Home > Uncategorized > Keen, Roubini and Baker win Revere Award for Economics

Keen, Roubini and Baker win Revere Award for Economics

Steve Keen (University of Western Sydney), receiving more than twice as many votes as his nearest rival, has been judged the economist who first and most cogently warned the world of the coming Global Financial Collapse. He and 2nd and 3rd place finishers Nouriel Roubini (New York University) and Dean Baker (Center for Economic and Policy Research) have won the inaugural Revere Award for Economics.  It is named in honour of Paul Revere and his famous ride through the night to warn Americans of the approaching British army.

Keen, Roubini and Baker have been voted to be, more than all others, the three economists who if the powers of the world had listened to, the Global Financial Collapse could have been avoided.

More than 2,500 people voted—most of whom were economists themselves from the 11,000 subscribers to the real-world economics review. With a maximum of three votes per voter, a total of 5,062 votes were cast.  The voters were asked to vote for

the three economists who first and most clearly anticipated and gave public warning of the Global Financial Collapse and whose work is most likely to prevent another GFC in the future.

The poll was conducted by PollDaddy.  Cookies were used to prevent repeat voting.

Award Citations  

Steve Keen (1,152 votes)

Keen’s 1995 paper “Finance and economic breakdown” concluded as follows:

The chaotic dynamics explored in this paper should warn us against accepting a period of relative tranquillity in a capitalist economy as anything other than a lull before the storm 

In December 2005, drawing heavily on his 1995 theoretical paper and convinced that a financial crisis was fast approaching, Keen went high-profile public with his analysis and predictions. He registered the webpage http://www.debtdeflation.com dedicated to analyzing the “global debt bubble”, which soon attracted a large international audience.  At the same time he began appearing on Australian radio and television with his message of approaching financial collapse and how to avoid it.  In November 2006 he began publishing his monthly DebtWatch Reports (33 in total). These were substantial papers (upwards of 20 pages on average) that applied his previously developed analytical framework to large amounts of empirical data. Initially these papers analyzed the Global Financial Collapse that he was predicting and then its realization.

Nouriel Roubini (566 votes)

In summer 2005 Roubini predicted that real home prices in the United States were likely to fall at least 30% over the next 3 years.  In 2006 he wrote on August 23:

By itself this [house price] slump is enough to trigger a US recession.

And on August 30 he wrote:

The recent increased financial problems of … sub-prime lending institutions may thus be the proverbial canary in the mine – or tip of the iceberg – and signal the more severe financial distress that many housing lenders will face when the current housing slump turns into a broader and uglier housing bust that will be associated with a broader economic recession. You can then have millions of households with falling wealth, reduced real incomes and lost jobs…”

In November 2006 on his blog he wrote:

The housing recession is now becoming a construction recession; and the construction recession is now turning into a clear auto and manufacturing recession; and the manufacturing recession will soon turn into a retail recession as squeezed households – facing falling home prices and rising mortgage servicing costs – sharply contract their rate of consumption.

Dean Baker (495 votes)

In August 2002 Baker published “The Run-Up in Home Prices: Is It Real or Is It Another Bubble?” in which he concluded that it was the latter. In December 2003 he published in the Los Angles Times  “Who to Blame When the Next Bubble Bursts”. This was the first of dozens of columns appearing in US newspapers that Baker wrote on the bubble. In one from May 2004, “Building on the Bubble”, he wrote:

The fact that people are borrowing against their homes at a rapid rate (more than $750 billion in 2003) is more evidence of an unsustainable bubble. The ratio of mortgage debt to home equity is at record highs.

 In 2006 he put out repeated warnings of the systemic implications of the housing bubble, and in November published the paper “Recession Looms for the U.S. Economy in 2007” in which he wrote:

The wealth effect created by the housing bubble fuelled an extraordinary surge in consumption over the last five years, as savings actually turned negative. …This home equity fuelled consumption will be sharply curtailed in the near future…. The result will be a downturn in consumption spending, which together with plunging housing investment, will likely push the economy into recession.


