Here’s some good fun: Let’s compare what various economists and officials had to say at Davos in 2008 versus what they’re saying today,
THEN: Finance Minister Aleksei Kudrin of Russia said his country, its coffers swollen by oil profits, would "soon be the focus of attention as a haven of stability."
NOW: Speaking on television last month, Kudrin predicted "the worst year for the economy in modern times. 2009 will be the most difficult for the Russian and world economies. I cannot remember a worse year since the end of World War II."
THEN: Stephen Roach, chairman of Morgan Stanley Asia, criticized the U.S. Federal Reserve’s management of monetary policy after its emergency rate cut of 75 basis points in January 2008. "Policy makers are reaching back into the same playbook that got us into this mess in the first place," Roach said.
"We have two factors that triggered this recession – a decline in housing prices and the bursting of the credit bubble. Aggressive Fed action will not fix the impact of supply and demand, which is pushing housing prices lower, and it’s not going to return credit markets to their pre-crisis function."
NOW: Interviewed recently, Roach asked: "What does the world get from the massive monetary stimulus of the past year? It seems to me that this response of the authorities is aimed at resurrecting the same dysfunctional system and behavior that got us into this mess in the first place."
"The very last thing overextended, saving-short American consumers need is to return to the debt-supported, asset dependent consumption binge that lies at the heart of this crisis."
THEN: Fred Bergsten, director of the Peter G. Peterson Institute for International Economics in Washington, said: "It is inconceivable – repeat, inconceivable – to get a world recession."
NOW: Speaking before Davos began, Bergsten conceded: "You can argue about the definition of recession, but I’m not going to hide behind technicalities: The slowdown and globalization of it has been much greater than I expected." Still, he added, "through the first three quarters of last year, my prediction was correct."
THEN: Nouriel Roubini, a New York University economics professor, predicted a flood of credit defaults and a prolonged bear market. "The debate," he said, "is not whether we’re going to have a soft landing or a hard landing. The question is only how hard the hard landing will be."
NOW: Roubini said at a conference last week: "I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers. If that’s true, it means the U.S. banking system is effectively insolvent, because it starts with a capital of $1.4 trillion. This is a systemic banking crisis."
"The problems of Citi, Bank of America and others suggest the system is bankrupt. In Europe, it’s the same thing."
He also said commodities prices could fall "over all another 15 to 20 percent. This outlook for commodity prices is beneficial for oil importers. It’s going to imply that economic recovery might occur faster, but from the point of view of oil exporters, this will be very negative."
THEN: John Snow, chairman of Cerberus Capital Management and a former secretary of the U.S. Treasury under President George W. Bush, said that if the United States slipped into recession, it would be "short and shallow."
"That’s been the pattern of recessions in the U.S., and there’s a reason for it," he said. "There is an inherent resilience in the U.S. economy. We’re already seeing an adjustment."
NOW: Snow, asked for his views last week, declined to comment.
THEN: Angel Gurria, secretary general of the Organization for Economic Cooperation and Development, opposing proposals for a new global regulator to oversee financial markets, warned against institutional proliferation: "Don’t invent new stuff" he said. "Don’t invent a new bureaucracy."
NOW: Commenting on the humbling of the free market, as reflected in the forum this year, Gurria said: "Davos is reflecting what’s happened in real life. The main protagonists – and the ones setting the agenda – are the political leaders."
THEN: Robert Shiller, an economist at Yale University and the originator of the Case-Shiller index of U.S. house prices, said U.S. house prices could fall by as much or more than they did in the 1930s. "It is such a big crisis that it is of historic importance," he said. "It may represent a major turning point and we will see years of falling home prices and associated economic weakness."
NOW: Shiller said last week that the thing that had surprised him the most was "how unstable the banking sector could be if pushed beyond the normal limits."
"I’m not any more optimistic now," he said. "But the good news is that we have a charismatic new president. The recession will end by 2010, but the growth from it will be disappointing."
So, which one is best? I’m partial to Fred Bergsten’s quote and John Snow’s, but I’ll let other people choose.