Financial crisis: they saw it coming . . . International brigade
The Lehman Legacy
US economist earned the nickname Dr Doom when he speculated as far back as 2005 that inflated house prices could sink the US economy. In September 2006, he warned the IMF that the US was likely facing a catastrophic property crash, an oil shock, a steep fall in consumer confidence and a lasting economic
Roubini, now professor of economics at New York University’s Stern School of Business, warned recently of an overheating of economies in the Brics countries (Brazil, Russia, India, China and South Africa), which “may hit a thick wall, with growth and financial markets taking a serious beating”.
Roubini made the headlines this month
after he was ordered to remove a giant hot tub, famed for being filled with models
during wild parties, from the roof of his Manhattan penthouse. “They love my beautiful mind,” he told New York Magazine. “I am ugly, but they’re attracted to the brains. I’m a rock star among geeks, wonks and nerds.”
While serving as the IMF’s youngest-ever chief economist, Raghuram Rajan was deemed a “Luddite” by former US treasury secretary Lawrence Summers for his “misguided” warnings in 2005 that financial managers were being encouraged to take “risks that generate severe adverse consequences”, and that banks may not be able to provide adequate liquidity to the markets.
By 2009, public and professional opinion about Rajan had turned, with the Wall Street Journal declaring that “few are dismissing his ideas”. He was one of the main contributors to Charles H Ferguson’s Oscar-winning 2010 documentary on the crisis, Inside Job. He stepped down after one year as chief economic adviser to the Indian government last week to become governor of the Reserve Bank of India.
An associate professor of economics at the University of Western Sydney, Steve Keen is regarded as the only Australian economist to have warned (as early as 2005) that a global financial crisis was bound to happen. The Real -World Economics Review awarded him a prize in 2010 for being the economist whose work was most likely to prevent a financial crisis, and the Institute for New Economic Thinking, a US think-tank, has granted him almost $250,000 to create a computer programme to predict future economic crashes.