Sunday, March 11, 2012

100 False Prophecies by the Pied Piper of Doom: 11-19, bankrupties are gonna crash and burn the economy! (1)

- 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, put some popcorn in the microwave or pour a nice libation and enjoy ths following Sunday reading.

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 I simply decided that rather than having this sit unpublished in my computer, a record should be available.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've had to split it into two sections. This is the first section. Here is last week's post with the first 10 false prophecies.

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.

11. In May 2009 he claimed that there were going to be
upcoming six-figure job losses certain to occur throughout the auto industry
Obama was able to arrange for the prepackaged bankruptcy of GM and Chrysler. Those 6-figure layoffs never happened.
He was wrong.

12. On July 21, 2009 he claimed that CIT corporation would go bankrupt and throw the economy into the abyss:
the CIT Group bailout may collapse over the next few days, despite the recent hoopla about the private sector's so-called (feeble) attempt to support an entity that represents one of the most important sources--if not the most important source--of financing for a good portion of Main Street.
We're talking 300,000 small business--out of the almost one million served by CIT--in jeopardy of closing their doors in coming days or weeks as a result of this "not-too-big-to-fail" mentality being deployed by our government's pretzel logic right now.

...Our government's indicating Main Street's expendable! " See: "Treasury Bets U.S. Financial System Can Weather CIT Collapse."

Businesses are closing their doors due to this, and it isn't even official! See: "Alabama Tool Supplier Blames CIT Woes for Bankruptcy."

Now multiply that times 300,000... Gone. Do you know what this will do to the unemployment numbers in coming weeks and months?
CIT did declare bankruptcy, and not one of his apocalyptic predictions came to pass.
He was wrong.

13. The next day he said:
The disparity between the "happy news" crowd's call for an imminent economic recovery simply doesn't jive with their occasionally (more) sober comments regarding stark Main Street realities.
Backed into a corner, with the imminent closing of no less than 300,000 of their almost one million Main Street small business clients (accounting for, perhaps, millions of existing jobs in the retail and manufacturing sectors) on the line, CIT Group senior management agreed to "Don Corleone financing" terms, accepting 'an offer they couldn't refuse' that guaranteed an immediate $100 million-plus profit to the PIMCO-led vulture capital group the moment the ink hit the bondholder agreement documents.
He was still wrong.

14. On September 9, 2009 he claimed that The Auto Sector was going to tank:
And, of course, there are the government programs to support our ailing auto and housing sectors...note the first sentence of the story, we heard that Ford's sales were up 17% last month...but...wait a minute...GM and Chrysler were down? It will be very interesting to follow car sales over the next few months. The sales volume will fall, as the stimulus to buy is no longer there. The question will be: " Did the clunker program just steal from future consumption, or has there been a permanent increase in demand that reflects a stronger economy? My bet is that the demand is going to fall flat. I visited a car dealer on Tuesday and they had not seen a customer. Without the rebate there are no buyers. We're told things are looking up; but these statements are based upon slight upticks in manufacturing indices which are only temporarily inflated by short-term government programs. Both the retail auto and housing sectors are, indeed, projected to continue to tank after the federal supports are withdrawn.
Auto sales fell for only one month, and then resumed their upswing, hitting 11 million by spring 2010, 12 million by autumn, and as of last month, 15 million.

Yeah, he was wrong.

15. 10 days later, he claimed:
The cash-for-clunkers program, in view of even near-term sustainability of auto sales, was a failure. Comments coming from senior industry analysts with regard to September sales are far beyond even awful.
Yeah, you know. Still wrong.

16. Remember the commercial real estate catastrophe? In March 2010 he said:
the commercial real estate (CRE) bust will do more to undermine an already-struggling small business environment than most realize, simply because Main Street businesses have always relied upon the mid-sized and small community banks for the lion's share of their credit needs, and these are the same banks that are going to feel the brunt of the CRE meltdown
The CRE meltdown never happened.
He was wrong.

17. Or how about the catastrophe of Christmas 2010 caused by the SBA failing to make loans? In July 2010 he said:
It creates a brutal, cascading effect upon U.S. small business, of course. (Both directly and indirectly.) So, when I read articles like this, "SBA Lending Cliff Dives in June, Boding Ill for Employment," from Naked Capitalism, today, it's disconcerting, to say the least.
[quoting Naked Capitalism] Christmas-related spending is a big boost for much of the economy; businesses need to buy supplies and produce/carry inventory in advance of Christmas orders. Limited access to funding in the runup to this critical selling season would be particularly damaging.
Didn't happen.
He was wrong.

18. Remember how BP had to declare bankruptcy and crashed the economy? During the gulf oil disaster he said:
Stories have been circulating over the past few days that BP may be looking at its bankruptcy options as the only way out of its self-made travesty in the Gulf of Mexico. But, in the past hour, according to an interview with top oil and gas consultant Matt Simmons, just posted on Fortune Magazine's website, it now appears that the possibility that BP will file bankruptcy very soon is quite real.
BP didn't declare bankruptcy.
He was wrong.

19. Remember how the commercial real estate disaster took down over 1/3 of the nation's banks? The Pied Piper claimed:
due to the just-commencing downturn in commercial real estate (CRE), approximately 3,000 of our nation's 8,000 banks are at risk of insolvency in the course of the next 36 months. In what's just the first inning of a rather massive commercial real estate bust, it's really all about how this will affect these banks that just happen to be the same banks that have been the traditional source for capital for much of our nation's small business

.... the double-dip Great Recession, the meme that even some of the blogosphere's most optimistic pundits downplayed up until just the past few weeks...
That didn't happen either.
He was wrong.

To be continued ... and continued ... and continued ....