# Did anyone predict the sub-prime crisis and international credit freeze?



## Brendan Burgess

Lots of people predicted house price falls and crashes. But did anyone predict the following sequence: 

1) Widespread, massive sub-prime lending in America
2) Widespread, massive defaults on these loans
3) Massive write-offs by American and European banks on secutised products. 
4) Collapses in international banks
5) Banks refusing to lend to each other? 

People did predict that banks would reduce the credit to borrowers, but did anyone predict the collapses? 

Obviously, links to these predictions would be preferable to "I saw it coming" remarks.


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## Brendan Burgess

*Re: Did anyone predict the international credit freeze?*

Here is a prediction from on Askaboutmoney back in September 2006, but it's not anywhere close to what actually happened, although it does use the word "credit crunch for Irish consumers" 



> Low inflation Japanese style i.e. deflation a possibility in the US as the velocity of money is hampered by recession, a consumer retreat from unsustainable indebtedness and a credit crunch.



I have read on a few pages in this thread and I can't see that the point was developed any further.

brendan


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## JohnBoy

*Re: Did anyone predict the international credit freeze?*

This chap did

http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html



> *On Sept. 7, 2006*, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.


..and this chap

http://www.npr.org/templates/story/story.php?storyId=89123972

..and another fellow

http://www.telegraph.co.uk/finance/...he-man-who-predicted-the-subprime-crisis.html



> In recent months, Wood's stock has risen still further, largely as a result of his forecast in October 2005 which said baldly: "Investors should sell all exposure to the American mortgage securities market." A year before HSBC issued its first profit warning on the back of its exposure to US home-loan defaults, Wood had spotted stress fractures in the system which, during the past three months, have become fissures.




Not to mention those that actually profited from this bust including Goldman Sach and numerous hedge funds.


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## tyoung

*Re: Did anyone predict the international credit freeze?*

Paul Volcker ex chairman of the Federal reserve.




        ....We are buying a lot of housing at rising prices, but home ownership has become a vehicle for borrowing as much as a source of financial security. As a nation we are consuming and investing about 6 percent more than we are producing.

.........I don't know whether change will come with a bang or a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change.


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## Remix

*Re: Did anyone predict the international credit freeze?*

This, er, outspoken guy saw the subprime meltdown coming

So long, suckers. Millionaire hedge fund boss thanks 'idiot' traders and retires at 37



> The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged "idiots" and thanking "stupid" traders for making him rich.
> 
> Andrew Lahde's $80m Los Angeles-based firm Lahde Capital Management in Los Angeles made a huge return last year by betting against subprime mortgages.
> 
> "The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking," he wrote. "These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government," he said.
> "All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."


 
EDIT: just noticed this article was posted yesterday by GeneralZod. Didn't nick it from him, honest! Got it from www.drudgereport.com


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## ubiquitous

*Re: Did anyone predict the international credit freeze?*



> ... a consumer retreat from unsustainable indebtedness and a credit crunch.



Of course he's wrong. He should have said


> ... a credit crunch and a consumer retreat from unsustainable indebtedness


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## JohnBoy

*Re: Did anyone predict the international credit freeze?*

To be fair to Brendan no one appears to have been able to forecast the freezing of money markets and the extent to which the financial system of the developed world is only operating because of massive state intervention/support. So that basically takes care of point 5.

Points 1-4 were resaonably predictable given how much leverage there was in the system and how poor underwriting standards were (and not just in the US). Lots of academics, journalists (the FT/Economist) and financial insiders are on record for expressing grave concern at financial developments over the past few years.

Lots of hedge fund managers started to position themselves as early as late 2004. Many US institutions and hedge funds started selling Irish equities in mid/late 2006. Goldman Sachs managed to extract itself from the worst of this mess in time (alledegly selling lots of the toxic junk to UBS). The Spanish central bank forced the Spanish banks to build up provisions in anticipation of a property crash.

I believe that since the general public in most countries affected by the credit crunch did not really become aware of the seriousness of the situation until fairly recently (say within the last 6-8 months), there is a widespread belief that no one saw this coming. This is patently untrue. Lots of people saw the financial imbalances and understood full their consequences. No one was able to predict the exact path of the crisis, but that there would be a crisis was never in doubt.


The scale of private sector indebetness in the US, UK, Spain and Ireland was not a secret. House prices in the high-debt countries had massively overshot every single valuation metric. The size of the financial sector profits as a share of GDP was also a potent warning sign. Our own David McWilliams started sounding alarm bells back in 2001/2002. 

