Wrong About Everything

These guys are reaching Bill Kristol levels of prediction making:

As 2010 began, there was nearly unanimous agreement in financial circles on at least one thing: Interest rates were sure to rise during the year.

Quite to the contrary. As Labor Day approaches, interest rates have collapsed, plunging along with economic optimism.

That turn of events, which has shocked savers and stunned investors, appears to indicate that financial markets’ worries are turning in a very different direction from those of many governments.

The governments are seeking ways to bring down budget deficits, fearing that without austerity they could go so far into debt that they would never be able to borrow again. Investors in the financial markets seem to be much more concerned by the possibility of renewed recession and a general deflation that could send asset values and prices down.

Of course the reason governments are focused on deficits and austerity is that the Galtian geniuses spent the last two years screaming about the budget deficit and austerity or the bond masters would kill us all in our sleep. The entire time, of course, Krugman’s hair was on fire and he was screaming bloody murder, but since he is a dirty hippy, he doesn’t count.

So now, because the assholes who created our financial mess were then wrong about the way to handle that mess, we can look forward to even more economic pain. Another round of bonuses for everyone!

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63 replies
  1. 1

    As 2010 began, there was nearly unanimous agreement in financial circles on at least one thing: Interest rates were sure to rise during the year.

    Ah yes. I well remember my FA at Merrill Lynch telling me that if he were me, he’d wouldn’t be able to sleep at night until he refinanced. Yes those were his exact words. It was “OMG YOU HAVEN’T REFINANCED YOUR MORTGAGE YET ARE YOU FREAKING NUTS???!!!!”

    So we refinanced. And it was like pulling teeth to get the bank to cough up the money, even though we have excellent credit scores. It basically ruined my December and January, dealing with the Bank of America fuckers.

    And now it seems I should have waited.

    Assholes. I’m done with them.

  2. 2

    @Southern Beale: Same here, almost exactly the same situation. I was warned very sternly that this was a last chance scenario and that rates would be going back up. They have since dropped another half point, maybe even more now that I’ve decided to stop caring about it.

  3. 3
    Lolis says:

    I am very nervous. My stocks are in the toilet. I can’t even look at my retirement account. I am trying to buy a house cause I know when the economy recovers I won’t be able to afford one. My dad says the interest rates are the lowest he has ever seen. He bought our family home in the 90’s at 12 % interest rate and that was a good price at the time. I can’t even imagine.

  4. 4
    Michael says:

    The credit rating system is broken – those scores are meaningless.

    This thing doesn’t break loose until three things happen:

    1. The mass slaughter of the currently ascendant bank risk managers, all of whom are running around in circles while shrieking “ZOMG!!ZOMG!!! We warned you and warned you but you didn’t listen to us back then, so now we will have the reins and nobody gets any money until we’ve had 8 committee meetings of the most tightassed chickenshitted officers of the bank and we agree unanimously!!!!

    2. The CEOs of the the big Wall Street investment banks, the consolidating retail banks and all the big mutual fund companies get gout and learn that it is coming from the rich diet they’re eating – that diet consisting of Main Street Americans.

    3. The Democrats make it a campaign strategy to point to everybody’s meager 401K returns from mutual funds, and point out that consumers’ returns on Social Security are far more reliable than money invested with liars who game the stock market.

    Sadly, I don’t see this happening.

  5. 5
    Zifnab says:

    So let me get this straight? The smart folks who – in 2006 – were telling us all how the market will never go down and the Bush Economy was a total triumph and CDOs were the best thing since sliced bread, then required a multi-trillion dollar bailout to keep their banks from completely collapsing, now have a new round of GREAT FREE ADVICE we really need to listen to. And this information also appears to be wrong.

    I am SHOCKED! SHOCKED GOOD SIRE!

    Seriously, how many Balloon Juice Banner Ads does the US have to fall for before someone in the Treasury department gets a clue?

  6. 6
    schrodinger's cat says:

    OT: Ross Douthat has an odious piece in today’s NYT making excuses for the bigots who oppose the construction of the Community Center/mosque in lower Manhattan. His America has no place for you if you are not a Christian ( you will be tolerated if you are Jewish or Catholic), oh and you have to speak English and no other language. Seriously these creeps are scaring me. Why is NYT giving these ideas a forum?

