It was, I guess, a rude awakening for me when I realized, many years ago, that most of the talking heads I saw on TV had no idea what the hell they were talking about. The sooner one learns that lesson, the better. So, take it from me (and BR, who says the same thing): Figure out who’s on their game and who isn’t; who’s got an agenda and who doesn’t. Stick with those who are consistently good and occasionally great, jettison the money-losers and ideologues. Finance is not the place for one-hit-wonders. (How do you wind up with a small fortune on Wall St? Start with a large one. Or follow the money losers because they deliver a message you want to hear, not one that will make you money.)

Now, to be clear, there’s a difference between being wrong and being ignorant (though some folks are often both). And there’s yet another, more insidious category: those who deny they’ve ever been wrong, gloss over their mistakes, don’t learn from them, or perhaps pretend they never happened. Being wrong is one thing, staying wrong is another; there’s nothing wrong with the former, everything wrong with the latter.

My jaw about hit the floor last year when I caught Niall Ferguson claim that a sudden, large spike in Federal payrolls was stimulus related when it was actually Census related. I’d never held him in particularly high esteem, but that gaffe just cemented my view of him little more than a cue to change channels.

In the past few days, I (sadly) happened to witness more of the same – this time from Meredith Whitney and, separately, Monica Crowley.

Ms. Whitney was on the tube defending and re-writing her call in December 2010 that there was going to be a debacle in the muni bond market. To the best of my knowledge, Ms.Whitney has twisted, distorted, and re-shaped her 60 Minutes comments six ways to Sunday, never being enough of a mensch to acknowledge that she was, indisputably, wrong – an admission for which I’d respect her. Instead, I’ve lost all respect for her inability to come to terms with this one horrific call (notwithstanding whatever else she may have gotten right or (mostly) wrong).

Here was Ms. Whitney with Steve Kroft in December 2010 (emphasis mine):

“There’s not a doubt in my mind that you will see a spate of municipal bond defaults,” Whitney predicted.

Asked how many is a “spate,” Whitney said, “You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars’ worth of defaults.”

Municipal bonds have long been considered to be among the safest investments, bought by small investors saving for retirement, and held in huge numbers by big banks. Even a few defaults could affect the entire market. Right now the big bond rating agencies like Standard & Poor’s and Moody’s, who got everything wrong in the housing collapse, say there’s no cause for concern, but Meredith Whitney doesn’t believe it.

“When individual investors look to people that are supposed to know better, they’re patted on the head and told, ‘It’s not something you need to worry about.’ It’ll be something to worry about within the next 12 months,” she said.

I respect the fact that Whitney went out on a limb and made a bold call. I really do. As she makes the rounds to peddle her new book, she should own up to the fact that her call was dead wrong instead of trying to re-write and distort what she plainly said.

No, the Reagan recovery did NOT produce 1.1 million jobs in one month

Which leaves Monica Crowley who, while dumping on Friday’s jobs report (1:07) invoked…wait for it…the Reagan recovery and the “fact” (not really a “fact”) that “…we had one month in the Reagan recovery, 1.1 million new jobs created in a single month…”. It’s possible, of course, that Crowley got her misinformation from National Review, which was apparently peddling that line a couple of years ago. Sadly, the former paper of record for Wall St. – the Wall St. Journal – also had no problem lying about the 1983 report, and that may well have been the point of origin:

As it happens, the biggest one-month jobs gain in American history was at exactly this juncture of the Reagan Presidency, after another deep recession. In September 1983, coming out of the 1981-82 downturn, American employers added 1.1 million workers to their payrolls, the acceleration point for a seven-year expansion that created some 17 million new jobs.

And so a talking point – having no basis in fact – is born, and continues to make the rounds.

Of course, not recognizing that number, it was off to the BLS archives for me, to find out what was going on. I suspected I had an inkling, and my hunch proved spot-on.

As BLS originally reported (so no revisions here; emphasis mine):

Nonagricultural payroll employment rose by 735,000 in September to 90.5 million, seasonally adjusted. About 675,000 of this increase, however, represented the return of employees to payrolls following settlement of strikes, chiefly that of communications workers. [Ed note: Without doing the requisite digging, I'll assume future revisions eventually took the number to >1MM.]

Here’s what that period in time looked like, and what Ms. Crowley was referring to (note the precipitous decline in the month prior to the spike up – that’s the workers being laid off the payrolls):

one million jobs

BLS, prior month:

The number of employees on nonagrlcultural payrolls fell by 410,000 in August to 89.8 million, seasonally adjusted. However, the establishment survey data were significantly affected by a nationwide strike of some 700,000 communications workers.

