Forecasting is a rough gig that often confounds even those who do it for a living and generally do it well.

Situational awareness (see e.g., this and this), on the other hand, is all about knowing “what you need to know not to be surprised,” and having “the ability to maintain a constant, clear mental picture of relevant information and the tactical situation…” It’s making sense of the world around us in real-time, whereas forecasting is an attempt to extrapolate those current events to figure out some future outcome.

In the real world, the latter (situational awareness) is an easier task than the former (forecasting). It’s hard to imagine a decent forecaster not having good situational awareness; those folks with bad situational awareness make for awful forecasters.

Of course, we’ve all been wrong in both assessing situations and in forecasting. There are times when situations are so obvious, I’ve often wondered what might be at play beyond incompetence for those who get it so wrong. Is it Upton Sinclair-ism: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” Is it a variant thereof in which we substitute “ideology” for “salary,” as I believe is very often the case (Kudlow, Luskin, Bowyer, Laffer)?

Among the reasons I’ve always had a great deal of respect for two commentators in particular — Paul Krugman and David Rosenberg — is because they have consistently exhibited superior situational awareness and forecasting skills, a rare combination to be sure. Their records speak for themselves. The knock on Krugman — that he’s an ideologue — in no way diminishes or tarnishes the fact that he’s been spot-on in his situational awareness and forecasting since well before the crisis began to unfold in 2007. If anything, his accuracy and astuteness support his ideology in the same way the ideologies of the likes of Kudlow, Bowyer, Luskin and Laffer have been discredited as a result of their being woefully, painfully wrong. [BR: Though Laffer did get the Recession call correct circa February 2008]

Below are several examples of situational awareness, both good and bad. Some of it is striking for its insight, some of it for its total lack thereof. Consider it an object lesson in the ever-present need to consider the source, and the source’s motivations and incentives.

[NOTE: Über-hacks like David Lereah and Lawrence Yun were simply not worth researching. They're in a class by themselves.]

A Decade of Punditocracy, Pathetic Edition

George W. Bush, June 17, 2002

“Now, we’ve got a problem here in America that we have to address. Too many American families, too many minorities do not own a home. [...] Freddie Mac will launch 25 initiatives to eliminate homeownership barriers.”

David Rosenberg, August 6, 2004

“We assess the likelihood that the housing sector has entered into a“bubble” phase. There are numerous shades of gray, but when we examine the classic characteristics of a“bubble,” it seems to fit the bill.”

Ben Bernanke, August 9, 2005

“There’s a lot of good news on housing. The rate of homeownership is at a record level, affordability still pretty good. [Ed Note: The first part of that statement was true, the second part demonstrably false.] The issue of the housing bubble is one that people have — whether there is a housing bubble is one that people have raised. Housing prices certainly have come up quite a bit. But I think it’s important to point out that house prices are being supported in very large part by very strong fundamentals.” [Ed Note: In fact, it was exactly at this time that we were beginning to see cracks in the housing market as prices peaked in Boston, Detroit, Atlanta and Charlotte.]

Paul Krugman, August 12, 2005

“How does the country [U.S.] earn its money? The answer, these days, is that we make a living by selling each other houses. [...] Over the past five years housing prices have grown much faster than the overall cost of living, adding about $5 trillion to the public’s wealth.”

Alan Greenspan, September 26, 2005

“In summary, it is encouraging to find that, despite the rapid growth of mortgage debt, only a small fraction of households across the country have loan-to-value ratios greater than 90 percent. Thus, the vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices.”

Ben Bernanke, March 28, 2007

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.”

Tim Geithner, May 15, 2007

“Financial innovation has improved the capacity to measure and manage risk. Risk is spread more broadly across countries and institutions.”

Henry Paulson, July23, 2007

“There has been a very significant housing correction. I think we’re at or near a bottom there,” Paulson said on CNBC television. “I don’t deny there’s a problem with subprime mortgages but…it’s quite containable.”

Brian Wesbury, July 26, 2007

“The current financial environment does not reflect conditions normally associated with a credit crunch. The bottom line is that fears about the underlying health of the economy and financial markets are more about hypochondria than reality.”

Martin Feldstein, August 31, 2007

“Martin Feldstein, president of the National Bureau of Economic Research, said that there’s a “significant” chance the U.S. economy will sink into recession.”