The real concern is that those people who were in a position to do something about these problems ended up doing nothing.


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## tyoung

*Re: Did anyone predict the international credit freeze?*

Good post Johnboy

I would also mention Stephen Roach, for many years chief economist at Morgan Stanley and also James Grant of Grant's Interest Rate Observer.
But for sheer doggedness and dedication Doug Noland surely takes the prize. Every Friday night he has been following the excess of the credit markets on his Credit Bubble Bulletin at Prudentbear.com.
Here's an article from 1999!

[broken link removed]

Here's his most recent article.
[broken link removed]

As to why it was missed here's a profile/interview in the most recent Economist with Jeremy Grantham, another individual who saw it coming.

http://www.economist.com/daily/columns/businessview/PrinterFriendly.cfm?story_id=12453382


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## Duke of Marmalade

*Re: Did anyone predict the international credit freeze?*

I can't produce the links but Ian Paisley predicted this cataclysm as an inevitable retribution for the cult of 24/7 and the abandonment of the Sabath. He didn't of course predict it in points 1 - 5 format.

_tyoung_ has produced an incredible link to an article by Paul Vocker in April 2005 when everything looked rosy. Consider this snippet:


> At some point, the sense of confidence in capital markets that today so benignly supports the flow of funds to the United States and the growing world economy could fade. Then some event, or combination of events, could come along to disturb markets, with damaging volatility...


He like Paisley couldn't see exactly where or how the wheels would come off but what he could sense is that even a puncture was enough to send the world crashing.


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## WaterSprite

*Re: Did anyone predict the international credit freeze?*

The ban on the discussion of house prices applied to all, not just those who thought that the housing bubble was in imminent danger of bursting.  So the accusations of hypocrisy are unfair IMO.

In any case, let's get *this* thread back on track.  I think it would be very useful to have a review of what experts said what and when, even just to see if there is any real "science" to the world of economic statements/forecasts.  If I saw that someone really had an educated and, ultimately correct view on the predictability of the current crises, then I'd be listening to them now that's for sure!  It amazes me that some in the financial industry and economic "experts" got it so spectacularly wrong and are now throwing up their hands saying "well, no-one else saw this coming, how was I supposed to?"  

So who does know what they are talking about when it comes to economic matters?  That's what I want to know.

Sprite


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## sfag

*Re: Did anyone predict the international credit freeze?*

some very interesting reads there. Cheers.


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## charttrader

*Re: Did anyone predict the international credit freeze?*

Huh?  It's astonishing that people are questioning as to whether anyone predicted massive sub-prime defaults, a financial crisis, etc.  This was no black swan - many people called it.  

'Roubini had announced at a meeting of the International Monetary Fund that in the coming months the US would be facing a *once-in-a-lifetime housing crisis*, an oil shock, sharply declining consumer confidence, *homeowners defaulting on mortgages and trillions of dollars of mortgage backed securities unraveling world wide*.  He was dismissed as a pessimist and professional naysayer. 
This was in September of 2006!'
http://activerain.com/blogsview/632587/Professor-Nouriel-Roubini-AKA

Barry Ritholtz has been blogging about such a crisis for years and recently laughed at the suggestion that no-one saw it coming.
'*A significant number of economists, strategists, academics and blogs all forecast the housing disaster way way in advance. Not only me, but Nouriel Roubini, and James Grant and John Paulson and Jim Rogers and Peter Schiff, and lots of sites: Calculated Risk and The Mess that Greenspan Made and ML-Implode and Mish and Housing Doom and NJ Real Estate Report and iTulip, and, well, you get the idea.*'
http://bigpicture.typepad.com/comments/2008/10/sp-its-not-our.html#comments

John Paulson made a profit of 590% last year on the bursting of the subprime bubble.

Jeremy Grantham in 2007 -  
'In 40 years I believe I have been offered three obvious and extreme opportunities to make - or at least save - money. The first in 1974 was presented by the extreme undervaluation of small cap stocks in absolute terms... 
The second opportunity was in 1999 and 2000 when the extraordinary overpricing in absolute terms of growth stocks, especially technology and the internet....
Well, the third great opportunity is now upon us in my opinion, and that is anti-risk.