The point here being that during this period we were generally printing between 200k – 400k nonfarm payroll jobs per month, which is certainly admirable enough. Ms. Crowley could have said as much and been done with it instead of pushing a bogus 1.1MM number. So, either she was unaware of the circumstances surrounding that anomalous print, or chose to forge on ahead with information she knew to be misleading – neither scenario reflects well – for Ms. Crowley, National Review, or the Journal. So let’s put this one to bed, shall we?

Update (June 10): Replaced the line graph with a bar graph, a more appropriate choice under the circumstances.

Category: Economy, Employment, Financial Press, Media, Really, really bad calls

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.

31 Responses to “On Meredith & Monica”

  1. AtlasRocked says:

    The Reagan run was just another credit expansion by the Federal gov’t, It is the main source of the illusion of growth for the last 40 years:

    Debt increase by the term:

    ………..increase…per 1 year GDP
    reagan….66%……..30 %
    reagan…..62%……..33 %
    bush I……48%……..32 %
    clinton…..28%……..22 %
    clinton……11%………9 %
    W.Bush…..33%……..23 %
    W.Bush…..34%……..27 %
    Obama……53%……..46 %

  2. RW says:

    As Joe Friday pointed out this Sunday in comments, Meredith Whitney is also flogging the “Texas Miracle” balderdash.

    Folks who wander out of their area of expertise need to be careful because a very common form of cognitive bias is the belief that skill in one area translates into comparable skill in another; typically it does not.

    Whitney was worth listening too on banking particularly WRT reference to balance sheet shenanigans but the balance sheets of municipalities and states have important differences from corporate balance sheets and these differences become extreme at the level of national accounting; e.g., a balanced budget for a company or household is a good thing normally and it might be a good thing for a municipality or state under many (but not all) circumstances but for a nation it would be nothing less than catastrophic.

    Shorter me: Meredith Whitney does not appear to understand the difference(s); she should have stuck to what she knew.

    Invictus: “Folks who wander out of their area of expertise need to be careful because a very common form of cognitive bias is the belief that skill in one area translates into comparable skill in another; typically it does not.”

    Bingo. Thank you.

  3. VennData says:

    Meredith Whitney i could care less about; she married a professional wrestler. She’s a peripatetic bundle of hair coloring.

    Niall Ferguson is probably one of the greatest conservative intellectual giants of the last two centuries. in other words, a complete buffoon.

    Well done providing more data Invictus.

  4. MayorQuimby says:

    Everyone is selling something. I keep that in mind when reading anything/everything.

  5. AtlasRocked says:

    “When faced with two groups of liars, choose the group that offers the most rosey forecast from their lies, and the most benefits. Untrustworthy people always tell cockamamie stories about the hardship resulting from hard work, honesty and clear bookkeeping. “

    • Anonymous Jones says:

      Is that a real quote?

      Pretty thin gruel as sarcasm, given that one could run it the other way just as well.

      I’d think it’s the certainty that should be mocked, not the percentage of optimism or pessimism in any prediction.

      [And if you already know both groups are liars, why does the second sentence reference "untrustworthy" people when both groups already are such by definition? Just bizarre.]

      • AtlasRocked says:

        Once the gov’t provides benefits for the people there will only be two parties: One, the party of “expand the benefits” and another, the party of “we offer just a little less benefits”. There will be no party of “no benefits”, they will be of little or no popularity at all.

        And: The party of “less benefits” will be proclaimed the party of Beelzebub by the party of “expand the benefits.” The benefits expanders will claim to be sole defenders of “good” and all others are evil.

      • Joe Friday says:

        Once again, your baseless unsubstantiated rant in regards to “benefits” ignores the reality that the only Welfare State we have is a Corporate Welfare State for the Rich & Corporate.

  6. Willy2 says:

    1. Niall Ferguson predicted Hyper-Inflation and by doing so he made himself a laughing stock

    “Hyper-Inflation requires Hyper-Deflation”
    “Hyper-Inflation is a political choice”
    Hugh Hendry

    2. Meredith Whitney:
    She’s right. There’ll be A LOT OF municipal defaults. But surprisingly, “Obamacare” (for the time being) saved the bacon of municipalities. Interest on those municipal bonds are (A) tax deductable and (B) “Obamacare” tax exempt. As a result, A LOT OF US investors have flocked to those bonds. That allowed those municipalities to issue more and more debt. No wonder, California is still able to finance its debts. But sooner or later even for the municipalities “the chickens will come home to roost”.
    3. Payroll figures: I stopped studying them a long time ago. These are like the GDP & inflation figures the result of “cooking the books”.