Joseph Stiglitz, November 16, 2007

Joseph Stiglitz, a Nobel-prize winning economist, said the U.S. economy risks tumbling into recession because of the “mess” left by former Federal Reserve Chairman Alan Greenspan. “I’m very pessimistic,” Stiglitz said in an interview in London today. “Alan Greenspan really made a mess of all this. He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems. He encouraged people to take out variable-rate mortgages.”

Larry Kudlow, November 2007

Three More Years of Goldilocks? (“Too much is being made of both the sub-prime credit problem and the housing downturn.”)

Paul Krugman, December 3, 2007

“But the [financial] innovations of recent years — the alphabet soup of C.D.O.’s and S.I.V.’s, R.M.B.S. and A.B.C.P. — were sold on false pretenses. They were promoted as ways to spread risk, making investment safer. What they did instead — aside from making their creators a lot of money, which they didn’t have to repay when it all went bust — was to spread confusion, luring investors into taking on more risk than they realized.”

George W. Bush, March 12, 2008

“I think when people take a look back at this moment in our economic history, they’ll recognize tax cuts work.” [Ed. Note: I'm thinking not so much.]

Jerry Bowyer, May 16, 2008

Recession? Not so fast, I say (“But as a member of the “some say no recession” camp, I’m here to say the economy still looks pretty good.”)

Ben Stein, July 8, 2008

Don’t Panic – Buy Index Funds and Real Estate (“The truth is that while the economy is clearly slowing down we are not yet in a recession.”) [Ed. Note: S&P500 closed that day at 1,273.70, on its way to a 676 close in March 2009.]

Phil Gramm, July 9, 2008

“You’ve heard of mental depression; this is a mental recession. We may have a recession; we haven’t had one yet. We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness, America in decline…”

Amity Shlaes, July 12, 2008

“Phil Gramm was right…”

Jerry Bowyer, Sept. 2, 2008

The Recessionistas Were Decisively Wrong (“I’ve spent much of the past year both on Kudlow & Co. and in columns arguing with Jared Bernstein, Robert Reich, Barry Ritholz, Jonathan Chait, and others about whether or not we’re in a recession. These folks were certain we were, while I, along with Larry and other supply-siders, thought we were not.”) [Ed Note: We were.]

Don Luskin, Sept. 14, 2008

Quit Doling Out That Bad-Economy Line (“Things today just aren’t that bad.”)

Christopher Cox, Chairman, Securities and Exchange Commission, October 2008

“There is no question that, somewhere in this terrible mess, many laws were broken. Right now, the criminal authorities and the civil authorities, not only in the federal government and the state governments, but in other countries, because this is now, as you know, a matter of intense international focus, are working to make sure that lawbreakers are held accountable and people are brought to justice.” [Ed. Note: It’s now almost three years later. How are those investigations progressing? Seems the list of folks “brought to justice” could fit on an M&M.]

Alan Greenspan, October 2008

“And what I’m saying to you is, yes, I found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact. [A] flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak. That is — precisely. No, that’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.””

David Rosenberg, December 16, 2008 (The Frugal Future, no link)

“The macro themes we are developing now are much more secular in nature. We are witnessing epic changes in the ways in which people approach how they move around and how they allocate their budgets, especially with respect to discretionary spending and their attitudes toward debt. Whether or not this turns into a Japanese-style “kyoukou” remains to be seen, but we are convinced that historians will label the environment we are in today as something different from a garden-variety recession.”

WSJ Editorial Page, May 29, 2009

The Bond Vigilantes (“They’re back. We refer to the global investors once known as the bond vigilantes, who demanded higher Treasury bond yields from the late 1970s through the 1990s whenever inflation fears popped up, and as a result disciplined U.S. policy makers. [...] It’s not going too far to say we are watching a showdown between Fed Chairman Ben Bernanke and bond investors, otherwise known as the financial markets. When in doubt, bet on the markets.”) [Ed. note: What would the WSJ tell us the markets are saying now as that is, after all, what we should “bet on”? The 10-yr was around a 3.70% then vs. about 2.25% now; place your bets.]

Arthur Laffer, June 11, 2009

Get Ready for Inflation and Higher Interest Rates

Paul Krugman, July 2, 2009

“Once again a Democratic president has pushed through job-creation policies that will mitigate the slump but aren’t aggressive enough to produce a full recovery. Once again much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.”

