Ten people who predicted the financial meltdown

The financial events of recent weeks have filled many of us with shock and panic. Surely no one could have predicted that we would be in this mess? Well, actually, they did. Here are ten people who saw the financial meltdown coming...

1. Vince Cable - deputy leader of the Liberal Democrats

Here is a question Mr Cable’s posed to Gordon Brown, then Chancellor, during Treasury Questions back in November 2003: “The growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level. What action will the Chancellor take on the problem of consumer debt?”

Mr Brown did not answer how he would solve the problem, merely replying that: “We have been right about the prospects for growth in the British economy, and the hon. Gentleman (Mr. Cable) has been wrong.”

2. Christopher Wood – chief strategist of CLSA, a broking firm in the Asia-Pacific Market.

In October 2005 Mr Wood wisely declared: "Investors should sell all exposure to the American mortgage securities market." In an interview in 2007, he said: "Some institutions have been behaving like leveraged speculators rather than banks… The UK economy is heading for a sharp shock. It just remains to be seen how bad."

3. Founders of www.stock-market-crash.net – website aimed at investors

The writers of this site claim that predicting crashes is, in fact, easy: “One of the greatest myths of all time is that market crashes are random, unpredictable events. The lead up to a market crash is often years in the making. Certain warning signs exist, which characterize the end of a bull market and the start of a bear market. By learning these common warning signs, you can liquidate your investments and prosper by shorting the market.”

4. Henry Weingarten - astrologer

Mr Weingarten is head of the Astrologers Fund, a New York firm that advises businesses on the basis of planetary movements. He forecast a major economic downturn in March 2007 – so hopefully his clients took note.

His website claims he has in fact made numerous successful predictions about worldwide financial affairs, including “both Mexican 1995 crises, the first 1995 dollar crisis, the 1998 oil collapse and 1999 recovery, and the decline of the Euro after its 1999 birth.”

5. Nouriel Roubini - economics professor

Aka Dr Doom, Dr Roubini is an economics professor at New York University. On September 7, 2006, at an International Monetary Fund meeting, he announced that a crisis was brewing. He said that the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.

Homeowners would default on mortgages, trillions of dollars of mortgage-backed securities would unravel worldwide and the global financial system would shudder to a halt. These developments, he said, would cripple major financial institutions like Fannie Mae and Freddie Mac.

As Mr Roubini stepped down, his host said: “I think perhaps we will need a stiff drink after that.” They do now.

6. Nikolai Kondratiev - Russian Marxist economist

In the early 1920s, Mr Kondratiev proposed a theory that Western capitalist economies have long term (50 to 60 years) cycles of boom followed by depression. These business cycles are now called "Kondratiev waves", or grand supercycles. He predicted an imminent dip, and he was proved right with the Wall Street Crash in 1929.

The current crisis may mean he is about 10 years out – but, still, not a bad prediction for a man who died in 1938.

From the archive: William Rees-Mogg on Kondratiev (1980)

7. Founders of Housepricecrash.co.uk – property website

HousePriceCrash.co.uk was established in October 2003 after its founders predicted “one of the potentially biggest economic boom bust events in living memory” was coming. Its aim, apparently, is to provide a “counterbalance to the huge amounts of positive spin the housing market receives in the main media”.

Whist there is not currently a lot of positive news about the housing market to counter, the site does provide a plethora of information, statistics and forums for those interested in the great house price crash.

8. Lord Oakeshott - Liberal Democrat Treasury spokesman

He may not have predicted the entire financial meltdown, but he did warn the Government of the possible collapse of Icelandic banks back in July. He said last week: “"Alarm bells were ringing all over about the Icelandic banks and the Treasury must have been blind and deaf not to hear them."

In a written question to the government in July, he asked: "What steps [have] the United Kingdom financial authorities taken to satisfy themselves, independently of the Icelandic financial authorities, of the solvency and stability of Icelandic banks taking deposits in the United Kingdom?”

Lord Davies, for the Government, replied that there was no concern about the liquidity or capital base of Icelandic banks operating in the UK.

9. Stephen Roach - senior executive at Morgan Stanley

In November 2004, Mr Roach predicted an “economic Armageddon”, in part due to the record US current account, trade and government deficits. His outlook was largely dismissed at the time.

