Paul Kedrosky: Beware the Leopard: The Credit Crisis's Long Arrival

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September 28, 2008

Beware the Leopard: The Credit Crisis's Long Arrival

You can't go very far without someone telling you how the credit crisis is being sprung on an unsuspecting electorate as some sort Bush Administration election surprise. I'm not sure how it helps McCain, but let's give that a pass for the moment.

Trouble is, most smart and reasonable people who follow these things knew there was something nasty coming -- and much it was tipped again in highly concrete terms last February at my Money:Tech conference by Nouriel Roubini and Rick Bookstaber. The credit crisis has been building for years, the drumbeats getting louder for a year, and deafening for six months -- and yet most people still had heard nothing.

(For my part, to personalize this, while I saw all the symptoms, and wrote and spoke about them, the severity of the credit crisis also exceeded what I initially thought it would be. Admittedly, I was not alone, but it still pains me immensely to say it. I was forced to play catch-up, when I should have known better.)

What didn't the general population know, and when/why didn't it know it? It's an important question. In a perverse way, the supposed "suddenness" of the crisis reminds me of this classic Hitchhiker's Guide to the Galaxy moment.

"But Mr Dent, the plans have been available in the local planning office for the last nine month."

"Oh yes, well as soon as I heard I went straight round to see them, yesterday afternoon. You hadn't exactly gone out of your way to call attention to them, had you? I mean, like actually telling anybody or anything."

"But the plans were on display ..."

"On display? I eventually had to go down to the cellar to find them."

"That's the display department."

"With a flashlight."

"Ah, well the lights had probably gone."

"So had the stairs."

"But look, you found the notice didn't you?"

"Yes," said Arthur, "yes I did. It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard'."