Tuesday, December 9, 2008

Evening Edition Doom and Gloom

I just saw this and wanted to get it out. NY Magazine on the Oracles of Doom and Gloom. Fortunately I have been following three of the six oracles they cite, which has helped me to survive financially in this environment. But the real reason that I wanted to post this is their future predictions. Let me address them seriatim.

Gerald Celente predicts our dollars will be worthless in the future. I generally agree. All this multi-trillion dollars in alphabet soup relief programs will quite possibly lead to the collapse of our currency in due time. Unfortunately, Celente seems to be right quite often. I look forward to searching him out in the future as I have not followed him to date.

Noriel Roubini, need I say more. I have reported here before on his predictions and recently noted I have this bad gut feeling that he is right, which is increasingly being supported by more data. Gut feelings are fine, but data tells the true story and it is not looking pretty.

Peter Schiff. I have not followed him. His prediction that this will be worse than the Great Depression could be true but I tend to think things won't get that bad. I do think it will be the worst recession since the Depression, like Noriel Roubini, but I think the global response will save us from the worst. Schiff, of course, now sees the global response as the problem, and for the most I cannot say I disagree that much, but I still think we will avert the extreme he predicts. It will likely be more like Japan, long and drawn out. The difference between that and the Great Depression may be hard to discern.

Richard Russell. He anticipates the DOW will reach new lows and break the 50% down mark. I agree totally. I would explain why in detail, but I do that every day.

Barry Ritholtz. I refer to Barry at the Big Picture on a fairly regular basis. Barry hedges his statement on the attached article, but I know from following him that he is more bullish now than his comment reveals. No, he is not all the way back into the pool by any means, but I think he thinks we are past the worst. Sadly, I don't think so, but he knows more about this stuff than me and I respect his opinion. He certainly gets lots of air time on financial news shows.

Jeremy Grantham. Several months back I read a lot about his outfit GMO. Mostly a quant shop with a good dose of common sense thrown in when the computers do not make sense. I am not a big fan of quantative analysis. Sure, it can be a backup to proper analysis, but when we give our analysis over to mathmaticians and computers, we end up like Lehman, Merrill Lynch, Bear Stearns, etc. A lot of the derivatives mess was possible due to this kind of analysis. Nonetheless, GMO has done well and Jeremy Grantham is worth your ear. His prediction that volatility will die down as we become numb could be correct, but I think that will take a long time of us being beaten in the head with bad news. I know it seems it has already been a long time - get used to it.

Just my take on the oracles. My hat is off to them for the help they have provided me this year. I, however, would be remiss not to add my own oracle. Michael Panzner wrote a little book called Finacial Armageddon that came out in early 2007, which means it was largely written in 2006 or before, well before this debacle started. I started reading it at the beginning of this year and finally had to put it down as it was too scary for me. Pretty much everything that had happened was predicted by him but not everything he has predicted has happened. And the other things he predicts are somewhat worse than the oracles above predict. Nonetheless, he predicted the derivatives mess, the Fannie/Freddie mess, and numerous other messes that are still unfolding. Reading his book has been a user's guide to what is happening, so my hat is off to him as the last oracle. It is still a good read today.


No comments: