There were two fundamental concepts in economics when I was a lad; Ceteris Paribus which means “With all other things equal” and Rational expectation theory which supposes that under certain conditions, a consumer will make certain buying/selling decisions. The sooner we all understand what these concepts mean and how central they still are to economic theory, the sooner we will realise that economics can never predict anything with any particular certainty.

Reading some of The Times and The Sunday Times economics commentators’ articles, I’m not surprised that they are asking what the point of ‘economists’ is. David Smith and Anatole Kaletsky, take note.

Seriously though, with regard to the recent economic crisis, there are two views that I will not and cannot subscribe to. The first is Taleb’s theory of the ‘Black Swan’ event, namely that the crisis was the coincidence of a number of extraordinary and diverse factors that could not have been foreseen. If this were true, then how come so many people correctly predicted the credit crunch before it happened? You’ll obviously have to take my word for it, but I predicted that we would run out of credit resulting in a ‘credit crunch’ in 2006. That’s better than the Times and Sunday Times economists managed.

The second theory that I cannot accept is that the crisis was everyone’s fault. It was not. At no point during the credit boom could I have gone to my mortgage lender and said “Excuse me, I’d like to buy a house but I’d like to opt out of the current cheap credit-fuelled speculative housing boom, please. Do you have an alternative price list?”. Blaming the ‘man on the street’ for having some vague notion of ‘collective delusion’ is a thinly veiled attempt to divert blame away from the real culprits — central bankers and politicians eager to see the good times roll on while ignoring the systemic risk.