Saturday, February 21, 2009
There's a very good interview with Nouriel Roubini in today's Wall Street Journal - it's well worth a look and it's free. After talking about his contemporaries and how he was able to "connect the dots", he leaves one dot unconnected.
"People like [Robert] Shiller were very worried about the housing bubble. People like Steve Roach were worried about an economy based on asset bubbles leading to consumption bubbles that were unsustainable. People like Ken Rogoff talked about global imbalances in the current account deficit not being sustainable. Nassim Taleb has been worrying for a while about 'fat tail' events . . . . So lots of people signaled concern about things. I was one of those who put the dots together and thus gave a more fleshed-out picture."Uh... Easy money?
To Mr. Roubini, the most interesting question isn't the one of who got it right. Instead, he asks why we "over and over again, get into these periods of irrational exuberance, when not only is there an asset bubble and a credit bubble, but people believe these are sustainable over a long time -- Wall Street, policy makers, rating agencies, academics, journalists . . . ."
Those aren't hard dots to connect.
There's much more, including a well-deserved dressing down of the former Fed chairman.