I have been trying to come up with a simple statement that would capture how serious the situation is for the *overstretched, overleveraged financial system,* and this is it: In 5 years I expect that *at least one major “bank” (broadly defined) will have failed and that up to half the hedge funds and a substantial percentage of the private equity firms in existence today will have simply ceased to exist.* ... 
The feeling I have today is that of watching *a very slow motion train wreck.*
Earlier that year Grantham described the "first worldwide bubble in history covering all asset classes. 
Everything is in bubble territory, he says. 
Everything. 'The *bursting of [this] bubble will be across all countries and all assets.'*

[broken link removed]

British strategist Christopher Wood - 
http://www.telegraph.co.uk/finance/...he-man-who-predicted-the-subprime-crisis.html

Mike Panzer, author of Financial Armageddon, was spot on, (*below link well worth reading)*
[broken link removed]

Closer to home, Charlie Fell has been banging on about the seriousness of the situation for a long time (Irish Times every Friday) and warning investors to steer clear of the market (in last few weeks, he's turned long-term bullish).  

Many, many others.

Predictive abilities aside, it's been obvious for all of 2008 that things were very serious.  The notion that the FR did all he could seems surreal to me.  Finally, many AAM moderators/posters are devoted to the outdated efficient market theory, feeding questioners the notion that 'timing the market is a mug's game' and other such inanities.  Markets were too ready to believe ‘the worst is over us’ line and the bear market rally in April/May (when the Dow came within 7/8% of its all-time high!) offered an ideal opportunity for investors to move to cash (or at least reduce their exposure) and therefore avoid the massive falls of recent weeks.  Buying at the bottom is a fantasy but avoiding the worst of the carnage was very doable.


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## ajapale

*Re: Did anyone predict the international credit freeze?*

Ive removed some OT posts. But dont worry you can find them here.
Ive removed some more OT posts .


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## Brendan Burgess

*Re: Did anyone predict the international credit freeze?*

Hi AJ

You have great patience. 

I have deleted all the other off topic posts about who predicted the housing bubble in Ireland, who predicted the stockmarket crash, who predicted a credit crunch. 

I asked at the start of this thread: 



> Lots of people predicted house price falls and crashes. But did anyone predict the following sequence:
> 
> 1) Widespread, massive sub-prime lending in America



I have left all the posts which provided very useful answers to these questions. Thanks to all for providing the links.

Brendan


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## z109

Dick Bove of Punk Ziegel also predicted that a sub-prime crisis would turn into a credit crisis in July 2007:
[broken link removed]


> Stocks are plummeting. Loan deals are faltering and banks, unable to pass the buck, are getting stuck holding on to a lot of unwanted junk. How will it all end?
> 
> Very badly, warns analyst Richard Bove, who has followed the banking and brokerage industries since the 1970s. When banks can’t move their inventories of corporate loans, it clogs up their balance sheets. That can limit their ability to extend new financing. And that could mean, according to Bove, a decade-long, Japanese-style credit crisis.


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## diroche

Were David McWilliams predictions not good enough for you?

From thread about discussion on Ray Darcy show about the economy:


DavyJones said:


> Anyhow Brendan was being more up beat and David wasn't. Ray asked David what the title of his next book would be and Brendan quickly said "I told you so" much to the delight of the team and listeners no doubt, It certainly made me giggle. It was the last say on the interview and you could faintly hear  David trying to retort unsuccessfully. It was very funny indeed. Well done Brendan.


http://www.askaboutmoney.com/showthread.php?t=88953


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## diroche

There is an article here about Satyajit Das, who predicted the credit crash & which includes a useful explanation of how CDOs work:

http://articles.moneycentral.msn.co...ls/AreWeHeadedForAnEpicBearMarket.aspx?page=1


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## Brendan Burgess

That was only a few months ago? I asked if anyone had predicted the sub-prime crisis in the States. Maybe David McWilliams did predict it. I just didn't hear him do so.

Brendan


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## Superman

Brendan said:


> I asked if anyone had predicted the sub-prime crisis in the States.


The guys over on itulip.com did and have been amongst the most vociferous and astute analysists of the problem.  
It's an interesting website, in that it was originally set up (in '98) to point out the dot com bubble(it was set up deliberately as a dot com public company, with no form of income with the word "tulip" in the title referring to the tulip mania in the Netherlands.  Ironically the share price went up following the IPO.).  It even accurately predicted the top and collapse date for the dot com bust.  They then took it off line in August 2002 with a warning about the emerging housing bubble, and brought it fully back on-line in January 2004 to point out the upcoming housing crash
Here is a quote from the article of January 29th 2004:
_*"Collapsing housing bubbles, on the other hand, are characterized by illiquidity, a sudden collapse in transactions.* *Buyers and sellers seem to disappear. *"_


The analysis grew more sophisticated from that point on to encompass other areas of the FIRE economy based on the housing bubble.


