Housing Disaster a Surprise? Don't Be Silly

12/10/2007 11:57 am ET | Updated May 25, 2011

One of the hallmarks of most financial implosions is the willful amnesia practiced by 99% of participants after the crash. One common hallucination? The idea that no one saw it coming.

Despite what you'd think from reading today's newspapers, lots of people saw the housing crash coming--just as lots of people saw the Internet crash coming, the biotech crash coming, the Japanese stock-market crash coming, and our own 1929 stock market crash coming.

Lots of analysts had been shouting from the rooftops since as far back as 2002 (three years before the peak) that a housing crash was coming and that it would kneecap not only homeowners but the rest of the economy. The crash took longer to happen than most of these analysts expected (the big crashes always do), but, so far, it's playing out just as they predicted.

Among the doom-and-gloomers who during the boom years were despised, ridiculed, and/or ignored:

Dean Baker, Center for Economic Policy and Research
Jim Grant, financial commentator
Jeremy Grantham, legendary money manager, and dozens of others.

The point here isn't to anoint a new generation of market gurus (which is what usually happens to the loud minority who get big calls right). It is merely to note that, although the ongoing news about the housing market and credit crunch is depressing, it isn't really news.

For years, those who sat on the sidelines of the housing market were ridiculed as being too stupid to take advantage of a safe, once-in-a-lifetime free lunch. Now, the caution of these brave folks is being rewarded. Meanwhile, the rest of us--the great screwed majority--are collectively trying to make ourselves feel better by presenting the crash as an unprecedented and unthinkable shock.