Sorry if you’re OD’ing on Roubini, but since we’ve been talking about the upsurge in attention towards Dr. Doom, it seems wise to spotlight the naysayers. This morning, econoblogger non-pareil Megan McArdle notes that a few years ago, Roubini’s did not see the US banking system as the epicentre of our economic problems:
A more interesting question is what to do about doomsayers like Nouriel Roubini, who got the magnitude of the crisis right, but has similarly been predicting a financial holocaust for five years, with changing scenarios which mostly did not come to pass. Obviously, he was right that the global financial system was shaky. On the other hand, his understanding of why the global financial system was shaky does not seem to have been strong enough to predict the source of the failure–the current account deficit and the dollar have been at best minor players, at least in the way that he was worried about way back in 2004.
It’s an important point. We’ve been reading his RGE Monitor for a long time, and our earliest memories of it revolve heavily on issues of global trading imbalances.
Eddy Elfenbein is less restrained than McArdle:
Finally, someone is criticising Roubini. His status as a financial visionary is wholly undeserved. He’s been screaming about the downfall of capitalism for years now.
Here’s my complaint about making predictions–there’s a lack of balance. Basically, you can call for the world to end for years, then step back and take any crisis and claim vindication. It’s like the people who said they were right about Iraq. But the disaster they saw coming was millions of Arabs rushing to Saddam’s side and a Stalingrad-like siege of Baghdad.
The same could also be said about Sacred Swan Nassim Taleb, who gets a lot of credit everytime there’s a crash.
But let’s go back to Roubini for a second: We don’t think the fact his view of the crisis may have evolved disqualifies him as an important, or even a prescient voice in this whole affair. His crystal ball may not work four years out, but then, most pundits are having a hard time elucidating what’s happening right now — On this, he’s clearer in his statements than just about anyone else.