The 10 Worst Economic Predictions Ever
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...
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