Roubini Is Always Right

Celebrities cannot be misquoted. They have been in the public spotlight for too long. Anything that they say is just a thin epidermis on top of the thick layer of their work and personalities. They are what they have created themselves to be -memorable characters with memorable views.

Nouriel Roubini, arguably the world’s most famous economist, went to great lengths yesterday to refute the impression that the press gave that he believes that the economy will begin to recover later this year. The press had to be wrong because Roubini has to be the most pessimistic economist in any room. That is his role and has been for three years, since well before the current financial crisis was under way.

Roubini defended his dark view of the universe by saying that the current recession was a 24-month recession and not a 19- month or 2o-month or 21- month recession. He went further by saying the recovery would be shallow, barely a recovery at all and one ripe for a second period of negative growth–a “double dip.” He wrote in his own blog, after media reports of his optimism helped lift the stock market, that “maintaining large budget deficits and continued monetization of such deficits would eventually increase long-term interest rates (because of concerns about medium-term fiscal sustainability and because of an increase in expected inflation), thus leading to a crowding out of private demand.” Put another way, the credit markets could still go to hell.

Roubini probably was more rosy in his observations yesterday than he has been in the past. The minute that the media began to make his views look mainstream, he was forced to say that he was never wrong. Reporters and editors were mistaken. The context of his remarks is that they must always be the most discouraging remarks about the recession. If that is not true, he loses his place in the world, and the pecking order of economists in which he is at the head.

The trouble with trusting what forecasters like Roubini say is that they can only play one note. It may be the note that keeps them in the limelight, but, eventually is is the note that makes them wrong. At some point, reality passes them and their views of the world by.

Douglas A. McIntyre