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## Duke of Marmalade

[broken link removed] I found this paper on the Central Bank's website. It is a stress test done in 2006. The interesting section is the stress test on liquidity risk. The extreme test was that 30% of *non bank on demand* retail depositors would ask for their mony back. The system appears to meet the stress with no bother.

What is not tested at all is if *inter bank* depositors demanded back their money - i.e. the credit crunch. I suppose the thinking was that if Bank B refused to lend to Bank A then its surplus liquidity would be in the Central Bank who could simply step in as lender of last resort. What seems to have been missed is that Ireland was hugely dependant on foreign inter bank lending.


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## Brendan Burgess

Hi Superman

That is a very clever and interesting site. 

But a lot of people predicted the collapse of the housing bubble.

The other links mentioned earlier actually highlighted the sub-prime crisis and the securitization of sub-prime loans.

Brendan


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## Brendan Burgess

Hi Duke

Another interesting document. It does seem that the Financial Regulator has been very conscious of the possibility of a run on a bank. I put down a motion of no confidence in Michael Fingleton 5 years ago and the Central Bank stopped it on the grounds that even discussing it might cause a run on the Irish Nationwide. At the time, I thought that this was ridiculous. Now I can see their point. Although the risk was remote, if it did cause a run, the effects could have been disastrous. 

I wonder if interbank lending has ever frozen before?  If so, then the regulators worldwide should have had a plan for it. 

Brendan


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## z109

Brendan said:


> I wonder if interbank lending has ever frozen before?  If so, then the regulators worldwide should have had a plan for it.


It has happened in any number of the currency crisis economies - Argentina, Thailand, Korea, Indonesia etc. 

It also happens in countries where property bubbles burst - Finland and Sweden being our nearest neighbours where the banking system effectively had to be rebuilt through: guarantees, capital supports, nationalisation, a national 'bad' bank depending on how bad the individual bank was.

An additional problem with this crisis is that a lot of transnational banks are bigger than their home governments.


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## jrewing

In 2006, in "The Black Swan", Nicholas Taleb wrote:
Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks – when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur ….I shiver at the thought.​The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deem these events "unlikely".
​


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## OPTIMUM

seemingly the old brush over predicted it...Donald Trump - wonder are his bankers sweating these days with all his NY real estate and casinos!!
[broken link removed]


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## PaulHoughton

Brendan said:


> I wonder if interbank lending has ever frozen before?


I think I remember Dublin interbank rates getting exetremely high in about 1992-1993. Business banks were suddenly offering very high short term rates to retail depositors.


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## webtax

This video of someone on fox news predicting the depression in 2006-07 being laughed at is amusing in retrospect (as are the bulls shocking share tips!):

http://www.youtube.com/watch?v=2I0QN-FYkpw


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## johnvbrennan

Brendan said:


> Lots of people predicted house price falls and crashes. But did anyone predict the following sequence:
> 
> 1) Widespread, massive sub-prime lending in America
> 2) Widespread, massive defaults on these loans
> 3) Massive write-offs by American and European banks on secutised products.
> 4) Collapses in international banks
> 5) Banks refusing to lend to each other?
> 
> People did predict that banks would reduce the credit to borrowers, but did anyone predict the collapses?
> 
> Obviously, links to these predictions would be preferable to "I saw it coming" remarks.



A guy called Peter Schiff saw the troubles in the US economy way back in 2006. The following video has turned out to be extremely accurate and is definitely worth watchin:

http://au.youtube.com/watch?v=LfascZSTU4o


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## MacTheKnife1

Peter Schiff predicted it and was laughed off US TV by a number of "analysts". 

This is really funny from youtube. Note the dates of the various newsclips. This guy takes an awful lot of flak from the journalist but he sticks to his story consistently:

http://www.youtube.com/watch?v=2I0QN-FYkpw&eurl=http://scvtalk.com/


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## charliemacck

I do not think anyone could have predicted the downturn we saw personally. It is completely unprecendented and largely based on negative sentiment and also people applying for mortgages they could not afford in the long term. It is simply people following the crowd and you cannot predict this, this is called chaos theory. The only people who will profit from this kind of discussion are the doom and gloom merchants. People from the media will only use such discussion for their own aims.


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## z109

charliemacck said:


> I do not think anyone could have predicted the downturn we saw personally.


Except they did - read some of the posts above.


> It is completely unprecendented


No it isn't - look at Japan, Finland, Sweden, Hong Kong, Korea, Iceland...