Jerry Bowyer, July 21, 2009

We’re All Inflation Hawks Now

Andrew Bary, Barron’s Cover Story, October 19, 2009

We make our case for the Fed to increase short-term interest rates to a more normal 2% — or risk fostering another financial bubble.

Nassim Taleb, February 4, 2010

Nassim Nicholas Taleb, author of “The Black Swan,” said “every single human being” should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration.

It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”

Christina Romer, August 2011

“The basic idea that if you increase government spending or you cut people’s taxes that stimulates the economy and lowers the unemployment rate, is a very widely accepted idea. It’s in every economics textbook, that’s what we teach our undergraduates, and I certainly try to teach them the truth. It is a very known and accepted idea and fact and the empirical evidence is definitely there, and people just want to say the sky is green.”

Did I miss anyone . . . ?

Category: Analysts, Contrary Indicators, Really, really bad calls, Research

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

73 Responses to “The Punditry Chronicles”

  1. rktbrkr says:

    6/30/09 Cramer nails the bottom in Real estate

    mit entertaining video

  2. number2son says:

    Those quotes from Bernanke and Geithner are priceless. I’m sure Larry Summers had a few gems along the way, too – in particular with respect to financial regulation. But he isn’t worth the time to Google up a few examples. The brightest man in the room, indeed!

    Anyway, that’s just part of the reason Obama will NOT have my vote in 2012. He embraced Summers, Geithner and Bernanke while ignoring Krugman, Rosenberg, Stiglitz and Volcker at a time when it was ESSENTIAL that he find good counsel. We are now living with the results of that failure.

  3. theexpertisin says:

    Just about everyone has said things they surely regret, or thought (remember the Jimmy Carter “lust in my heart” moment within Play Boy years ago). I admit that it is interesting to see the well-qualified people above be so divergent in views, so “right” or “wrong”, courtesy of a rear view mirror. In the course of a lifetime of proferring opinions, I suspect that in the end one’s total utterances would probably be as accurate as a coin flip. Krugman is not as brilliant as he is cherry-picked to be here, nor is Bush so stupid.

    Maybe the best road to follow is the one the sitting President utilized in Illinois to propel his political aspirations: get elected and vote “Present” for a majority of legislative votes. Ouch.


    BR: Not sure I understand your comment — Krugman is brilliant, but not THAT brilliant; Bush is stupid, but not THAT stupid? And Carter’s comments were not remotely either situational awareness or forecasting.

    Let me guess: You are an idealogue who is not happy with the economic prognostications of advocates of your idealogy?

  4. rktbrkr says:

    Actually Cramer should get partial credit, he said ‘Bernanke is one of us” and he would move heaven & earth to raise asset values, he was able to jack up stocks but not RE, similar to greenspan getting the RE bubble when he really wanted a stock bubble after 9/11

  5. [...] A fantastic piece by Invictus – pundits and situational awareness.  (TBP) [...]

  6. rktbrkr says:

    Agree completely that O’B picked the wrong guys for his economic counsel…largely a continuation of Bush policies, Gates even threw in a “surge” in Afgan just to throw more money down a rat hole. O’B has turned out to be “Old Wine in a new Bottle” .

  7. wally says:

    “Anyway, that’s just part of the reason Obama will NOT have my vote in 2012.”

    I feel the same.. but if not him, then what is the alternative? Some guy who makes pledges to an interest group rather than his constituents? I mean, we’re down to no good choice here.

  8. atandon says:

    Thanks for the informative and enlightening compilation that this is. I am a follower of your blog for more than an year now and these days, I follow on a regular basis (every 2 hours) and I’ve learnt quite a lot from your writings. Keep up the great work.

  9. Petey Wheatstraw says:

    We all know the flood is coming. Indeed, the water is knee-deep in the streets. We can hope and pray the water doesn’t get deeper. We can disagree with it. We can deny it. We can carry on as if nothing unusual or unprecedented is happening. But we can’t change it (regardless what the weather observers/forecasters say).

    The clouds have been seeded, the rains have begun, and the flood will come. Our only hope for survival is to move to higher ground, and prepare to be wet, cold, and hungry (but not starving, hopefully). If we’re smart, we’ll force those who recommended seeding the clouds to stay on the fertile low ground they fought so hard to possess and control, as all of it is washed away beneath their feet.

