08 June 2013

What does it mean to have "predicted the crisis"?

Posted by Noah Smith

Since 2008, quite a lot of people have boldly claimed that they "predicted the crisis". Usually, the claimants use this "fact" to argue for the superiority of their economic school of thought, modeling approach, investing approach, or personal intuition. But what does it mean to have "predicted the crisis"?

First of all, there are different things that get labeled "the crisis". These include:

1. The big drop in U.S. housing prices that started in 2006-7.

2. The systemic collapse of the U.S. financial industry that began in 2008.

3. The deep recession and the long stagnation that began in late 2008.

Predicting one of these is not the same as predicting the others.

0 Comments:

Post a Comment

<< Home