Unless you're deep in the financial industry you couldn't have possibly known the details of what was coming in 2008 in 2007. However you easily could tell, if you were paying attention, that something wasn't right in 2007.
Plenty of analysts and economists much smarter and more informed than me have been worried about the massive credit bubble we're in and the consequences of that popping.
While I agree, it would be far more interesting to know exactly what is going to cause the system to snap, it doesn't mean that observations that something is deeply wrong and we are very likely in for a lot of trouble are invalid "doomerism".
Additionally, what's your evidence that this will be less severe than 2008?
> Would it not be that the ones who saw it coming were really the experts?
No, because there are people that predict fiscal doom all the time.
* People predicted that 2016 would have a huge crash.
* People predicted that 2017 would have a huge crash.
* People predicted that 2018 would have a huge crash.
* People will predict that 2019 would have a huge crash.
* People will predict that 2020 would have a huge crash.
If there's a huge crash in 2019, are you sure the people that predicted the 2019 crash are geniuses? Perhaps some of them were simply lucky. You have to be super careful if you are going to go by a small sample of past predictions, because there are a lot of people that make a lot of predictions. Statistically, some of them will make predictions that are correct by random chance.
> With the proviso that nobody foresaw the housing crisis in its eventual form
Believe it or not, there were a bunch of us that did and took action. See The Big Short for some other examples.
Of course, nobody with a conflict of interest managed to see it (Ben Bernanke, Fed Chair, Mark Zandi, Economist at S&P which was rating the trash AAA).
That you can miss predicting the biggest economic event in three generations and still have a job as an economist is a testament to how broken that field is.
> How does that make any sense?
Absolutely zero. And the fact that nobody is doing time for what happened is itself a crime.
> Events like 2008 and 1929 and 1987 come out of nowhere as a surprise,
No, they don't. Lots of people, in pretty much every media outlet, were saying a collapse of the type that occurred, with very much the specific trigger (housing bubble collapse) that it occurred, was imminent for a couple years leading up to it in the run up to the 2008 collapse. Like every notable economic commenter from every different school that usually agree on nothing.
Maybe fee people were paying attention, but definitely lots of people were sounding the alarm.
> As bad as 2008? Nobody knows, but it wouldn’t surprise me.
The recency of 2008 has really warped people's brains. 2008 was the 2nd worst financial crisis of all time (maybe it would have been the worst if our fiscal and monetary tools were still at 1929 levels of sophistication). You should be extremely hesitant to declare that anything will even come close to it.
> This will go down as one of the biggest policy mistakes in Fed history.
The Fed largely caused the 2008 crisis by underestimating the effects of falling house prices on bank solvency.
What's crazy is that all I hear about in the financial press is how the Fed saved the economy after 2008. Conveniently omitted is that their miscalculations also caused the crash.
Whenever the Fed talks about finding a soft landing, I get nervous.
> I just can't get past the very first sentence. First, it ignores the realities of both economists and financial insiders who made attempts to blow the lid off of the ARM/toxic loan schemes - not unlike pre-Snowden whistle blowers who were equally ignored and erased from history.
The fact they were effectively silenced and ignored is largely because they were few in number.
The vast majority didn't foresee the scale of the disaster.
> Second, even as a 17 year old kid, in 2001, I wrote an economics paper about the impending housing collapse - only I was guessing 2005 not 2008 - based on ARM's; 103% financing with 0% down; and stated income.
If you can demonstrate this for a significant number of recessions [e.g. 5+], its relevant.
I pulled my money out in May of 2007 because I was pretty sure something was going to happen and threw it back in to basically double it...doesn't mean I believe it was abundantly obvious to everyone. The mere fact I could do that demonstrates it wasn't obvious.
The simple fact is, whenever there is a crisis, there is going to be a minority of Doomsayers who predicted correctly. However, the fact the majority was oblivious implies it was non-obvious and possibly chance that a specific Doomsayer was, ultimately, correct in his/her prediction for reasons beyond random chance.
2008 was bad because the collective banks of the US realized trillions in mortgages were money on the books that wasn't real and was never going to be real. The correction involved resetting said books and taking a few banks and a trillion dollars of US taxpayer money along the way.
What is the correction this time? All it would really be is a run on confidence in global financial markets. This has happened many, many times (and did happen in 2008 but it was a response to the insolvency of banks). It happened in 2000, it happened in 1993, it happened in 1980, etc.
If its just a correction in overvalued stocks, futures, and a contraction in loans and interest rates thats just a normal recession. We're due to have one, they happen all the time, and since there shouldn't be an influx of millions of displaced / homeless suddenly because this isn't the result of mass foreclosures on defaulting home loans it shouldn't be as disruptive this time. A lot of theoretical stock value gets wiped out, some people lose a lot of money, and then you get to start the cycle over again with rates back under 1% and the DOW down a a few thousand points from its current cresting highs.
> I could say that I saw this coming; the problem is that I’ve been seeing it coming for several years, and it keeps not arriving (and I don’t know if this is really it, even now.)
This is me as well (not that I would compare my predictive prowess to that of a Nobel prize-winning economist). I started predicting the 2008 recession in 2004 (I was right about the reasons, but obviously waaaay off on my timelines). Naturally, it wasn't until I gave up on trying to predict a time for the recession to hit that it finally hit.
Likewise, I've been predicting a permanent drop in the dollar's value since around 2005, when I started paying attention to the quiet movement to diversify oil transactions away from the petrodollar system.
I'm at the point now where I'm reduced to the unhelpful punt: it will happen if and when it happens. So of course the point at which I give up trying to predict when petrodollar hegemony fails would make a fine time for it actually to happen.
>"There are probably a large number of HN readers that have weathered the dotcom bust, the 2008 financial crisis, and the 2022 financial crisis."
The "2022 financial crisis"? That's not even a thing. Slowing economic growth and even a recession, should we enter one later this year does not constitute a "financial crisis."
> This is possibly the biggest financial crisis in the history of everything.
Isn't that a huge hyperbole? I really don't see how it could even remotely resemble anything at all what it was like in 2008. It's no more than a footnote in practically every single country other than the US (and there probably too).
> Only to those of us with other work to do, did it look like a flash crash out of nowhere.
The market crashed last year because of COVID. Nobody saw that coming.
Everyone has been predicting a major correction or recession every year for at least the past 6 years. Claiming that they predicted what was going to happen last year is pretty blatant confirmation bias.
People predict a recession every year, and then when one finally hits, they say "see, I was right! Ignore all the years where it didn't happen!"
There will be another correction in the future, we don't know when it will hit, and the same pattern will play out again.
And you complain about a statement containing no information?
The thing is, no one knows exactly when a crash will happen.
But some people know that one will happen say, within the next five years, and that it's going to be worse than 2008 and 2001 because the underlying problems have only been getting worse.
>You wait, this bubble is about to pop. Not a great time to have large financial obligations. I suspect this will make 2008 look like nothing
While I agree that a bubble is about to pop - I disagree with comparisons to 2008.
My personal take is that the current recession and impending pop will be for reasons different from 2008 - we have been making different mistakes. I also believe that 2008 was really big and I'm not certain the impending pop will be really big - just kind of big.
Who did see it coming? Are there any media outlets that reliability predicted financial crises?
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