Having being proved right, he recently went on to accuse central banks of being “asleep at the switch” in failing to stop the escalating crisis. “The lack of monetary discipline has become a hallmark of unfettered globalization,” he said.

10. Ron Paul - Republican Congressman

Back in September 2003, Mr Paul told a House Financial Services Committee that: “Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market.

“This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions.” Of course, if we are going to give Mr Paul credit, than we should also highlight the efforts of Peter Schiff, his economic advisor and long-time economic hawk.

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Comments

[american]

HousingPANIC in the US was on this since 2005, now http://sootandashes.blogspot.com

[dhome]

Forcasters??!!
Hell, even the New York Times of 29th of May 2005 was warning of a crash. Want a forcaster, try Raghu Rajan who, in August 2005 told Greenspan, Summers and other "economic" geniuses what would happen and why - to their faces at the US Fed's 2005 Jackson Hole symposium.
Or Bill Akman, a shorter who starting in 2004; warned and warned and then made billions when it all happened – just like he warned it would.
Or Bill Gross at Pimco.

My favourite list for The Wazzat Noise?? Award would come from:
•"I don't think we're headed to a recession," said George W. Bush January 11, 2008
•"I don't think I've seen any scenario where the American taxpayer needs to be stepping in with more taxpayer dollars," added Henry Paulson. March 4th, 2008.
•March 11th, the Treasury Secretary went on to explain that the fallout from sub-prime mortgages was "largely contained."
•From the report in the Wall Street Journal March 15th: “Paulson, a former chief executive of Goldman Sachs Group, repeated his view that the U.S. economy is fundamentally on sound footing and would dodge a recession."
•The very next day, Bear Stearns CEO Alan Schwartz told the world that his firm faced no liquidity crisis. In an exclusive interview with CNBC, he said the nasty rumors were unfounded: "We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion," he said. "As the year has gone on, that liquidity cushion has been virtually unchanged."
•That same week, SEC Chairman Christopher Cox added that his agency was comfortable with the "capital cushions" at the nation's five largest investment banks.
(Acknowledgement to Bill Bonner @ Daily Reckoning)
Good selection of fools there, could add Greenspan, Bernanke, Gramm, Rubin, Summers,………. Recognize some of those names? Yep, they are going to tidy up the mess made by a thing they did not see.

[k.j.]

we would"nt be where we are if currency was gold. paper and credit based currency systems give the governments opportunity to promise the citizens much more than country can afford and result is always this. just watch obama in action & he has not even been sworn in yet.all the politicians are busy robbing the prudent & frugal savers of this planet but savers have good habits to survive any adversity. watch out everybody else its gonna get very rough!!!!!

[S Davies]

Erm, yes the BNP leader should be high on the list for praise...for predicting that immigration will bring Britian to its knees...what an idiot

[John Bull]

What blatant political bias!

You include two LibDem politicians in your list but omit Nick Griffin, leader of the British National Party, who predicted this economic crash several years ago.

No wonder the BNP has Britain's most visited political website - everyone is coming to read the truth which the media and the other parties are trying to keep hidden!

[tony jaynes]

I am a subscriber to Elliott Wave International and Robert Prechter, in "Conquer the Crash" provided such warnings. Please, please, please, I beg you to read this book ten times and learn to think for yourself. The experts can't tell the truth and cause a panic or a bank run. The financial planners kept people in the markets and rode your portfolios to the ground while taking a monthly commission. How was that for the clients best interest at heart?

I got out of the markets several years ago and put my cash in a Treasurys-only money market fund. I also support the idea of burying your money in the back yard and buying gold and silver. I gambled with put options and had a beautiful 2008.

Good luck in 2009 and get ready to "burn the woods off" as the markets head much lower!!

[Mark Young]

I predicted it several years ago after William Rees Mogg first drew my attention to the impending crash in an article published eight to ten years ago. I took evasive action, sold my house and moved to the Czech Republic when the lemmings were moving to Spain. The pound is declining against the Czech Crown admittedly, but not as much as against the Euro. In any case all my major purchases have been made, and building work completed.

