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Four out of (these) five economists see no "D"

April 29, 2008 |  6:34 pm

How do you get four Nobel laureates in economics to agree on something? Tell them another Nobel laureate is using the "D" word in discussing the economic outlook.

At the Milken Institute global conference today in Beverly Hills, Michael Milken asked his four laureate lunch guests (the panel is an annual tradition) what they thought of recent comments by fellow laureate Joseph Stiglitz, who predicted that "this is going to be one of the worst economic downturns since the Great Depression."

"A ridiculous statement," said Gary Becker, 77, a University of Chicago prof who won his Nobel in 1992. "We're nowhere near that."

Edmund Phelps, 74, who won his Nobel in 2006 and is a colleague of Stiglitz's at Columbia University, said the economy's weakness for now "looks like it will barely qualify" as a classic recession, meaning two consecutive quarters of contraction.

Myron Scholes, 66, who chairs Platinum Grove Asset Management (Nobel class of 1997) and former Stanford Graduate School of Business Dean A. Michael Spence (Nobel 2001), 64, also said they didn't endorse Stiglitz's woeful view.

That's four Nobels against one, but I can't say the Milken panel was terribly convincing. They used arguments we've heard before: The unemployment rate is relatively low, the U.S. economy is dynamic and flexible, China and other up-and-coming nations have huge wealth hoards to spend even if U.S. consumer spending continues to ebb.

All true -- but will it be enough when we're in the thick of the worst housing bust of the modern era?

Posted April 29, 2008