> and largely based on negative sentiment and also people applying for mortgages they could not afford in the long term.


So which is it? Sentiment or unaffordable debt? One is fluffy and unpredictable; the other is subject to analysis and its outcomes are predictable.


> It is simply people following the crowd and you cannot predict this, this is called chaos theory.


Again, you are contradicting yourself. Chaos theory is deterministic - predictable, so either you can predict it or you cannot. Make up your mind.


> The only people who will profit from this kind of discussion are the doom and gloom merchants. People from the media will only use such discussion for their own aims.


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## charliemacck

yoganmahew said:


> Except they did - read some of the posts above.


 
Brendan has been quite clear in this thread that noone could have foreseen the exact events. Just crying wolf constantly is very different. Anyone can do that. The financial experts in this forum did not see this coming.



> No it isn't - look at Japan, Finland, Sweden, Hong Kong, Korea, Iceland...


 
Why do people keep saying Ireland is like these countries? We are very different from them. Why are you comparing us to communist dictatorships?


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## z109

charliemacck said:


> Brendan has been quite clear in this thread that noone could have foreseen the exact events. Just crying wolf constantly is very different. Anyone can do that. The financial experts in this forum did not see this coming.


 Now you're just having a laugh. 

The point about 'crying wolf' that you seem to have missed is that most of these people were warning about the risk of asset mispricing (bubbles) and the underpricing of risk. This is not 'crying wolf', this is identifying a danger. The logical consequences of the risk (which some of the commentators spelled out) are the bursting of asset bubbles, a credit shock, severe stress for the financial system, a bleed over from this into debt-laden consumers, resulting in a severe recession in the real economy.



> Why do people keep saying Ireland is like these countries? We are very different from them. Why are you comparing us to communist dictatorships?


Er, which communist dictatorship in the list I gave would that be? What you should be asking yourself is why should Ireland be different? What law of financial gravity doesn't operate here that operates everywhere else?


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## charliemacck

yoganmahew said:


> Now you're just having a laugh.
> 
> The point about 'crying wolf' that you seem to have missed is that most of these people were warning about the risk of asset mispricing (bubbles) and the underpricing of risk. This is not 'crying wolf', this is identifying a danger. The logical consequences of the risk (which some of the commentators spelled out) are the bursting of asset bubbles, a credit shock, severe stress for the financial system, a bleed over from this into debt-laden consumers, resulting in a severe recession in the real economy.


As The Boss says, lots of people cryed word but noone actually could have forseen the sequence of events, are you disagreeing with his opinion. At the time noone considered these assets overpriced we were told that Ireland had sound fundamentals. I still believe this is the case and that much of the negative growth we have seen is in peoples minds. We just need to pull together and help out those in trouble at this time. 

And the communist dictatorship I am referred to is of course Korea.


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## Superman

charliemacck said:


> At the time noone considered these assets overpriced


I did.


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## Conan

I would expect nothing else from Superman! It must be the x-ray glasses.


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## Sunny

charliemacck said:


> As The Boss says, lots of people cryed word but noone actually could have forseen the sequence of events, are you disagreeing with his opinion. At the time noone considered these assets overpriced we were told that Ireland had sound fundamentals. I still believe this is the case and that much of the negative growth we have seen is in peoples minds. We just need to pull together and help out those in trouble at this time.
> 
> And the communist dictatorship I am referred to is of course Korea.


 
I doubt he meant North Korea somehow. Lots of people were saying assets were overpriced despite the fundamentals. I wasn't one of them and I was wrong. It was a bubble and they were right. What do you mean negative growth is in peoples minds? Thats just bizarre


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## Sunny

charliemacck said:


> I It is simply people following the crowd and you cannot predict this, this is called chaos theory.


 
You are contradicting yourself here or else you don't understand chaos theory


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## z109

charliemacck said:


> And the communist dictatorship I am referred to is of course Korea.



That's right, the two Kims have had many a housing bubble fueled by an easy credit policy... or cast your eyes south over the border to capitalist state with the 13th largest economy in the world...

So, tell me again how Ireland is different to all these countries. Apart from the people of course, with their sunny (sorry sunny) optimism in the face of disaster.


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## charliemacck

yoganmahew said:


> That's right, the two Kims have had many a housing bubble fueled by an easy credit policy... or cast your eyes south over the border to capitalist state with the 13th largest economy in the world...
> 
> So, tell me again how Ireland is different to all these countries. Apart from the people of course, with their sunny (sorry sunny) optimism in the face of disaster.


