Ten years ago (September 2005) I launched my website. To mark this anniversary, here are ten postings that I think got it right. Many of them are included in my book, The Economic Crisis: Notes From The Underground (2012).
1. Keynesianism: what it is and why it still matters (September 18, 2005). My first post. What was intellectually unfashionable back then is now in.
2. The Questionable Legacy of Alan Greenspan (October 16, 2005). Raining on the Maestro’s parade was not popular.
3. Winner’s curse: The Torment of Chairman-designate Bernanke (November 4, 2005). I suspect Mrs. Bernanke wishes Mr. Bernanke read this before accepting the job.
4. Two Views About a Possible U.S. Hard Landing: Foreign Flight versus Consumer Burnout (October 23, 2005). Nouriel Roubini predicted a hard landing caused by a dollar crash and rising interest rates [HERE], which never happened. My alternative hypothesis was a hard landing from consumer burnout due to debt exhaustion, which is closer to what transpired.
5. The Weak Recovery and Coming Deep Recession (March 15, 2006). Got most things right far in advance, but was wrong on the political willingness to accept massive budget deficits.
6. Meltdown Moment: What Must Be Done (March 10, 2008). What the Fed should have done to prevent the financial crisis; failed to do; and then did do after the horse had bolted. Here’s another post after the Lehman crisis titled “ Why Federal Reserve Policy is Failing ” (October 6, 2008). Governor Randall Krozner was kind enough to e-mail a thanks for sending it. I like to think it may have helped the Fed eventually get it right, albeit after massive damage had been done.
7. America’s Exhausted Growth Paradigm (April 11, 2008). An early prediction of stagnation, made before the idea was even a twinkle in the eye of a certain Mr. Summers. The full paper [HERE] concluded:
“Now, there is a grave danger that policymakers only focus on financial market reform and ignore reform of America’s flawed economic paradigm. In that event, though the economy may stabilize, it will likely be unable to escape the pull of economic stagnation. That is because stagnation is the logical next stage of the existing paradigm.”
8. European Monetary Union: An Old Keynesian Guide to the Issues (1996). Written in 1996, published in 1997, and posted in 2005. Not your generic optimal currency area critique of the euro. Instead, a detailed analysis of why the euro zone’s monetary and fiscal architecture was likely to produce the type of problems we have seen. From the published article:
“5.3 Will capital still be able to veto policy?
…First, financial capital may still be able to discipline governments through the bond market. Thus, if financial capital dislikes the stance of national fiscal policy, there could be a sell-off of government bonds and a shift into bonds of other countries. This would drive up the cost of government borrowing, thereby putting a break on fiscal policy (p.155-156).”
9. Euroland Is Being Crucified Upon Its Own Cross of Gold (March 18, 2010). An early (perhaps the first?) characterization of the euro as an analogue gold standard that promised to cause stagnation, high unemployment and fissures within the euro zone.
10. Investing in China: Fool’s Gold? (January 15, 2008). The title speaks for itself. Take a look at a 10 year chart of the Shanghai Composite Index.
And one for the road ahead:
11. The US Economy: Explaining Stagnation and Why It Will Persist (August 7, 2015). A prediction for the future to be checked on in ten years. Compare this with the “China as cause of global recession” hypothesis advanced by Willem Buiter.
Looking back, it’s not a bad record. Theory makes a difference. The right theory will get things roughly right: the wrong theory will get things woefully wrong. Now that’s a research assessment exercise that seems worth doing and might even shake the status quo a bit. Fat chance, however.