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pattern economics By Mark Anderson
I. Lessons from the GFC After the Global Financial Collapse of 2007-2008, the Financial Times reported that only three people had accurately predicted it. Since I had done so in mid-March of 2007, on CNBC's Power Lunch Europe, that would make four. More noteworthy, though, was the FT's statement that no professional economists had made the call. (In fact, those who were successful shared the attribute of looking at the patterns of flows.) One professional who often makes the same claim is Nouriel Roubini. Nouriel, in my opinion, is disqualified on two counts: first, he had been predicting collapse for so long that, like a broken clock, he would have to be right at least twice a day; and second, because he was one of thousands who said the US housing market was the story, and it was destined to collapse - but this was a symptom, not the disease. It might be easier to count those who did not predict the real-estate collapse than those who did. All of which leads back to the FT's observation of "the dismal science" of economics. It certainly is dismal, but it just as certainly is not a science. With a world of trained experts failing to call the most important event of their careers, we can say without any doubt that current economic theories are not up to the task. |
