Cassandra Search

Tyler Cowen asks about the existence of Cassandra's concerning the current financial situation in the US.  But Tyler overlooks the warnings we have put forth on this blog, inspired not just by theory, but the practical insights of a very successful businessman in the financial sector Edward Weick.  Ed worked for Goldman Sachs for years before opening his own office.  Ed has been influenced by the Austrian school, but he is not only an abstract thinker but a man of practical affairs.  Ed has been arguing for at least 3 years of the coming crisis, after years of being much more optimistic.  The individuals who invest with Ed had very high stakes in being right, and they listened to him about the coming financial collapse and they worked together to protect assets in preparation of the difficult times.

In 2005, I wrote an blog entry about "Is it time to sell short?"; in 2006, I wrote a follow up blog entry about "Is it time to sell short? Redux", and Fred has written similar blog entries influenced by Ed.

I discuss Ed's impact on my intellectual development in an entry entitled "Mentors and Me."

So Ed Weick fits Tyler's description of an insightful Cassandra because not only did Ed state the possibility of the coming collapse, he acted on that warning personally and professionally, and he did so with significant financial stakes on the line.  And as Ed will tell anyone who cares to ask, he did so because of his deep understanding of financial markets gleaned from a close study of Ludwig von MIses and over a quarter century of practical experience in the industry.

Comments

[Ed Weick]

Austrian economics and Pete for a teacher are a dynamite combination.

[Mike]

I would think that the charge against Austrians would be similar to the one Arnold Kling makes against Paul Krugman, that they were too pessimistic too early and that they did not predict many of details of the current crisis or that many of their specific predictions failed to materialize.

I'm sure youve heard the joke by now of Austrians predicting seven of the last five recessions by now.

[Dave Prychitko]

I recall Pete mentioning Ed in that earlier post, and I know this is a fact: Pete never speaks lightly of those who had a direct impact on his intellectual development. He is always sincere.

[Peter Boettke]

Mike,

Yes a broken clock gets the time right twice a day. Understand.

But in the case of this particular gentleman, he actually detailed the issues with falling housing prices and the difficulties of mortgage back securities. I did not say I predicted it, I said Ed Weick did and the stakes involved where beyond what any of us could imagine in our own private lives. Seriously!

I pushed back against Ed and argued he was too pessimistic. And that the economy could absorb a silly amount of restrictions. Ed pushed back on me and gave detailed arguments about why this was different because of the mortgaged back securities and the leveraging going on.

So while I agree that many so-called "Austrian" types are guilty of the "a broken clock gets the time right twice a day", Ed Weick does not fall into that category.

Pete

[Steve Horwitz]

Let me just add that although I haven't known Ed as long as Pete, he got this more right than anyone else I know, to my own embarrassment in also pushing back against his pessimism right before things began to fall apart.

Ed is also a gentleman - he could easily have done the "I told you so" routine on my in the last few months, but he never has.

[Richard O. Hammer]

This thread makes me wish I could learn more about Ed Weick and his work. My Google search did not help. Can you provide a link? Or would that be inappropriate?

[TGGP]

If Austrian economics really helps investors, why aren't there a lot more folks in finance using it?

[Ed Weick]

to TGGP__The essence of the political economic theory developed by the Austrian scholars is seldom seen in the financial literature. My experience included two very unique teaches; the 2d was Pete when he taught but two years at Oakland University. We met and began a deep teacher/student relationship.