Martin Feldstein: Houston, We Have A Problem

Feldstein says this could be the worst recession since WWII. I told you so back in October. (That is, after I told you not back in January of 2007.)


  1. In your piece from a year ago, very few analysts predicted that the credit crunch would be as severe as it is today. Nor did many observers believe that the dollar would lose as much value.

    The reason I mention this is because in your last footnote, you mention a $50 range. However, oil actually surpassed $90USD last year... arguably due to economic "terrorism" in the form of inflation and free loans.

    Still the same, good piece.

  2. Well, what happened is that I had been bewitched by my former employer, and thought that oil prices were coming down. (They were around $60/barrel when I wrote that piece.)

    So if oil prices really did come down, then that would've reduced the trade deficit and pressure on the dollar.

    Also, the people I was arguing with were just saying, "Fiat money bad! Trade deficit bad!" They weren't giving specific reasons for the economy to do poorly at that time.

    Then after I quit my job and delved into the data on my own, I saw things that I hadn't noticed before. In particular, I looked at the Fed's handling of interest rates and realized just how crazy the 2003-2004 period was. So that's when I got scared.

  3. And we all know who to blame for it.


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