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The King of Doom and Gloom
Old 02-21-2009, 05:53 AM   #1
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The King of Doom and Gloom

Here is George Soros and Company - Officially our Economic Planners - is there any wonder that the USA is "in the tank" with this sort of "official" pronouncements?

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

Soros sees no bottom for world financial collapse | Reuters

Maybe with this sort of talk the Markets will recover starting Monday.
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Old 02-21-2009, 08:25 AM   #2
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So much for "the only thing we have to fear is fear itself."
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-21-2009, 08:31 AM   #3
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Paul Volcker is also cited in the article as echoing Soros' views.

I'm mentioning this only to point out that these are not stupid men. Soros, for example, has made a lot more money through his investing decisions than any of us have. (Unless folks like Ray Dalio of Bridgewater are regular readers of this forum.) Volcker's credentials are beyond reproach. No disrespect intended, I just don't agree with the dismissive tone of your post.

On another note, I don't really learn anything from the sound-bite news stories like the one to which I was linked.

Tom
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Old 02-21-2009, 08:35 AM   #4
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I understand your feeling I think. Proclaiming that things are bad doesn't help increase confidence.

Another point of view is that we could be glad that our government isn't lying to us. Hiding the truth might make us feel better but doesn't really solve any problems or even help us adapt to the reality of a bad situation.
It's not the fact that they are saying things are bleak. (Duh.) It's how they are presenting it, making us feel like there's no hope for us, that we're all screwed. Instilling that attitude helps make it a self-fulfilling prophecy.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-21-2009, 09:01 AM   #5
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I read an interesting story the other day (can't find it to link) about a researcher who's made a career of benchmarking the accuracy of "expert" predictions. His research shows that "expert" predictions are no more accurate than random chance would suggest. He even went so far to say that average well-read individuals are at least as accurate as the "experts". Moreover, his research also suggested that those folks who are way out in front on big issues (i.e. Roubini, et al) tend to ride their initial conclusions too long and end up missing the next big change.

So take all the punditry with a grain of salt. None of the "experts" are any better at predicting the future than you are. This crisis too will pass.
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Old 02-21-2009, 09:04 AM   #6
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He even went so far to say that average well-read individuals are at least as accurate as the "experts". Moreover, his research also suggested that those folks who are way out in front on big issues (i.e. Roubini, et al) tend to ride their initial conclusions too long and end up missing the next big change.
I think some of them start to drink their own Kool-Aid and begin to think they are infallible. That happened to Elaine Garzarelli after she "called" the 1987 crash and was frequently wrong after that. I can only hope that in the end, Roubini follows in her footsteps.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-21-2009, 09:12 AM   #7
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I posted elsewhere that some other experts said we can't get better better until we are completely out of hope (to paraphrase yet another thread, "we need to be down so far that it will look like up from there"). So perhaps these dire pronouncements are laying the groundwork for the bottom in the very near future.

I have utmost respect for the economists but on the other hand, it's not hard to proclaim that it's raining when you're already in the deluge.
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Old 02-21-2009, 10:13 AM   #8
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I posted elsewhere that some other experts said we can't get better better until we are completely out of hope (to paraphrase yet another thread, "we need to be down so far that it will look like up from there"). So perhaps these dire pronouncements are laying the groundwork for the bottom in the very near future.
I hope so. Just looked at my portfolio balance and it is at it's lowest point since I retired.
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Old 02-21-2009, 10:34 AM   #9
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I read an interesting story the other day (can't find it to link) about a researcher who's made a career of benchmarking the accuracy of "expert" predictions. His research shows that "expert" predictions are no more accurate than random chance would suggest. He even went so far to say that average well-read individuals are at least as accurate as the "experts". Moreover, his research also suggested that those folks who are way out in front on big issues (i.e. Roubini, et al) tend to ride their initial conclusions too long and end up missing the next big change.

So take all the punditry with a grain of salt. None of the "experts" are any better at predicting the future than you are. This crisis too will pass.
Philip Tetlock on expert predictions on the economy - Feb. 18, 2009
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Old 02-21-2009, 10:39 AM   #10
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I'm counting on history to repeat on the upside . Perhaps we will have a barn burner of a bull market in a few years, like the mid 1930's:



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Old 02-21-2009, 10:45 AM   #11
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Originally Posted by OAG View Post
Here is George Soros and Company - Officially our Economic Planners - is there any wonder that the USA is "in the tank" with this sort of "official" pronouncements?

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

Soros sees no bottom for world financial collapse | Reuters

Maybe with this sort of talk the Markets will recover starting Monday.
I would think our "official economic group" would be people like the president, Treasury Secretary, and Fed chairman, rather than Soros. Remember 2007 and early 2008 when they were saying there wasn't a recession, and that the financial problems were "contained"?

Yes, there is a feedback system, what we say is somewhat self-fulfilling. But there are economic fundamentals that you can't avoid. Lots of people borrowed/loaned way too much money on too many houses. Too many people supported spending with borrowing. Too many bankers took risks that were too big. I'd say that our problems today have a lot more to do with the fundamentals than with pessimistic statements.
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Old 02-21-2009, 11:09 AM   #12
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The more I learn the less respect I have for economists. They're a skittish superstitious lot who can't seem to think more than 5 minutes into the future.

People aren't buying things, not because they are scared of people saying the economy is bad. They aren't buying anything because we've spent ourselves into oblivion and have no more credit.
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Wait a minute
Old 02-21-2009, 03:13 PM   #13
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Wait a minute

Soros isn’t an economist, he’s a currency speculator and hedge fund manager with a significant political agenda. Like other asset managers, he always has his own interest first and foremost.

Volker had said lately that the present economic situation is grave – but has not made any gloom and doom predictions that I am aware of.

