Meet the Economist Who Thinks We're Doomed

via AlterNet:



Meet the Economist Who Thinks We're Doomed

By Stephen Mihm, The New York Times. Posted August 18, 2008.

Dr. Nouriel Roubini believes we face a housing bust, a huge credit crisis, an oil shock and a deep recession. Just for starts.



On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.

The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, "I think perhaps we will need a stiff drink after that." People laughed -- and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market. And then there was the espouser of doom himself: Roubini was known to be a perpetual pessimist, what economists call a "permabear." When the economist Anirvan Banerji delivered his response to Roubini's talk, he noted that Roubini's predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer.

But Roubini was soon vindicated. In the year that followed, subprime lenders began entering bankruptcy, hedge funds began going under and the stock market plunged. There was declining employment, a deteriorating dollar, ever-increasing evidence of a huge housing bust and a growing air of panic in financial markets as the credit crisis deepened. By late summer, the Federal Reserve was rushing to the rescue, making the first of many unorthodox interventions in the economy, including cutting the lending rate by 50 basis points and buying up tens of billions of dollars in mortgage-backed securities. When Roubini returned to the I.M.F. last September, he delivered a second talk, predicting a growing crisis of solvency that would infect every sector of the financial system. This time, no one laughed. "He sounded like a madman in 2006," recalls the I.M.F. economist Prakash Loungani, who invited Roubini on both occasions. "He was a prophet when he returned in 2007." .......(more)

The complete piece is at: http://www.alternet.org/workplace/95375/meet_the_economist_who_thinks_we%27re_doomed/

of her, and she's 82. I'm not sure I even want to read it. :scared:

known to man.

Like the scientific community, the economists know which side their bread is buttered on. It's that simple. How else is it possible to explain the total inversion of Adam Smith's teachings touted in todays', or, rather, yesterday's received wisdom - as defined by the far right. Money talks - truth walks.

In fact, in the scientific field, the repressive, exclusive, almost Stalinist imposition of the "received wisdom", ie, that favoured by governments, their tame MSM and their corporate sponsors, who also fund much of the research, now even in the most prestigious seats of learning, is even more egregious.

Economics is never going to be a science, any more than social "sciences" are properly so-called. At least, until scientists can create a single living vegetable cell from mineral constituents.

...based on human relationships, behaviors, drives and motivations which can not be predicted or controlled by mathematical econometric models and multivariate analysis.

It is group behaviors which flows out of dominance, power, deception and larceny, factors not at all overlooked by Minsky!

mathematical model and, moreover, covering only the most recent past?

How convenient is that, in the light of the repeated business bubble creations...? And the rake-offs of the apex predators. Not difficult to distinguish the counterfeit expert economists from the genuine ones of integrity, is it? Or am I reading too much into it?

....mathelmatical models and moreover most certainly not based on observations within the recent past. Such models are only performance measurement tools and not at all predictors of future behaviors or outcomes. Economics is a deliberative social science not a predictive system at all.

The so-called scare resources which economists talk about all the time are scarce by design. Thus we see that there are individuals and syndicates which seek to deliberately keep resources under their control scarce in order to maximize profits and returns on investments which can be harmless enough in the short run. But, when such forces seek more sinister goals like eliminating 80% of the world's population and enslaving 80% of those who remain, it becomes rather apparent why such counterfeit economists are able to emerge and acquire legitimacy. They are accepted because power says they are---Karl Marx redux.

Alan Greenspan is just such an animal and was able to bluster along as the Federal Reserve Chairman and faux economist from late 1987 following the Reagan blowout of supply side economic farce to when resigned and handed over the mess he created by 2006 because he could intimidate through the authority of virtual unchecked monetary power he had no right to have under the U.S. Constitution. Had the country remained under the Bretton Woods currency system established by FDR and negotiated fair trade agreements instead of free trade imperialistic globalism I think the U.S. and all of the trading partners involved would have remained on a much more solid economic track over the decades. We can get that system back, all that is needed is the will by the American people to return to that. We could certainly do without several thousand hedge fund gamblers, arbitrage money changers, corporate monopolies and big financial trusts who are economic parasites which suck away incredible economic resources to fight their wars and add nothing to the economic welfare of the masses of people who work and toil for these huge monoliths. They could be stopped dead in their tracks and would not be missed while the world would breath more freely and prosper extensively.

of economics, it's so simple to see the bare bones of the issue - thanks actually to posters like yourself, Demeter, Marmar et distinguished al. I'd noticed the phenomenon in the scientific sphere, of course. That, too, is glaringly obvious.

"it becomes rather apparent why such counterfeit economists are able to emerge and acquire legitimacy. They are accepted because power says they are---Karl Marx redux." As I said, Money talks, truth walks. Yes, Karl Marx redux.

I once read a very humorous and evidently absolutely true comment by Warren Buffet on the subject of one of those derivatives salemen, some people who actually produced something with their labour and desert island, but I can't remember it now.

...among other things:

"Can "It" Happen Again? Essays on Instability and Finance" Hyman P. Minsky

...and:

"Stabilizing an Unstable Economy" Hyman P. Minsky


Our congress and economic advisers ought to refresh or modify their understanding of what needs to be done to save our economy at this most perilous juncture.

"The '90s were an eventful time for an international economist like Roubini. Throughout the decade, one emerging economy after another was beset by crisis, beginning with Mexico's in 1994. Panics swept Asia, including Thailand, Indonesia and Korea, in 1997 and 1998. The economies of Brazil and Russia imploded in 1998. Argentina's followed in 2000. Roubini began studying these countries and soon identified what he saw as their common weaknesses. On the eve of the crises that befell them, he noticed, most had huge current-account deficits (meaning, basically, that they spent far more than they made), and they typically financed these deficits by borrowing from abroad in ways that exposed them to the national equivalent of bank runs. Most of these countries also had poorly regulated banking systems plagued by excessive borrowing and reckless lending. Corporate governance was often weak, with cronyism in abundance."

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Folks..that's us!

...toward that state of glaring and deliberate economic incompetence, eh? Minsky suggests that deficits in the overall economy are pushed and forced toward an unsustainable level as spending accelerates, production declines, tax revenues are reduced, infrastructure is neglected and plundered, etc. These conditions then allow the financial speculator parasites with access to cheap low interest highly leveraged money to come in loot and plunder everything of value causing the economy to implode and the system to collapse. The result is not just a recession or depression but a complete economic meltdown.

And they are right. Fortunately we are a rich country, not wildly overpopulated yet, so it could be worse. But first we need to retire all these dimwit ideologues that got us into this pickle.