    So far, we have only let them climb up on our backs, even though we know that in doing so, we will drown before they do.

  10. efrltd says:

    DR. C says “Things are great.” DR. K says “Things are bad.” Who was right? Insight? Intuition? Or darn luck?

  11. Petey Wheatstraw says:


    I believe that Kucinich has the mind and heart to lead us in the right direction. But he’s short in stature, and we don’t do short. Perry (the secessionist with chiseled good looks and great hair), will probably be the one to drive the final nail in our coffin.

    Wrapped in the flag?


    Holding the Bible?


    We’re doomed.

  12. winstongator says:

    Re: Taleb
    2/4/10 – 10yr treasuries @ 3.62%, today, 2.29%, nearly 1.5% lower. Great trade!

    There is a lot of ideological coloring of analysis. Lots of those talking don’t have any real risk. People watch those shows for entertainment, but take away some advice.

  13. TLH says:

    The best substitute for brains is silence.

  14. DebbieSmith says:

    Even the “esteemed” IMF, by their own admission, got caught in a massive case of clusterthink and totally missed the Great Recession

  15. franklin411 says:

    Rick Perry:
    “If Bernanke comes to Texas, we’ll lynch him.”

  16. FS says:

    And why exactly didn’t the Bush tax cuts work in your mind? Essentially when you cut taxes, people get to keep more of what they actually earned keeping it out of the hands of a government that is inefficient (at least), ineffective (often) or incompetent (see President, see Congress).


    BR: weak job creation, loss of tax revenues, economic gains based on free money/credit.

    Let me ask this question to you, my ideological reader: Why do you think THEY WORKED ?

  17. tom brakke says:

    All of this is compounded by another type of failure from the lack of “situational awareness,” in how money is managed, caused by the infatuation with relative performance and relative valuation. Here was my take on it at the time of a notable airline incident in which the phrase cropped up:

  18. dtraxel says:

    I can see why Krugman might be labeled an ideologue, but he doesn’t fit the profile of a mere unthinking liberal. For example, he has written some critical things about the results of unlimited immigration: drives down wages and hurts the campaign for national/universal heath insurance. He has been attacked by his friends for these comments, and it is true he does not touch on such subjects very often, but I have the sense that, like BR, he is more interested in the truth than ideology.

  19. Petey Wheatstraw says:


    Fitch Affirms U.S. at AAA Rating, Outlook Stable – Reuters

    Okaaaaay . . .

  20. b_thunder says:

    Yes, you forgot this one:

    Altucher’s ” Dow 20,000 in 2012″ call!

  21. Concerned Neighbour says:

    I expect politicians, central bankers, and economists to lie to me when it comes to the economy. When the economy is as fragile/broken as it is now, these people don’t want to tell it like it is because: a) they view the electorate as a bunch of immature children who can’t deal with reality; and b) they must try and maintain confidence/hope, as it’s the only thing putting a floor under the economy.

    I think many of the quotes above were known to be lies by the speakers who uttered them. And in some cases I hope so, otherwise we have even greater cause to be concerned in our leadership’s competency (how low can you go?)

  22. dsawy says:

    Dude. Really. You should read this guy’s blog. Name is Ritholtz or some such. Had a column on this economist Zandi’s track record awhile back with some real thigh-slappers:

  23. louis says:

    “I expect politicians, central bankers, and economists to lie to me when it comes to the economy.”

    And I do not.

  24. Concerned Neighbour says:

    I didn’t say I welcome it. I would prefer to be told the truth. But alas, I don’t think this has been the case for quite a while.

  25. Petey Wheatstraw says:

    dtraxel Says:

    “ . . . like BR, he is more interested in the truth than ideology.”

    preceded by:

    “ . . . he doesn’t fit the profile of a mere unthinking liberal.”

    Which interests you more — truth or ideology? Got any other ideological “profiles?” (Or are they “mere” straw men or stereotypes you’re throwing around?)

    And then:

    “ . . . For example, he has written some critical things about the results of unlimited immigration: drives down wages and hurts the campaign for national/universal heath insurance. He has been attacked by his friends for these comments . . .”

    Please show me any liberal who advocates unlimited immigration. Please link to a credible “attack” on Krugman by his “friends” because of his reasonable stance on this issue.

