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Financial crisis of 2007–2008

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Role of economic forecasting: better
Within mainstream [[financial economics]], most believe that financial crises are simply unpredictable,<ref>{{cite web|url=|title=John Cochrane's Response to Paul Krugman: Full Text " Modeled Behavior||date=September 11, 2009|accessdate=May 1, 2010}}</ref> following Eugene Fama's [[efficient-market hypothesis]] and the related [[random walk hypothesis|random-walk hypothesis]], which state respectively that markets contain all information about possible future movements, and that the movements of financial prices are random and unpredictable. Recent research casts doubt on the accuracy of "early warning" systems of potential crises, which must also predict their timing.<ref>[ ''Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning''], Federal Reserve Bank of San Francisco, July 2009</ref>
Stock trader and financial risk engineer [[Nassim Nicholas Taleb]], author of the 2007 book ''[[The Black Swan (Taleb book)|The Black Swan]]'', spent years warning against the breakdown of the banking system in particular and the economy in general owing to their use of and reliance on bad risk models and reliance on forecasting, and their reliance on bad models, and framed the problem as part of "robustness and fragility".<ref>{{cite news|url=|title=Pablo Triana: Why Nassim Taleb is the True Predictor of this Crisis|work=Huffington Post|date=August 19, 2009|accessdate=January 2, 2011}}</ref><ref>{{cite web|url=|title=The Black Swan: Quotes & Warnings that the Imbeciles Chose to Ignore||date=April 2007|accessdate=July 7, 2012}}</ref> He also took action against the establishment view by making a big financial bet on banking stocks and making a fortune from the crisis ("They didn't listen, so I took their money").<ref>{{cite news|url=|work=The New York Times|first=Joe|last=Nocera|title=Risk Mismanagement|date=January 4, 2009}}</ref> According to David Brooks from the New York Times, "Taleb not only has an explanation for what’s happening, he saw it coming."<ref>{{cite news|url=|work=The New York Times|first=David|last=Brooks|title=The Behavioral Revolution|date=October 28, 2008}}</ref>
==Impact on financial markets==