Roubini appears to be a credible economist - but his track record is still short. Still, he is not predicting gloom, just recession.

Good, credible economists are much better at economic forecasting than they are at investing or investment advising.

I think the people to listen to right now are the ones that have a sustained track record of at least 5 years. Jeremy Grantham comes to mind. Bill Gross as well. Neither is predicting doom, gloom or famine. In fact, Grantham is about as optimistic as I have read in at least 5 years – maybe longer.

There is no data pointing to economic collapse out there. On the downside housing prices continue to fall. On the upside there is stimulus 1 (rebate) , stimulus 2 (tarp), now stimulus 3 ((taxes + spending). Helecopter Ben and Mr. Obama in the hot seat (he actually appears to care). Commodity prices will soon cycle through the economy. A 2% full year decline in GDP means 98% of the GDP is still there.

I’m not saying there’s nothing to worry about – just the real bad news is past and present, and there is nothing as frightful as the unknown. Things are downright not good right now, but they sure aren’t gloom and doom level either.
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Old 02-21-2009, 03:24 PM   #14
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Soros isn’t an economist, he’s a currency speculator and hedge fund manager with a significant political agenda. Like other asset managers, he always has his own interest first and foremost.

Volker had said lately that the present economic situation is grave – but has not made any gloom and doom predictions that I am aware of.

Roubini appears to be a credible economist - but his track record is still short. Still, he is not predicting gloom, just recession.

Good, credible economists are much better at economic forecasting than they are at investing or investment advising.

I think the people to listen to right now are the ones that have a sustained track record of at least 5 years. Jeremy Grantham comes to mind. Bill Gross as well. Neither is predicting doom, gloom or famine. In fact, Grantham is about as optimistic as I have read in at least 5 years – maybe longer.

There is no data pointing to economic collapse out there. On the downside housing prices continue to fall. On the upside there is stimulus 1 (rebate) , stimulus 2 (tarp), now stimulus 3 ((taxes + spending). Helecopter Ben and Mr. Obama in the hot seat (he actually appears to care). Commodity prices will soon cycle through the economy. A 2% full year decline in GDP means 98% of the GDP is still there.

I’m not saying there’s nothing to worry about – just the real bad news is past and present, and there is nothing as frightful as the unknown. Things are downright not good right now, but they sure aren’t gloom and doom level either.
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Old 02-21-2009, 03:26 PM   #15
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With any luck the talking heads of today will seem as out of touch in four years as the people quoted in the OP of this old thread that resurfaced today:

Equity Is Altering Spending Habits and View of Debt
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Old 02-21-2009, 04:45 PM   #16
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Speaking of Doomsters, does anyone know much about the original Dr Doom, Henry Kaufman? He was a bit before my time, so I don't know if he enjoyed the same rock stardom as Roubini and whether he was a one-trick pony or changed his views as the 1980s bull market started.
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Old 02-21-2009, 06:27 PM   #17
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MichaelB,

Thank-you for your informative and accurate post. You're well-informed.

Tom
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Old 02-21-2009, 07:08 PM   #18
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I find that Scott Burns' answer to this question applies to this thread:

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We could easily find people who see as much danger in bonds, if not more, as in stocks--- witness a recent Barron's article on the "Treasury bubble."

Within limits, a higher future inflation rate isn't necessarily bad for stocks. Researcher Steven Leuthold, for instance, found that stocks performed well in a relatively narrow range of inflation/deflation rates but did poorly in extremes of either condition. There is a point, for instance, where the inflation rate increases interest rates and those, in turn, start taking P/E ratios down. That's what happened in the 70s as interest rates soared. The key issue is whether inflation stays within a narrow band. That may happen. It may not.

I don't buy the excess supply of stocks argument because equity ownership is highly concentrated and the wealthiest Americans won't be so pressed for cash that they are forced to sell stocks. So the liquidation burden will be smaller than many would expect.

Now let's take an extreme view of consumer credit. If credit card balances actually shrank millions of households would have MORE money to spend on products and services because they would be spending less money on interest. So we'll work off credit excesses and have a slow growth economy for a while. That may not be so bad--- we've got a lot of people retiring over the next 15 years.

It's always possible to paint a dark picture of the future. But it seldom turns out so badly, usually for reasons that no one anticipates. I've got a whole shelf of books declaring the end of life as we know it. Some date from the 60s.
(I hope I haven't exceeded any "fair use" statutes.)
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Old 02-22-2009, 06:37 AM   #19
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With any luck the talking heads of today will seem as out of touch in four years as the people quoted in the OP of this old thread that resurfaced today:

Equity Is Altering Spending Habits and View of Debt
I enjoy reading old articles or threads. Often correct predictions or warnings are in there. It's just hard to know which ones are the correct ones.

Interesting that some of the responses in that thread, and some of the comments in the article turned out to be correct. For example, Modhatter's

I think it has a direct effect on the economy however. With so many young people faced with such huge mortgage payments each month, it will leave very little income for purchasing, which will in turn not be good for the economy and of course the stock market. Unless incomes rise to a level to support these high mortgages that is. Thieir current answer to this problem is taking on debt, running up their charge cards. This is not sustainable either. Eventually, you must pay the piper.

and (from the article):

If mortgage rates rise sharply or home prices fall, many homeowners could be in financial turmoil. They may be unable to service their loans, or could even find that their homes are worth less than their mortgages.
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Old 02-22-2009, 08:01 AM   #20
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I enjoy reading old articles or threads. Often correct predictions or warnings are in there. It's just hard to know which ones are the correct ones.
I am sure that the authors of each article believes he or she is the reincarnation of Cassandra but Appolo's curse was well-founded. Who really and truly wants to know, with precision, what the future holds for them? One's time will come much easier with less pressure from the clock.
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