    The “truth” is, like many other developments over the period of “conservative” control of government, illegal immigration served the interests of Profit Above All Else — regardless of legality. “Profit Above All Else” is clearly the mantra of the right wing/conservatives.

  26. phb says:

    @BR – Not to be an ideologue, but we have no idea what would have happened with tax increases or static tax rates in 2001/2002 forward. Perhaps a full blown depression was avoided? Or perhaps we have indeed “kicked the can down the road.” I tend to think we are still waiting for our house of cards to tumble, and the tax cuts have just prolonged the inevitable. If somehow, economic disaster is avoided and Altucher’s 20,000 Dow is reached then the tax cuts will look differently in the rear view mirror.

  27. DeDude says:

    Great list. Some people waste their credibility, others earn it, but nobody becomes infallible goods. You are a little too modest by not including some of this blog’s great calls. In the long run people are better off paying attention to those who have been mostly right and ignoring those that have been mostly wrong. The best predictors are generally characterized by relying much more on scientific methods than on ideological guidance for how to interpret events. That is why I get most of my big picture insights from this blog, calculated risk and Krugman.

  28. ephinz says:

    Roemer’s quote cuts through the ideological clutter. Economists learned it and then taught it to others.

    The country needs to decide whether top line government spending is supportable at present levels. Current levels of taxation cannot do it.

  29. Christopher says:

    LOL….hyperbole is always the last resort of the hypocrite….

    Kinda like Obama talking tough on banks…
    “Never again will the American taxpayer be held hostage by a bank that is too big to fail.”

    You stupid fucking partisans keep insisting that these politicians speak the truth…..and then when they do you start whining like a bunch of schoolgirls…..

    The funniest part is all the toolbags who bought into Obama’s bullshit….LOLOLOL….the look on their faces as they realize they have been had….exactly the same as the as the rightwingnuts who thought W was the second coming…..Priceless.

    Perry is going to be the next President of the USA…..barring the dead girl/live boy scenario…..

    Not because Perry is so great….but because Obama is just another lying POS defender of the STATUS QUO….just like Bush, Clinton, Bush, etc….

    franklin411 Whines:
    August 16th, 2011 at 9:49 am
    Rick Perry:
    “If Bernanke comes to Texas, we’ll lynch him.”

  30. FS says:

    Ideological? I’m a dem who can actually do math-that’s more albino than ideologue.

    They worked because they started (and I will grant you in a totally inefficient way) to stop the double taxation
    of capital gains by reducing said rate. They worked because they put a poot into the stock market, where a lot of Americans have placed money. They worked because they kept money out of the hands of a government that has lost it’s way.

  31. DeDude says:

    Krugman is basing his conclusions on solid facts and using solid scientific approaches to reach them. That is the reason he gets things right so often. His presentations are often partisan and ideological, probably in part from frustration with the fact-free ideologogery the other side throws at him. However, in deep contrast to most of the main stream media his opinions are based on solid approaches to analyzing facts.

    Like with politicians, some are bad, some are not so bad, and none are perfect. For the best outcome, you better stick to the least bad you can find.

  32. AHodge says:

    add hatzius, berner, Ellen Zentner, your buddy and mine Kotok, Niall Ferguson, Shiller,Simon johnson
    Glad you mentioned feldstein (r) and stiglitz (d) both better than your faves, roubini at least as good as rosnberg for that soupcon of permabear, neither a slouch.

  33. Molesworth says:

    I know I’m off topic here a little and probably late, but how is Cramer credible?
    How can anyone try to be Walter Cronkite in the morning and PeeWee Reese in the evening and ever be taken seriously?
    What does CNBC see in him?
    Do any of you guys, the smartest guys in the planet as best I can tell, listen or watch him?

  34. FS says:


    “Do any of you guys, the smartest guys in the planet as best I can tell”—Since this was addressed to me, I will answer.
    No. Or mute.

  35. AHodge says:

    wait wait
    theres you, bob Barbera, Rogoff, larry klein, volcker, soros
    latter actually amazing as theorist
    he marched into the AEI Hayek retrospective said he liked a lot of hayek
    I come to pay my respects
    too bad his ideas perverted with goofy stuff like rational expectations efficient markets non of which hayek supported and reamed all the other “economist” panelists out in his gentlemanly way
    there is actually no shortage of good thoughts
    they are coming a little more to the fore
    the major prob is the ability to recognise them

    all kinds of journalists like martin wolf ……………’

  36. AHodge says:

    gee how can i be “moderated” when i list you first on this extra great pundit econs?

