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>Very few economists foresaw the great recession of 2008–2009 I just can't get past the very first sentence. First, it ignores the realities of both economists

>Very few economists foresaw the great recession of 2008–2009 I just can't get past the very first sentence. First, it ignores the realities of both economists and financial insiders who made attempts to blow the lid off of the ARM/toxic loan schemes - not unlike pre-Snowden whistle blowers who were equally ignored and erased from history. Second, even as a 17 year old kid, in 2001, I wrote an economics paper about the impending housing collapse - only I was guessing 2005 not 2008 - based on ARM's; 103% financing with 0% down; and stated income. The next thing will be people talking about how very few economists foresaw the issues with reverse home mortgages, or how no regulators foresaw the dangers of equity crowdfunding for non-accredited investors.

dragonwriter 11y ago
> > Very few economists foresaw the great recession of 2008–2009 > First, it ignores the realities of both economists and financial insiders who made attempts to blow the lid off of the ARM/toxic loan schemes - not unlike pre-Snowden whistle blowers who were equally ignored and erased from history. Yeah, whether it was tied specifically to those particular schemes or not, lots of economists were predicting an imminent severe recession -- including both notable Austrian-school economists and notable neo-Keynesians -- driven by a collapse in the housing market bubble.
notahacker 11y ago
> The next thing will be people talking about how very few economists foresaw the issues with reverse home mortgages, or how no regulators foresaw the dangers of equity crowdfunding for non-accredited investors. And some of the people writing those articles will inevitably be business journalists who spent the previous five years complaining about the regulations that remained and shilling for the crowdfunding companies...
tryitnow 11y ago
You should try to read past the first sentence. The simple fact is that few economists predicted a recession of that magnitude. Predicting a crash is very different than predicting a recession. And predicting a recession is very different than predicting the magnitude of that recession. Nuance matters. I'm glad you were able to foresee it, but there's always outsiders who foresee a collapse, so that data point just isn't terribly relevant.
jstalin 11y ago
It's probably more accurate to state that those economists who make policy didn't see it coming... the economists that matter. http://www.forbes.com/2007/05/17/bernanke-subprime-speech-markets-equity-cx_er_0516markets02.html http://www.forbes.com/2007/05/17/bernanke-subprime-speech-ma... Of course, the economy nearly collapsed a year after that speech. That's the great conceit of central banking, that a small committee of "learned professionals" can predict the future and claim to divine the actions of billions of market transactions.
cpursley 11y ago
Came here to say the same thing. The Austrian-school economists were screaming at the top of their lungs: https://wiki.mises.org/wiki/Austrian_predictions https://wiki.mises.org/wiki/Austrian_predictions
- ceejayoz 11y ago
  Aren't they usually, though?
  - loki49152 11y ago
    Given the century of economies dominated by Keynesians, Monetarists, Marxists, and other UFO abductees pretending to be economists, why wouldn't they?
fweespeech 11y ago
> I just can't get past the very first sentence. First, it ignores the realities of both economists and financial insiders who made attempts to blow the lid off of the ARM/toxic loan schemes - not unlike pre-Snowden whistle blowers who were equally ignored and erased from history. The fact they were effectively silenced and ignored is largely because they were few in number. The vast majority didn't foresee the scale of the disaster. > Second, even as a 17 year old kid, in 2001, I wrote an economics paper about the impending housing collapse - only I was guessing 2005 not 2008 - based on ARM's; 103% financing with 0% down; and stated income. If you can demonstrate this for a significant number of recessions [e.g. 5+], its relevant. I pulled my money out in May of 2007 because I was pretty sure something was going to happen and threw it back in to basically double it...doesn't mean I believe it was abundantly obvious to everyone. The mere fact I could do that demonstrates it wasn't obvious. The simple fact is, whenever there is a crisis, there is going to be a minority of Doomsayers who predicted correctly. However, the fact the majority was oblivious implies it was non-obvious and possibly chance that a specific Doomsayer was, ultimately, correct in his/her prediction for reasons beyond random chance.
- dragonwriter 11y ago
  > The fact they were effectively silenced and ignored is largely because they were few in number. No, they weren't particularly few in number -- it was lots of economists (they were few in number compared to the whole population, but the universe at issue was economists, not the whole population.) They were ignored because there was substantial financial interests among the powerful interests resting on the perception that things were going to continue going well, and because the top-line economic indicators (which aren't particularly good leading indicators, in any case) that the mainstream media likes to look to were strong, so there was a PR effort that was in line with what the media was naturally inclined to follow; the warnings from various different directions were an inconvenience for the interests of the powerful and the comfortable narrative of the media. > I pulled my money out in May of 2007 because I was pretty sure something was going to happen and threw it back in to basically double it...doesn't mean I believe it was abundantly obvious to everyone. The mere fact I could do that demonstrates it wasn't obvious. Sure, it proves that it the particular impacts and timing of the impending collapse weren't widely expected by market participants. That's not inconsistent with a significant number -- not very few -- predicting an imminent and significant downturn to be driven by the collapse of the housing bubble.
andrewtbham 11y ago
I completely agree. Here is an article from the economist in 2005 and it states: "The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops" http://www.economist.com/node/4079027 http://www.economist.com/node/4079027
lurkinggrue 11y ago
Though many didn't see the seriously toxic credit default swaps going on and what exactly was going on with derivatives. Many didn't know we had over leveraged the value of the entire world economy several times over.

