Didn’t Other Bearish Analysts Get It Right, Too?

Not really. Back in 2006, there was a small group of more bearish financial analysts and economists who correctly predicted some slices of the problems we are seeing now. We say hats off to them for having the courage and insight to make what they felt were honest, if not popular, appraisals of the economy. It takes guts to yell “fire” when so few people believe you because they can’t even smell the smoke.

However, there are times when smart people make the right predictions for the wrong reasons, or for incomplete reasons, and that makes them less likely to be right again in the future. In this case, there are important differences between our way of thinking and the typical “bear” analysis, which we think you ought to know about. For one thing, a lot of bear analysis tends to be apocalyptic in tone and predictions, sometimes going so far as to call for drastic survivalist measures, such as growing your own food. Unlike these true Doom-and-Gloomers, we see nothing of the kind occurring.

Another important difference is that so much bear analysis seems to carry moralistic overtones, implying that, individually and collectively, we have somehow sinned by borrowing too much money, and we will eventually have to pay a hefty price for our immoral ways. We certainly disagree that borrowing money is morally wrong. In fact, depending on the circumstances, borrowing money can be the best course of action for an individual, a business, or ...

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