Vote for Revere Award

Flattr this!

Vot­ing is now open for the Revere Award for Eco­nom­ics. The Revere Award is the pos­i­tive com­pan­ion to the Dyna­mite Award in Eco­nom­ics, which was devel­oped by the Real World Eco­nom­ics Review to rec­og­nize the fail­ure of the vast major­i­ty of econ­o­mists to fore­see the Glob­al Finan­cial Cri­sis. It was award­ed to the three econ­o­mists whose work most helped cause the GFC, with the even­tu­al win­ners being Alan Greenspan, Mil­ton Fried­man and Lar­ry Sum­mers (see Greenspan, Fried­man and Sum­mers win Dyna­mite Prize in Eco­nom­ics).

The Revere Award, on the oth­er hand, will go to three of the hand­ful of econ­o­mists who fore­saw the glob­al finan­cial cri­sis.  Yours tru­ly is one of the nom­i­nees, along with Dean Bak­er, Wynne God­ley, Michael Hud­son, Paul Krug­man, Jakob Brøch­n­er Mad­sen, Ann Pet­ti­for, Kurt Richebäch­er, Nouriel Roubi­ni, Robert Shiller, George Soros and Joseph Stiglitz. Click here to go to the Real World Eco­nom­ics Review vot­ing site.

The remain­der of this post repro­duces the three rel­e­vant entries from the RWER:

For the record, I vot­ed for Wynne God­ley, Michael Hud­son, and myself.

Voting is now open for the Revere Award for Economics

The Revere Award for Eco­nom­ics is named in hon­our of the Amer­i­can rev­o­lu­tion­ary hero Paul Revere, who rode through the night to warn of the approach­ing British army. In this its inagur­al year, it will be award­ed to the 3 econ­o­mists who first and most clear­ly saw the Gob­al Finan­cial Col­lapse com­ing and whose work is most like­ly to pre­vent anoth­er GFC in the future.

96 peo­ple were nom­i­nat­ed for the prize.  Through con­sul­ta­tion with con­trib­u­tors to the Real-World Eco­nom­ics Review Blog, the fol­low­ing short­list of twelve econ­o­mists has been select­ed for the bal­lot: Dean Bak­er, Wynne God­ley, Michael Hud­son, Steve Keen, Paul Krug­man, Jakob Brøch­n­er Mad­sen, Ann Pet­ti­for, Kurt Richebäch­er, Nouriel Roubi­ni, Robert Shiller, George Soros and Joseph Stiglitz.

As with the Dyna­mite Prize, which attract­ed over 7,500 most­ly econ­o­mist vot­ers –, the bal­lot will be con­duct­ed by Poll­Dad­dy.

Vot­ing is quick and easy.  The bal­lot is near the top of the right-hand col­umn (of the Real World Eco­nom­ics Review Blog home page).   Click on your three choic­es and then the big yel­low “vote” but­ton.

Foresight and Fait Accompli: Two Timelines for the Global Financial Collapse


Steve Keen con­cludes his JPKE paper “Finance and eco­nom­ic break­down: mod­el­ling Minsky’s ’finan­cial insta­bil­i­ty hypoth­e­sis’” as fol­lows:

There are, how­ev­er, severe doubts as to whether the kind of gov­ern­ment that has been con­struct­ed over the last thir­ty years is a suf­fi­cient­ly pow­er­ful or bal­anced sta­bi­liz­er to cap­i­tal­ist invest­ment behav­iour.

From the per­spec­tive of eco­nom­ic the­o­ry and pol­i­cy, this vision of a cap­i­tal­ist econ­o­my with finance requires us to go beyond that habit of mind that Keynes described so well, the exces­sive reliance on the (sta­ble) recent past as a guide to the future.  The chaot­ic dynam­ics explored in this paper should warn us against accept­ing a peri­od of rel­a­tive tran­quil­li­ty in a cap­i­tal­ist econ­o­my as any­thing oth­er than a lull before the storm. [empha­sis added]


Wynne God­ley in a paper with L. Ran­dall Wray argued that the cur­rent sta­bil­i­ty in the US econ­o­my was unsus­tain­able, because it was dri­ven by the growth of house­holds’ debt, which in turn was fuelled by real estate cap­i­tal gains.  Using an account­ing frame­work of the US econ­o­my devel­oped by God­ley, they pre­dict­ed that when debt growth slowed down – as it inevitably would with­in years -, growth would stop.


