This one was fun. Excerpt:
Some economists — strict academics mostly–have long considered Roubini a quack. They
sneer at his approach, which is wide, deep, and deeply unconventional.
When he travels, for instance, he says his research includes talking to
"everyone from the airport cab driver all the way to the finance
minister." One prominent economist who studies recession indicators
recently slammed Roubini for his "subjective," "wild man" predictions
because they don't always rely on econometric modeling. And Roubini
certainly didn't help his case at an IMF conference in September 2006,
when he guesstimated the chances of a world recession at 70 percent
before offering, by way of explanation, that he had pulled the number
"just out of my nose."
I’ve yet to understand the attraction to Roubini, and I certanly don’t understand the worship. He’s been wildly wrong on several ‘predictions’ that from articles like this I would presume he should have known better than making if, indeed, he “intuits connections” and “understands better than anyone” the state of fundamentals. He was no more “right” here than many others who harped on the same building pressures, and I’ve seen no evidence that the much-accused fundamental behavioral breakdowns were anything he had railed against. Like many die-hard bears he was in the general vicinity of “predicting” a negative economic event (aside from that he had been predicting it for ages), and he was fortunate enough that it was a biggie.
Roubini did a better job of fleshing out and predicting this catastrophe than the Midas Men we were always getting to watch on CNBC: Alan Greenspan, Ben Bernanke, Dick Fuld, Chuck Prince, John Thain, and Kerry Killinger. The fact that the latter are are thoroughly disgraced or ridiculed should show evidence of how far THEIR predictions varied from reality.
Priors.
Thanks for the link, Tyler I enjoyed the article. But why did you choose to quote the most derogatory paragraph in the article? Do you agree with those economists who consider Roubini a quack? If so, you should say so and not hide behind a quote. That’s the sort of thing hack journalists do and I think you’re above that.
‘he had pulled the number “just out of my nose.”‘ Snot true.
It strikes me that econometric modeling is just a fancy set of rules for pulling numbers out of one’s nose.
No economist ever got rich making middle of the road predictions.
So, the guy who is about the only one to predict crash is a quack. But hundreds of totally useless academic parasites engaging in mental masturbation are respectable scientists?
Who, in his right mind, will not exchange all economics profs at George Mason for one Roubini?
Not to pick on George Mason, the same is true for all B- and B Universities and arguably for most A Universities.
So one pulls a final number out of his nose. Another gets a final number from a model he pulled out of his nose.
Maybe that model was built upon a previous model, and that one was built on one before it. But trace any of them back and you’ll end up in someone’s nose eventually.
Isn’t entirely possible that one day “cromulent” will be added to the dictionary?
Point being, use something long enough and no matter how silly the origins, its worthiness becomes increasingly accepted. Without being too offensive, I dare say much of religion falls under this category as well. Religion and the rational representative agent.
The metric is not who is right/wrong how many number of times. But whose model(not necessarily in the formal sense) of things turned out to be more accurate. You can have the right model and come up with wrong predictions. He saw how the housing bust would cascade into trillion(s) of losses. People were sneering at his numbers even after the bust. He predicted how it would play out.
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