Tuesday, February 9, 2010

Well look at that!

And they say nobody saw it coming.

"Unless we take action now, our nation may confront a situation similar to the Great Depression -- and maybe even worse."

(The opening statement of United We Stand by Ross Perot, 1992.)

Nineteen ninety-two.

Across the League of Extraordinary Economic Gentlemen — in the world of “experts,” sadly, it’s mostly men — almost all opined the market was headed for the heavens.

The experts were wrong. This we know. But the problem isn’t so much that they were wrong, but that they had no basis upon which to be right. The chorus of opinion that prices would keep rising was informed by the chorus of opinion that prices would keep rising. It was a feedback loop.

Today, the key message of the elite is that “no one” predicted the Vancouver real estate collapse....

from "Nobody saw this coming?" by condohype, January 18, 2009. "It was a feedback loop." That about sums it up.

The financial mess that we are in, that nobody saw coming, is a load of rubbish.... Nobody saw it coming is just a lame excuse for failure.
from "Nobody Saw It Coming" on TPM, January 9, 2009. Rubbish f'sure.

That phrase -- nobody saw it coming -- still bothers me. The two reactions to it, above, are from early 2009, while the phrase was still echoing. But by the end of the year, the story-line had evolved:

A number of economists, economic policymakers, regulators, and central bankers have attempted to explain away their failure to both foresee and mitigate the current financial crisis by asserting that no one saw it coming. The inference is that they cannot be held accountable for something so unusual, so extraordinary, and so unforecastable that that no one saw it coming. Robert Shiller, in a November 1, 2008 NYT OP-ED, noted the following example:

Alan Greenspan, the former Federal Reserve chairman, acknowledged in a Congressional hearing last month that he had made an “error” in assuming that the markets would properly regulate themselves, and added that he had no idea a financial disaster was in the making. What’s more, he said the Fed’s own computer models and economic experts simply “did not forecast” the current financial crisis.

However, the Fed and other policymaking agencies cannot honestly claim that no one saw it coming. There is ample evidence that:

• Economist and commentators “saw it coming”; and

• Economists and others repeatedly brought their observations to the attention of the authorities including the Fed, but were ignored.

In fact, the Fed increasingly exhibited a willingness ignoring critics and criticism.

from "Was it 'Nobody Saw It Coming' or 'Everybody Who Saw It Coming Was a Nobody'?" by Richard Alford, November 6, 2009.

By late 2009, the finger had been pointed (at the Fed).

Richard Alford is "a former economist at the New York Fed." Sounds like Alford is saying he saw it coming, and nobody would listen to him because he was "a nobody."

Anyway, here's the zinger, from the "Interview with John Cochrane" by John Cassidy, January 13, 2010.

CASSIDY: And you have some banking experts who can, perhaps, claim to be among the few economists that warned us about this crisis. Raghu Rajan, and so on?

COCHRANE: (Laughs) Well, every conference I go to lately, everybody says, “The crash proved my last paper right.”

They all saw it coming???

Let's file this post under Evolution of the Excuse. Amazing what can happen in just a year, no?

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