    • Anonymous Jones says:

      Huh? What gigantic debts does the State of California (one of the largest economies in the world) have that are difficult to finance? All the debt machinations are a political choice because of balanced budget laws. They have nothing to do with the inherent ability to finance the governing apparatus of California’s economy. Certainly, to many with informed opinions, California’s debts are not so significant in relation to its size.

      Oh wait, I forgot, California is bankrupt, California is Greece. [It's amazing how well run everything is here given that the state is "bankrupt" and its economy "collapsing".]

      And what’s really amazing is that people not only invest based on such faulty ideas, but feel empowered to lecture everyone on it.

      [NB: Oh yeah, the reckoning is "going to come". Just know that "being wrong on timing" has a more simple synonymous phrase: it's also called "being wrong".]

      • willid3 says:

        and if one was really thinking that the economy is collapsing, why are you investing at all? and why do you care about the currency if its just pieces of paper? why would you bother to start or invest in any business at all?

      • Willy2 says:

        Still a muni bond bull ?

    • willid3 says:

      if you really think the governments cook the GDP and inflation and employment numbers, then i would also expect you think the same of any business that sells stocks. or has bonds. as i am guessing that you suspect the numbers because the government has an incentive to ‘cook’ them. so doesnt the business have as much or more incentive to do the same ?

      • AtlasRocked says:

        1. all humans cheat
        2. Gov’t employees have the cops ON their side, so now you need police to police the police.
        3. The idea of minimal gov’t, to reduce gov’t corruption, was not arrived at by whim or a night of drinking. There is a deep human history of abusive gov’t’s, including the national bank being used to hide tricky financing – what we see now: the benefits mongers are all saying the debt is not real, and if Barry would post my “best case” debt payback analysis, we’d all know how bad it really is.
        4. So the best solution is let the gov’t focus on regulation, leave the benefits to the states. That worked for 150 years really well. Only when benefits appear do we have runaway peacetime (or regional war) debt.

        “a citizen will never admit to that which he is paid to ignore. ”

        Gov’t is paying citizens 10,000X more to vote a certain way than citizens or corporations are giving to gov’t. It is reasonable to assume, therefore, 10,000X more insidious, perverting influence of gov’t over citizens, than vice versa.

        Few citizens will fight corruption when the corrupt actors are appearing to employ them, and buy them food, shelter, and medical care.

      • toddie.g says:

        @AtlasRocked –

        You write: ” the benefits mongers are all saying the debt is not real, and if Barry would post my “best case” debt payback analysis, we’d all know how bad it really is.”

        What makes you think we MUST pay back the debt? There is no debt crisis if the debt servicing costs can be comfortably serviced (without printing money to do it). Just like someone with a mortgage, so long as they make the payments they don’t have a crisis – even if they got a cut in salary. If the next wave of technology is centered on fuel efficiency, and demand for fossil fuels falls significantly, then we will see very large economic growth as oil falls to $75/barrel and maybe to $50-60/barrel. That opens the door to a whole lot of discretionary income for the middle class.Job creation would go through the roof, and money spent by the government for social programs (long term unemployment insurance, food stams) would shrink significantly and revenues raised in the form of taxes on payrolls would rise significantly. Buh-bye deficits in a hury

  7. rd says:

    I don’t watch anything about finance on TV. Life is too short.

    TV reporting is designed for immeidate reaction, so it is useful for breaking news and sports. there is very little in finance too be breathless about, which is how it all seems to be reported.

    Traders need to watch finance TV because they do live in a breathless world. The average investor should stay as far away from it as possible as our reaction time frames need to be years or decades in length.

  8. MelJ says:

    Rule of thumb: If someone doesn’t have documented history
    of ALL their predictions, ignore them.
    For more information on the subject see:

    The Folly of Prediction

    * Human beings love to predict the future.
    * Human beings are not very good at predicting the future.
    * Because the incentives to predict are quite imperfect
    — bad predictions are rarely punished
    — this situation is unlikely to change.

    Philip Tetlock

    under the auspices of the Intelligence Advanced Research Projects Activity
    (IARPA), is attempting to hold people accountable for their predictions at

    The Good Judgment Project

    Which pundits are willing to enter a level playing field forecasting tournament?

  9. DeDude says:

    Thank you Invictus. It is important to call out these types of distortions because they poison the public debate.