  37. DonF says:

    “Did I miss anyone?”

    I don’t have any specific quote, but one person who I thought was missing was Nouriel Roubini. I thought his voice to be memorable in all of this and someone who’s opinion I valued as others tried to label him as a loon. Great stuff, Invictus! Thank you.

  38. AHodge says:

    oops meant “you” barry ritholtz

  39. JerseyCynic says:

    did you forget anyone??????? (from the outer limits)

    THE ALIENS????? — hello-O
    ronald reagan speaks at the 3:00 spot

  40. Thor says:

    Invictus – As always, brilliant post. Thank you!

    BR – Lovin’ the smack-downs from you in this thread! :-)

  41. T_S says:

    Franklin 411, nice editorializing of your Rick Perry “quote”. the verb TO LYNCH carries
    a specific meaning, and I’ll note “lynch” and “lynching” seem to be totally and completely
    absent from that article. Did Mr. Perry actually say that?

    For the record, I am not a fan of this Texas gov. But you know, misquoting him in
    such a way is unlikely to swing anyone to your point of view.



  42. GuinnessFan says:

    @Petey Wheatstraw: “…… Perry (the secessionist with chiseled good looks and great hair), will probably be the one to drive the final nail in our coffin.

    Wrapped in the flag?

    Holding the Bible?

    You forgot that he’d be holding the Bible in one hand and a gun in the other.

    You are correct in your conclusion. We’re doomed. I feel like I’m living in a re-write of the movie Dr. Strangelove.

  43. Thor says:

    Speaking of folks with horrible track records, whatever happened to Pretcher?

  44. Petey Wheatstraw says:


    I was going to go back and fix it, but didn’t. Thanks for doing it.

  45. DeDude says:


    I think it was a technical issue. I also lost a posting at that time, with nothing offensive (and it had a compliment to Barry).

  46. JerseyCynic says:

    Clinton says: “Rick Perry is a “good-looking rascal” with “crazy” policies

    “All hat and no cattle”

    ********TURN IT OFF — TURN IT ALL OFF********

    from Noxema — 1967

  47. AHodge says:

    i first read all hat and no candle….

  48. BR,

    How can you say Krugman is brilliant?

    The man just advocated creating a ‘fake crisis’ where we ramp up defense spending to astronomical levels in ‘preparation’ for an impending alien invasion. The idea being we get stimulus spending out of it all.

    But this is nothing more than the broken window allegory. What benefit do we get from producing weapons we don’t need? This is the problem with Keynesianism. It requires that the powers that be know where to spend the capital that would otherwise be spent in the free market. They can’t know and so it is an impossible task. All it does is misallocate capital.

    And this man is supposed to be brilliant?


    BR: 1)This was written by Invictus, not Barry
    2) Nobel Prize. Nuff said

  49. How about Joe Lasagna from Deutsche Bank?
    He has been a joke.

    And most of the other Wall Street Sell-Side analysts who also were pointing to much higher US Treasury yields and inflation…

  50. ToNYC says:

    The need for forecasting is prehistoric. The science employed is always backwards looking. No wonder that P.T. Barnum struck gold when he got that right. Bon chance, mon frere; it’s a jungle out there.

  51. WaveCatcher says:

    Taleb’s 2/11 prediction of declining Treasury prices is wildly wrong. Of course, like most pundits he didn’t include a timeframe in his prediction so he may just be “not wrong, just early.”

  52. WaveCatcher says:

    err, Nassim Taleb’s forecast was made Feb 2010, making him even wrong/earlier than I had thought.

  53. DeDude says:

    Off course the science employed is always backwards looking. Nothing wrong with learning from past mistakes (and a lot wrong with failing to do so). The problem arrive when people are too lazy to get beyond predictions based on previous correlation. You have to understand why there was a correlation and all of the preconditions that this correlation is resting on. Then you can actually predict when a specific correlation will hold and when it will fail.

  54. Lukey says:

    Here’s one :

    Vice President Biden joined White House spokesman Robert Gibbs at the regular news briefing to talk about what he calls the “Summer of Recovery” fueled by the highest levels of work yet on projects funded by the Recovery Act, otherwise known as the “stimulus bill.”