[Anne Bewey]

Dear Sir
I can hardly add up 2 and 2, but I've read "The Emporer's New Clothes" and see this story re-enacted time after time. Nobody got rich quick other than the fraudsters, and those who fell for it have only themselves to blame. However, I am disgusted by the lack of protection for UK taxpayers from the guys whom they pay for protection.
Yours

[Richard Head]

Nikolai Kondratiev's predictions involve capitalist booms are 50 to 60 years followed by downturns that recover in far shorter time frames.

Where was his prediction of the 70+ years of Russian depression, followed by collapse, that followed the Bolshevik Revolution?

It seems that every loser is a master of criticism.

[Douglas]

I first started reading warnings about a coming collapse in 1999 from US experts who warned that the vast increases in personal and government financial leverage was unsustainable and would lead to an almighty crash. To listen to politicians and economists claim they had no warning is incredible. What a bunch of liars!

[Biz]

Nick Taleb: " ...The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deem these events "unlikely""

[dissertation help]

Blogs are good for every one where we get lots of information for any topics nice job keep it up !!!

[ged manchester]

I worked in the chemical industry.Everything was tested.New tests were devised for new products regardless of cost. I read the obituary of a man who became the worlds leading expert on testing concrete. I would have thought tests for monetary products even more important

[john cornford]

where are there any predictions for the recovery (if any - the latter I mean !)

[rob dee]

It's not the coming depression that worries me, it's the Orwellian regulations the govt will impose to try and correct their mistakes. Contrary to what most believe it wasn't a lack of regulation which got us here. What got us here was lax monetary policy, implicit govt guarantees to irresponsible banks and the abandonment of "CAVEAT EMPTOR" on the part of investors, depositors, buyers, insurers etc.

Watch the legislators, we'll be lucky if we're still legally allowed to sneeze in a year or two!

[david]

I am a nobody but I also predicted house price boom and bust linked to lax lending policies, poor regulation as a result of reducing interest rates after Sept 11.

In June 2002 I wrote to Tony Blair, HM Treasury and the MPC. Would you like to see my e-mail and the replies?

[Andy]

A lot of people predicted it... It was an engineered collasp! People have been warning against this for YEARS now!

Ron Paul is a true living legend! Mass respect for the guy and his leval of honestly!

[J kaye]

The Investment Banks

[Karl Marx]

And what about me!!!

[Derek Clifton]

One that you missed was Malcolm Perry, a regular on the financial channel Blomfield, who clearly predicted "a meltdown situation soon" about two months before other pundits

[Ursula]

Raymond Merriman - one of the world's leading financial astrologers has predicted the actual financial situation many years ago.
I managed to convince my husband to take out his investments from the stock market in due time. Since, I have become his chief financial advisor...

[wolfgang]

Peter Schiff is also widely credited for predicting the economic crash

[jane simons]

DUH.............SURELY NUMBER 1 SPOT SHOULD GO TO THE MAN WHO SOLD FOXTONS ESTATE AGENCY?

[George C]

Tony Dye certainly deserves a mention (P Danon comment noted).

Very sad that he didn't live to see his convictions borne out. Reading one of the final reports (Jan 2007) from his "Contra Fund" hedge fund, he had 27% of the Fund short on Banks/Financial Services, 16% long on Oil/Gas and a further 16% long on Pharma. I dare say he and his investors would have become significantly richer had he lived to see the world post August 07!

[Chris Bovey]

David Icke also predicted this would happen.

[GERONIMO]

Ten people who predicted the financial meltdown??....Ten????

Make that at least 11, I saw/heard this fiasco coming round the corner with hobnail boots on years ago!

What surprises me is even the Queens advisers got caught napping!
So much for the "Experts"!

"Orf wiv their Eads"!

GERONIMO

[Gunnar Tómasson]

The crash of the post-Bretton Woods world monetary system could be seen coming back in the 1970s when its advent was welcomed by mainstream (Paul A. Samuelson) and monetarist (Milton Friedman) economic scholars alike. Only its timing and precise form of its collapse was uncertain, cf. the last two paragraphs of my letter to the editor of The Washington Post last September 20.

***

Your Sept. 20 editorial (’Day of Reckoning’) refers to “greedy Wall Street executives and the inattentive Washington regulators who enabled them to build what we now know was a financial house of cards.”

