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Who actually predicted this Financial Crisis?

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Beej said:
The Austrians have been "seeing" the GFC coming since the early 1900s.....

Beej
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:headshake Asinine comment.

Austrians understand the business/credit cycle. Therefore there will be period recessions, correction and contractions of credit, in response to excesses of credit and the resulting booms and malinvestment.

If you can leave aside your mendacity for about four hours, watch these videos:

http://sigmaoptions.blogspot.com/2008/01/bump-lessons-in-economics.html
 
Beej said:
The Austrians have been "seeing" the GFC coming since the early 1900s.....

Beej
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And we definitely know the classical economists (mainstream) never saw this coming.

I know which side I will take.
 
Temjin said:
And we definitely know the classical economists (mainstream) never saw this coming.

I know which side I will take.
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LOL

There may be a lot of ill feeling between the Austrians and the Keynsians but I reckon they should join together and kick out the neo classical economists who have no idea and yet seem to hold all the important positions. All they have in their advantage is a good name.

Once they are removed we can go from there.
 
Knobby22 said:
LOL

There may be a lot of ill feeling between the Austrians and the Keynsians but I reckon they should join together and kick out the neo classical economists who have no idea and yet seem to hold all the important positions. All they have in their advantage is a good name.

Once they are removed we can go from there.
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Lol that's the problem, they hold all the "wealthy" positions and have plenty of power. Try asking for a policy to ban all neo-classical economic teaching in universities and replace them with alternative texts, and you will probably be flamed down till death. I know Steve Keen is trying his best with his readers right now, so I hope it does raise the awareness.

Too many innocent undergraduates are being "brainwashed" into the dark side.
 
I just wish they would stick to one theory.

The greatest problem in my opinion, is that they chop and change in the interests of political expediency.

One minute they're laissez faire, the next they're Friedmanite monetarists, then they're blinkin' full on Keynsesians etc.

What we have is none of the above. What we have is Frankenomics... bits and pieces from the dead corpses of other theories sowed together in an effort to appease the ignorant masses.

Neo-classical economics, as practised by self interested bureaucrats, is nothing more than the reptilian shape-shifting of science fiction. There is no overriding central tenant that is adhered to.

I could live with proper Keynsianism (with a lot of muttering under my breath), so long as we are Keynesians in the boom as well as the bust. Only invoking Keynesianism in busts is nothing more than tax and spend for political survival.
 
Joseph Stiglitz did. :eek:

http://www.newsweek.com/id/207390/page/1

Stiglitz has warned for years that pro-market zeal would cause a global financial meltdown very much like the one that gripped the world last year. In the early '90s, as a member of Clinton's Council of Economic Advisers, Stiglitz argued (unsuccessfully) against opening up capital flows too rapidly to developing countries, saying those markets weren't ready to handle "hot money" from Wall Street. Later in the decade, he spoke out (without results) against repealing the Glass-Steagall Act, which regulated financial institutions and separated commercial from investment banking. Since at least 1990, Stiglitz has talked about the risks of securitizing mortgages, questioning whether markets and authorities would grow careless "about the importance of screening loan applicants." Malaysian economist Andrew Sheng says, "I think Stiglitz is the nearest thing there is to Keynes in this crisis."
 
Here's another one http://www.guardian.co.uk/business/2008/oct/31/creditcrunch-gillian-tett-financial-times

But "they" didn't like it and "Schiffed" her publicly.

Jeff Randall and Ambrose Evans-Pritchard were another couple of financial journos over here who warned, and were roundly scoffed at.

Tett's doom-mongering did not make her tremendously popular. Largely, her cautions were ignored, and when they weren't ignored they were subject to criticism. "We had enormous kickback from the bankers in the City saying, 'Why are you being so critical of the industry? Why are you being so negative?' All that kind of stuff." On a trip to the economic forum Davos in 2007, she was even denounced from the stage. "One of the most powerful people in the US government at the time stood up on the podium and waved my article, the article that predicted the problems at Northern Rock, as an example of scaremongering."
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LOL
 
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Merryn Somerset-Webb was another one who was publicly bearish... and served as something of a pin-up girl for us bears at the time. :D
 
This guy did as well. He used to be the CEO of Lehman Brothers :eek:
 

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wayneL said:
I just wish they would stick to one theory.

The greatest problem in my opinion, is that they chop and change in the interests of political expediency.

One minute they're laissez faire, the next they're Friedmanite monetarists, then they're blinkin' full on Keynsesians etc.

What we have is none of the above. What we have is Frankenomics... bits and pieces from the dead corpses of other theories sowed together in an effort to appease the ignorant masses.

