Tuesday, September 14, 2010

Freefall Part 2

RTE's documentary about the property crash and banking crisis is available on this link. UCD's Morgan Kelly emerges as a somewhat prophetic figure from the documentary. He himself would generally say that he called the bust when it had become obvious it was going to happen. But it is clear that very few others saw it as obvious even by 2006 and that he took an enormous reputational gamble in coming off the fence so emphatically, accruing a large amount of powerful enemies in the process who would have completely and utterly thrashed him had his predictions turned out to be incorrect.  In particular, Morgan pointed out with crystal clarity the full implications of the Irish banking system's reliance on property and what the crash would do to bank balance sheets and the consequent effect this would have on the overall national financial position. Economists generally do not welcome introspection but we really need to have some sessions on what this bust has taught us about how Economics is taught and how Economists are embedded in public policy.

2 comments:

Mark McG said...

One thing it does show is that it's very difficult to challenge the prevailing orthodoxy, which in this country was revealed to have been dominated by self serving interests in almost every sector of society.

And even after the fact there’s always the argument that a broken clock tells the right time twice a day.

Martin Ryan said...

"Reasonable People Did Disagree? Optimism and Pessimism About the U.S. Housing Market Before the Crash":

http://url.ie/7hpq

A Federal Reserve Bank of Boston discussion paper: September 2010