The new celebrities of the financial crisis are savants like Krugman and Roubini
By JOYCE HOOI 21 September 2009
Perhaps one of the good things to have come out of the recession is that people have stopped paying attention to pop star Bono, where pressing world issues are concerned.
The new celebrities of the financial crisis have taken a tweed-blazer turn this year, as ivory tower economists see people hanging onto their every word about everything from mortgage rates to Minnesota holidays.
Economists have filled the void left behind by other discredited pundits, and the stars of Paul Krugman and Nouriel Roubini are shining the brightest.
‘Krugman has garnered a lot of respect. He doesn’t say cliched things. His viewpoint is justified by analysis that is sound,’ said Winston Koh, a professor of economics at Singapore Management University (SMU).
One measure of fame: Prof Krugman, a professor at Princeton with his own op-ed column in The New York Times, has received more hate mail this year than he ever has since 2004. This is no mean feat; in 2003, the professor received so many death threats that someone had to be paid to delete them from his email inbox.
When he isn’t calling US President Barack Obama’s stimulus package inadequate, he includes anecdotal entries about cycling trips and name-calling in which he brands history professor Niall Ferguson ‘a poseur’ - and the masses are paying close attention.
Before the recession, his blog used to attract about 20-30 comments per entry. This month, largely all of his almost-daily entries registered well over 100 comments - the highest being 396.
‘All the top economists have their own blog and are very accessible, compared to the past. They’re very good writers, appealing to laymen as well,’ said Prof Koh.
Having foreseen the impact of the housing price bubble despite Alan Greenspan’s stand to the contrary, Nouriel Roubini - also known as Dr Doom - has hit intellectual superstar status.
His blog entry on the reappointment of Ben Bernanke as chairman of the Federal Reserve drew 585 comments in August.
As part of a practice previously reserved for cult-status blogs, readers of the New York University professor’s blog now compete to be the first to post a comment.
What’s happening to economists today was played out in the past with a different group: stock analysts. There was a time when stock analysts had been perched atop the pedestal of oracles - their forecasts moving both markets and investors to anger.
The dotcom implosion in 2000 saw at least four analysts receiving death threats. In 2007, Canadian Imperial Bank of Commerce analyst Meredith Whitney made headlines when she received death threats after downgrading Citigroup to ‘market underperform’.
All has been quiet on the death-threat front for analysts this year, with CEOs becoming the new target of ire - a sign, perhaps, that analysts have waned in influence.
With the latest economic crisis extending beyond tanking stocks to the soundness of macroeconomic policy, the public has begun to worry more about their jobs and home loan interest rates than the state of their portfolios. In this respect, analysts could be finding themselves outclassed.
‘Analysts produce a view that translates into a trading strategy. Their analysis might not be as sound because they tend to rely on investment and market psychology. Even when they’re good, they flip-flop very often,’ commented a professor of economics at a local university.
Other players have been discredited as well. Henry Paulson, a former US Treasury secretary with an investment banking background, famously declared in 2007 that the sub-prime mortgage woes were not going to be a serious problem.
Even within the field of economics, some economists are more equal than others.
Jeffrey Sachs, who focuses on sustainable development and poverty alleviation, appeared on the Time 100 List of Most Influential People in 2004 and 2005, but failed to make it to this year’s list, unlike his peers - Messrs Krugman and Roubini.
‘There are trends and fashions in economics. Finance economics professors are a lot more quoted these days because that’s where the media think the experts are,’ said Prof Koh.
The current trend is a surprise to others in the industry who have longer memories that stretch back to when economists had gotten it wrong.
‘I thought economists lost some credibility with the downturn, with their being unable to predict it,’ said Shandre Thangavelu, an associate professor at the National University of Singapore’s (NUS) economics department.
He pointed out that in July, a group of British economists had the unprecedented experience of apologising to the queen of England for failing to foresee the crisis, pleading a ‘failure of the collective imagination of many bright people’.
Even so, CIMB-GK regional economist Song Seng Wun reckons that people looking to use economists as crystal balls will be disappointed.
‘Alan Greenspan was adored during his time; every word he uttered was dissected. Now, it’s Bernanke’s turn. But they are not gods; they are human beings,’ said Mr. Song. Mr. lan Greenspan has now been widely criticised for causing the US property price bubble.
‘Economics is not a science. Some days it’s correct, and some days it’s not.’
While the prospect of economists getting it wrong on some days might be most unsettling, the Keynesian adage - in the long run, we are all dead - is correct every day.