The vote totals for the other finalists were:   

Joseph Stiglitz  480

Ann Pettifor  435

Robert Shiller  409

Paul Krugman  399

Michael Hudson  351

Wynne Godley  281

George Soros  262

Kurt Richebächer  168

Jakob Brøchner Madsen  64

Reasons for the
Revere Award

The general failure to warn of the approaching Global Financial Collapse demonstrated that within the economics profession today the general level of competence at real-world economics is grievously less than what society requires.  Worse, the economics establishment has attempted to evade all responsibility for the Global Financial Collapse by calling it an unpredictable, “Black Swan” event.  Such statements are plainly untruthful.  Some economists did foresee the crisis and warned the public of its approach.  At the time they were widely ridiculed for doing so.  It is hoped that the Revere Award will give these economists some of the professional and public recognition they deserve, to encourage others to utilize their methods, and to increase the likelihood that, for the benefit of humankind, empirically responsible economists, instead of faith-based ones, will be listened to in the future. It is not just for the winners’ sake but for everyone’s that Keen, Roubini and Baker should be given public credit for their competence and courage.

More information
about the contributions of the winners and finalists is available at Foresight and Fait Accompli: Two Timelines for the Global Financial Collapse  https://rwer.wordpress.com/foresight-and-fait-accompli-two-timelines-for-the-global-financial-collapse/

  1. s h a r o n
    May 13, 2010 at 2:19 pm

    Is there some place (on RWE or elsewhere) where one could ask dumb questions?
    So with this heads-up, I’ll ask one here:

    What would an alternate scenario look like had any of the top three award winners’ warnings and insights been heeded?

    • Chris@cepm.co.uk
      November 21, 2013 at 11:02 am

      It would depend on who did the heeding and what they hoped to gain. It could vary from a slow leak in the bubble that reduced the bang or prevented it bursting to, at the other end of the scale, derivatives being made illegal financial instruments.

  2. Bernard Mallia
    May 13, 2010 at 4:11 pm

    A very big well done to Dr. Keen .

    Although this is only the beginning of our war on the sophistires of neoclassical economics, I believe that there is no one who is more deserving than him for the Revere price in Economics. He has been called a looney by the real lunies, but in the end he has been proven right. He was also unfortunate enough to lose a bet that was biased by intervention from the Australian Government, so it is very encouraging to see that many people in the field recognise this fact.

    His book, “Debunking Economics” should be standard reading for anyone interested in economics. I have learnt much more from his writings and those to which he refers than I have in all my other economics readings combined.

  3. May 13, 2010 at 9:25 pm

    Congratulations to Steve….very well deserved, and someone whose work I have long admired and drawn upon. I am told by a visiting Australian that he is still walking…He will be vindicated.

  4. harry_w
    May 13, 2010 at 9:46 pm

    Congratulations to the 3 winners, especially to Steve Keen for his brave analysis against the grain of most of the economics profession.

    Fred Foldvary justifiably points to his own work from 1995 onwards:

    Perhaps Henry C.K. Liu isn’t eligible, but if he were then I think his analyses in Asia Times Online from 2002 onwards merit consideration:

    Sep 14, 2005
    Greenspan, the Wizard of Bubbleland
    …In recent months, Greenspan has repeatedly denied the existence of a national housing bubble by drawing on the conventional wisdom that the US housing market is highly disaggregated by location, which is true enough. Disaggregated markets are normally not exposed to contagion, a term given to the process of distressed deals dragging down healthy deals in the same market as speculator throw good money after bad to try to stem the tide of losses. But the bubble in the housing market is caused by creative housing finance made possible by the emergence of a deregulated global credit market through finance liberalization. The low cost of mortgages lifts all house prices beyond levels sustainable by household income in otherwise disaggregated markets.

    Under cross-border finance liberalization, negative wealth effects from asset-value correction are highly contagious. For example, the Dallas Fed Beige Book released on July 27 states: “Contacts say real-estate investment is extremely high in part because the district’s competitively priced markets are attracting investment capital from more expensive coastal markets.” The nationwide proliferation of no-income-verification, interest-only, zero-equity and cash-out loans, while making financial sense in a rising market, is fatally toxic in a falling market, which will hit a speculative boom as surely as the sun will set. Since the money financing this housing bubble is sourced globally, a bursting of the US housing bubble will have dire consequences globally. …

    Jan 11, 2006
    Of debt, deflation and rotten apples
    Deflation is a problem that looms over the horizon when the US debt bubble bursts to slow down the economy. …

    A look at the Japanese debt economy in the past decade will give some idea of what awaits the US debt economy when deflation hits. …

    Deflation is a problem that cannot be cured by monetary measures alone, as Japan has found out and as the United States is about to. …

    In March 1999, about a month after the adoption of the zero-interest-rate policy, major [Japanese] banks were recapitalized by injection of public funds. But the “convoy system” of bank mergers shelters the weakest banks at the expense of the strong. … There is visible evidence that something similar will happen to the United States when deflation hits. Many US companies would in fact be walking dead in a deflationary environment even if interest rates were set at zero.