dragonwriter 11y ago

> > Very few economists foresaw the great recession of 2008–2009 > First, it ignores the realities of both economists and financial insiders who made attempts to blow the lid off of the ARM/toxic loan schemes - not unlike pre-Snowden whistle blowers who were equally ignored and erased from history. Yeah, whether it was tied specifically to those particular schemes or not, lots of economists were predicting an imminent severe recession -- including both notable Austrian-school economists and notable neo-Keynesians -- driven by a collapse in the housing market bubble.

notahacker 11y ago

> The next thing will be people talking about how very few economists foresaw the issues with reverse home mortgages, or how no regulators foresaw the dangers of equity crowdfunding for non-accredited investors. And some of the people writing those articles will inevitably be business journalists who spent the previous five years complaining about the regulations that remained and shilling for the crowdfunding companies...

tryitnow 11y ago

You should try to read past the first sentence. The simple fact is that few economists predicted a recession of that magnitude. Predicting a crash is very different than predicting a recession. And predicting a recession is very different than predicting the magnitude of that recession. Nuance matters. I'm glad you were able to foresee it, but there's always outsiders who foresee a collapse, so that data point just isn't terribly relevant.

jstalin 11y ago

It's probably more accurate to state that those economists who make policy didn't see it coming... the economists that matter. http://www.forbes.com/2007/05/17/bernanke-subprime-speech-markets-equity-cx_er_0516markets02.html http://www.forbes.com/2007/05/17/bernanke-subprime-speech-ma... Of course, the economy nearly collapsed a year after that speech. That's the great conceit of central banking, that a small committee of "learned professionals" can predict the future and claim to divine the actions of billions of market transactions.

cpursley 11y ago

Came here to say the same thing. The Austrian-school economists were screaming at the top of their lungs: https://wiki.mises.org/wiki/Austrian_predictions https://wiki.mises.org/wiki/Austrian_predictions

ceejayoz 11y ago
Aren't they usually, though?
- loki49152 11y ago
  Given the century of economies dominated by Keynesians, Monetarists, Marxists, and other UFO abductees pretending to be economists, why wouldn't they?

fweespeech 11y ago

> I just can't get past the very first sentence. First, it ignores the realities of both economists and financial insiders who made attempts to blow the lid off of the ARM/toxic loan schemes - not unlike pre-Snowden whistle blowers who were equally ignored and erased from history. The fact they were effectively silenced and ignored is largely because they were few in number. The vast majority didn't foresee the scale of the disaster. > Second, even as a 17 year old kid, in 2001, I wrote an economics paper about the impending housing collapse - only I was guessing 2005 not 2008 - based on ARM's; 103% financing with 0% down; and stated income. If you can demonstrate this for a significant number of recessions [e.g. 5+], its relevant. I pulled my money out in May of 2007 because I was pretty sure something was going to happen and threw it back in to basically double it...doesn't mean I believe it was abundantly obvious to everyone. The mere fact I could do that demonstrates it wasn't obvious. The simple fact is, whenever there is a crisis, there is going to be a minority of Doomsayers who predicted correctly. However, the fact the majority was oblivious implies it was non-obvious and possibly chance that a specific Doomsayer was, ultimately, correct in his/her prediction for reasons beyond random chance.

dragonwriter 11y ago
> The fact they were effectively silenced and ignored is largely because they were few in number. No, they weren't particularly few in number -- it was lots of economists (they were few in number compared to the whole population, but the universe at issue was economists, not the whole population.) They were ignored because there was substantial financial interests among the powerful interests resting on the perception that things were going to continue going well, and because the top-line economic indicators (which aren't particularly good leading indicators, in any case) that the mainstream media likes to look to were strong, so there was a PR effort that was in line with what the media was naturally inclined to follow; the warnings from various different directions were an inconvenience for the interests of the powerful and the comfortable narrative of the media. > I pulled my money out in May of 2007 because I was pretty sure something was going to happen and threw it back in to basically double it...doesn't mean I believe it was abundantly obvious to everyone. The mere fact I could do that demonstrates it wasn't obvious. Sure, it proves that it the particular impacts and timing of the impending collapse weren't widely expected by market participants. That's not inconsistent with a significant number -- not very few -- predicting an imminent and significant downturn to be driven by the collapse of the housing bubble.

andrewtbham 11y ago

I completely agree. Here is an article from the economist in 2005 and it states: "The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops" http://www.economist.com/node/4079027 http://www.economist.com/node/4079027

lurkinggrue 11y ago

Though many didn't see the seriously toxic credit default swaps going on and what exactly was going on with derivatives. Many didn't know we had over leveraged the value of the entire world economy several times over.