 
Brendan is a financial wizard a major shareholder and the brains behind a very successful financial website (as in this one). I think even you will admit this. And he did not see this chain of events. Can you tell me your qualifications and why you think you are smarter than him. Otherwise I think I will be paying more attention to his opinion on these matters thank you.


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## gaius

charliemacck said:


> largely based on negative sentiment and also people applying for mortgages they could not afford in the long term.


A little bit more negative sentiment at the time would have prevented people from getting "mortgages they could not afford in the long term".

Nice try though.



charliemacck said:


> Brendan is a financial wizard a major shareholder and the brains behind a very successful financial website (as in this one). I think even you will admit this. And he did not see this chain of events. Can you tell me your qualifications and why you think you are smarter than him. Otherwise I think I will be paying more attention to his opinion on these matters thank you.


 I think Brendan will be blushing at this point.


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## z109

charliemacck said:


> Brendan is a financial wizard a major shareholder and the brains behind a very successful financial website (as in this one). I think even you will admit this. And he did not see this chain of events. Can you tell me your qualifications and why you think you are smarter than him. Otherwise I think I will be paying more attention to his opinion on these matters thank you.


History is littered with smart people who went bust. Ask the nobel prize winning economists behind Long-Term Capital Management. They didn't see it coming either. The people on the other side of the trade did. Someone always sees it coming and profits from it. Some see it coming and despite this lose out (look at Peter Schiff). Some don't see it coming and still win. But there is always someone out there, most likely classified as a nut when he points out the risks, that sees it coming.

I am a student of past events. There is nothing new under the sun. If history does not repeat itself, it at least rhymes.

By the way, I am not having a poke at Brendan. Very few people saw it coming. This is not the same as "no one saw this coming".


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## charliemacck

yoganmahew said:


> I am a student of past events. There is nothing new under the sun. If history does not repeat itself, it at least rhymes.
> 
> By the way, I am not having a poke at Brendan. Very few people saw it coming. This is not the same as "no one saw this coming".


 
I do not see how the Boss could consider that anything other than a big poke in his eye as are you are suggesting he is not sensible or clever enough to know that history repeats or is not a good student of past events. That is what you are saying now. Would it not be better for you to admit it is more likely that you simply got lucky hanging on the Ginger Fella's coattails for the past 15 years. A stopped clock is right once a day and all that.


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## Doozie

This thread is becoming a little surreal, I'm not sure how you have construed other people's posts as a personalised attack on Brendan, Charlie. In any event, I'm sure that Brendan would be perfectly capable of defending himself if this was necessary.

It seems to me that the thread commenced with a very interesting question rather than an expressed viewpoint, to which the general response has been that each of the components of the current crisis were indeed predicted by various commentators, if not in the exact sequence that Brendan used in asking the question. The nature of the crisis is complex and by it's nature difficult to predict.

Whether the predictions which posters have linked to are an indication of realism and honesty or simply "stopped clock syndrome" presumably depends on readers personal perspectives, but in any case the links make for some very interesting reading indeed.


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## webtax

This report by Moran Kelly in April 07 is accurate in term of its predictions on the effect of an abrupt fall in housing construction activity on the economy and the likely fall in house prices.
[broken link removed]


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## charliemacck

Doozie said:


> This thread is becoming a little surreal, I'm not sure how you have construed other people's posts as a personalised attack on Brendan, Charlie. In any event, I'm sure that Brendan would be perfectly capable of defending himself if this was necessary.
> 
> It seems to me that the thread commenced with a very interesting question rather than an expressed viewpoint, to which the general response has been that each of the components of the current crisis were indeed predicted by various commentators, if not in the exact sequence that Brendan used in asking the question. The nature of the crisis is complex and by it's nature difficult to predict.
> 
> Whether the predictions which posters have linked to are an indication of realism and honesty or simply "stopped clock syndrome" presumably depends on readers personal perspectives, but in any case the links make for some very interesting reading indeed.


 
Well, Doozie, as the leader of this forum I am sure that Brendan wants to maintain a distance from the slings and arrows of little bears. He is well to stay above this kind of squabble and leave it to stalwart yeoman like myself to take on these bugbears of misery. The above link is a good example, it was just yet another fella saying at great length as these academics are want to do that house prices will fall because they fell everywhere else before. As the saying goes would you jump off a cliff because your friend did it. As I said before if you say Ireland is like Japan sure that means we'll shortly be invading Manchuria. There were and are fundamental differences between Ireland and the rest of the world. Brendans question was "Did anyone predict the sub-prime crisis and international credit freeze?" and noone has proved this. If anyone had Brendan would have agreed with them.


