Economists who predicted the crisis

We're told by conservatives and mainstream media that nobody could have predicted the crisis.

Here's a partial list:

Brooksley Born, 1996-8 Cassandra of the Derivatives Crisis.  Warned about unregulated derivitives, especially Credit Default Swaps and other Collateralized Debt Obligations.  Greenspan and his allies destroyed her agency as thanks for her prescience.

Sheila Bair (FDIC chair at the 2006-2011) warned of derivatives and initiated the first legal actions, in March 2007, against a subprime lender, and began advocating for mortgage restructurings shortly later.

Nouriel Roubini, September 2006 Dr. Doom.  Predicted a crash of the housing bubble, an oil shock, and a long, deep recession.

Robert Shiller: August 2005: Be Warned:  of the housing bubble.  says that we'll be seeing housing decline 40% and think it's a "soft landing" compared to what might have happened.

Paul Krugman: August 2005. Greenspan and the Bubble and That Hissing Sound. Describes the housing bubble and its causes, and predicts that we're in for a "rough ride".


What do these people have in common?  They are all Keynesians.   The truth is that no anti-Keynesian could have predicted the crisis, but quite a few Keynesians did.

More:  John Paulson now famously built funds that bet against the housing bubble, and made a pile.

Charlie Munger, Warren Buffett's long time business partner, pointed out in 2002 that unregulated derivatives are "a sewer, and if I'm right, there'll be hell to pay in due course"

Michael Burry made a fortune betting against derivatives and was able to explain why at the time.  Michael Lewis wrote a book about him and several others, The Big Short.

Senator Byron Dorgan (D-ND) spoke passionately on the floor of the Senate in 1999 against overturning Glass-Steagall:  "I think we will look back in 10 years’ time and say we should not have done this, but we did because we forgot the lessons of the past, and that that which is true in the 1930s is true in 2010".  Dorgan was one of only 8 senators who voted "No" on the deregulation bill (the Gramm–Leach–Bliley Act).  The timing of his prediction was almost perfect.