  7. 7
    General Stuck says:

    Kristol is an always wrong fool. But beyond that fact, we are likely in for a lot of economic pain for the foreseeable future, no matter what is, or isn’t done.

  8. 8
    Bulworth says:

    Yeah but Hyper Inflation!! Zimbabwe Hyper Inflation!! We’re Zimbabwe!! Deficits!!

  9. 9
    schrodinger's cat says:

    Why is anybody worrying about inflation when the interest rates are hovering close to zero.

  10. 10
    MikeBoyScout says:

    Wait.
    Paul Krugman, Nobel Prize winning economist, has been writing every week in the New York Times and his thinking was different from the banksters and Very Serious People?
    And this has been going on for 18 months?

    Where have we all been?

  11. 11
    Punchy says:

    OT: Probably ominous w/r/t the Afghan get-the-fuck-out plan, Gates going to retire in 2011 (per TPM). This does not auger well, as it puts Patraeus in a huge power advantage, as Repubs block every and all potential successors.

  12. 12
    MattF says:

    The word I hear lately is that since the return on cash is zero (or less if there is any inflation), one should be fully invested. I’ll just note in passing that this is not a risk-free strategy.

  13. 13
    MikeBoyScout says:

    But the prediction of success for Greece with a super austerity budget is on track, right?

  14. 14
    roshan says:

    @schrodinger’s cat:
    Well, no one could have imagined that the puritans who came to America to escape religious prosecution would do the same once they got settled here. It has always been, religious freedom for me and followers of my religion.

  15. 15
    General Stuck says:

    They are going to have to borrow as much money as needed to keep the states from going under and defaulting. I would say that even the wingnuts will go along with this no brainer, but I won’t, because they are insane personnel with matches and cans of gasoline. The US Senate has become republican headquarters for the war on America.

  16. 16
    ks says:

    Does anyone else use Google Reader and find that multi-paragraph blockquotes on this site are often (always?) broken? Looks like it’s because there’s a <p> tag outside the <blockquote> rather than inside it. The result is that only the first paragraph of the blockquote is indented, making it look like the rest is part of the BJ blogger’s commentary. Confusing!

  17. 17
    cat48 says:

    Didn’t Obama do this in his Saturday address? Did you see the Radio Address? You might want to watch that.

    point out that consumers’ returns on Social Security are far more reliable than money invested with liars who game the stock market.

  18. 18
    AJ says:

    “Investors in the financial markets seem to be much more concerned by the possibility of renewed recession and a general deflation that could send (their) asset values and (their) prices down.”

    Fixed it!

  19. 19
    ks says:

    D’oh! Let’s try that again… there’s a [p] tag outside the [blockquote] rather than inside it.

  20. 20
    stuckinred says:

    @cat48: How can you “see” a radio address?

  21. 21
    beltane says:

    I don’t know what’s worse: the false prophets themselves or the people who constantly fall for the false prophecies. As long as CNBC is watched by more than a handful of random crazy people, I have no hope that the situation will improve.

  22. 22
    roshan says:

    We have got a no-balls, everyone’s right, let’s make a deal and cut the baby in half, President, who just doesn’t seem to understand that folks outside his economic team, the economic policy wonks and experts on the left, have been mostly accurate about the meltdown and have been suggesting the remedies for it all along. In his Sunday broadcasts, he says that the republicans are out to destroy social security and forgets that he has appointed all the grim reapers from the right-wing to his deficit commission who are proposing exactly what he said. Maybe he just want’s to play a game of say something and do something else, but the general public has caught the deficit hysteria and there is no momentum for getting gov’t involved into aiding the private sector into action. Even infrastructure projects are a no go. Not sure what exactly is in his mind, but come November, he is going to have to deal with a momentum in the opposite direction in which he would not want to go from the republicans in the house and their subpoenas.

  23. 23
    John S. says:

    Has anyone else noticed the shift in credit scoring? Just over a year ago, I got a 6% new car loan with no problem and a credit score of 780. I just got turned down for a balance transfer credit card at 15% citing the insufficient strength of my credit score. It seems now, the high 700s is deemed as “Average” whereas it used to be considered “Good”.

    Did the ratings agencies collude with credit issuers to make it more difficult to for average folks survive in this economy?