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## charliemacck

SPC100 said:


> Charlie what is the point you are trying to make? or is aim simply controversy.


 
The point I am trying to make it that so far noone has proved the Boss wrong. Noone forsaw the current situation. I'm not sure what is so "controversial" about that except if you belong to the Ginger one's fan club.


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## Sunny

charliemacck said:


> As the saying goes would you jump off a cliff because your friend did it. As I said before if you say Ireland is like Japan sure that means we'll shortly be invading Manchuria. There were and are fundamental differences between Ireland and the rest of the world. Brendans question was "Did anyone predict the sub-prime crisis and international credit freeze?" and noone has proved this. If anyone had Brendan would have agreed with them.


 
Bizarre post.

What made Ireland and its housing bubble so different to the rest of the world? What are these fundamental differences that you keep talking about? Very few people (but there were some) saw the credit crisis coming but Irelands burst housing market has nothing to do with the sub-prime mess in the States and the subsequent credit crisis. Irelands property bubble burst all on its own just like the UK's, Spains, Sweden, Japan, Australia etc etc etc. A bubble is a bubble no matter where in the world it is. I personally thought we would get lucky and have a so called soft landing but I didn't forsee the economic conditions in this country turning so quickly, an incompetent government high on stamp duty taxes and of course the subsequent credit crisis (even though I was predicting things to get this bad and worse once the crisis began even as politicians and central bankers were saying it was a blip). I was wrong but can readily admit that there were plenty of people who were right.


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## MortgageGuy

Fred Harrison in the UK wrote a book in 2004 called 'boom bust the depression of 2010' prediction roughly how things would turn out.

Peter Schiff in the USA called it back in 2005 and there are videos of him at the mortgage bankers association annual meeting in 2006 and he talks all about the debt unwind which will result in an absence of credit etc. almost like he had a crystal ball at times! those vidz are on youtube, there are 7 of them each is about 8 mins long.


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## Raskolnikov

charliemacck said:


> Noone forsaw the current situation.


Look, Charlie lad, that is simply not true. Watch this video, seriously.

http://www.youtube.com/watch?v=2I0QN-FYkpw

It's hilarious listening to some of the opposing viewpoints. "Savings are down but wealth (home values) is way up", "House prices will go up by a normal (ha!) 10% next year", "Sub-prime is a tiny blip", "DOW upto 16,000", etc. The arrogance and the mockery that Schiff was facing was hilarious.

He was right though! Housing was screwed, financials were a horrible investment, non-mortgage based credit would dry up too, etc.


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## charliemacck

Raskolnikov said:


> Look, Charlie lad, that is simply not true. Watch this video, seriously.
> 
> http://www.youtube.com/watch?v=2I0QN-FYkpw
> 
> It's hilarious listening to some of the opposing viewpoints. "Savings are down but wealth (home values) is way up", "House prices will go up by a normal (ha!) 10% next year", "Sub-prime is a tiny blip", "DOW upto 16,000", etc. The arrogance and the mockery that Schiff was facing was hilarious.
> 
> He was right though! Housing was screwed, financials were a horrible investment, non-mortgage based credit would dry up too, etc.


 
Well, I do not understand that if property was a bad buy, why was I not warned by the moderators of this forum. They claim they are running a financial advice forum. I can not get my head around it. It would be nice if Brendan would clear the air on this one.


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## Dave Vanian

charliemacck is evidently a plant by the Property Pin website, yet another example of the immaturity that pervades that site.  Those little boys just can't accept that they got chucked out of Askaboutmoney and are now trying to wind up Askaboutmoney regulars because their own failed attempt at analternative site isn't up to much.  

See also here.


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## charliemacck

Dave Vanian said:


> charliemacck is evidently a plant by the Property Pin website, yet another example of the immaturity that pervades that site. Those little boys just can't accept that they got chucked out of Askaboutmoney and are now trying to wind up Askaboutmoney regulars because their own failed attempt at analternative site isn't up to much.
> 
> See also here.


 
That is terrible abuse and here is me standing up against abuse from all types around here. I'm not sure what the point of that link is but I can see you are a fine fella sticking up for the wheelers and dealers with your fingers in a few pies (I am not being dirty). Keep hammering them. As you well know I would have those Pin fellas up for trial for treason if I could. Are you really the same fella who was the lead singer of the Damned.


