- by New Deal democrat
Introductory note: For those of you who aren't aware of the past history of the bloggers here with Daily Kos, or don't want to hear more about it, please pass on. Regular economic blogging will resume tomorrow. For those of you who do, here is the third installment in this periodic series.
Once again I request that you not cross-post this. Unfortunately you're not going to change anyone's mind. I simply decided that rather than having this sit unpublished in my computer, a record should be available.
This installment turned out to be so long, I had to split it into two sections. This is the second section. The first section can be found here. The first 10 false prophecies, "The stock market's gonna crash!" can be found here.
The Reckoning continues....
The Pied Piper of Doom has been very sure that, well, just about everything is on the brink of bankruptcy that will surely cast the economy into the abyss.
20. In October 2010 he said that the robosigning scandal would crash the recovery:
we are just beginning to ring the bells on a new, raging, eight-alarm fire within our economy which may (this is by no means inconceivable, at this point) undermine virtually all efforts at a recovery, to date, from the get-go; thus, further propelling our country into a downward trajectory which may already require generations to fully overcome. For the moment, we're calling this: "The U.S. Foreclosure Fraud Crisis."Didn't happen. He was wrong.
21. No, seriously. That same month he said that the mortgage industry was going to re-implode :
For the second time in two years, our country's mortgage industry is imploding before our eyes. .... The proverbial sh*t's hitting the fan on this one, bigtime, just like the previous mortgage meltdown. And, the rumors are getting beyond scary, in terms of the implications these events may wrought with regard to our already-teetering economy.Still didn't happen. He was still wrong.
22.. No matter. Remember, from the same time period, the second Wall Street implosion of 2010?
Is Wall St. Imploding, Again? Krugman: It's "very, very bad."
here's the latest big story, the business lede from Friday's NYT, with all of the bloody details which point out that this week--just like that week in mid-September 2008--may very well end up being another pivotal point (for all the wrong reasons) in our nation's economic history... .... The story provides the narrative over the past few days... --market uncertainty, worries about "the financials;" --everyone thought this would pass quickly, but that's looking "less and less likely;" .... The calendar tells us it's October 15th, but it sure looks like it's Groundhog Day to me.That didn't happen either. He was wrong.
23. A few days later, he said that the mortgage industry's MERS scandal was going to take down major Wall Street Firms.
isn't it now crystal clear to many of those that are following the Mozilo story, that it's just the tip of an iceberg of a lengthy list of memorialized events which all tell us that the entire mortgage mess is just a major chapter in a much bigger story of crony capitalism and corporate kleptocracy gone awry; a story which may soon record a second collapse of many major, too-big-to-fail (TBTF) Wall Street firms -- one which is not-so-quietly playing out over this weekend, but still unbeknownst to most. .... And if you're still doubting what's immediately ahead for the U.S. mortgage industry and the largest/TBTF Wall Street banks, and consequently much of our economy, you may want to checkout these three articles relating to the incredible pounding they're taking (quietly, behind the scenes, this weekend) Bank of America Wells Fargo .... just hours after I posted a diary, entitled: "Is Wall St. Imploding, Again? Krugman: It's "very, very bad," on Friday, had I known that the news on Mozilo would occur later that day, I would have retitled that post not as a question but as a statement of FACT: "Wall Street Is Imploding, Again.FACT: wrong. Again.
24. Then in November 2010 he claimed that a New Jersey state court ruling would cause Bank of America to fail:
When mortgages are "securitized" by the banks that originate them ("sponsors"), such as Bank of America -- whom we're slowly learning, this weekend, due to developments in a New Jersey bankruptcy hearing last week, may have actually and completely fallen into the insolvency abyss -- they're subject to a "pooling and servicing agreement."As of Friday it's stock was still trading on the NYSE. He was wrong.
25. In early December 2010 he claimed that, in part due to a sure-fire devastating publication by Wikileaks, Bank of America was going to be forced to declare bankruptcy:
While you may not have heard about it yet (you probably will start noticing it in the MSM soon, if not this morning), it appears that over the past 18 hours our country's largest bank, Bank of America, may have entered into the final stage(s) of a fairly swift implosion. .... Apparently, the BofA story from ten days ago was just a teaser for the main act which started playing out on the MSM stage roughly 18 hours ago. Yesterday, MSM and blog stories started surfacing concerning two separate issues ... which provides an update to the story I started covering 10 days ago), with either one providing more than sufficient cause to drive the two-trillion-dollar behemoth into receivership, or worse--that place where almost all divine oligarchic institutions have gone of late: taxpayer exponential bailout hell. As you'll see, below, the bank is very much in Wikileaks' sights, and it's all but formally confirmed that they will be the subject of Julian Assange's next planned data dump, sometime in January. .... Any way one might look at these most recent developments, IMHO, from a myriad of perspectives, this latest BofA chapter in the over-arching story of our country's recent financial woes could easily turn out to be THE biggest nightmare yet. One thing that's obvious, if only for the past few hours, is that whatever's going down right now is happening very swiftly.The "biggest nightmare yet" apparently vaporized with awakening that day. He was wrong.