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The reign of tweed and elbow patches
The new celebrities of the financial crisis are savants like Krugman and Roubini
By JOYCE HOOI
21 September 2009
Perhaps one of the good things to have come out of the recession is that people have stopped paying attention to pop star Bono, where pressing world issues are concerned.
The new celebrities of the financial crisis have taken a tweed-blazer turn this year, as ivory tower economists see people hanging onto their every word about everything from mortgage rates to Minnesota holidays.
Economists have filled the void left behind by other discredited pundits, and the stars of Paul Krugman and Nouriel Roubini are shining the brightest.
‘Krugman has garnered a lot of respect. He doesn’t say cliched things. His viewpoint is justified by analysis that is sound,’ said Winston Koh, a professor of economics at Singapore Management University (SMU).
One measure of fame: Prof Krugman, a professor at Princeton with his own op-ed column in The New York Times, has received more hate mail this year than he ever has since 2004. This is no mean feat; in 2003, the professor received so many death threats that someone had to be paid to delete them from his email inbox.
When he isn’t calling US President Barack Obama’s stimulus package inadequate, he includes anecdotal entries about cycling trips and name-calling in which he brands history professor Niall Ferguson ‘a poseur’ - and the masses are paying close attention.
Before the recession, his blog used to attract about 20-30 comments per entry. This month, largely all of his almost-daily entries registered well over 100 comments - the highest being 396.
‘All the top economists have their own blog and are very accessible, compared to the past. They’re very good writers, appealing to laymen as well,’ said Prof Koh.
Having foreseen the impact of the housing price bubble despite Alan Greenspan’s stand to the contrary, Nouriel Roubini - also known as Dr Doom - has hit intellectual superstar status.
His blog entry on the reappointment of Ben Bernanke as chairman of the Federal Reserve drew 585 comments in August.
As part of a practice previously reserved for cult-status blogs, readers of the New York University professor’s blog now compete to be the first to post a comment.
What’s happening to economists today was played out in the past with a different group: stock analysts. There was a time when stock analysts had been perched atop the pedestal of oracles - their forecasts moving both markets and investors to anger.
The dotcom implosion in 2000 saw at least four analysts receiving death threats. In 2007, Canadian Imperial Bank of Commerce analyst Meredith Whitney made headlines when she received death threats after downgrading Citigroup to ‘market underperform’.
All has been quiet on the death-threat front for analysts this year, with CEOs becoming the new target of ire - a sign, perhaps, that analysts have waned in influence.
With the latest economic crisis extending beyond tanking stocks to the soundness of macroeconomic policy, the public has begun to worry more about their jobs and home loan interest rates than the state of their portfolios. In this respect, analysts could be finding themselves outclassed.
‘Analysts produce a view that translates into a trading strategy. Their analysis might not be as sound because they tend to rely on investment and market psychology. Even when they’re good, they flip-flop very often,’ commented a professor of economics at a local university.
Other players have been discredited as well. Henry Paulson, a former US Treasury secretary with an investment banking background, famously declared in 2007 that the sub-prime mortgage woes were not going to be a serious problem.
Even within the field of economics, some economists are more equal than others.
Jeffrey Sachs, who focuses on sustainable development and poverty alleviation, appeared on the Time 100 List of Most Influential People in 2004 and 2005, but failed to make it to this year’s list, unlike his peers - Messrs Krugman and Roubini.
‘There are trends and fashions in economics. Finance economics professors are a lot more quoted these days because that’s where the media think the experts are,’ said Prof Koh.
The current trend is a surprise to others in the industry who have longer memories that stretch back to when economists had gotten it wrong.
‘I thought economists lost some credibility with the downturn, with their being unable to predict it,’ said Shandre Thangavelu, an associate professor at the National University of Singapore’s (NUS) economics department.
He pointed out that in July, a group of British economists had the unprecedented experience of apologising to the queen of England for failing to foresee the crisis, pleading a ‘failure of the collective imagination of many bright people’.
Even so, CIMB-GK regional economist Song Seng Wun reckons that people looking to use economists as crystal balls will be disappointed.
‘Alan Greenspan was adored during his time; every word he uttered was dissected. Now, it’s Bernanke’s turn. But they are not gods; they are human beings,’ said Mr. Song. Mr. lan Greenspan has now been widely criticised for causing the US property price bubble.
‘Economics is not a science. Some days it’s correct, and some days it’s not.’
While the prospect of economists getting it wrong on some days might be most unsettling, the Keynesian adage - in the long run, we are all dead - is correct every day.
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