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## mf1

charliemacck said:


> That is terrible abuse and here is me standing up against abuse from all types around here. I'm not sure what the point of that link is but I can see you are a fine fella sticking up for the wheelers and dealers with your fingers in a few pies (I am not being dirty). Keep hammering them. As you well know I would have those Pin fellas up for trial for treason if I could. Are you really the same fella who was the lead singer of the Damned.




Ah now, you're just being very silly at this stage.  Have you considered a stage career with (perhaps) D' Unbelievables?

mf


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## charliemacck

mf1 said:


> Ah now, you're just being very silly at this stage. Have you considered a stage career with (perhaps) D' Unbelievables?
> 
> mf


 
Right I know when I am not wanted like a profit in his own land. I thought I could find wheelers and dealers and Celtic Tigers here like myself, men who made this country great by buying and selling lots of houses to each other. But even those fellas have turned on on me when I just ask a simple question or two about foreseeing the property correction. Its is a sad day to lose a home, first the PDs are gone and now this. Goodbye cruel world.


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## ionapaul

A very obvious troll...if someone from the Pin was behind that I'd be disappointed as I am an avid reader of both AAM and the Pin!


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## shanegl

Dave Vanian said:


> charliemacck is evidently a plant by the Property Pin website, yet another example of the immaturity that pervades that site.  Those little boys just can't accept that they got chucked out of Askaboutmoney and are now trying to wind up Askaboutmoney regulars because their own failed attempt at analternative site isn't up to much.
> 
> See also here.



True story. We have a secret hidden forum where we plot the downfall of AAM all night long.


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## Complainer

charliemacck said:


> Right I know when I am not wanted like a profit in his own land.


Class.


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## MortgageGuy

charliemacck said:


> Well, I do not understand that if property was a bad buy, why was I not warned by the moderators of this forum. They claim they are running a financial advice forum. I can not get my head around it. It would be nice if Brendan would clear the air on this one.



is it really the job of a website to determine your financial advice and guide you?


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## jensks.com

Brendan said:


> Lots of people predicted house price falls and crashes. But did anyone predict the following sequence:
> 
> 1) Widespread, massive sub-prime lending in America
> 2) Widespread, massive defaults on these loans
> 3) Massive write-offs by American and European banks on secutised products.
> 4) Collapses in international banks
> 5) Banks refusing to lend to each other?
> 
> People did predict that banks would reduce the credit to borrowers, but did anyone predict the collapses?
> 
> Obviously, links to these predictions would be preferable to "I saw it coming" remarks.


 

The closest I know of in print is my Masters Thesis from March 2006:

Predicted that massive loan taking through deregulation and new loan types would cause a credit crisis due to higher interest rates.
House prices would start decreasing and the credit contraction would initiate a reinforcing process leading to a widespread credit crisis. 
Due to the size of the credit expansion the credit crisis would lead to a financial crisis and highly likely to a global recession...


Other people like
Roubini is said to have stated it (havent seen anything on print).
Quite a few have stated that house prices were overvalued...
Shiller, Brochner Madsen etc


Take a look at my site... 


Merry Christmas
Jens


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## smiley

I am reading a book called 'Panic'-the story of modern financial insanity (michael lewis)

There is a article by an economist called John Cassidy which was titled 'the next crash'. This was published in the new yorker in 2002.

Its really worth a read. Most of the predictions have come true. Some quotes:

“For a calamity to happen to Freddie Mac or Fannie Mae, you are talking about some economic scenario that is probably as severe as, if not worse than, the Great Depression,” Nothaft said.


"If Fannie or Freddie did get into serious trouble, the repercussions would dwarf the problems at Long-Term Capital Management in 1998, when buyers and sellers withdrew from the credit markets and the financial system almost seized up. That “liquidity crisis” prompted the Fed to organize a multibillion-dollar bailout, which a number of big Wall Street firms paid for. If Fannie and Freddie needed bailing out, taxpayers would probably end up paying for it."

"Not everybody is convinced by this argument. William Poole, the president of the Federal Reserve Bank of St. Louis, recently warned that the sheer size of Fannie and Freddie could create a “massive problem in the credit markets.” To pay for all the mortgages they buy, Fannie and Freddie issue bonds, which pay interest to their owners. What would happen, Poole asked, if the market value of these bonds fell sharply, because investors grew concerned about the financial soundness of Fannie and Freddie? “I do not know, and neither does anyone else,” he said. Poole."

http://www.newyorker.com/archive/2002/11/11/021111fa_fact_cassidy?currentPage=4


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