  24. 24
    Mumphrey says:

    So how does one get one of these jobs where you can be wrong about everything, all the time, and not only do you not get fired, you get lots of big bonuses (Wall Street) or you get your own twice-weekly column and get to go to all the great parties with George Will and David Broder (our glorious press)? I mean, hey, I’m as incompetent as the next guy; I bet I could be wrong about everything, all the time.

    Now that I think about it, I think I’ll pass on the parties with Broder and Will, though; I don’t think I’d want to be in the same room with those guys for 10 seconds. I’ll just go for the bonuses instead. Give me a computer and access to millions of investors’ money, and I feel confident that I could flush it down the toilet with the best of them.

  25. 25
    James Hare says:

    I saw a Michelle Bachmann ad AND a Rand Paul ad when I loaded the page today.

    Others may complain, but I think it’s great that Rand Paul and Michelle Bachmann are paying (even a small amount) to get mocked by the fine front pagers here. I think I’ll click on those ads to find out more about their campaigns (so I can mock them further). Mind you, this is not inciting clickfraud. Such a thing is bad for John. No, I just think many interested BJers should find out more about Rand Paul and Michelle Bachmann!

  26. 26
    Anoniminous says:

    @schrodinger’s cat:

    Why is anybody worrying about inflation when the interest rates are hovering close to zero.

    Stupidity.

    SATSQ

  27. 27
    cathyx says:

    In the spring of ’09, I locked in a 5 year CD rate of 4.25%. I knew then that rates were staying low for a long while. I just wished at the time they had a 10 year CD.

  28. 28
    roshan says:

    @Mumphrey:
    My gosh, Sir, you seem to be one of the finest minds of American Capitalism. What are you doing among these recently turned into liberal slums of welfare proponents? You must have surely lost your way, but no worries, even if you are lost, it just means that the gov’t has lead you astray. The only downside is that absolutely no one here has any idea of what they are doing, and certainly everyone here smells of weed and is most likely to mislead you further. You are best advised to call the nearest black person, a n***er, and see if some white person high-fives you, in which case that person would be most appropriate to direct you to your destination.

  29. 29
    suzanne says:

    I bet I could be wrong about everything, all the time.

    That position is currently filled by matoko_chan.

  30. 30
    mclaren says:

    Larry Kudlow for President!

    Kudlow/Kristol 2012! YEAAAAAAHHHHH!

  31. 31
    cat48 says:

    @stuckinred:

    It’s on Video at the WH website. I used Radio because a lot of media folks still call it that. :)

  32. 32
    roshan says:

    @suzanne:
    Leave matoko_chan ALONE!

  33. 33
    ThatLeftTurnInABQ says:

    @roshan:

    the general public has caught the deficit hysteria and there is no momentum for getting gov’t involved into aiding the private sector into action. Even infrastructure projects are a no go. Not sure what exactly is in his mind, but come November, he is going to have to deal with a momentum in the opposite direction in which he would not want to go from the republicans in the house and their subpoenas.

    Political advice for Obama, et. al., circa 2011:

    Don’t wear sandals. Try to avoid the scandals.
    Don’t wanna be a bum. You better chew gum.
    The pump don’t work ’cause the vandals took the handle.

    1937 here we come!

  34. 34
    cat48 says:

    @roshan:

    Not so much deficit hysteria in the latest polls:

    Economy Remains Top Concern as Nov. Elections Draw Nearer http://t.co/tSoouEg Econ 30% Jobs 28% Deficit 7%! per GALLUP

  35. 35
    Mumphrey says:

    @roshan:

    I was trying to mock the geniuses who trashed our economy, not praise them. And I didn’t really mean that I wanted to be one of them. I guess I didn’t do the best job at getting that across. Sorry if what I wrote was offensive, I didn’t mean it that way, though I guess that’s no excuse.

  36. 36
    DecidedFenceSitter says:

    @ks: Yeah, just how Greader reads the HTML coding – it borks up on a few other sites. RSS isn’t a perfect read – but it is great for notification.


    On Topic:

    Who else do we listen to, though? Is there anyone out there that actually has a clue what’s going on at a lower level than Krugman, for actual, useful practical advice to Joe Schmoe?

