The 10 Worst Economic Predictions Ever

Tyler Durden's picture

From Bernanke's infamous 2008 "not forecasting a recession" call to Fannie Mae CEO Franklin Raines 2004 "subprime assets are riskless" commentary, the following 10 "predictions" - as opposed to Wien "surprises" - will go down in infamy for their degree of errant-ness...

 

10) Ben Bernanke, 10th January 2008 - "The Federal Reserve is currently not forecasting a recession."

A few months later, United States entered one of the wort recessions ever.

9) Herbert Hoover 1928: "The United States are nearer to the final triumph over poverty than ever before in the history of any land."

The Great Depression started a year after. Stocks lost almost 80% under his presidency.

8) James Glassman & Kevin Hassett (writers of the book : DOW 36000), 1999: "Stocks are now in the midst of a one-time-only rise to much higher ground–to the neighborhood of 36,000 on the Dow Jones industrial average."

According to their estimates, the Dow Jones was supposed to reach 36,000 points. The following years were marked by the Internet bubble, the Dow went down from 10,000 (book edition) to 7,200.

7) Georges W. Bush, 15th July 2008: "We can have confidence in the long-term foundation of our economy... I think the system basically is sound. I truly do."

This sentence was pronounced exactly two months before the bankruptcy of Lehman Brothers.

6) Donald Luskin (US investment guru), 14th September 2008: "Anyone who says we’re in a recession, or heading into one—especially the worst one since the Great Depression—is making up his own private definition of 'recession'."

According to Luskin, Obama deliberately worsened economic figures to discredit McCain for the presidential election that took place two months later. Lehman Brothers filed for bankruptcy the next day.

5) Irving Fisher (economist), 15th October 1929: "Stock prices have reached what looks like a permanently high plateau."

The crash of 1929 began the following week, the Dow Jones losing up to 85% of its value from the "permanent plateau"!

4) David Lereah (US economist), 12th August 2005: "I truly believe the housing market will continue to expand. But rather than the double-digit price appreciation we’ve seen, we might see that drop to a 5 or 6 percent appreciation sometime toward the end of next year."

Real Estate prices fell sharper between 2006 and 2008 than during the Great Depression.

3) Joseph Cassano (Head of Financial Products at AIG), 2007: "It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these Credit Default Swap transactions."

The following year, AIG was rescued by the government after huge losses. Especially on CDS positions...

2) Franklin Raines (CEO of Fannie Mae), 10th June 2004: "These supbrime assets are so riskless that their capital for holding them should be under 2 percent."

The U.S. government intervened in 2008 to rescue Fannie Mae – in big trouble during the subprime crisis.

1) David Woo (Analyst, Bank of America), 5th December 2013 about bitcoin: "Our fair value analysis implies a price of $1300"

The future will tell whether it is reasonable to assign a "fair value" to this virtual currency. Meanwhile, the bitcoin still lost 46% of its value Friday...

Source: Victor Baetens via Investir.ch

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Pickle Jar Bob's picture

All that to just clown on BTC?

mayhem_korner's picture

 

 

Ditto.  Sort of a non-sequitur.

wintermute's picture

Bitcoin just touched $980 again. 

David Woo will be proved right. The others are idiots.

 

Bunga Bunga's picture

No, he is completely off the charts. Time will tell.  $15 bln is just ridiculous, national debt is increasing by this amount in a single week.

Boris Alatovkrap's picture

When state is pursuit of policy of least untruthful, what to expect beside perpetual surprise and errant prediction? Please wait patient while Boris is attempt facial expression of utter wonderment.

Manthong's picture

I seem to recall something about “If you like your doctor/plan, you can keep it.”

Is there something about this prediction process I am missing?

disabledvet's picture

"this time is different." as in "worse." It has been argued that "progress" is a myth. in other words "what are we progressing towards?" Rousseau argued "by studying the arts and sciences we become only better monsters."

zhandax's picture

How about "If you don't like your president, you can elect one you do"?  It is just as big a lie, but it sounds more comforting.

GetZeeGold's picture

 

 

Paging Jon Nadler.......phone call from Andy Smith.

