Did Roubini Get It Right?

by Don Boudreaux on March 21, 2009

in Fooled by Randomness

Here's a letter that I sent several days ago to the Washington Post:

your "Conversation With Nassim Nicholas Taleb" (March 15), Mr. Taleb
rightly warns against taking seriously any specific macroeconomic
predictions made by economists.  But I'm surprised that Mr. Taleb
identifies Nouriel Roubini as an exception to this rule – as an
economist who "got it right" when it came to predicting today's
economic downturn.

Roubini has predicted economic Armageddon for
years now, so he did not accurately predict the timing of this downturn
unless you regard incessantly screaming "we're doomed" to be an
accurate prediction.  And he got important details wrong.  For example,
as recently as 2005 Roubini warned that the "hard landing" would occur
because foreign holders of dollar-denominated assets would start to
diversify out of these assets, leading (in his words) "to a sharp fall
in the value of the U.S. dollar [and] significantly higher U.S.
long-term interest rates."* None of these things has happened.

Donald J. Boudreaux


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