Kurt Richebäch­er in Sep­tem­ber 2001 wrote:

the new hous­ing boom is anoth­er rapid­ly inflat­ing asset bub­ble financed by the same loose mon­ey prac­tices that fuelled the stock mar­ket bub­ble.


Dean Bak­er in August pub­lished “The Run-Up in Home Prices: Is It Real or Is It Anoth­er Bub­ble?” in which he said:

While the short-term effects of a hous­ing bub­ble appear very beneficial—just as was the case with the stock bub­ble and the dol­lar bubble—the long-term effects from its even­tu­al defla­tion can be extreme­ly harm­ful, both to the econ­o­my as a whole, and to tens of mil­lions of fam­i­lies that will see much of their equi­ty dis­ap­pear unex­pect­ed­ly. The econ­o­my will lose an impor­tant source of demand as hous­ing con­struc­tion plum­mets and the wealth effect goes into reverse. This will slow an econ­o­my already reel­ing from the effects of the col­lapse of the stock bub­ble of 1999, … Unfor­tu­nate­ly, most of the nation’s polit­i­cal and eco­nom­ic lead­er­ship remained obliv­i­ous to the dan­gers of the stock mar­ket and dol­lar bub­bles until they began to deflate. This fail­ure cre­at­ed the basis for the eco­nom­ic uncer­tain­ty the coun­try cur­rent­ly faces … [which] will be aggra­vat­ed fur­ther by the defla­tion of the hous­ing bub­ble. This process will prove even more painful if the hous­ing bub­ble is allowed to expand still fur­ther before col­laps­ing.


Jakob Brøch­n­er Mad­sen (month unknown) wrote:

I am very pes­simistic. We are head­ing into some­thing in the world which is worse than what we expe­ri­enced in 1982. It will be the worst reces­sion since the Sec­ond World War”.

Ann Pet­ti­for in August pub­lished in Open Democ­ra­cyThe Com­ing First World Debt Cri­sis”.  The arti­cle, which focused on “a giant cred­it bub­ble”, began:

The reck­less finan­cial poli­cies of lead­ing west­ern pow­ers in the last two decades make it like­ly that the next seis­mic debt cri­sis will be in Amer­i­ca, not Argenti­na. It can be avoid­ed … only by seri­ous efforts to bring reg­u­la­tion and bal­ance to the inter­na­tion­al econ­o­my.

Ann Pet­ti­for in Sep­tem­ber pub­lished her edit­ed col­lec­tion Real World Eco­nom­ic Out­look: The Lega­cy of Glob­al­iza­tion: Debt and Defla­tion, which exam­ined the growth and new dom­i­nance of the finan­cial sec­tor. Con­trib­u­tors includ­ed Dean Bak­er, Her­man Daly, Wynne God­ley, Michael Hud­son and Joseph Stiglitz.

Pet­ti­for’s intro­duc­tion said:

Remov­ing con­trols over the finance sec­tor paved the way for its rise to dom­i­nance, which in turn has led to a trans­for­ma­tion of the glob­al econ­o­my and increased insta­bil­i­ty.

[One of] the con­se­quences for the glob­al econ­o­my [is an] enor­mous increase (or ‘bub­ble’) in the stock of finan­cial assets in rela­tion to the real econ­o­my, as mea­sured by GDP or the stock of phys­i­cal, human, and tech­no­log­i­cal cap­i­tal.

There will be a col­lapse in the cred­it sys­tem in the rich world, led by the Unit­ed States

Once default rates approach 1 per cent of the val­ue of the debt across the whole lend­ing spec­trum, the prof­itabil­i­ty of banks is called into ques­tion. If default rates reach 2 per cent, the prob­a­bil­i­ty of a finan­cial cri­sis ris­es appre­cia­bly.

Also in Sep­tem­ber, Pet­ti­for restat­ed her argu­ments for a forth­com­ing glob­al finan­cial col­lapse in a cov­er arti­cle for The New States­man mag­a­zine.

Dean Bak­er pub­lished in the Los Angles Times on Decem­ber 3 “Who to Blame When the Next Bub­ble Bursts. This was the first of dozens of columns that Bak­er wrote on the bub­ble. (most can found at

Dean Bak­er’s col­umn “Build­ing on the Bub­ble” in May appeared in six US news­pa­pers. He wrote:

The fact that peo­ple are bor­row­ing against their homes at a rapid rate (more than $750 bil­lion in 2003) is more evi­dence of an unsus­tain­able bub­ble. The ratio of mort­gage debt to home equi­ty is at record highs.