 

Please pick up the black courtesy phone.

slotmouth's picture

No list is complete without some from Lavorgna.  He seems to consistently get everything wrong defying all odds with his wrongness.

Fredo Corleone's picture

Indeed, one of the most infamous - and still avialable - has been omitted.

February 29, 2000. Beginning that particular leap year with a complete work of market-top farce...

http://www.thestreet.com/story/891820/1/the-winners-of-the-new-world.html

yofish's picture

Spingmo lases hornoish e lispting fo dwong kernl shoust?

Bay of Pigs's picture

And who the fuck is David Woo? Oh, BOA....fantastic.

Anyone from Deutsche Bank weighing in on this as well?

PT's picture

Please excuse me while I go off on a seemingly unrelated tangent.  Does anyone know how these investors "make money"?

http://www.tic.com.au/

No, this is not an advertisement.  It is a question.  No, I said, "No.  This is NOT an advertisement."  Just can you answer my question? 

Sparkling Wiggles's picture

As far as I can tell, by selling coffee.

IridiumRebel's picture

Well then you should load up on BTC. It's on sale. Grab it by the handful.

GetZeeGold's picture

 

 

The good news is the cost of nothing.....is finally getting cheaper.

tgatliff's picture

First, cost has nothing to do with value.  Bitcoin's foundation is mathmatics itself.  It is far easier to dilute all gold in the world with tungsten than it is to dilute the supply of bitcoins.  The value is that you know with a fair certainty how many bitcoins exist as well as how many are ultimately able to exist.  

I agree that bitcoins are not the final solution.  Their ledger accounting concept is not ideal, and I think future implementations will definitely improve this concept.  The beauty of a technology solution, however, is that it can improve, unlike precious metals.

Bitcoin at its foundation is simply a protest against what central banks are doing.  Also, unlike precious metals, it is very easy to understand what the price of BTC will be long term.  From a US perspective, if the FED continues to dilute the USD currency into infinity (previous history says this is probably likely), then BTC2USD will continue to rise.  If you believe that the FED is serious about tapering, then BTC2USD will fall.  The key difference to precious metals is that Central banks have very little control over BTC, and as long as they cannot find flaws in the protocol, this will continue.  

I personally feel that the biggest risk to BTC at the moment is a DDos attack, simply because without the underlying nodes there is no way to exchange BTCs.   This is definitely something that will have to be addressed longterm if BTC is to be used as a true global currency.

PT's picture

Once again I first admit that I am ignorant and for all I know, bitcoin could crash to zero, reach a permanently high plateau, or oscillate over an ever increasing spread for the next millenia.  For those who have too much time on their hands, ponder this:

If the Beryellenanke cannot go to the trillion dollar platinum coin, the trillion dollar bitcoin will go to the Beryellenanke.

Just a thought. 

Burnbright's picture

So apparently some of my friends are getting caught up in the bitcoin mania and I saw a facebook conversation about taking some bit coin profits and investing in this "stock". For .05 bitcoins you can get a bitcoin dividend! People going balls deep crazy on this shit. So you take e-currency to purchase e-stock in an e-miner. Why does this feeling like some derranged MMORPG?

 

http://www.peta-mine.co/

 

 

PT's picture

Thanks for that link.  Much appreciated.  We all know how this one ends.  

Perchance some strangers, who were born every minute, stumble across this post:  I predict that somewhere along the line the dividend payout will not justify the price of the shares - just like every other share and piece of real estate on the planet, at which point, people will start buying shares in hope of capital gains - just like every other share and piece of real estate on the planet.  Then, some people may be tempted to borrow money to convert to bitcoin to buy shares in the hope that the capital gains will pay for the interest, just like every other share and piece of real estate on the planet, well, close enough.

I mean, smart people should be able to do a bit of due diligence and figure out how many bitcoins are left to be mined and an expected return etc etc etc ... but since when have smart people ever driven prices?

Quite sure I've left out some important points here, feel free to add them. 

PT's picture

Who said you can't print your own money?

Ummmmmm, printing - bad, typing - good ? 

Exponere Mendaces's picture

So let me get this straight. This list contains: Economist, Politician, A book written by an Economist and a Harvard B.A. in Government, Politician, Investment CIO (whose only saving grace seems to be a hatred for Paul Krugman), Economist, Economist, AIG Financial Products Head, Fannie Mae CEO and an Analyst from Bank of America.

Seems the deck is stacked with economists - who practice their "craft" with the knowledge they can be wrong as much as they'd like with no penalty, Politicians - the master liars of the universe, who say anything to get the votes they need and corrupt financial Executives who know they are selling shit, but couldn't admit it in public without massive repercussions.

And that is all stacked against a single analyst?

How is this not grasping at straws?

disabledvet's picture

I like fonestar better than you. I don't know why...apologize if this offends. he's like a "kinder/gentler bitcoin." don't worry though...at some point your "distributed approach" will evolve into a pack of rampaging jackals soon enough.

yofish's picture

Very good, I don't up many here.

Al Huxley's picture

I don't think a recent prediction on the fair value of bitcoin belongs in this list.   It's not even an economic prediction.

NoDebt's picture

Yeah, that's a bit gratuitous and detracts from what credibility the article has.

View wasn't worth the climb in this case.

 

zhandax's picture

"I don't think a recent prediction on the fair value of bitcoin belongs in this list.   It's not even an economic prediction."

Why not?  They are all a prediction on whether human folly will trump intrinsic asset value.

chump666's picture

"Our fair value analysis implies a price of $1300"

lol

Great post ZH.

 


jomama's picture

what about gold to 10,000 bennybux an oz.?

Dr. Engali's picture

Any day now.....still waiting....... Stilllllllll wai..t...i...n.....g.

LoneStarHog's picture

Question:  Where the hell is Cramer in that list of idiots?

wintermute's picture

Swap out Woo for Cramer - and the list is good.

Tapeworm's picture

Crammer is so last decade.......

Tapeworm's picture

Crammer is so last decade or farther back in the fourth dimension: an anachronism.

Dr. Engali's picture

Should I take my money out of Bear Sterns?

Cramer: No..no...no... Bear Sterns is fine.......:

http://youtu.be/HPc16cuQJR0

akak's picture

An ADD-afflicted, memory impaired, poo-flinging monkey in a clown suit with the sleaves rolled-up. Wearing blinders. On coke.

GetZeeGold's picture

 

 

-1 <-----Cramer......is that you?

falak pema's picture

I liked Kramer n George, dunno about Cramer...Funny how a K can change perception. 

George and Kramer conversation - YouTube

PT's picture

American cousin of Baghdad Bob???

.

.

.

 (I've never seen him, only heard about him 2nd hand so perhaps I shouldn't comment.)

Exponere Mendaces's picture

Sorry to break it to the ZH crowd, but if you don't like Bitcoin - you agree with Cramer.

Bit of a mindfuck, eh? And considering Cramer's stellar record, I'd say that's the best contrary indicator ever.

disabledvet's picture

I love bitcoin. Jimmy Cramer at a certain level "saved America" (certainly early in the crisis) in my view. Having said that how he does what he does being done live on television is an abomination...and CNBC knows it. This ain't Ozzie and Harriet...and while I might listen on occasion...I don't watch anymore. "Fuhrer approved" as they say. And look at the battle over Time Warner. Talk about ironies.

Ghordius's picture

I have another one: if you are convinced that the EUR is a failed experiment - then you agree with Paul Krugman

Dr. Engali's picture

We should probably reward them for their competence. After all just think how bad things would have been without them.

fonzannoon's picture

The greek statue (caption) reminds me of a joke. Two statues in a park were sitting there for hundreds of years. One was a greek god and the other a greek goddess. After what seemed like forever an angel came down out of the sky and unfroze them both. the angel said to them "I have unfrozen you, you have one hour to do whatever you wish. After that, I will freeze you both as statues for eternity. The two of them looked at each other and motioned over to the bushes. for about 5 minutes the bushes were rocking back and forth ferociously. Then the two of them came out and stood back where the were and prepared to become statues again. The angel said "you still have at least a half an hour left". The god looked at the goddess and said "okay this time I will hold the pigeon down and you shit on it".

This is why I won't do 2 shows a night anymore, I just won't do it.