    I bought my house in March and am fine with the interest rate then, cause they will always fluctuate.

  37. 37
    Anoniminous says:

    @General Stuck:

    They are going to have to borrow as much money as needed to keep the states from going under and defaulting.

    Eventually, when the cotton farmers of Mississippi and wheat farmers of Kansas are losing their farms because their crop subsidy checks are no longer arriving.

    Until then, I doubt the US Senate is going to make any moves towards applying solutions, instead of rounds of logomachian persiflage.

  38. 38
    MaryJane says:

    @John S.:

    Yep, and they ain’t even providing the Vaseline.

    We have 12% unemployment and Everyone and their Uncle Lou is in bankruptcy. No way in hell is a 780 FICO score Average. Liars.

    OT – I need to learn how to blockquote. Do you realize there are no FAQs in the FAQ section?

  39. 39
    celticdragonchick says:

    @suzanne:

    Heh!

  40. 40
    celticdragonchick says:

    @John S.:

    Has anyone else noticed the shift in credit scoring? Just over a year ago, I got a 6% new car loan with no problem and a credit score of 780. I just got turned down for a balance transfer credit card at 15% citing the insufficient strength of my credit score. It seems now, the high 700s is deemed as “Average” whereas it used to be considered “Good”.

    Did the ratings agencies collude with credit issuers to make it more difficult to for average folks survive in this economy?

    You have to wonder, especially since your credit score is also being used against you on your car insurance rates and your ability to get any job outside of fast food.

    I am still wonder what the hell my credit score has to do with my car insurance rate…

  41. 41
    roshan says:

    @cat48:
    As much as I like citing facts and seeing them abruptly brushed aside in our debates with the wingnuts, I do acknowledge the poll you cite. There is certainly no deficit hysteria in the general public as much as it is being portrayed in the news media. I am not sure what the President looks at while designing his economic initiatives but it most likely comes from the inner circle of his economic team who have bought into the deficit hysteria created by the right-wing elites.

  42. 42
    roshan says:

    @Mumphrey:
    I was kidding too, mister. Don’t apologize and bow like Obama bin laden. Now, carry on.

  43. 43
    John S. says:

    @MaryJane

    If you look at any of the banner ads that show the credit scores, they show you that anything under 800 is considered a “C”, anything in the 800s is a “B” and 900 is an “A”. I know it’s bullshit because it didn’t used to be like that. I’ve been monitoring my credit for years, and it’s just recently that they moved the fucking goalposts on us all.

    I just wondered if anyone else had noticed, or could say what it was all about.

  44. 44
    Neo says:

    In case you hadn’t heard, Thursday’s action on the New York Stock Exchange registered a technical anomaly known as the Hindenburg Omen.

    It takes two Hindenburg Omen trading days within a 36 day window to trigger the end of life in the markets as we know it.

  45. 45
    hilzoy says:

    As a break from bashing the bond vigilantes, I offer my personal favorite example of Baghdad Bob-style predictions. It’s by Jefferson Davis in April 1865, after the Confederate Government had fled Richmond before the advancing Union army, and a few days before Lee’s surrender at Appomatox. He said:

    “Relieved from the necessity of guarding cities and particular points, important but not vital to our defense, with an army free to move from point to point and strike in detail the detachments and garrisons of the enemy, operating on the interior of our own country, where supplies are more accessible, and where the foe will be far removed from his own base and cut off from all succor in case of reverse, nothing is now needed to render our triumph certain but the exhibition of our own unquenchable resolve.  Let us but will it, and we are free; and who, in the light of the past, dare doubt your purpose in the future?”

    I love “Relieved from the necessity of guarding cities” as a way of saying: now that we’ve been chased from our capital, which has been taken over by the Union Army, along with pretty much every other city of any appreciable size …

  46. 46
    roshan says:

    @John S.:
    Why can’t we too get Moody’s to give all of us Aaa+ ratings on whatever cow dung we own? They sure as hell did it for all the wall street playa’s and their assets before the meltdown and continue to do so.

  47. 47
    MaryJane says:

    @John S.:

    Oh, I believe you. I know my score but haven’t tried to get a loan in years so didn’t realize 800 isn’t worth shit now.