This is espe­cial­ly scary because equi­ty val­ues may be inflat­ed by as much as 30 per­cent due to the bub­ble,

Michael Hud­son in June pre­sent­ed at an aca­d­e­m­ic con­fer­ence the paper “Sav­ing, Asset-Price Infla­tion, and Debt-Induced Defla­tion”. He not­ed that the ‘large debt over­head – and the sav­ings that form the bal­ance-sheet coun­ter­part to it” is the ‘anom­aly of today’s [US] econ­o­my’.  He warned against the ‘self expand­ing growth of sav­ings’ and the unsus­tain­able ‘growth of net worth through cap­i­tal gains’ induced by US mon­e­tary and tax poli­cies.  He said that the:

nat­ur­al lim­it to the process was reached in 2004 when the Fed­er­al Reserve reduced its dis­count rate to 1 per­cent. Once rates hit this nadir, fur­ther growth in debt threat­ens to be reflect­ed in drain­ing and amor­ti­za­tion pay­ments away from spend­ing on goods and ser­vices, slow­ing the econ­o­my accord­ing­ly.

Dean Bak­er spon­sored through the CEPR a $1,000 essay con­test to solic­it the most-con­vinc­ing argu­ment that the hous­ing mar­ket was not in a bub­ble.  The con­test was twice writ­ten up in the New York Times.

Jakob Brøch­n­er Mad­sen (month unknown) wrote:

There is some­thing com­plete­ly wrong. We are see­ing large bub­bles and if they bust, there is no back­up. House prices and shares are com­plete­ly out of pro­por­tion. And it will go wrong.


Dean Bak­er and Paul Krug­man in March pre­dict­ed in a paper writ­ten with J. Brad­ford DeLong that asset prices in the US were bound to fall in the medi­um term.

Robert Shiller in May in the Intro­duc­tion to the sec­ond edi­tion of his book Irra­tional Exu­ber­ance warned that home prices were look­ing “very anom­alous” and that:

fur­ther ris­es in the [stock and hous­ing] mar­kets could lead, even­tu­al­ly, to even more sig­nif­i­cant declines… A long-run con­se­quence could be a decline in con­sumer and busi­ness con­fi­dence, and anoth­er, pos­si­bly world­wide, reces­sion. This extreme out­come … is not inevitable, but it is a much more seri­ous risk than is wide­ly acknowl­edged.

Paul Krug­man on 27 May wrote in his NYT col­umn:

If hous­ing prices actu­al­ly start­ed falling, we’d be look­ing at [an econ­o­my pushed] right back into reces­sion. That’s why it’s so omi­nous to see signs that America’s hous­ing mar­ket … is approach­ing the final, fever­ish stages of a spec­u­la­tive bub­ble.

Nouriel Roubi­ni in sum­mer 2005 pre­dict­ed that real home prices were like­ly to fall at least 30% over the next 3 years.

Steve Keen in Decem­ber, draw­ing heav­i­ly on his 1995 the­o­ret­i­cal paper “Finance and eco­nom­ic break­down: mod­el­ling Minsky’s ‘finan­cial insta­bil­i­ty hypoth­e­sis’” and con­vinced that a finan­cial cri­sis was approach­ing, decid­ed to go very pub­lic with his analy­sis. He reg­is­tered the web­page ded­i­cat­ed to ana­lyz­ing the “glob­al debt bub­ble”.  His site soon attract­ed a large inter­na­tion­al audi­ence.  At the same time he began appear­ing on Aus­tralian radio and tele­vi­sion with his mes­sage of approach­ing finan­cial col­lapse.

Jakob Brøch­n­er Mad­sen (month unknown) wrote:

I feel lost. Mon­ey growth is increas­ing, oil and com­mod­i­ty prices have dou­bled in the last 10 years. There­fore infla­tion and inter­est rates should increase, but noth­ing hap­pens. All the mod­els we use to pre­dict infla­tion have bro­ken down, it is chaos.


