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I think you're misremembering. The 2001 and 2007 crashes were very widely foretold. The current recession risk concensus seems pretty weak to me right now. That

by tootie 4y ago

I think you're misremembering. The 2001 and 2007 crashes were very widely foretold. The current recession risk concensus seems pretty weak to me right now. That's just perception but the popular joke goes something like "economists have predicted 8 of the last 3 recessions". The risk of an unexpected recession is much worse than a warning that doesn't come true so warnings are always pessimistic. Risk right now still feels 50/50. The next CPI report after the major Fed action will be watched very closely.

hn_throwaway_99 4y ago
> I think you're misremembering. The 2001 and 2007 crashes were very widely foretold. Hard disagree, at least by what I said in my comment about what "widely foretold" meant. I mean, the IMDB opening description of The Big Short starts with "When four outsiders saw what the big banks, media and government refused to..." Michael Burry, https://en.wikipedia.org/wiki/Michael_Burry https://en.wikipedia.org/wiki/Michael_Burry, famously said he wasn't a super genius or anything, and was surprised that so few other folks saw the coming housing collapse like he did. Again, my point is not that nobody could foresee that the recessions were coming, it's that the institutional "powers that be" - government, large corporations, VCs, etc. - actively downplayed the risk of recession. The exact opposite is happening now.
- tootie 4y ago
  JP Morgan navigated the 2007 crisis and came out on top. They're saying recession risk is 50/50 and the S&P will end up positive for the year. There were definitely a lot of people in power and especially policy makers who put their own interests ahead of what the data tells them. Burry is also a shameless self-promoter who has predicted a lot of disasters that haven't happened including WW3 a few years ago. There's like a dozen people who have made careers out of claiming to be the only ones that predicted the 2007 recession. If you keep predicting recessions you're bound to be right. In reality, it's just not possible to predict accurately. Here's Krugman in late 2006 presenting the data and putting the recession risk for 2007 at 2:1 https://www.nytimes.com/2006/12/01/opinion/01krugman.html https://www.nytimes.com/2006/12/01/opinion/01krugman.html Right now there are several indicators flashing and a lot that aren't. Technical data like P/E ratios, volatility, yield curves are great at predicting things that happened in the past but they just can't be relied on as being infallible.
  - mancerayder 4y ago
    Burry's famous because he placed a bet on a carefully researched observation connected to the sub-prime crisis before it was remotely known, and he was disbelieved. He might have made other wrong predictions but to gloss over the above fact is a big omission. There are the economists and there are people with skin in the game, I think there's a big difference if you're a wealth manager versus a NYT editorialist. Incidentally Krugman seems like a proponent for whatever blue tie is in power (https://www.nytimes.com/2022/01/04/opinion/2021-economic-recovery.html https://www.nytimes.com/2022/01/04/opinion/2021-economic-rec...). That's different than placing bets in the tens of millions.
    - tootie 4y ago
      I'm not sure what that link is supposed to prove. 2021 was a pretty great year. Krugman is usually very sanguine about not ascribing credit policy or presidents and he didn't in that article. He doesn't disclose his holdings because he doesn't give investment advice. And Burry definitely wasn't a rogue genius. Lots of hedge funds bet on the crash. Goldman Sachs was specifically called out for betting heavily on a crash while they were still selling mortgage assets to customers.
      - mancerayder 4y ago
        2021 was a fake year for growth, that's the point, because we were relying on cheap and plentiful money being subsidized by borrowed time. We'll be paying the press for a long time for the spending and helicopter money that provided demand, while supply was still limited. For Krugman, a monetarist, printing money when there are fewer goods and services in an economy, wasn't registered as a problem. Ah, but he admitted recently that he was wrong in the party line of "transient inflation" (where every private economist outside of academia and the government knew it was not going to be transient and made moves at the end of the 2021).

by tootie 4y ago

hn_throwaway_99 4y ago

> I think you're misremembering. The 2001 and 2007 crashes were very widely foretold. Hard disagree, at least by what I said in my comment about what "widely foretold" meant. I mean, the IMDB opening description of The Big Short starts with "When four outsiders saw what the big banks, media and government refused to..." Michael Burry, https://en.wikipedia.org/wiki/Michael_Burry https://en.wikipedia.org/wiki/Michael_Burry, famously said he wasn't a super genius or anything, and was surprised that so few other folks saw the coming housing collapse like he did. Again, my point is not that nobody could foresee that the recessions were coming, it's that the institutional "powers that be" - government, large corporations, VCs, etc. - actively downplayed the risk of recession. The exact opposite is happening now.

tootie 4y ago
JP Morgan navigated the 2007 crisis and came out on top. They're saying recession risk is 50/50 and the S&P will end up positive for the year. There were definitely a lot of people in power and especially policy makers who put their own interests ahead of what the data tells them. Burry is also a shameless self-promoter who has predicted a lot of disasters that haven't happened including WW3 a few years ago. There's like a dozen people who have made careers out of claiming to be the only ones that predicted the 2007 recession. If you keep predicting recessions you're bound to be right. In reality, it's just not possible to predict accurately. Here's Krugman in late 2006 presenting the data and putting the recession risk for 2007 at 2:1 https://www.nytimes.com/2006/12/01/opinion/01krugman.html https://www.nytimes.com/2006/12/01/opinion/01krugman.html Right now there are several indicators flashing and a lot that aren't. Technical data like P/E ratios, volatility, yield curves are great at predicting things that happened in the past but they just can't be relied on as being infallible.
- mancerayder 4y ago
  Burry's famous because he placed a bet on a carefully researched observation connected to the sub-prime crisis before it was remotely known, and he was disbelieved. He might have made other wrong predictions but to gloss over the above fact is a big omission. There are the economists and there are people with skin in the game, I think there's a big difference if you're a wealth manager versus a NYT editorialist. Incidentally Krugman seems like a proponent for whatever blue tie is in power (https://www.nytimes.com/2022/01/04/opinion/2021-economic-recovery.html https://www.nytimes.com/2022/01/04/opinion/2021-economic-rec...). That's different than placing bets in the tens of millions.
  - tootie 4y ago
    I'm not sure what that link is supposed to prove. 2021 was a pretty great year. Krugman is usually very sanguine about not ascribing credit policy or presidents and he didn't in that article. He doesn't disclose his holdings because he doesn't give investment advice. And Burry definitely wasn't a rogue genius. Lots of hedge funds bet on the crash. Goldman Sachs was specifically called out for betting heavily on a crash while they were still selling mortgage assets to customers.
    - mancerayder 4y ago
      2021 was a fake year for growth, that's the point, because we were relying on cheap and plentiful money being subsidized by borrowed time. We'll be paying the press for a long time for the spending and helicopter money that provided demand, while supply was still limited. For Krugman, a monetarist, printing money when there are fewer goods and services in an economy, wasn't registered as a problem. Ah, but he admitted recently that he was wrong in the party line of "transient inflation" (where every private economist outside of academia and the government knew it was not going to be transient and made moves at the end of the 2021).