Another Global Financial Crisis Looms

The thing about which I have been most right in my career is the thing for which I have received the least credit. Beginning in June, 2006, I wrote a series of articles and gave numerous speeches that predicted, with considerable precision, the global financial crisis that would emanate from subprime mortgage defaults.

Looking back, I now realize I should have kept that prediction to myself, set up a hedge fund and short-sold everything in sight, beginning with U.S. mortgage lenders.

Instead, like the fool of an academic that I am, I wrote a book (The Ascent of Money) that was published just as my predictions were coming true. I tell you this only so that you will read attentively my current thoughts on the global economy. After all, there is a lot about the present time that is reminiscent of those pre-crisis days. Almost every asset class is up. In all but a handful of housing markets (notably Ireland), inflation adjusted home prices are above where they were on the eve of the crisis. From peak to trough, U.S. home prices plunged by a quarter between 2006 and 2012. They have now recovered all of that loss and added some more on top. New York condos are now 19 per cent above their pre-crisis high. And real estate isn't the best performer of 2017.