    Aha, it was the recovery from a Reagan induced labor conflict that produced a monthly gain of over 1.1 million in the number of people working. I guess the GOP is addicted to Reagan “miracles” as they now are engaged in temporary laying off government workers so they again can strut out huge gains in the number of people working after that circus is called off.

    Thanks. And your comment is spot-on.

  10. Vitus Capital says:

    I: Thanks for another useful tidbit.

    Invictus: Thank you.

  11. 873450 says:

    “either she was unaware of the circumstances surrounding that anomalous print, or chose to forge on ahead with information she knew to be misleading”

    She consciously chose the latter, hyping misconstrued data with misleading language – “jobs gain” and “employers added 1.1 million workers to their payrolls” don’t necessarily mean “new jobs” were created.

  12. willid3 says:

    more on that prediction’s business. since we have no real chance of predicting what will happen the next day (we can give a reasonable good approximation of that but not an absolute one. just look at weather prediction, they phrase it in percentages for a reason).


  13. louiswi says:

    Another very fine piece Invictus. Thanks for taking the time.

    Invictus: Thank you.

  14. BennyProfane says:

    She probably wants to take that “within twelve month” time constraint back, big time. These defaults will happen, but will take much much longer. There are hundreds and thousands of union pensions and retiree health obligations that haven’t disappeared in the past year or so. As a matter of fact, there’s that many Boomer public workers that have retired and are collecting, and the problem has gotten worse. Watch Detroit. They’re negotiating with the unions right now. Let’s see how that one settles. Oh, and the San Bernardino bondholder lawsuit may be interesting. If I was one of these kids who just graduated law school and want to find a lucrative career, this sounds like a solid specialty.

  15. AtlasRocked says:

    So why not have meredith or monica write a follow up? What happened?

    I really doubt they “lied”, knew before hand they lied, like Obama lied about NSA spying on citizens, where he knew it was going on and openly said the opposite to his fawning fans.

    Let’s hear it from them, what happened? There is a lot of funny business going on, 5 scandals involving lying and cover ups. Fiscal fraud was ID’ed and allowed to fester after the FCIC report – no prosecution.

    These aren’t the behaviors of honest leaders, folks. You all know it- I can tell by the way you all change the topic at certain points of every thread. By the hard facts that are repeatedly ignored and scoffed at.

    Invictus: “What happened,” you ask? Well, Ms. Whitney is trying to salvage her reputation from that horrific call. And Ms. Crowley? Well, she works for Fox. That said, I’ve made an effort to make her aware of her mistake. I guess we’ll see if she cares. For the record, I’m as disgusted by what the government is doing “in my name” under Obama as I was under Bush.

    • AtlasRocked says:

      I quit the Republican party in 2005. If you think he’s bad, have you quit the Democrat party? Have you demanded Impeachment yet?

      I very much doubt it, Invictus. Post your new party affiliation or the letter you wrote your senator to demand impeachment for violating the rights of millions of Americans with the NSA data gathering. I can do both.

      I find all the liberals just saying this is more of the same, instead of of Bush to the 10th power.

      Show us your authenticity.

      Invictus: Uh, I can loathe what Obama is doing in my name (as I did with Bush) without abandoning the core principles and ideals that draw me to the party. No need for me to change parties.

  16. Pantmaker says:

    Dems and Repubs are both a joke and Obama is one stock market crash away from taking the worst president ever award from Carter (I actually think Carter was a good man). Foolishly I bought all of his tough talk against the damage Bush did to our constitution. Joke was on me and I accept that. Throw in all the bank bailouts, ZIRP, etc. etc. and I’m not sure what we are supporting in this guy. He makes Meredith and Monica look like a couple of kids selling Girl Scout cookies.

  17. Malachi says:

    Nice post! And the amazing thing is this goes on in all fields and walks of life. People who are clearly wrong but just keep on creating justifications and excuses along with reaffirmations of their original corrupted ideas. I wonder if I do this too?!

  18. Joe Friday says:

    Crowley is simply engaging in what the American RightWing has been doing for several decades: desperately attempting to convince the American people how great the economy supposedly was during Reagan’s terms.

    In regards to employment, according to IRS data obtained via a FOIA request, there was not ONE single net new job created during Reagan’s two terms that paid more than $20,000.

    All the net new jobs created were low-wage McJobs.

    Add this to the massive accumulation of federal debt, the skyrocketing inequality, the rising Poverty, the Standard of Living going backwards for the overwhelming number of American workers, and clearly the Emperor had no clothes.