    As for Krugman – I think he is without peer in economic analytical abilities. He “sees” what is going better than anyone. But when he starts recommending policy prescriptions straight out of the Euro Zone play book, that’s where he fails (in my view).

  55. MikeG says:

    The Recession Debate Is Over [Larry Kudlow]
    “There ain’t no recession.
    Plus, profits are stronger than people seem to understand. The ISMs are fine. Productivity, reported out today, soared to over 6 percent annually in the third quarter. That’s the best number in four months for output per person.
    On top of that, business inflation is zero. Flat. Nada.
    The recession debate is over. It’s not gonna happen. Time to move on.
    At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come. ”
    — December 2007

  56. ToNYC says:

    “Then you can actually predict when a specific correlation will hold and when it will fail.”

    Not me for one.
    I have so much respect for CIKNA (CyclesIKnowNothingAbout) that binary solutions are epic fail.
    Keep moving along and stick with first-party information, or pretend you can know why before.

  57. DeDude says:


    The good news is that in investing you don’t have to be 100% right 100% of the time. You can make a lot of money getting it 60% right 60% of the time (which is still a challenge since you would have to beat the flip of a coin).

  58. scapescu says:

    If you talk here about both economists and politicians, I think it is worth mentioning Ron Paul ( sorry for not being political correct )

  59. Frwip says:

    Invictus is being unfair to Paul Krugman (yes, I’m a member of his fan club).

    August 2002

    “The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

  60. toddie.g says:

    @ FS

    The Bush Tax Cuts worked? Really???? I’d hate to see how awful this economy would be if they didn’t work. I guess you are saying that the Bush Tax Cuts saved us from 30% unemployment.

    Regarding the utter hackery of Lawrence Kudlow and all his crony supplysiders who have these terrible track records, why does Lawrence Kudlow still have a show on CNBC bleating the same hackneyed responses to economic ills, and trotting out the same old guests like Bowyer, Lufkin and Laffer who have repeatedly embarrassed themselves with their dead-wrong prognostications? I can understand why government is so incompetent and no one is held accountable, but I don’t understand how their is no accountability in the private
    sector? I suppose CNBC management will not be satisfied until all viewers of Kudlow’s show lose all their money.

    And one final embarrassing forecast by Ben Stein. I’m sure this will ring a bell to you, BR. On August 12, 2007 just at the incipient moments of the financial collapse, Ben Stein graced us with an infamous and incredibly wrong op-ed in the NY Times entitled “Chicken Little’s Brethren, on the Trading Floor. Supercilious fop that Ben Stein is, he wrote “THE job of an economist, among many other duties, is to put things into perspective. So, because I am an economist, among other duties, here is a little perspective on the recent turmoil in the stock and bond markets.”

    Stein’s appallingly wrong op-ed decried the market’s 6.7% selloff as “wildly out of all proportion to the likely damage to the economy from the subprime problems.” Stein went on to describe Bear Stearns as “clever.”

    Stein summed up his piece with “This economy is extremely strong. Profits are superb. The world economy is exploding with growth. To be sure, terrible problems lurk in the future: a slow-motion dollar crisis, huge Medicare deficits and energy shortages. But for now, the sell-off seems extreme, not to say nutty.”

    “Some smart, brave people will make a fortune buying in these days, and then we’ll all wonder what the scare was about. ”

    The full text of Stein’s embarassment can be read here:

    Ben Stein remained a regular guest on Neil Cavuto’s Saturday morning show on Fox News, proving that there is no accountability at Fox if everyone who listened to your financial advice went bankrupt,so long as you keep on bleating the GOP line of bullshit on Fox.

    Whenever the private sector bemoans the ineptness and lack of accountability in government, they should look at the skeletons in their own closet.

    Imagine the fortunes you could have made by doing exactly the opposite of the advice of Kudlow, Stein, Lufkin, Bowyer, Laffer. They should start the George Costanza School of Economics.

  61. louis says:

    Did the guy’s at PIMCO make the short trade on subprime?

  62. Equityval says:

    Well, yeah, Krugman would be aware of the housing bubble in 2005, after all he was the leading advocate for creating one in 2001:

    “The basic point is that the recession of 2001 wasn’t a typical postwar slump… To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

    How’d that work out?