Neo-classical economics, as practised by self interested bureaucrats, is nothing more than the reptilian shape-shifting of science fiction. There is no overriding central tenant that is adhered to.

I could live with proper Keynsianism (with a lot of muttering under my breath), so long as we are Keynesians in the boom as well as the bust. Only invoking Keynesianism in busts is nothing more than tax and spend for political survival.
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True

They just invoke Keynes in bad times as an excuse to appease politicians.
It seems to be policy to serve short term goals rather than actually managing the economy. The problem is that the science for economics is soft and very somewhat unproven. This gives the beaurocrats, I mean economists, the excuse to follow policyies of appeasement to whatever political party they are aligned with. And the political party are oncerned with serving their powerbase or getting re-elected.

I also could live with us trying Austrian policy properly though not at the middle of a major crisis. I reckon it would lead to anemic growth but what do I know, it might work splendidly.
 
Was their ever a monetary system used throughout history that was well balanced???

If yes why not adopt that?
 
Ageo said:
Was their ever a monetary system used throughout history that was well balanced???
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What is your definition of well balanced?

Who knows if boom and bust isn't the best way to get to where we want to go? where do we want to go?
 
Ageo said:
Was their ever a monetary system used throughout history that was well balanced???

If yes why not adopt that?
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The gold standard did work well through the 19th century but caused heaps of problems in the early 20th century. It had a good stabilising effect and in the 19th century it was more wars that caused it problems.

The are many problems with the gold standard in today's world but that should be another thread.
 
I was in the US in April 2007 and bought a book called Crash Proof How to Profit from the Coming Economic Collapse by Peter Schiff. At that stage I had not heard of him.

He is now featured regularly on CNBC and other US business programs usually portrayed as the "bear".

So as has been already said on this thread he was one of the ones who called it correctly. From memory the first real signs were in Europe and of course Bear Stearns in the US in July 2007.
 
Flipper15 said:
I was in the US in April 2007 and bought a book called Crash Proof How to Profit from the Coming Economic Collapse by Peter Schiff. At that stage I had not heard of him.

He is now featured regularly on CNBC and other US business programs usually portrayed as the "bear".

So as has been already said on this thread he was one of the ones who called it correctly. From memory the first real signs were in Europe and of course Bear Stearns in the US in July 2007.
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Funny this is though i don't think from what i have read he has done that well though.

Especially when you take into account the bears sit out the rally or are always trying to pick the tops and have their heads handed to them.

Could be wrong though. Fans will set us straight.
 
The fellow who wrote in The Bulletin magazine wrote about 2004, 2005 and 2006 (the CDO, CDS, derivative avalanche). What is his name? He spelt it out just as it has happened.....gosh I hate it when I can't remember a name!:D

Max Walsh springs to mind.
 
Trembling Hand said:
Funny this is though i don't think from what i have read he has done that well though.

Especially when you take into account the bears sit out the rally or are always trying to pick the tops and have their heads handed to them.

Could be wrong though. Fans will set us straight.
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LOL.

Reading this I would be lucky if anyone could understand what the hell I was trying to say!!:eek:
 
Knobby22 said:
Who actually accurately predicted this downturn and where are they on the economic compass?
An MRPA paper (Netherlands university) has looked into this. http://mpra.ub.uni-muenchen.de/15892/

I have summarised below:

Peter Schiff, Kurt Richbacher - Austrian School - emphasises savings and production against asset prices. (apologies to Wayne L)

Stephen Keen, Wynne Godley, Michael Hudson - Keynsian - emphasis on the accounting flow of funds approach (Says Law) - These guys have actually set up models that appear to have worked.

Sorenson, Baker - Financialization scenario - i.e. financial innovation will casue a liquidity drain at some point.

Schiller, Roubini, Janszen, Baker - Cycles theory, we were due for a downturn.


The paper is particuarly critical of neoclassical theory which failed to predict this occuring even at the late stages using the Equilbrium model. Specifically noted is the Washington University Macro Madel which is a massive dominant model.

I really liked the Keynsian model set up, but then I am a Keynsian fan. Bit of a big read but worth it.
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knobby

how does each of the different models you discuss simply answer and explain whats going to happen next

taking into consideration china is increased money supply and credit from a steady 16% PA to its present 28% since the crash

imho whats happening in china is not something one can sustain when your closing down factories, your commercial properties are double or triple what the needs and capabilities are and real estate is being built far beyond what the demands are..

seriously interested in peoples views on this one.. its one you simply ignore only at your own peril

china is the bubble


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TIA
 
I haven't got time at the moment to discuss. Maybe you should start a thread titled "What happens next?". Generally in my opinion it depends what governments do next.

Knobby
 
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