    … in this era of finance capitalism flirting fearlessly with debt, lowering rates creates complex problems, especially when most big borrowers routinely hedge their interest-rate exposures. For them, even when short-term rates drop or rise abruptly, the cost remains the same for the duration of the loan term, the only difference being that they pay a different party. While debtors remain solvent, investors in securitized loans go under. Credit derivatives have been the hot source of profit for most finance companies and will be the weapon of massive destruction for the financial system, as Warren Buffet warned. …

    … Arbitrary, secretive and whimsical intervention on a massive scale hangs as an ever-present threat over the global system of financial exchange. Individual self-preservation moves and short-term profit incentive will bring the global system crashing down some Tuesday morning. This is what Alan Greenspan means by the need of central banks to provide “catastrophic insurance”. …

    For his own retrospective:
    Mar 17, 2007
    Why the subprime bust will spread

  5. May 14, 2010 at 7:38 am

    My sincere congratulations to the three winners.

    This is an important step into what eventually will be a paradigm shift in economic thought. It’s already long overdue.

  6. May 14, 2010 at 8:53 am

    That’s really amazing, congratulations to all three. Hyman Minsky should get a post mortem award as well, from my point of view. Back in 1986 he kind of predicted the current crisis of Economic research: “Unfortunately, the economic theory that is taught in colleges and graduate schools is seriously flawed. The conclusions based on the models derived from standard theoretical economics cannot be applied to the formulation of policy for our type of economy.”

  7. May 14, 2010 at 3:31 pm

    And what about William (Bill) White of the Bank for International Settlements? His reports were extremely prescient. Roubini foretold the wrong crisis: a dollar collapse caused by a violent unwinding of the global imbalances.

  8. May 16, 2010 at 7:52 pm

    Very interesting. Is there such a thing as global balance when there is soo much financial unstability.

  9. JBH
    June 14, 2010 at 4:56 pm

    Curious. Why did Paul Krugman get all these votes? I can find no place in his written record where he concretely warned of systemic risk like the top three vote getters obviously and definitely did. This question, I believe, is worthy of serious study and review.

  10. June 21, 2010 at 4:53 am

    I agree with you JBH, nice idea

  11. scientella
    October 27, 2010 at 10:15 pm

    NOW you are getting what you deserve.



  12. April 4, 2011 at 8:37 pm

    Hey, I like this award system. I want to see a lot of “niche” awards!

  13. Mike
    July 20, 2011 at 1:49 pm

    For visitors not aware of it, an interesting paper:

    “No one saw this coming” : Understanding Financial Crisis Through Accounting Models

    Click to access MPRA_paper_15892.pdf

  14. December 29, 2011 at 4:00 am

    With exceptions like those noted by JBH, this is an excellent idea, one that we journalists should copy.

    Speaking of which, I am somewhat more than curious that the book “Debunking Economics” attracts barely quarter of a million search results on Google, and just one – count it – link on Google News. To, of all places, Forbes. From just last week. For a book first released nearly ten years ago, in 2002.

    Is this abject failure to gain traction an appalling global conspiracy? Appalling lack of promotion? An appalling combo of both?

  15. Gweirydd ap GWyndaf
    February 1, 2012 at 4:13 pm

    It’s amusing that Keen gets the award considering that Keen’s own book, Debunking Economics, singles out Fred Harrison as the first one to give the warning, a year before Keen, in 2005 (though he actually predicted it as far back as 1997, 9 years before any of these).

  16. October 18, 2013 at 4:30 am

    Academic economists are totally out of touch with reality, as shown by this list of Revere Prize finalists, which did not even include Peter Schiff, who forecast in accurate detail how the housing induced recession was going to unfold. None of the other finalists described the various steps of the unraveling and were merely warnings rather than forecasts, which must specify events A, then B, then C then D etc…

    Listen to the 13 November 2006 speech around the 35 minute mark of this video, which now also warns about Janet Yellen and mainstream media misinformation:

  17. October 27, 2013 at 3:33 pm

    What’s the point to be the first to most cogently warn the world of the coming Global Financial Collapse when it was a Global Systemic Crisis (and not simply a financial one) ?
    Read this announcement back in February 2006, updated each month since :

    or this one about Lehman Brothers collapse :

  18. June 13, 2014 at 5:19 pm

    Maybe I missed it, but any talk of where we’re headed now with the housing economy seeminly making a recovery…at least here in Dallas?

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