As a former senior IMF staff member (1966-1989) and critic of mainstream economics and The Washington Consensus, I have long viewed post-Bretton Woods world monetary arrangements as fatally flawed. In this respect, John Maynard Keynes cautioned: “Soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”

One such idea is Paul A. Samuelson’s “hypothesis that [a real-world market] system is in “stable” equilibrium or motion.” (Foundations of Economics, p. 5) For, when applied to policy-making, it implies that monetary stability is best served by the IMF, governments, and regulatory institutions getting out of the way of self-correcting market forces.

In fact, it is not rocket science to figure out that an ever-increasing ratio of world paper ‘wealth’ to real output is unsustainable. But, once the inevitable happens, those in authority will feign surprise and assert it could not have been forseen. In late 1996, therefore, I advised Fed Governor Laurence Meyer, inter alia, as follows:

“It is fair surmise that macro-economic forecasting models predicated on mainstream monetary thought, which have detected no signs of a global crisis during the rapid rise in the ratio of paper wealth to real output during the past quarter century, are once again setting policy-makers up for a nasty “surprise”.”

Also, in early 1997 I wrote to Professor Patrick Minford, economic adviser to Margaret Thatcher, concluding with respect to post-Bretton Woods world monetary arrangements that “[This] house of cards is certain to come crashing down.”

[David L.]

The late, great Bob Beckman is worth a mention. Those in possession of 'The Downwave' and 'Into the Upwave', would or should have been well prepared for the current crisis by judicious use of the information contained therein.

Essentially the books are an analysis of business and economic cycles identified by Kondratieff, Jugler, Kitchen, Schumpter and other economists. With benefit of hindsight (the books were written during the 80's) the timing and projections of some scenarios are a bit out but the fundamentals are sound.

From my own point of view it was a simple matter to calculate that that the 9 year (Juglar) cycle would peak in July 2007 and that the Kondratieff long wave debt cleansing period had had yet to happen. Which, of course, it now has with a vegeance.

As to who is to blame? well apart the lemming like greed and fear element that is always part the the various business and economic cycles I can do no better than quote the following from Bob Beckmans acknowledgements in 'Into the Upwave'

'And of course, I must acknowledge the contribution of governments the world over, without whose mindless meddling, rhetoric and propaganda, this book would not be mandatory reading for all.'

Says it all really.

[David Tolhurst]

In March 2000 I wrote a four page financial report predicting where we are today namely on the brink of a Depression. In February this year I sent it to the Bank of England's nine members on the MPC and five of it's advisors. My PS was "The world could well be sitting on a systemic financial meltdown" None replied. Kondratief was spot on and he would have been this time had not the Fed stopped the collapse from engulfing the world earlier.

[Dave aka littledavesab]

The reference to No 7. Founders of Housepricecrash.co.uk – property website

surprises me as many of their more gloomy members were effectively shut down by the HPC moderators.

The real HPC bears - Dr Bubb, cgnao and Goldfinger can now be found at

http://www.greenenergyinvestors.com/index.php?showtopic=3285&hl=

I highly recommend cgnao's MAJOR DERIVATIVE MELTDOWN ALERT thread which started 8/6/2008 in which he pretty much predicts the end of the financial world and the worrying thing is that everything he has predicted so far has come true.

Dr Bubb appears regulary on Commodity Watch Radio and Dr Bubb & cgnao have even been quoted in Moneyweek !!!!!!!!!!!!!!!

[Salty]

I predict there will be a bubble shortly following the bottom of the current market.

It will last a few years though and I can't say it's exact length.

Will I receive a big mention when it comes? That's the same theory as mentioning all these people who have been talking down markets for years.

Housepricecrash.co.uk have done that.

House pricecrash were predicting a crash tomorrow for the last 4 years. Even at the bottom of the current downturn if you had bought 4 years ago 90% LTV you wouldn't be in negative equity.

[richard]

You should add UK economist Hugo Bouleau to your list, author of "The Final Crash" published March 2007 and which has proved to be the most accurate prediction of all (see www.finalcrash.com)

[milan]

Finanční krize výrazně podkopává důvěru spotřebitelů a podnikatelů v ekonomiku Evropské unie. Důvěra se tak v říjnu snížila na nejnižší hodnotu od roku 1993. Její souhrnný index zároveň zaznamenal dosud největší meziměsíční pokles, když se propadl o 7,4 bodu na 77,5 bodu.

