an interesting thing to do.

Posted by: Roy Belmont at September 28, 2008 02:20 PM

Well, it looks like the heist will happen tomorrow after they included the House GOP's crazy plan to open an insurance branch in the Treasury. It's been neutered from the original version, at least, where they proposed making us liable for over 2.5 trillion in outstanding mortgage debt held in the private sector, where default rates are something like 6 percent rather than the GSE's 2, which we already insure.

And the final compromise sausage the NYT is describing is heinous.

Posted by: buermann at September 28, 2008 02:44 PM