Gasparino vs Roubini

By Felix Salmon
October 11, 2010
Charlie Gasparino takes a swing at Nouriel Roubini today; I'm not sure why, beyond general unhappiness at the fact that Nouriel still gets a lot of respect both inside and outside Washington.

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Charlie Gasparino takes a swing at Nouriel Roubini today; I’m not sure why, beyond general unhappiness at the fact that Nouriel still gets a lot of respect both inside and outside Washington.

Gasparino apparently conducted an “informal survey”, in which, he says, he couldn’t find a single investor who regularly uses Roubini’s research. He tells us nothing about the participants in this survey — who they are, how many of them there are — and neither does he tell us what he would consider “regular use”. (Note what he doesn’t say: that his survey turned up no subscribers to Roubini’s research.)

It’s not entirely clear what the point of this “informal survey” was, since all he needed to do was phone up Nouriel’s spokesman, who was happy to tell him that Roubini has over 1,000 institutional clients. Maybe it was just an excuse to start bashing Nouriel’s research output:

Roubini’s record shows that while he was predicting doom and gloom for the US in 2004, his initial call had nothing to do with a runaway housing bubble…

It wasn’t until about August 2006 that Roubini began talking about a housing crisis, and he was hardly alone. Several economists and investors, from John Paulson to Stan Druckenmiller and around this time Goldman Sachs, were also predicting the housing decline…

Last year he predicted that the rising price of gold was in fact a bubble, just like the housing one a few years earlier, and like housing, it would burst as well. But as we all know gold prices remain strong.

Someday, Roubini might be right about gold’s demise, but what good does that do me as an investor now?

This doesn’t even make internal sense. Gasparino implies that Nouriel’s bearish prediction in 2004 would have had value if he had tied it to the housing bubble, even though the housing bubble didn’t burst for a good three years after that. But then he slams Nouriel for talking about the gold bubble last year, on the grounds that identifying a bubble more than a year in advance doesn’t do him good “as an investor now”.

If Gasparino spent time on the phone with Nouriel’s spokesman, he surely knows that there’s a great deal more to Nouriel’s research product than Nouriel’s own predictions. Those are highly publicized in any case: you don’t need to pay Roubini.com thousands of dollars to find out what Nouriel thinks about, say, Greece. Instead, his product gives you access to a large team of smart economists, who do a lot of very useful aggregation, analysis, and strategy. And if you pay enough, you also get access to Nouriel himself, which means he’ll answer your questions and have interesting and provocative conversations with you, which in turn will be informed by all the other interesting and provocative conversations that he’s constantly having with clients, policymakers, and other smart and important people.

Does Gasparino really believe that the reason to subscribe to Nouriel’s research product is so that you can find out where Nouriel thinks that asset classes are moving, place bets in those directions, and then make money when he turns out to be right? I can’t imagine that he does, but clearly he’s happy to pretend to believe that if doing so will give him anti-Roubini ammunition.

The truth is, of course, that Gasparino’s only real beef with Roubini is that he’s a successful liberal. But the secret of Nouriel’s success is only partially a function of his early and loud insistence that the collapsing housing bubble would prove catastrophic. If Gasparino considers himself a student of how to successfully navigate Wall Street, he should take a much more serious look at Roubini.

(Full disclosure: I was fired from Roubini’s shop in early 2007, but he did give me enough exposure as an econoblogger that I was soon hired by Portfolio.com.)

Update: Watch Gasparino stammeringly recapitulate his argument on air, adding for good measure that “the only person that has disagreed with my analysis so far is Felix Salmon of Reuters, who — besides that he has a screw loose — is maybe the worst reporter in the world”. He says all this while bashing Roubini and while sitting right next to Mike Norman of John Thomas Financial. About which you might want to learn more here or here.


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Comments
10 comments so far

You know, Gasparino is complaining about you on Facebook (http://www.facebook.com/profile.php?id= 1193068568) but when I tried to link to this article at his Facebook page, he deleted the link and told me not to post links to his site.

Posted by DaveFriedman | Report as abusive

Gasparino is terribly tedious, self-regarding and quite, quite unfit to take pops at Roubini, Krugman, Stiglitz or any of the other liberal economic commenters he is required to fulminate about per his Fox contract.

For a start, as he has pointed out with his books about Wall Street’s political lobbying, no-one will listen to them anyway because they don’t pay the bills.

His boss on the other hand… is a different story. How about the fact that all mainstream financial news is now basically owned by about three families, the Murdoch’s, Bloombergs and Thompsons?

Posted by KatyH | Report as abusive

How can you type “John Thomas Financial” without falling off your chair in hysterics?

Posted by Uncle_Billy | Report as abusive

How do you get fired by Roubini ..

Posted by Woltmann | Report as abusive

The worst reporter in the World! That is some achievement.

For any Monty Python newbies out there, here is a video that mentions the above-mentioned financial firm.

http://www.youtube.com/watch?v=CcP8sVjZ5 qg

Posted by JDB | Report as abusive

Well done Felix.

Posted by chaetodon | Report as abusive

Obviously he is wrong about your good self Felix, but he does have something of a point on the Prof, or more importantly the way that the media (irony alert) create “experts” in the wake of crashes (Elaine Gazzerelli anyone?)It is true that Roubini has been a crash in search of a cause, variously warning on the US economy for 4 or 5 years and then becoming an instant pundit when his “Predictions” came true. Except of course they didn’t. To his credit Roubinni has subsequently written a very sound diagnosis of the way the financial markets crashed the economy rather than the other way around. However, almost none of this was what he “predicted”, which is I gues Gasparino’s point. He also performed a service in providing a coherent explanation to the crisis to Oliver Stone in Wall St 2, although which childrens’ book of how Wall St works provided the “background to the rest of the “Plot” remains a mystery.

Posted by MTinker1 | Report as abusive

BADGE OF HONOR!!!

Posted by fixedincome | Report as abusive

MTinker1, well at any one time at least one guy out of the tens of thousands of pundits are going to be right. At least Roubini seems to be a serious thinker, unlike say Taleb.

I am inclined to agree with Mr Salmon here. The value is not any “predictions” – presumably if they were coming up with actionable predictions they’d be investing not advising – but rather trying to have some of your core assumptions challenged or looking at something from a different angle.

Posted by Danny_Black | Report as abusive

Why do we care what is said on Fox News?

Honestly aren’t most segments as loud and inane as monster truck commercials at 3AM?

SUNDAY! SUNDAY! SUNDAY!

Posted by East80thAND5th | Report as abusive
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