We know it could be foreseen because it was foreseen by economists (not just by bloggers), who did voice their concerns about the global imbalances. Even Greenspan talked about "irrational exuberance" in the 1990's. Krugman thought the depression woud hit after the .com crash. And so on.
The fact is that these warnings were not heeded, not even by the people with the power to do anything about it (such as Greenspan ca. 2003). En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.
As I suggested to Melanchthon, most were content to leave those who did speak out to carry on as voices in the wilderness.
(PS Greenspan doesn't count as one who "spoke out" ;)).