    My knowledge of credit is pretty much limited to swiping my card and clicking on Bill Pay. But it’s obvious they don’t trust me to continue providing them ginormous profits. The steady stream of new card and balance transfer offers is history.

  48. 48
    Zifnab says:

    @cathyx: I don’t know why. Buy some AT&T stock. That company isn’t going anywhere and they’re paying dividends in the 6-7% range.

  49. 49
    John S. says:

    Here’s the banner ad that was running here on Balloon Juice:

    Everyone’s credit sucks, unless you’re rich

    Nice, huh?

  50. 50
    Bill Murray says:

    @schrodinger’s cat:

    Why is anybody worrying about inflation when the interest rates are hovering close to zero.

    if you own other people’s debt, inflation reduces the amount you make on this debt.

    If you have debt, a little inflation is a good thing

  51. 51
    Chris says:

    @roshan:

    Why can’t we too get Moody’s to give all of us Aaa+ ratings on whatever cow dung we own?

    We can, we just have to pay them for the ratings, the way Wall Street did.

  52. 52
    Chris says:

    @Bill Murray:

    if you own other people’s debt, inflation reduces the amount you make on this debt.

    Correct! And, I do own other people’s debt. My concern, which I think the bankers are finally cottoning on to themselves, is that if the economy stays this bad, the other people won’t be able to pay me back at all, regardless of the value of the dollars they would otherwise pay.

  53. 53
    Sentient Puddle says:

    @John S.:

    If you look at any of the banner ads that show the credit scores, they show you that anything under 800 is considered a “C”, anything in the 800s is a “B” and 900 is an “A”.

    Isn’t the highest possible credit score 850? That seems to me to be rather telling in some regard…

  54. 54

    I’ll take my bonus straight up, no chaser.

  55. 55
    Silver says:

    @MaryJane:

    Unless they changed significantly over the last 5 years, a FICO of 780 is very high. Scores close to 800 is basically Virgin Mary credit. I think the highest I ever saw was 823.

  56. 56
    Anoniminous says:

    @Chris:

    True.

    But let me put it this way:

    Every house should have plumbing. One should work to ensure the plumbing works. When the house is burning down the relative weight of work should go to putting the damn fire out and then worry about the damage to the plumbing.

    Simple fact: if debt payments can’t be met because the debtor ain’t got no job it doesn’t matter what the inflation rate is the debt won’t be paid. This puts the principal “at risk” – meaning “they ain’t gonna get it” – and that loss is much worse (bigger) than the inflation-adjusted loss.

  57. 57
    ChrisS says:

    @Zifnab:
    So, since there were a few that bet against the economy before the bubble crashed and made a few billion, how can I bet against it now?

    With this lot in charge and the nitwits trying to take their places, I don’t have a lot of hope for a prosperous few years ahead. I’m thinking at least a decade or a generation before things start getting better.

  58. 58
    John S. says:

    @SentientPuddle:

    The banner ad I linked to above shows an ‘A’ rating with a credit score of 923. Wikipedia says:

    The FICO credit score ranges between 300 and 850. The VantageScore score ranges from 501-990.

    So I guess we’ve moved from using FICO scores to Vantage scores. The product was unveiled by the three credit bureaus on March 14, 2006. So I guess it is collusion to fuck us all over.

  59. 59
    Sentient Puddle says:

    @ChrisS: The people who bet against the economy during the bubble pretty much had to invent their financial instruments on their own, so I suspect anyone wanting to bet against the economy now would have to do the same.

    As for what area you can do it in, maybe bet against the morons who predict hyperinflation? I don’t know how you could go about that…a futures derivative of some kind?

  60. 60
  61. 61
    frosty says:

    Nit. John, it’s spelled hippie. Always was, always will be. You’re only a hippy if you’re bit broad in the beam.

    There. I feel better.

  62. 62
    frosty says:

    @Lolis: Yep. My first mortgage was 12.75%. I currently have a 5.25% mortgage and a 3.25% HELOC. It still hasn’t dropped enough to justify another refi.

  63. 63
    frosty says:

    @hilzoy: Boy, you know who else thought all his generals needed was enough will….

    Funny, when you’re outnumbered 3:1, you generally lose. Regardless of will. I learned that from Risk.

    Oh, and don’t start a land war in Asia. Risk (and Princess Bride) will teach you that, too.

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