The Economist as Journalist

When Nouriel Roubini converted his Roubini Global Economics service to a subscription basis in 2005, EP compared the development to the launch of a magazine.

Like many others, the New York University professor was searching for a business model.  His site had begun life nearly ten years before as a public service bulletin board posting everything that was being written about the Asian financial crisis of 1997-98. As a monitor of what was being said, rather like Romenesko on the news industry or Johnson’s Russia List, he earned a devoted following among economists, investors, regulators and journalists. But it was hard work, and by 2005 he was eager to monetize his success.

By offering differential levels of access to high-paying customers, Roubini would be able to assemble a staff that could consult, as well as produce reams of analytic narrative for the general public. His determination to capitalize his name reminded me of the story of another entrepreneurial immigrant, B.C. Forbes, who quit his newspaper job in order to invent the modern business magazine in 1917. Many others followed in his train, including Barron’s, Dun’s, Kiplinger’s, Business Week, Fortune and, most recently, Grant’s.

But a purely electronic distribution? Why not? As long ago as the 1980s, Michael Bloomberg had shown that it could be done.

Good timing! Starting with a memorable talk at the International Monetary Fund in September 2006, the peripatetic Roubini issued a nearly constant stream of warnings that a very hard landing was not just likely, but all but inescapable. As problems slowly developed in ways not unadjacent to the worst case he had foretold, his fame increased among financial market participants.

Today he is first among equals in a small group considered to have sounded a credible alarm. It includes the University of Chicago’s Raghuram Rajan, Berkeley’s Maurice Obstfeld, Harvard’s Kenneth Rogoff and the University of Maryland’s Carmen Reinhart;  Yale’s Robert Shiller; the Massachusetts Institute of Technology’s Simon Johnson; William White, former chief economist of the Bank for International Settlements; and a pair of Wall Street economists, Stephen Roach of Morgan Stanley and David Rosenberg, formerly of Merrill Lynch, now with Gluskin Sheff in Toronto.  

Now Roubini is back with a book, Crisis Economics: A Crash Course for the Future of Finance, in a bid to consolidate his gains.

(In the summer of 2008, The New York Times Magazine assigned Stephen Mihm to write a profile of Roubini. It ran that August as “Dr. Doom.” An associate professor of history at the University of Georgia (NYU PhD 2003), Mihm then signed on as Roubin’s co-author, much in the manner of the collaboration of economist Steven Levitt and magazine journalist Stephen Dubner on Freakonomics. As a result, Crisis Economics is a better book than it would have been otherwise. More to the point, it is done.)

 It is, in fact, a pretty good book – better than its immediate competitors, which include Rajan’s Fault Lines: How Hidden Fractures Still Threaten the World’s Economy, Johnson and James Kwak’s 13 Bankers: The Wall Street takeover and the Next Financial Meltdown and Joseph Stiglitz’s Freefall: America, Free Markets, and the Sinking of the World Economy .. It touches all bases – probably it is fair to say that it lays out the paths between the bases that any non-technical account of the events of 2007-09 must follow – beginning with a quick rehash of the current predicament.  The underlying structure of the episode is so familiar to students of mania, panics and crashes, Roubini says, that it should be considered a “white swan,” as opposed to a completely unexpected event.

Next comes an homage to previous writers on the topic, Charles P. Kindleberger and Hyman Minsky in particular; followed by a review of the vast wave of financial innovation in the last fifty years that gave rise to the welter of new institutions known collectively as the shadow banking system.  The latter is particularly important.  To the extent that regulators were flummoxed by the panic of 2007 and the crisis of 2008, it was because they didn’t understand the ways in which the financial sector had changed.

Roubini then settles down to an extended narrative of the crisis – its presentation first in the United States; its subsequent propagation throughout the global system; the extraordinary monetary policies that the Federal Reserve Board pursued as lender of last resort; and the fiscal stimulus upon which the  Obama administration and the111th US Congress quickly agreed in early 2009.

There are chapters on the financial reforms already undertaken; on the need for more radical measures; and on the continuing threat of global imbalances.  There’s a conclusion, naturally – wholesale reform is necessary to bring the financial system to heel – and then a further chapter on the outlook for the global economy in the next twelve months. Accustomed to life as a play-by-play broadcaster, Roubini can’t stop narrating the action. The result is high-quality journalism, not economics, neither original nor deep by the  standards of research economics, but always lucid and knowledgeable. And it does convey some of the Roubini flavor: words like “ridiculous” and “absurd” turn up from time to time.

He prepared for this.  Born in 1959 in Istanbul to Iranian Jews, Roubini grew up in Teheran and Tel Aviv, attended college in Israel and Italy and received a PhD from Harvard in 1988 (Jeffrey Sachs was his adviser). He taught at Yale for six years (where he formed a durable friendship with Robert Shiller) before moving to New York University in 1995. NYU is an especially entrepreneurial place: soon the bulletin board was calling.  He spent a year as senior international economic staffer at the Council of Economic Advisers, then two more as an adviser in the Treasury Department, 1999-01, before returning to teaching  and tracking the economy full time.

Roubini himself is much as the book jacket describes him: a regular visitor to the World Economic Forum at Davos, a frequent television commentator, one of the “Top 100 Public Intellectuals” in the world in 2008 according to Foreign Policy magazine; “the second most important public intellectual in the world,” according to Prospect magazine. He is a darling of the Financial Times. George Soros, the hedge fund magnate, hosted Roubini at his summer home while he finished parts of the book.

There’s much more to say about the crisis, of course, and the various authorities pronouncing on it in an avalanche of books, but not this Sunday morning. For now, recognizing Roubini as a highly accomplished narrator, rather than as a producer of fundamentally new ideas, means reorganizing somewhat our ideas about the Fourth Estate. With the aid of many others, some of them citizens of the blogosphere – among those he singles out are Yves Smith of “Naked Capitalism” and Barry Ritholtz of “The Big Picture,” each of them authors in their own right – Roubini has done a remarkable job as a commentator over the last ten years of structuring the story. But can you aspire to be recognized as a prominent journalist in a democracy if you don’t seek an audience in a form an average reader can afford and even read in print?

The answer is no. This is the reasoning  that animated Bloomberg’s LLP’s purchase of Business Week last year, enabling Bloomberg’s Business Week to enter the lists. It is the logic that impelled Roubini to write his book. By dint of publishing an analytic narrative of the events of 2007-09, he has become one of our leading economic journalists, along with Paul Krugman, Joseph Stiglitz, Robert Samuelson, Simon Johnson, Raghuram Rajan and Martin Wolf. You can read Roubini on the printed page, or on the web, or wait until a few days until his views, like those of other leading lights, are fashioned by others into conventional wisdom.

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Those who enjoyed Knowledge and the Wealth of Nations: A Story of Economic Discovery  (and even those who didn’t) will find absorbing Sebastian Mallaby’s article in The Atlantic magazine on the latest chapter in the Paul Romer saga: The Politically Incorrect Guide to Ending Poverty.

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