Giving credit where credibility is due.

Charlie Rose:

How do you see the economy today? The world economy? Where are we?

Answer:

I think the financial system is extremely fragile. I think that you can see it in the volatility of currencies; you can see all sorts of weaknesses. I believe that there is an incredible amount of danger in things like the derivatives. I think that we are moving toward the outer limits of acceptable risk taking. … I think our financial system is dangerous and could create great problems for the real economy. …

— Sir James Michael Goldsmith, billionaire financier, 1994; February 26, 1933 – July 18, 1997

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On the Record

Learn what makes this downturn different from prior contractions, and why many view the recently-enacted financial reform as necessary medicine for a still-ailing economy struggling to reach a “new normal“:

• View Charlie Rose’s interview, uncut HERE.

• “Financial Reform Law: What’s in it and How does it Work?” | Christian Science Monitor.

• The Trap, by the late Sir James Goldsmith, not only made for a lively debate on Charlie Rose in 1994, but hails from the same man who foretold the 1987 stock market crash and, arguably, the roots of today’s economic certainties.

• What did the shocking revelation that Americans are filing for personal bankruptcy in record numbers — nearly one in seven families with children — inspire a Harvard Law Law School professor to do before the Great Recession loomed on the horizon? Co-author The Two-Income Trap: Why Middle-Class Parents Are Going Broke — a relevant-as-ever national wake-up call sounded by Elizabeth Warren, a bankruptcy law expert who foresaw the housing crisis in 2001. Warren is a candidate for the newly created Consumer Financial Protection Bureau, and presently serves as chairwoman of the congressional panel that oversees the Troubled Asset Relief Program (TARP).

• The 2002 book Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression foretells the financial crisis from the perspective of a successful Wall Street investment advisor, Robert R. Prechter, who in 2009 updated the work to provide additional ways for readers to protect their wealth. | Amazon

• Why All the Angst Now on What Caused the Great Recession? asks economist, lawyer and writer, Kimball Corson. He credits University of Chicago business school professor, Raghuram Rajan, with blowing the whistle at a 2005 symposium ironically intended to honor former Federal Reserve Chairman Alan Greenspan. Corson questions why we’re seeking recovery advice from the very same economists who didn’t see the recession coming. | Seeking Alpha

• “Dr. Bubble”, as Yale economics and finance professor, Robert Shiller, has been dubbed, predicted the Dot-com crash, the unsustainable real estate boom thereafter and, in 2005, the impending recession. In 2000 he coined the term and the book Irrational Exuberance, which describes the way in which markets behave in a manner far less rational than popular economic theory presupposes. What does Shiller and his colleague, John Campbell, predict today? Read all about it. | Yale Alumni Magazine

• [Another] Man Who Predicted the Economic Meltdown: Mainstream media scoffed at Peter Schiff, president of the Connecticut brokerage-firm Euro Pacific Capital. Watch the hatchet job unfurl when Schiff sounded the alarm on CNBC in 2006. | NPR

• Med Yones, president of the International Institute of Management, in January 2007 published a white paper outlining the risks to the U.S. economy through 2017. Yones warned of the impending economic meltdown, as did First Pacific Advisor CEO Robert L. Rodriguez in his ironically titled “Absence of Fear” speech in June of that year.

• “Perma-Bear”. That’s how colleagues of money manager Jeremy Grantham, chairman of Grantham, Mayo, Van Otterloo & Co. LLC, referred to the man who in April 2007 opined that we are in the midst of a “global bubble”. Later, hedge fund legend, Julian Robertson, expressed his own concerns for a “doozy of a recession” in an October 2007 CNBC interview. In November that year, Bloomberg went on to report: “Nine of 50 economists pegged the odds of a contraction over the next 12 months at 50 percent or higher, according to a poll taken from Oct. 22 to Nov. 6. Just five of 46 held a similar view in September.” | Bloomberg

• The Analyst Who Rocked Citi, Meredith Whitney, founder of an advisory group by the same name, exposed Citigroup’s perilous position in October 2007. | Businessweek

• “Dr Doom“, New York University economist Nouriel Roubini, penned the now-infamous paper “The Rising Risk of a Systemic Financial Meltdown: Twelve Steps To Financial Disaster“. He saw the worldwide credit crunch coming in February 2008. | The Guardian

• Paul Craig Roberts: America Has Become an Oligarchy of Private Interests. New American writer Steven Yates challenges Reagan Administration veteran, former WSJ editor and “blackballed” columnist Paul Craig Roberts’ dour view of the state of free trade. Roberts, an economist who has disavowed both Republicans and Democrats, is the author of How the Economy was Lost: The War of the Worlds. His columns on CounterPunch.org have been credited with foreseeing the roots of the crisis years in advance.

• Fellow prognosticators include Dr. Marc Faber, publisher of the monthly investment newsletter “The Gloom Boom & Doom Report”, which “highlights unusual investment opportunities”; Gerald Celente, futurist and founder of the “Trends Research Institute“, predictor of economic civil unrest by 2012; and Ravi Batra, professor of economics and author of The New Golden Age.

• Was Goldsmith and his NAFTA-criticizing American counterpart, Texas billionaire Ross Perot, right all along? Has outsourcing mania, “corporate mercantilism” and record trade deficits grown as a consequence of GATT, the General Agreement on Tariffs and Trade and predecessor to the World Trade Organization? Decide for yourself if the World Bank, International Monetary Fund and the WTO influences your present-day financial realities: See the Big Picture in this eye-opening Q&A. | HubPages

• So what Economic Doctrine is to blame for the meltdown? For that we turn to the “battle of the dead economists”: A contrast between Ludwig von Mises, who favored unregulated/unfettered capitalism with its inherent sink-or-swim risks, and the prevailing Keynesian economic doctrine, which allows for economic intervention as proposed by John Maynard Keynes, which appears in this Wall Street Journal opinion piece. For a modern solution to the age-old war of the economic dogmas, the New Trade Theory is proposed in Free Trade Doesn’t Work: What Should Replace it and Why by economist Ian Fletcher, Adjunct Fellow at the San Francisco office of the U.S. Business and Industry Council. For even more myth-busting revelations where that came from, visit AmericanEconomicAlert.org.

• “Did Changing Bankruptcy Laws Cause the Mortgage Mess?” Three prominent economists published in the National Bureau of Economic Research apparently think so, FoxBusiness reports. The Center for American Progress, in “Bush’s Bankruptcy Legacy: Three Years and Nearly 1.5 Million Bankruptcy Filings Later“, in 2008 urged Congress to soften the blow of a fundamentally weak economy by weaving broader social safety nets. However, subsequent healthcare reform, stimulus spending and the like have only given rise to the criticism that President Obama is a “socialist“. Yet Goldsmith, were he alive, would probably argue that economic stimulus and cradle-to-grave “solution making” is merely a desperate attempt to pacify a downwardly-mobile society while ignoring the elephant in the room: globalization.

• The final straw: Reckless Wall Street risks sanctioned by the legislative unraveling of the Depression-era Glass-Steagall Act, setting the deregulatory stage for the Great Recession. Of the Republican-led Gramm-Leach-Bliley Act, also known as the Financial Modernization Act of 1999, Sen. Byron L. Dorgan (D-N.D.) made this prediction:

I think we will look back in 10 years’ time [2009] and say we should not have done this but we did because we forgot the lessons of the past … of safety and of soundness.

So who was the man who foretold our economic future? He — and she — were a lot of people. And we simply didn’t listen. Are we listening now?