financial-crisis-tax-payer Even if you’re not an economist, chances are you might have heard of Nouriel Roubini, the Economics professor who declared in 2005 that the real estate industry was riding a speculative wave that would soon sink the economy. Much like the fabled Cassandra, his prediction was ridiculed just before it came true. In the Western world, his consultancy company got a boost and his credibility skyrocketed but due to producing mostly truisms during his conferences, he didn’t get very far.

Therefore, I was fairly surprised that in Romania he has the word “prophet” attached and he keeps getting invited to conferences while being praised more than the Delphi oracle. The simple fact that he came, given that he lacks invitations to the great economic poles of the world (like Shanghai or Tokyo), should show that newspapers-turned-tabloids aren’t exactly sources of information.

In fact, Roubini was neither the first nor the only one who saw it coming (not to mention the French did the whole subprime thing about 300 years ago). He was only the most vocal herald as well as the most inefficient. Therefore, it’s no wonder that he’s so popular in Romania, the land where being right about the issue and identifying the guilty is the same as having solved it.

So here they are, a few other who not only saw it coming, but they actually did something about it:

  • Sean Egan of rating company Egan-Jones Ratings – a rival of more famous Moody’s or Standard & Poor’s, Sean Egan has long warned his clients about poor credit quality and the dangers of the speculative system. When others labeled the subprimes as investment-grade, he shunned them and those who listened survived the crash.
  • Michael Mayo of Deutsche Bank in New York – in 1999 he favored stocks and shunned asset-backed securities that involved subprimes. In the same year, he accurately defined the crisis to follow, including the political fallout. Though his accurate predictions cost him his job at Credit Suisse, he has moved up ever since.
  • Robert Rodriguez of First Pacific Advisors – in 2004, Robert was already moving away from stock mutual funds. Decrying a lack in lending standards, he correctly noted that the lax lending policies would sink the mortgage industry and take down everything around. Unlike Michael Mayo, Robert Rodriguez expects a longer slump.
  • William Poole of St Louis Federal Reserve – as a ranking member of the Fed, William warned in 2002 that Fannie Mae and Freddie Mac lacked the liquidity to back their various financial products they were trading away. He firmly advocated they should be put down by the government instead of being pumped up to avoid a mild recession at the time. Warning against Fed policy also claimed his job, but his solutions may well be implemented in the future.
  • Richard Baker of Managed Funds Association – former congressman and then representative, Richard pushed for legal restrictions on financial institutions like Fannie Mae and Freddie Mac. Heavily attacked as a regulator in a free market and destroyer of the American dream of house ownership, Richard saw his bill die unsupported not too long before the government was faced with the decision of bailing out the two mortgage owners.
  • David Einhorn of Greenlight Capital – with worried dating 2005, David has long warned against the amount of leverage used by financial institutions. Advocating control by rating agencies on one hand, he took the liberty to profit by shorting Lehman Brothers stock, giving the giant institution a much needed nudge into the abyss and getting their Chief Financial Office the boot.
  • Bill Ackman of Pershing Square – he shorted bond insurer MBIA (who held insurance for both Fannie Mae and Freddie Mac) while cheekily advocating a reform for the two mortgage holders in a manner that would clear out existing shareholders (what a shock – he shorted them!). However, he still sides with financial institution, advocating only a mild reform that would keep independence.