Because the collapse of Lehman in Sept. 2008 serves as such a convenient inflection point, it's easy to forget that the Great Recession started at least nine months earlier, and that the shadow banking system started to unravel more than a year earlier. This also underscores the offensiveness of the many economic and political bigwigs who protested that "Nobody saw this coming" when things really got bad in the fall of 2008. Many credible analysts saw everything that was coming. I wrote about the dire implications of the unfolding crisis at least seven times before Lehman collapsed ( here, here, here, here, here, here, and here). I suspect that many of those who proclaimed to be blindsided actually knew better, but hoped the stock market (which made a new high just two months before the recession began) wouldn't notice. It's also possible -- though terrifying -- that the Federal Reserve Chairman Bernanke, who persistently described the housing crisis as "contained," was so blinkered by non-reality-based economics that he actually didn't see it coming.
A couple of predictions I made back then did not come to pass. Most notably, I predicted that the harsh economy would lead to a new appreciation of safety nets and other protections afforded by the government. Instead, we saw the rise of the Tea Party, whose members call for the dismantling of safety nets and regulations.
So here we are, six years later, with the markets once again at an all time high and the economy still mired in what might best be described as a depression. Margin debt is back to pre-collapse levels, the big banks are bigger than ever, and the rich are richer than ever. Yet the average American household remains tapped out, and struggles with a real income just a bit more than it was in 1973. So, in a few months, get ready to hear, once again, that "nobody saw this coming."