[Vince Farr]

I predicted it, and took action 2 years ago. Sold everything, house, car, business, even the furniture, and boat. How I'm house hunting, and buying up cheap stocks. woopee

[Torben Petersen]

My God!

No. 6: Nikolai Kondratiev wasn't a "marxist" economist. The poor guy was send to Gulag for being a liberal contra revolutionalist.

[Kevin. London.]

Eleven.

I predicted it a year ago.

[patrick]

Didn’t Warren Buffet refer to credit default swaps as being weapons of mass financial destruction (a few years previously)? Surely that warrants a top 10 listing. Has anybody out there managed to clone Mr Buffet?

[Jim Goulding]

"Ten people who predicted the financial meltdown"

You forgot about me.
2003 Author, of Winter is Coming.
http://www.jamesgoulding.com/wic.htm

Thanks,
Jim Goulding

[Richard]

House are not or should not be investmets; they are in fact places in which you live. Once you get that wrong the entire mess begins. By trying to profit off of what is basicly shelter we will all end up living in the streets.

[ian]

Citing the founders stockmarketcrash.net as one of the top ten,and obviously one of your "sources" is typical of lazy Google journalism. Is it a coincidence that that is the fourth ranking when you google "stock market crash". The website is a copy and paste google ad supported site that does not have any contact details, or authors cited.
This has happened before in an article about buying gold. Google buy gold and bullionvault.com comes at the top of the list.

Are you job sharing with your co-workers from the Sun ?

[Mark]

I'm very surprised that the late Bob Beckman has not received a mention.

Like Bob Prechter, his analysis involved Elliot Wave theory and studies of Kondratiev cycles.

I liked his approach which was based on data driving financial decisions rather than "current flavour of the month" which many
analysts seemed to follow.

I am biased as I made a nice stash of cash following his recommendations.

[pdubya]

My money is with Peter Schiff and Jim Rogers and buried in my backyard.

www.campaignforliberty.com

Keep up the fight, Ron.

[Russell Cavanagh]

Make that 11! I predicted all of this in my Live Journal "uneviedematelot" blog in April 2008 and in my Word Press "mean business" blog.
Maybe it helps I was a debt adviser in the not for profit sector for 10 years and knew all along that the debt bubble was entirely untenable.

[Basil Bell]

I predict it will all come back around again and then crash again. Remeber me, I said it first.

[Toby Birch]

With thanks to Rod who has already mentioned me. In April 2007 I published The Final Crash: Addictive Debt and the Deformation of the World Economy. At the time I was working for a Swiss Bank who didn't want me to be 'off-message' so I had to use a pseudonym (Hugo Bouleau). I am now managing a hedge fund based on the book's conclusions. I sent the book to ten leading journalists (including the editor of The Sunday Times) and the only one who gave me coverage at the time was Lord Rees-Mogg, although the Telegraph have since commented. Here's a tip for anyone who's interested in what to do next - start studying Islamic Finance.

[will]

i was advising my friends not to buy a house in 2005 as i was expecting a house price crash then.

it has also been obvious for a long time that what labour call regeneration is actually just papering over the cracks. consumer debt, new shops, house price inflation etc isnt exactly what you would call the basis of a sound ecconomy.

people are eager to blame this on the americans, and yes they are having just as big a financial crisis as we are but over the past 11 years they have produced global companies. google for example making billions of pounds of profit per year and while it is the most important dot com there are almost limitless silicon valley and seattle based companies snapping at their heels. have there been any british companies that have done anything like as well as that? Yahoo is currently pretty much a laughing stock, but even they are infinetly out of any british dot coms league.

these are simple things that the press and politicians never seem to comment on yet they are surely a sign that britainis doing nothing to keep up with our competitors?

[Ex Bank Manager]

Thanks, Ken.
A bag of crisps for my whippet would be nice as well.

[Tania Cheslaw]

Hi there,

The list missed me out :-)
I was asked by many therapy clients last year what I felt about the world's economy and I predicted our recession.
I feel it will last 18 months at its worst.

[Alex Lennon]

Come on guys. You missed out George Soros and Warren Buffet. They also predicted the coming derivatives crisis which you might want to start informing us about...

[malc pugh]

i predicted this on my website, accessible by typing lloyds bank birmingham to get the exact page, in 2006.
www.stiffsteiffs.pwp.blueyonder.co.uk