Nouriel Roubini, the economic doomsayer who predicted the 2008 financial crisis became one of the most sought-after economic consultants after being able to say "I told you so." Bernard Connolly, Europe's most outspoken pessimist, is confident that he too will end up on the right side of history.
“The current policy of lending plus austerity will lead to social unrest,” Connolly said in the New York Times.
As an Oxford educated economist in the early years of the European Union, he helped oversee the very first designs for European financial integration. When he expressed negative views about a common currency, he was dismissed. In 1998, just before the Euro was introduced, he predicted that Europe's smaller, less financially stable countries would cause problems for the entire region. As Connolly told the Times, Europe will face a "“downward spiral from which there is no escape unaided. When that happens, the country concerned will be faced with a risk of sovereign default.”
Connolly, like Roubini before him, is now profiting from spot-on economic forecasting. The European debt crisis that threatens not only Greece and Portugal, but larger countries like Spain and France has launched Connolly's consulting career. Unlike Roubini, who is now the head of Roubini Global Economics, a consulting firm in New York City, Connolly is an independent analyst. But this doesn't mean he profits less. Connolly reportedly churns out over 20,000 words of analysis per week, and while the price of his opinions is not publicly available, competitors are known to charge as much as $100,000 for complete services that include written reports as well as individualized meetings and phone calls.
When Connolly worked at AIG in 2005, he convinced a small group of investors to buy credit default swaps of the most vulnerable European countries. When Greece, Portugal, and Ireland came to the brink of default around 2008, the value of the swaps increased enormously, which turned the investors a hefty profit and earned him a devoted group of followers.
Today, the Connolly disciples are looking to spread his words of doom for the greater good. As a former colleague at AIG, James Aitken, insisted, “He sees where this is going and is warning against the human tragedy.”
Yra Harris, a trader on Chicago's Mercantile Exchange offered to pay $75,000 out-of-pocket to republish The Rotten Heart of Europe, Connolly's 1997 denunciation of the Euro's predecessor, the European exchange rate mechanism.
Still in the thick of the European crisis, it remains unclear whether Connolly's Eurozone death knell will ultimately ring true. One thing, however is quite certain- as the crisis continues, Connolly's stock continues to rise.