A wonderful confession

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Adair Turner is an obviously very intelligent man who graduated from Cambridge University with a double first in history and economics and whose distinguished career has included being Chairman of the British Financial Services Authority, director-general of the Confederation of British Industry chairman of the Pensions Commission and becoming Baron Turner of Ecchinswell.

He begins his recent book, Between Debt and the Devil, speaking of September 2008, with a remarkable and highly instructive mea culpa, which includes the following:

I had no idea we were on the verge of disaster.

Nor did almost everyone in the central banks, regulators, or finance ministries, nor in financial markets or major economics departments.

Neither official commentators nor financial markets anticipated how deep and long lasting would be the post-crisis recession.

Almost nobody foresaw that interest rates in major advanced economies would stay close to zero for at least 6 [now 8] years.

Almost no one predicted that the Eurozone would suffer a severe crisis.

I held no official policy role before the crisis.  But if I had, I would have made the same errors.

To draw the necessary implication of this wonderful confession: If you think that the superior knowledge, foresight and wisdom of government financial regulators and central banks are going to save you from getting into trouble, you are suffering from a strange, misguided and irrational faith.


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