Monday, February 6, 2012

It Is Safe to Resume Ignoring the Prophets of Doom ... Right?

Commentary: Financial Safety Rule #1 says: nobody can reliably, consistently predict future economic events. However, some people get it right occasionally [heck, in those days even I suspected that something big might happen to the housing market given the extreme exuberance everywhere!] . This was probably Mr Roubini's big chance at lasting fame and fortune in the world of economic seers. More than likely, he'll never get anything so right again in his entire lifetime, but that most likely will not deter many from believing his future crystal ball pronouncements. [Lesson to NYT article writer, and for us- perhaps "always expect the unexpected "? ]. Regards, Financial Safety Services

Extract: "I remember the first time I interviewed a relatively unknown economist named Nouriel Roubini. It was 2005, and as we sat in his New York University office, he laid out his scary vision of the future. Roubini is a specialist in the flow of money around the world and the crises that (sometimes) result. But on that day he wanted to talk about the U.S. housing market.

Homeowners, he said, had become too used to financing their lifestyles with money siphoned from overvalued homes. This housing bubble would pop, he warned, and send the world into a vicious recession, possibly even a depression. I remember leaving his office both stunned and confused. Only after calling a few leading economists was I reassured that this Roubini guy was expressing a fringe view that merited little attention. Like a lot of reporters that year, I turned around a tongue-in-cheek story about Dr. Doom and his scary (but probably best ignored) world view. Oops!...." Original article here

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