Idle curiosity... Did anybody predict this total credit crash?

[phantom power]

I realize that many people were predicting the end of easy credit. Credit was expected to become harder to get, probably higher interest rates, etc. But I cannot recall anybody saying anything like "Expect that the credit market will fucking seize up and even people/companies with good credit will be unable to get it."

It just wasn't on my list of Scenarios To Worry About. I tend to this list lovingly, and I feel like I failed.

[Jane Austin]

1. Ravi Battra did.

He's the SMU Economics professor who Thom Hartmann has on every few months.

[doc03]

11. He also predicted the Great Depression of 1990

so he doesn't have much of track record. Of course even a broken clock is right twice a day.

[Warpy]

20. He shouldn't have assigned a year to it. His mistake

was in grossly underestimating the debt load people were willing to take on and banks were willing to extend when their borrowing rates were low and loan return rates were high.

A lot of us on this board predicted this. Sustaining a consumer economy on debt is always a bad idea because eventually you reach an end point where servicing the debt cuts into subsistence and that's when people stop buying anything but food and crash the economy.

The crash in derivatives was predicted back in the 80s when the hedge funds were just starting to sell them as though they were worth something and investment jockeys were buying them to goose their profits.

It also didn't take a genius to predict what would happen when the housing bubble burst. If you read this board, you read a lot about that all during the bubble market.

Batra was chillingly accurate. He just underestimated the gullibility of both lenders and the public and missed the year.

[percussivemadness]

2. David Icke in 1996

Though he was ridiculed at the time for his theories, C4 in the UK recently did a documentary called "Was David Icke Right?" (I think its available on Google video)

What is fascinating about Icke is that he maintains this year is when the shift occurs and we start in 2009 moving towards a better future, and that movement starts in America.

[RUMMYisFROSTED]

5. "Reptilian humanoids will devour the market!"

:rofl:

[anigbrowl]

16. David Icke predicts disaster on a regular basis

Nice guy, but a complete loon. If he got it right this time, he was just echoing someone else and happened to pick the right person. I mean the guy thinks all the royal families in Europe are secretly space lizards.

[2Design]

3. yes - housing bubble blogs - housing is the ponzi scheme

it is over priced - and the banks and wall street loved it and Bush admin loved the higher prices because people helo their house for more money since wages were not going up

the only ones who say they didn't see it are the ones who benefited the most - it is a lie

www.housingbubbleblog.com and patrick.net - patrick was out there first and then others have followed - people should not buy a house more than 2 1/2 times their annual income -

wages for the majority have not gone up - I mean minimum wage is barely above what it was in the 70's - housing is out os sync every where and people used their homes as ATM's now they are not going up any more and there is no money flowing because people can no pay these mortgages at the monthly price banks have them and without regulation they all partied and even after they got bailed out they partied - so yes they all saw it coming but did not talk about it

[Fresh_Start]

4. Buffett 2002

http://www.fintools.com/docs/Warren%20Buffet%20on%20Derivatives.pdf

[lostnotforgotten]

6. Better Question - For How Many Years Will Our Children's Children Be Paying

For the thievery of the Bush Administration and their Oligarchs, Plutocrats, and Fascist?

[valerief]

7. People have been predicting it for years now.

[phantom power]

8. It must be that I wasn't reading the right people.

[David__77]

9. Lyndon LaRouche, in 1982.

Lol! A broken clock is finally right at some point!

Seriously though, I think it was mostly radical economists who were predicting this thing. Even the notion that there was a tremendous credit bubble was taboo as recently as two years ago.

[Lucky Luciano]

10. A lot of people had this call...trouble is that trying to put on the short credit

trade that was so deserved for so many years would have ripped most people's faces off.

Timing is everything and the people listed above who were so bearish never had to risk a dime in their life.

John Paulson did make $3.7B for himself when his hedge fund massivley bet against the suprime mortgage market. He just had good timing...a lot of people saw it coming, but could not time it. Timing a short is crucial - especially when you are trying to short a bubble.

[slipslidingaway]

21. Exactly...it is the timing. n/t

[doc03]

12. Jim Cramer has been going ballistic about it for

several months.

[phantom power]

13. How about that. Lots of people.

[pscot]

14. Glider Guider and the Bank of Scotland

The Bank of Scotland has been predicting an economic tsunami since last fall. Glider Guider flashed a key sell signal in January of this year when he revealed that a key source had told him a shit-storm was about to hit the markets. That's when I sold everything. The secret is to figure out not only who's right, but when.

[girl gone mad]

15. I posted a paper by Nouriel Roubini from last Feb.

He predicted it very precisely.

There were several others as well, though I think even some of the permabears turned out to have been too optimistic.

[anigbrowl]

17. Boss of Fortis (belgian bank) a few months ago

I played it down at the time because Fortis was having some problems of its own and I thought he was trying to lay off blame when he said the US financial system could crash within a matter of weeks or months. But looks like he was pretty on target.

[anigbrowl]

18. Also an economist at Royal bank of Scotland...forget name right now

But I am 90% sure I saw it posted here at DU.

[Celebration]

19. "preordained"

They had someone on CNBC yesterday that had been warning about this for two years or so. He used an interesting word to sum up the situation--"preordained."

As for the future, it could go either way--all bets are off. We can maybe muddle out of it as long as the dollar holds up. If people start dumping the dollar we are in very deep doo doo.

[nadinbrzezinski]

22. many of us did

and we hope we are not proven completely right

[Blue Meany]

23. Well, I think that a lot of us realized that we couldn't keep

living as a credit-card nation and that we were probably heading into a financial crisis.

I didn't think that business credit markets would freeze up like this. Instead, I expected consumer credit to dry up or get expensive and customers for US govt. treasuries to either stop buying or demand higher interest.

The timing is really unfortunate, because retailers need to be stocking up for Christmas, when many of the do about 40% of their annual sales. Even in a slump, this is critical for businesses. If they can't borrow to stock up, it will probably knock a lot of them right out of business, accelerating the economic downturn.