Here are below links to the full text of those speeches:
The 2006 speech is not – for some reason – available on the IMF website. But courtesy of ECRI (where Anirvan Banerji, the discussant of my talk, is based) you can find that speech on the ECRI web site.
My 2007 IMF speech is instead available on the IMF site in three separate formats: a summary of the talk, a full transcript of my speech and the event, and a video webcast.
The two speeches are a bit long but – hopefully – still informative while being premonitory.
And here is the beginning of the New York Times Magazine article where the reactions to those two speeches are mentioned:
Dr. Doom
Two years ago, Nouriel Roubini predicted the current economic crisis. Now he sees things becoming far worse.
BY STEPHEN MIHM
Published: August 15, 2008, New York Times Sunday Magazine
On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.
The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.” People laughed — and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market. And then there was the espouser of doom himself: Roubini was known to be a perpetual pessimist, what economists call a “permabear.” When the economist Anirvan Banerji delivered his response to Roubini’s talk, he noted that Roubini’s predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer.
But Roubini was soon vindicated. In the year that followed, subprime lenders began entering bankruptcy, hedge funds began going under and the stock market plunged. There was declining employment, a deteriorating dollar, ever-increasing evidence of a huge housing bust and a growing air of panic in financial markets as the credit crisis deepened. By late summer, the Federal Reserve was rushing to the rescue, making the first of many unorthodox interventions in the economy, including cutting the lending rate by 50 basis points and buying up tens of billions of dollars in mortgage-backed securities. When Roubini returned to the I.M.F. last September, he delivered a second talk, predicting a growing crisis of solvency that would infect every sector of the financial system. This time, no one laughed. “He sounded like a madman in 2006,” recalls the I.M.F. economist Prakash Loungani, who invited Roubini on both occasions. “He was a prophet when he returned in 2007.”
A repeat of that cycle of skepticism followed by acceptance occurred at the World Economic Forum in Davos: in January 2007 I presented my bearish views about the US economy to a skeptical audience and panel in a plenary session on the global economic outlook where I was the only bear among five speakers.
In January 2008 instead the panel moderator – Michael Elliot of Time magazine – started the session by reminding the audience that a year earlier I had spoken at the same panel about three bearish forces – housing bust, credit crunch and high oil prices – that would trigger a US hard landing and that I had been proven right; then he gave me the floor and asked me to provide my updated views. Unfortunately the video of that 2008 panel – shown live on CNBC – was never made available publicly.
So it looks like it usually takes 12 months for delusional beliefs to get a reality check. Indeed a year ago the liquidity and credit crunch erupted; then the consensus view was that this was a temporary and contained problem that Fed easing would soon resolve. At that time (summer of 2007) I wrote several pieces arguing that this was not just a temporary illiquidity problem but a deeper and more persistent credit/insolvency problem that would lead to a systemic crisis that Fed policy could not resolve; that this was very different from the temporary 1998 liquidity crunch following the near collapse of LTCM because of solvency problems in the economy; that the problems in financial markets had to do with unpriceable uncertainty rather than priceable risk as the financial markets and the new financial instruments were very opaque, illiquid, exotic and impossible to price; that the Fed would be unable to control and reduce those sharply rising liquidity and credit spreads.
Now a year later interbank spread and credit spreads are as wide as they have been since the beginning of this crisis and after all the actions of the Fed and of policy authorities have – as predicted here a year ago – done nothing to dampen this liquidity and credit crunch. Indeed:
· spreads in interbank markets are sharply widening in a situation that is becoming very severe as financial institutions are scared of counterparty risky;
· spreads in credit markets are sharply widening and given the refinancing needs of financial and non-financial institutions these firms are facing a refinancing time bomb;
· all the drastic monetary policy actions by the Fed (Fed Funds easing and creation of new facilities such as TAF, TSLF, PDCF) have done nothing to ease the liquidity and credit crunch as financial markets suffer of massive problems of insolvency and credit risk, not just illiquidity;
But it has taken a year for senior policy makers – that a year ago were dowplaying the severity of the incoming financial problems at Jackson Hole – to recognize them now at the latest Jackson Hole meeting a week ago. As Stan Fischer put it at Jackson Hole this year (as reported in Bloomberg): “The financial crisis has revealed ways to “to listen better and filter warnings better in the future,” Fischer said. The turmoil was “widely expected,” he said, citing economists including Nouriel Roubini, a former Treasury official known for his bearish views. “Nouriel was only off actually by a year and a half or so,” Fischer said.”
Stan Fischer even agreed with my view that the financial crisis is “the worst since the Great Depression” even if he pointed out that, so far, the economic contraction has been much more modest. In my view the second round effect that he referred to in his Jackson Hole remarks will now lead to a significant economic contraction in the few quarters ahead, both in the US and in the other advanced economies as the US recession is now spreading to all of the G7 and to other advanced economies;
So maybe a year from now when the current US recession (yes we are already in a serious recession in spite of the 3.3% growth in Q2) will be officially recognized by the NBER as having started in Q1 of 2008 the current delusional belief that we will avoid a recession will also fizzle away.
So it looks like that in the five stages of grief (Denial (this crisis cannot be true!), Anger (why is this meltdown hurting me?), Bargaining (God please avert this crisis!), Depression (I don’t care anymore if markets collapse or the economy contract), Acceptance (I’m ready for whatever comes)) agents need about a year to go from the denial stage in which most policy makers and market participants were stuck for a while to the depression and acceptance stage that signals a reality check and a turning point in the crisis.