Talking heads make a lot of predictions. I remember a lot of conservative talking heads in early to mid 2008 predicting the economy would continue to be strong throughout the rest of that year. In contrast, I made the following predictions on April 2, 2008:
I see a Dow in the 7000-9000 range, the S&P 500 struggling to stay over the 1000 mark and a NASDAQ in the 1400-1600 range. I see unemployment and inflation both between fifteen to twenty five percent. I see many consumers defaulting on their credit cards and the major crisis in the banking and lending industry will be compounded by hordes of consumers defaulting on their credit cards. As a result of these credit card defaults, more banks will fail and major banking insurers will fail as a result as well as investment funds and securities that are based on credit card debt. I believe there will be consumer and corporate bankruptcies on a massive scale.
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All of this came true except for the unemployment rate, and the reason that unemployment did not reach that high is because of government intervention in the crisis by both Presidents over the past 10-12 months. Recall, however, regarding my predictions that at the time I made them, the Dow was at 12626, the S&P was at 1370 and the Nasdaq was at 2279.
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