In 1972, the prestigious think tank Club of Rome got together to publish their Malthusian treatise The Limits to Growth. It predicted, among other things, that global economic growth would grind to a halt in the 1980s, foodstuffs wouldn’t be shipped and we’d all starve to death. Of course, they weren’t just a little wrong or even a lot wrong, they were completely wrong; the decade that gave us new wave music and Max Headroom experienced the greatest explosion of global growth yet seen.
With elections upon us, we take a look back at some of the wackier economic predictions, some panic induced, some more likely drug induced. We hope you find them as entertaining as we did.
No.1 Striking Out
Jim Cramer let us in on a little tip. He’s got a money manager he thinks is “not only a sophisticated investor, he's one of the great ones. I'm telling you, he's one of the great ones."
Turns out it’s Lenny Dykstra. Yes,that Lenny Dykstra, the former New York Mets and Philadelphia Phillies great (nicknamed “Nails”), who proved to be to money management what Yogi Berra is to rocket science. Since the market hit the skids, Dykstra has been accused of credit card fraud, failure to pay rent, bounced checks and is the subject of numerous lawsuits. In a typical illustration of just how far afield things went, Daily Show host Jon Stewart noted, “"Who better to trust your investment portfolio to than a not-so-literate, horse-s**t chomping, man named 'nails'?"
No.2 Off Balance
Sorry, CNBC, it just isn’t your night. Well-known television commentator, economist and author Larry Kudlow went on the nationally-syndicated Hugh Hewitt Radio Show to tell us he liked what he saw in financial stocks. The momentary dip was over, and banks were shoring up their balance sheets. Of course, this was in 2008, pre-Lehman bankruptcy, pre-TARP, pretty much pre-everything. We know what’s happened since. Probably won’t hear much about it on today’s airing of “The Kudlow Report.”
No.3 Hot Air
Okay, this one is not so funny, considering what too many Americans are still experiencing, but worth a revisit nonetheless.
On Jan. 9, 2009, Christina Romer, then chairwoman of the president's Council of Economic Advisers, released a report entitled "The Job Impact of the American Recovery and Reinvestment Plan." The report projected that the stimulus plan would create 3 million to 4 million jobs by the end of 2010. It also notes that without the stimulus, unemployment would hit 8.5% in 2009 and then continue rising to a peak of about 9%in 2010. The unemployment rate actually peaked around 10% in late 2009 (currently at 9.6%).
Romer has since left her post.
No. 4 All-Star Cast
We’ll let the Congressional Record speak for itself. From the House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Barney Frank: Let me ask [George] Gould and [Franklin] Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated? Mr. Raines?
Raines: No, sir.
Frank: Mr. Gould?
Gould: No, sir. . . .
Frank: OK. Then I am not entirely sure why we are here. . . .I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.
No. 5 Bueller … Bueller …
Ben Stein explained the Laffer Curve to a classroom of underwhelmed (comatose) adolescents in Ferris Bueller’s Day Off and he’s supposed to be the smart guy in those Comcast commercials with Shaq, but now we’re not so sure.
On August 18, 2007, Stein and fund manager Peter Schiff were part of a roundtable discussion on “Your World with Neil Cavuto” about the future of the housing market, subprime issues, the overall economy, etc. Schiff, who has certainly been wrong on a number of other issues, won the day on this one. He correctly predicted just about everything that was to happen in the housing and mortgage markets, with Stein responding that Schiff was “flat-out wrong.” If that’s Stein's idea of wrong, we’d hate to see what he considers right.