George Soros in Jan­u­ary on CNBC tele­vi­sion said:

There’s (a) prob­lem that I think is brew­ing, and that is the end of the hous­ing boom in the Unit­ed States and the abil­i­ty of house­holds to spend more than they earn because the val­ue of their house is ris­ing.

So I expect that by ‘07 there will be a sig­nif­i­cant decline in U.S. con­sumer spend­ing and I don’t see what will take its place because it’s so impor­tant as a motor of the world econ­o­my.

And to an audi­ence in Sin­ga­pore Soros said:

the soft land­ing (for the US econ­o­my) will turn into a hard land­ing. That’s why I expect the reces­sion to occur in 2007 not 2006.

Michael Hud­son in April pub­lished ‘The Road to Serf­dom: An Illus­trat­ed Guide to the Com­ing Real Estate Col­lapse’, in Harper’s Mag­a­zine. In it he wrote:

almost every­one involved in the real estate bub­ble thus far has made at least a few dol­lars. But that is about to change. The bub­ble will burst… Amer­i­ca holds record mort­gage debt in a declin­ing hous­ing mar­ket… For those who bought at the top and who now face decades of pay­ments on hous­es that soon will be worth less than they paid for them, seri­ous trou­ble is brew­ing. …. Ris­ing debt-ser­vice pay­ments will fur­ther divert income from new con­sumer spend­ing. Tak­en togeth­er, these fac­tors will fur­ther shrink the “real” econ­o­my, dri­ve down those already declin­ing real wages, and push our debt-rid­den econ­o­my into Japan-style stag­na­tion or worse.

Wynne God­ley in May in a paper with Gen­naro Zez­za, “Debt and Lend­ing: A Cri de Coeur”:

demon­strat­ed again the US economy’s depen­dence on debt growth and argued that only the small slow­down in the rate at which US house­hold debt lev­els were ris­ing, result­ing form the house price decline, would imme­di­ate­ly lead to a “sus­tained growth reces­sion … some­where before 2010

Kurt Richebäch­er in July wrote in his newslet­ter:

The one thing that still sep­a­rates the U.S. econ­o­my from eco­nom­ic and finan­cial dis­as­ter is ris­ing house prices that appar­ent­ly jus­ti­fy ever more cred­it and debt”…

… a reces­sion and bear mar­ket in asset prices are inevitable for the U.S. econ­o­my. … This will not be a gar­den-vari­ety reces­sion, in which mon­e­tary eas­ing unleash­es pent-up demand, as it used to do in past busi­ness cycles”.

… the great trou­ble for the future is that the cred­it bub­ble has its oth­er side in expo­nen­tial debt growth

The U.S. liq­uid­i­ty del­uge of the last few years has had one sin­gle source: bor­row­ing against ris­ing assets backed by the Fed’s mon­e­tary loose­ness… all hing­ing on fur­ther ris­es in asset prices. But they are going to plunge.

Michael Hud­son pub­lished his paper “Sav­ing, Asset-Price Infla­tion, and Debt-Induced Defla­tion”.

Joseph E. Stiglitz et al. in August 2006 pub­lished Sta­bil­i­ty with growth: macro­eco­nom­ics, lib­er­al­iza­tion and devel­op­ment which includes a chap­ter on “cap­i­tal mar­ket fail­ures” that looks “at how cap­i­tal mar­ket lib­er­al­iza­tion can exac­er­bate the prob­lems posed by coor­di­na­tion fail­ures and broad­er macro­eco­nom­ic fail­ures” [p. 189]

Robert Shiller on August 30, writ­ing with K. Case in the Wall Street Jour­nal, said:

there is sig­nif­i­cant risk of a very bad peri­od, with slow sales, slim com­mis­sions, falling prices, ris­ing default and fore­clo­sures, seri­ous trou­ble in finan­cial mar­kets, and a pos­si­ble reces­sion soon­er than most of us expect­ed.

Nouriel Roubi­ni  on August 23, 2006 wrote:

By itself this [house price] slump is enough to trig­ger a US reces­sion.

On August 30 he wrote:

The recent increased finan­cial prob­lems of … sub-prime lend­ing insti­tu­tions may thus be the prover­bial canary in the mine – or tip of the ice­berg – and sig­nal the more severe finan­cial dis­tress that many hous­ing lenders will face when the cur­rent hous­ing slump turns into a broad­er and ugli­er hous­ing bust that will be asso­ci­at­ed with a broad­er eco­nom­ic reces­sion. You can then have mil­lions of house­holds with falling wealth, reduced real incomes and lost jobs…

Like Bak­er and Keen, Roubi­ni now put out repeat­ed pub­lic warn­ings of the sys­temic impli­ca­tions of the hous­ing bub­ble.

Kurt Richebäch­er in Sep­tem­ber 2006 wrote:

There is no ques­tion that the U.S. hous­ing bub­ble is fin­ished. All remain­ing ques­tions per­tain sole­ly to speed, depth and dura­tion of the economy’s down­turn.

Ann Pet­ti­for in Octo­ber pub­lished her book The Com­ing First World Debt Cri­sis, an exten­sion of the analy­sis she had pre­sent­ed in 2003 and which detailed leg­is­la­tion need­ed to avert the com­ing col­lapse.  She sum­ma­rized her book’s analy­sis in arti­cles for The Guardian and Open Democ­ra­cy.

Octo­berThe boom in US house prices begins to reverse its course.  Defaults on home mort­gages approach record lev­els.

Joseph E. Stiglitz on Octo­ber 30 on the Alex Jones radio show dis­cussed the warn­ing signs of plum­met­ing real estate prices in the U.S. and the pos­si­bil­i­ty of a glob­al eco­nom­ic down­turn. He said:

If it’s well man­aged it will only be a slow-down, if it’s not well-man­aged it could be a reces­sion,


….I think we can avoid an implo­sion if we man­age this care­ful­ly but it’s going to be very risky

Steve Keen in Novem­ber began pub­lish­ing on his month­ly Debt­Watch Reports (33 in total). These were sub­stan­tial papers (upwards of 20 pages on aver­age) that applied his pre­vi­ous­ly devel­oped ana­lyt­i­cal frame­work to large amounts of empir­i­cal data. Ini­tial­ly these papers ana­lyzed the GFC that he was pre­dict­ing and then its real­iza­tion. His first report was titled “The Reces­sion We Can’t Avoid?”.

Dean Bak­er in Novem­ber, pub­lished the paper “Reces­sion Looms for the U.S. Econ­o­my in 2007” (–29.html)  in which he fore­casts that weak­ness in the hous­ing mar­ket was like­ly to push the econ­o­my into a reces­sion in 2007, pre­dict­ing ‑0.7 % GDP growth over 2007, Bak­er wrote:

The wealth effect cre­at­ed by the hous­ing bub­ble fuelled an extra­or­di­nary surge in con­sump­tion over the last five years, as sav­ings actu­al­ly turned neg­a­tive. …This home equi­ty fuelled con­sump­tion will be sharply cur­tailed in the near future…. The result will be a down­turn in con­sump­tion spend­ing, which togeth­er with plung­ing hous­ing invest­ment, will like­ly push the econ­o­my into recession….Over the course of the year, the econ­o­my will shed 1.2 mil­lion jobs.”

Nouriel Roubi­ni in a Nov 17 blog said:

[t]he hous­ing reces­sion is now becom­ing a con­struc­tion reces­sion; and the con­struc­tion reces­sion is now turn­ing into a clear auto and man­u­fac­tur­ing reces­sion; and the man­u­fac­tur­ing reces­sion will soon turn into a retail reces­sion as squeezed house­holds – fac­ing falling home prices and ris­ing mort­gage ser­vic­ing costs – sharply con­tract their rate of con­sump­tion.

Steve Keen’s Decem­ber report, titled “The run­away train of debt”, con­cludes:

Clear­ly house­holds can’t go on like this. At some point, whether vol­un­tar­i­ly or by duress, house­holds have to sta­bilise, and prefer­ably sub­stan­tial­ly reduce, their lev­el of debt. They can only do this by either sig­nif­i­cant­ly reduc­ing spend­ing, or by liq­ui­dat­ing assets. Long before this process actu­al­ly caus­es the debt bur­den to fall, the econ­o­my will be in a debt-induced reces­sion.

Paul Krug­man on 4 Decem­ber in the NYT wrote

Right now, sta­tis­ti­cal mod­els based on the his­tor­i­cal cor­re­la­tion between inter­est rates and reces­sions give rough­ly even odds that we’re about to expe­ri­ence a for­mal reces­sion.