    As for the credibility inferred by the Nobel Prize, they awarded one to Barack Obama 9 months into his term, you know the guy who ramped up the war in Afghanistan. Nuff said.

  63. rktbrkr says:

    Molesworth Says:
    August 16th, 2011 at 11:24 am
    I know I’m off topic here a little and probably late, but how is Cramer credible?
    How can anyone try to be Walter Cronkite in the morning and PeeWee Reese in the evening

    I think you meant PeeWee Herman

  64. jonhendry says:

    Equityval wrote: “Well, yeah, Krugman would be aware of the housing bubble in 2005, after all he was the leading advocate for creating one in 2001:”

    Krugman wasn’t advocating that a RE bubble be blown up. He was stating that Greenspan would need a RE bubble. He isn’t saying that’s a good thing. He was predicting, not prescribing.

  65. toddie.g says:

    @Equityval –

    Paul Krugman wasn’t advocating the complete abdication of lending standards by the shadow banking system, nor was he advocating the nonfeasance on the part of the Federal Reserve to enforce regulations on the books, nor was he advocating the payola corruption of the credit ratings agencies, nor was he advocating the rampant corruption running through the economy resulting from when the party in power believes free market capitalism can self-regulate, and so no enforecement of regulations is required (instead you get SEC officials watching porn 8 hours a day instead of investigating anyone). How did all that work out for ya?

    Additionally, the economy could have survived a garden-variety housing bubble just like it survived the bubble, which was followed by a typically shallow recession. The economy couldn’t survive a credit bubble of pandemic proportions. Krugman did not advocate a credit bubble. I do agree with you that he should not have advocated a housing bubble, but at least he was pointing out already in 2002 how structurally flawed the US economy was that the recipe for recovery was to careen from one bubble to another.

  66. MikeW says:

    Three brief observations :

    (1) The dismal science was not quite Mr. Bush’s forte.

    (2) Mr. Wesbury’s complacency could apparently survive an asteroid strike.

    (3) Mr. Rosenberg looks smarter with each passing year.

  67. [...] a good post at The Big Picture on awareness vs forecasting and a rundown on the most-excellent/dumb-ass pundits the last decade of [...]

  68. Equityval says:

    @jonhenry, @toddie.g,

    Thanks for the revisionism on Krugman. He is quoted in numerous places, roughly contemporaneous with the NYTimes piece, about the wisdom of lowering interest rates in order to inflate the housing market, for instance:

    “During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?”

    At the time he wrote the column in question, Fed Funds were at 2%, but apparently that wasn’t low enough for Krugman. As the host of this blog as explained in detail, it was the further drop in rates from this level that was a signifcant contributor to the housing bubble as well as other distortions in the capital markets – see this post for example if you need a refresher on this topic:

    Toddie, thanks as well for exposing your ignorance in equating the dot com bubble with the housing bubble. If you can’t distinguish between the destructive potential of an equity funded bubble of what was a relatively small sector of the economy and a debt funded bubble in the largest segment of the capital market, I suggest you go back and study some economic history. The two are not in anyway equivalent.

  69. [...] The perils of punditry [...]

  70. DeDude says:


    Would be nice with a link to that quote. What exact time did he say this?, The fact that the column (which did not make that statement) was written when the rate was 2% is not relevant. The question is what the rate was at the time he said what you are quoting him for – and what else he said in that context (was his next sentence something like, “however at this time there is little room for to do so because ……). Lets say it was something he said in an interview with a German magazine, that might be an important piece of information (and make it rather irrelevant for the US situation and what he thought US should do). Maybe I am paranoid (and please prove me wrong by providing the link), but the stuff you are setting out above just smells a little to Foxified to me. The statement he gives is 100% correct, including that you should always evaluate both the reasons to do it and the reasons not to do it. The potential for stimulation vs. potential for crating bubbles should always be carefully evaluated at any point in time when lowering rates is considered.

  71. DeDude says:

    If it was something Krugman said to a German newspaper in 1998 just before the launch of the Euro (Jan 1, 1999) that might sort of change what people think of his statement relative to the narrative you are trying to twist it into. I guess if reality doesn’t fit your narrative then you can always try to twist reality (barely missing an outright lie). God forbid that you let reality change your narrative or narrow world view. Do you think you are talking to a bunch of Fox-viewing morons?