Sorry Ma’am — we just didn’t see it coming.
A British newspaper reported Sunday that a group of eminent economists have apologized to Queen Elizabeth II for failing to predict the financial crisis.
The Observer newspaper reported that a letter has been sent to the queen after she demanded, during a visit to the London School of Economics last November, to know why nobody had anticipated the credit crunch.
According to the newspaper, the letter says that “financial wizards” who believed that their plans to manage risky debts and protect the financial system were infallible but were guilty of “wishful thinking combined with hubris.”
Signatories to the three-page letter include Tim Besley, a member of the Bank of England’s monetary policy committee and historian Peter Hennessy.
The newspaper said the content was discussed during a seminar with a group of leading economists in June, including Nick MacPherson, a permanent secretary at Britain’s Treasury, and Goldman Sachs chief economist Jim O’Neill.
“In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole,” the newspaper quoted the letter as saying.
Buckingham Palace declined to comment on the correspondence, but said the queen often discusses current issues with experts. In March, Mervyn King became the first Bank of England governor to be invited for private talks at the palace.
“The Queen always displays an interest in current issues and is kept abreast of current issues. Obviously the recession is very topical,” Buckingham Palace said in a statement.
Luis Garicano, a professor at the London School of Economics, said he had discussed the origins of the crisis with the queen during her visit. He said she had asked: “Why did nobody notice it?”
The London School of Economics was not immediately available for comment, or to provide a copy of the letter.