2007 (The GFC becomes a fait accom­pli)

Steve Keen con­tin­ues through the year with Debt­watch Report

Feb­ru­ary The decline in US house prices accel­er­ates. HSBC issues its first prof­it warn­ing in its 142-year his­to­ry, cit­ing bad debts in its US sub­prime unit.

April New Cen­tu­ry, the US’s largest sub­prime lender, goes bank­rupt.

Wynne God­ley in April fore­saw out­put growth “slow­ing down almost to zero some­time between now and 2008 and then recov­er­ing toward 3 per­cent or there­abouts in 2009–10”; but warned that “unem­ploy­ment [will] start to rise sig­nif­i­cant­ly and does not come down again.”

July – Invest­ment bank Bear Stearns reveals it has made huge loss­es in two of its hedge funds.

August – Banks around the world begin to dis­close that they too have large hold­ings in mort­gage-backed secu­ri­ties.

Sep­tem­ber – British bank North­ern Rock requests emer­gency funds, prompt­ing a run on the bank.

Steve Keen on 14 Sep­tem­ber pub­lished, with the Cen­tre for Pol­i­cy Devel­op­ment, a 79 page report “Deep­er in Debt”, ana­lyz­ing the caus­es of the finan­cial break­down in the US and the pos­si­bil­i­ty of it spread­ing to Aus­tralia.

Octo­ber – Cit­i­group reports sub­prime relat­ed loss­es of $40bn.

George Soros in ear­ly Novem­ber in a lec­ture at New York Uni­ver­si­ty said that after decades of over­spend­ing the U.S. econ­o­my is “on the verge of a very seri­ous eco­nom­ic cor­rec­tion”

Wynne God­ley and oth­ers in Novem­ber 2007 pre­dict­ed “a sig­nif­i­cant drop in bor­row­ing and pri­vate expen­di­ture in the com­ing quar­ters, with severe con­se­quences for growth and unem­ploy­ment”.

George Soros in Jan­u­ary at Davos said:

The cur­rent cri­sis is not only the bust that fol­lows the hous­ing boom,… It’s basi­cal­ly the end of a 60-year peri­od of con­tin­u­ing cred­it expan­sion based on the dol­lar as the reserve cur­ren­cy.

March — Bear Stearns col­laps­es and, days lat­er, is sold to JP Mor­gan Chase for just $2 a share.

Sep­tem­ber 14 – Mort­gage lenders Fan­nie Mae and Fred­die Mac are res­cued in one of the largest bailouts in US his­to­ry.

Sep­tem­ber 15 — Lehman broth­ers files for bank­rupt­cy, prompt­ing pan­ic as investors had assumed the US gov­ern­ment would pre­vent a bank of Lehman’s size – it was the US fourth largest invest­ment bank – from going under.

As Mer­ril Lynch approach­es insol­ven­cy, it is bought by Bank of Amer­i­ca for $50bn.

Sep­tem­ber 16 — Cred­it rat­ing agen­cies down­grade sta­tus of AIG, America’s largest insur­er. The US Fed­er­al Reserve loans the AIG $85bn and takes an 80 per cent stake.

Sep­tem­ber 19 – Hen­ry Paul­son, then US trea­sury sec­re­tary, unveils plan to use tax­pay­ers’ mon­ey to sta­bilise firms and buy up tox­ic assets.

Sep­tem­ber. 29: Dow suf­fers largest ever one-day drop.

Sep­tem­ber to Octo­ber – In the space of a month, banks around the world, notably HBOS, Roy­al Bank of Scotland,Washington Mutu­al, For­tis, Hypo Real Estate and Lands­ban­ki, col­lapse.

Octo­ber. 6: Dow drops below 10,000 for the first time since 2004.

Octo­ber. 9: Dow falls below 9,000.

Novem­ber. 19: Dow drops below 8,000 for first time since 2003.

Novem­ber 25 US Fed announces fur­ther $800bn stim­u­lus.

Novem­ber 28 The IMF approved a $2.1bn loan for Ice­land.


Jan­u­ary. 29: US job­less claims hit all-time high.

March - Stock mar­kets hit record lows, wip­ing out gains made since 1997. The Dow drops below 7,000.

* In com­pil­ing the Fore­sight Time­line, much use has been made of  Dirk Bezemer’s out­stand­ing paper ‘“No One Saw This Com­ing”: Under­stand­ing Finan­cial Cri­sis Through Account­ing Mod­els’. Bib­li­o­graph­ic details may be found there­in.

