If you've granted me the point about the inherent unpredictability of sports-team performance in a given season, let's take this into a more important area: the current economic meltdown. Some people - Bill Bonner, Jim Grant, Nouriel Roubini and a handful of others - were warning for some time about the dangers inherent in the creation of ever more debt and how this would lead to disaster. But most "experts" dismissed these "perma-bears" as killjoys who didn't understand the workings of the modern economy. Once again, we had entered a New Era, in this case one in which the values of residential real estate would continue ever upward and there would be no need to worry about derivatives of real things being priced at a multiple of the real things themselves.
We all now know this was massive self-delusion, the kind to which we succumb, just as did the peoples of earlier times. Strangely, one of the many sobering things about the current emergency is the lack of predictions about how this will turn out, or what will eventually right the ship. The "experts" in economics have apparently come to grips with the fact that they do not know what they do not know. Who could ever have predicted that?
