TCS Daily


Apocalypse Not

By Jerry Bowyer - May 10, 2007 12:00 AM

Four years ago the folks at NewsMax sent me a request to interview Robert Prechter, the author of Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression. I had just written a book called The Bush Boom, and although Prechter was pushing doom and gloom stuff, I wanted to hear the other point of view. I believe that ideas aren't confirmed until they're tested in debate.

Prechter came on the show and made his case: dividend yields were at historic lows, and this meant that the stock market was highly overvalued. At that point the Dow was at about 8,000. I told him that he was missing an important point, that dividends were low because the tax code had discouraged them; that the underlying earnings were what counted. He became irritated. I asked him how low the Dow would go. He refused to answer. "Right now, it's at about 8,000," I said. "A year or two from now will it be closer to 10,000 or 2,500?" He chuckled at the idiocy of my question, "Much closer to 2,500!" he said as though it was the most obvious thing in the world. I asked him if he'd come back on the show in a year to discuss it. He agreed, but I never did hear from him again.

It's not just Prechter and the others doomsayers that NewsMax was pushing at the time. It's not just the guys at Agora whose breathless emails and equally breathless titles have tantalized us for years with promises of coming soft depressions, melt-downs and demises. There's a whole cottage industry of apocalyptic financial 'journalism'. It's easy to spot: just go to Amazon and punch in the word "coming" and take your pick of "collapse", "melt-down", "Armageddon", "demise", or "depression". The day the Dow closed above 13,000 Larry Kudlow had one of them on his show (Michael Panzer, author of Financial Armageddon). "Sorry, not today Mike," Larry said with a chuckle.


Don't get me wrong. I love to read these guys. The Agora guys (Addison Wiggin, Bill Bonner, etc.) are an enjoyable read, but I am always left with the impression that I'm reading master copy writers, not master forecasters. In fact, the forecasts seem to me to have been abysmal.

Then there's the left. Paul Krugman who told us that we'd 'all better start brushing up on our depression economics," and astonishingly, two months ago, was talking about a short-term drop in the Dow as a sign of "economic collapse." The Robert Rubin sect which has been warning us about huge deficits (they've been dropping like a stone) and their negative impact on the economy. I heard Rubin himself talk like this during a conference call in 2004, I recently debated his assistant, Former Clinton Administration official Robert Shapiro, who has been warning his readers about the same thing since as early as 2000.

The Asian Contagion and the Sub-prime contagion are looking more and more like SARS and bird-flu: a disease with many, many more press hits than actual infections. Viral marketing seems to work a lot better than actual viruses. Oh, and then there's Lou Dobbs...don't get me started.


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