Short bios of the twelve short­list­ed econ­o­mists, the selec­tion cri­te­ria used for the short­list and back­ground about the prize can be read here.

Shortlist for the Revere Award for Economics

This Award is named in hon­our of the Amer­i­can rev­o­lu­tion­ary hero Paul Revere, who rode through the night to warn of the approach­ing British army. In this its inagur­al year, it will be award­ed to the 3 econ­o­mists who first and most clear­ly saw the Gob­al Finan­cial Col­lapse com­ing and whose work is most like­ly to pre­vent anoth­er GFC in the future. 

To its great shame, the eco­nom­ics estab­lish­ment has attempt­ed to evade respon­si­bil­i­ty for the Glob­al Finan­cial Col­lapse by call­ing it an unpre­dictable, “Black Swan” event.  That asser­tion is man­i­fest­ly untrue. Numer­ous non-neo­clas­si­cal econ­o­mists fore­saw the cri­sis and warned the pub­lic (usu­al­ly at the cost of ridicule) of its approach. The Revere Award aims to give these econ­o­mists the pro­fes­sion­al and pub­lic recog­ni­tion that they deserve, to encour­age oth­ers to uti­lize their meth­ods, and – most impor­tant — to increase the like­li­hood that, for the ben­e­fit of humankind, empir­i­cal­ly respon­si­ble econ­o­mists will be lis­tened to in the future

97 peo­ple have been nom­i­nat­ed for the award.  Some of these did not fit the require­ment stat­ed in the orig­i­nal announce­ment of the award, that the nom­i­nees should be econ­o­mists(broad­ly inter­pret­ed) and to have pub­licly warned of this par­tic­u­lar col­lapse, not col­laps­es in gen­er­al.  From those nom­i­nees who filled these require­ments and through con­sul­ta­tion with this blog’s com­mu­ni­ty of authors, a short­list of 12 has been select­ed.  All of them are wor­thy of our spe­cial regard.  If any of them had been lis­tened to by the pow­ers that be, a colos­sal amount of human mis­ery would have been avoid­ed.

Cri­te­ria used in the selec­tion includ­ed the fol­low­ing:

  1. that the pre­dic­tion was not whim­si­cal or lucky, but was dri­ven by the­o­ries, meth­ods, and tools that are clear­ly with­in the domain of ‘eco­nom­ic thought’;
  2. that the fore­cast could be repli­cat­ed giv­en sim­i­lar data;
  3. that the fore­cast was made pub­lic, and
  4. that the meth­ods and tools used will spur the devel­op­ment of eco­nom­ics such that the sub­ject gains rather than los­es trac­tion as a result of the cri­sis.

As with the Dyna­mite Prize, which attract­ed over 7,500 most­ly econ­o­mist vot­ers –, the bal­lot will be con­duct­ed by Poll­Dad­dy.

You may vote for three of the short­list nom­i­nees.

The prize will be award­ed joint­ly to the three econ­o­mists receiv­ing the most votes.

But before vot­ing (the bal­lot box opens in a few hours), please con­sult the post Fore­sight and Fait Accom­pli: Two Time­lines for the Glob­al Finan­cial Col­lapse.

Short­list for the
Revere Award for Eco­nom­ics

Dean Bak­er, for­mer­ly a pro­fes­sor at Buck­nell Uni­ver­si­ty, is co-direc­tor of the Cen­ter for Eco­nom­ic and Pol­i­cy Research in Wash­ing­ton. He is the author of many research papers, an eco­nom­ics colum­nist for the Guardian, a week­ly online com­men­tary on eco­nom­ic report­ing, and sev­er­al books, most recent­ly False Prof­its: Recov­er­ing from the Bub­ble Econ­o­my.

Wynne God­ley is pro­fes­sor emer­i­tus of applied eco­nom­ics at Cam­bridge Uni­ver­si­ty and more recent­ly a Dis­tin­guished Schol­ar at the Levy Eco­nom­ics Insti­tute of Bard Col­lege, New York. He is not­ed for his research that uses account­ing macro­eco­nom­ic mod­els to reveal struc­tur­al imbal­ances.