26. A few days later, he made one his most preposterous predictions -- that Bank of America was within days, if not hours, of failing:
Our country's largest bank has all but taken a final dive into the abyss. And, if you take a look at the lead in Sunday's NY Times, we're reminded it's not just the federal budgets that are hurting here. We're reminded that it's the United STATES of America: "Mounting State Debts Stoke Fears of a Looming Crisis." In Sunday's NY Times' lead, Michael Cooper and Mary Williams Walsh talk of an ongoing, massive collapse in state and municipal budgets around the country. Mounting State Debts Stoke Fears of a Looming Crisis By MICHAEL COOPER and MARY WILLIAMS WALSH New York Times December 5, 2010 ...Some of the same people who warned of the looming subprime crisis two years ago are ringing alarm bells again. Their message: Not just small towns or dying Rust Belt cities, but also large states like Illinois and California are increasingly at risk... The journalists focus upon commentary from Wall Street analyst Meredith Whitney, someone who's gained a well-earned reputation (she's also one of my favorites) for prescience due to the fact that she was one of the first to warn us of a mortgage meltdown. She now "...sees similar problems with state and local government finances."As of Friday its stock was trading at $8.25 a share. He was and is still wrong.
27. As 2010 closed, he thoroughly bought into Meredith Whitney's prediction that states and municipalities would default in huge numbers in 2011:
As we turn the page of the calendar into 2011, here are some stunningly inconvenient truths about our so-called economic "recovery..." Many of our country's states and municipalities are in dire financial straits, and many may default in 2011.Meredith Whitney had one of the most spectacularly wrong predictions for all of 2011, and he was right along with her for the ride. He was wrong.
28. Beyond municipalities going bankrupt in droves, in January 2011 he also thought that states themselves would go bankrupt:
Up until now, the concept of states filing bankruptcy has been a moot point. According to various legal precedents, basic definitions of sovereign law, and the U.S. Constitution, it simply couldn't happen. Up until now... as today's New York Times' lead also informs us: "Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions..." The article does note: "It would be difficult to get a bill through Congress, not only because of the constitutional questions and the complexities of bankruptcy law, but also because of fears that even talk of such a law could make the states' problems worse." And, it's possible that our federal "lawmakers might decide to stop short of a full-blown bankruptcy proposal," opting for something along the lines of what was established to guide New York City through its fiscal crisis in 1975, which was the Municipal Assistance Corporation. But, call it what you wish for political purposes, there are many synonyms for the word: "bankruptcy."I'll outsource the response to this, to Calculated Risk:
A recent article in the NY Times about "discussions" on state bankruptcies. Not Gonna Happen. Economix has California’s state treasurer, Bill Lockyer response: State Bankruptcies? ‘Ludicrous,’ He Says “It’s a cynical proposal, intended to incite a panic in response to a phony crisis,” Mr. Lockyer said in a conference call with journalists. “Killer bees, space aliens, and now it’s the invasion of the bankrupt states.” The state budget issues are serious. And the U.S. debt and deficit issues are serious too. But I've ignored the "debt ceiling" and "state bankruptcy" discussions for a reason - they are nonsense."Nonsense." I couldn't have said it better myself. He was wrong.
Not content with simply being wrong about municipalities and states, this self-identified arbiter of what it means to be a progressive, thoroughly bought into the trope that by running deficits, even in the face of strong deflationary forces, the federal government was crowding out private borrowing, and the federal government's bond auctions would ultimately fail. In so doing he clutched to his bosom and propagated a right wing meme that has been thoroughly eviscerated as fear of "invisible bond vigilantes" by both Professors Krugman and DeLong.
29. In February 2009 he claimed:
But are we already encountering problems selling our government debt to underwrite this? In his still-vague proposals, Geithner supports pouring an additional two trillion dollars in taxpayer funds to "stabilize" our nation's financial services sector and to get the credit markets flowing, once again. This assumes our government is even able to finance that debt with the sale of T-bills and bonds, etc. And, contrary to popular belief and the reality that the U.S. may just print money without any adverse consequences, we're already quickly learning--the hard way--that there's a limited market for our nation's unbridled debt, "Treasuries Drop as Dealers Digest $67 Billion in Notes, BondsAs Krugman has reminded us many times, treasury bond rates have fallen since then. The Pied Piper of Doom was wrong.
30. In May 2009 he reiterated this claim:
QUESTION #3: Are the much ballyhooed "Quantitative Easing" efforts of Fed Chair Ben Bernanke failing miserably out of the gate? THE ANSWER: Initial results indicate this may be the case. In an effort to keep interest on the federal debt low (read: manageable), the Fed poured the first piece of its $1.2 trillion 2009 QE budget, or $300,000,000,000 of taxpayers' funds, into the purchase of US T-bills in mid-March. Interest rates immediately dropped dramatically as a result of that. But, market activity over the past week now has 10-year notes eclipsing rates in the market from the day before Bernanke flipped the proverbial Quantitative Easing switch, roughly six weeks ago. $300 billion to keep interest rates on our debt suppressed for six weeks? That's only $50 billion a week to buy down interest on our debt, only to see market demand for U.S. debt slacken dramatically shortly thereafter. Such a deal!To the contrary, the even lower rates now for treasuries show us that relative to other investments, U.S. is still a safe haven. He was still wrong.
31. In the same diary he claimed:
QUESTION #4: From a purely market-driven perspective, are Wall Street bailout funding efforts inherently at odds with efforts to fund most of the other government-sponsored stimulus/bailout/Main Street programs? THE ANSWER: also appears to be, "Yes." Come to think of it, it's really just common sense, as the Business Insider blog tells us: "How Government Guaranteed Bank Debt May CRUSH Public Borrowing." If other government programs are offering better, guaranteed returns than T-bills and municipal bonds, etc., it's only logical that investors will be driven to those other investment vehicles.Treasuries were yielding less than 2% last week. He was spectacularly wrong, and spectacularly trumpeting a very Coolidge-like view as the one and only true progressivism as He Himself defined it for his acolytes.
To be continued ... and continued ... and continued ....