Michael Hud­son is a Dis­tin­guished Research Pro­fes­sor of Eco­nom­ics at the Uni­ver­si­ty of Mis­souri (Kansas City), pres­i­dent of the Insti­tute for the Study of Long-term Eco­nom­ic Trends and a Wall Street finan­cial ana­lyst. He has long been a crit­ic of growth induced by asset-price infla­tion.

Steve Keen is a pro­fes­sor of eco­nom­ics and finance at the Uni­ver­si­ty of West­ern Syd­ney and a spe­cial­ist in finan­cial insta­bil­i­ty. His ana­lyt­i­cal frame­work draws on Min­sky, Fish­er and Keynes. Begin­ning with the 2001 pub­li­ca­tion of his book Debunk­ing Eco­nom­ics, he gained inter­na­tion­al promi­nence through his math­e­mat­i­cal­ly ori­ent­ed attack on the neo­clas­si­cal main­stream, his expla­na­tion of why the lat­ter is such a poor guide to the way the econ­o­my actu­al­ly works and his hypoth­e­sis of finan­cial insta­bil­i­ty.

Paul Krug­man is Pro­fes­sor of Eco­nom­ics at Prince­ton Uni­ver­si­ty, win­ner in 2008 of the Sveriges Riks­bank Prize in Eco­nom­ic Sci­ences in Mem­o­ry of Alfred Nobel and op-ed colum­nist for The New York Times.

Jakob Brøch­n­er Mad­sen was a pro­fes­sor of eco­nom­ics at the Uni­ver­si­ty of Copen­hagen until 2006, when he moved to Monash Uni­ver­si­ty in Den­mark.

Ann Pet­ti­for is the author of sev­er­al books on debt and inter­na­tion­al finance.  Begin­ning in 2000, she head­ed the New Eco­nom­ics Foundation’s research unit on glob­al macro-eco­nom­ics.  Cur­rent­ly she is exec­u­tive direc­tor of Advo­ca­cy Inter­na­tion­al, which under­takes research and advis­es gov­ern­ments and organ­i­sa­tions on mat­ters relat­ing to inter­na­tion­al finance and sus­tain­able devel­op­ment.

Kurt Richebäch­er (1918–2007) was chief econ­o­mist for Dres­d­ner Bank from 1964 to 1977, when he left it for pri­vate con­sul­tan­cy. He wrote one of the longest-stand­ing invest­ment newslet­ters, “The Richebäch­er Let­ter,” in which he warned against the bub­ble in tech­nol­o­gy stocks in the late ’90s. Paul Volk­er, for­mer Chair­man of the US Fed­er­al Reserve, once remarked that the chal­lenge for today’s cen­tral bankers “is to prove Kurt Richebäch­er wrong.” He died on August 24, 2007, two weeks before the col­lapse began.

Nouriel Roubi­ni is Pro­fes­sor of Eco­nom­ics and Inter­na­tion­al Busi­ness at the Stern School of Busi­ness, New York Uni­ver­si­ty, Research Asso­ciate at the NBER and Research Fel­low with the CEPR. He is a for­mer advi­sor to the U.S. Trea­sury Depart­ment and for­mer mem­ber of the  White House Coun­cil of Eco­nom­ic Advis­ers. He runs the Roubi­ni Glob­al Eco­nom­ics Mon­i­tor and the blog Roubi­ni Glob­al Eco­nom­ics.

Robert Shiller is a Yale eco­nom­ics pro­fes­sor.  Like Richebäch­er he warned against the dot­com bub­ble.

George Soros, leg­endary financier and founder of a glob­al net­work of char­i­ta­ble foun­da­tions, has authored numer­ous books on finance and eco­nom­ics, includ­ing The Cri­sis of Glob­al Cap­i­tal­ism (1998). Like Richebäch­er and Shiller, he warned against the dot­com bub­ble. His analy­sis iden­ti­fies fun­da­men­tal insta­bil­i­ties in cap­i­tal­ism, most notably — and rem­i­nis­cent of Keynes — the reflex­iv­i­ty of mar­kets.

Joseph Stiglitz holds chairs at Colum­bia Uni­ver­si­ty and Man­ches­ter Uni­ver­si­ty and in 2001 received the Sveriges Riks­bank Prize in Eco­nom­ic Sci­ences in Mem­o­ry of Alfred Nobel.  He is know for his crit­i­cal views of glob­al­iza­tion, free-mrket fun­da­men­tal­ism, the IMF and the World Bank.

Bookmark the permalink.