Last Thursday, we penned certain misgivings about the increasingly popular view among some analysts and Wall Street experts that things were beginning to look up for the economy. We said at the time:
Conventional wisdom and billions in losses and write-downs notwithstanding, neither the real economy nor Wall Street is out of the dark and scary woods yet. You will soon see more than just the rating agencies change course and take cover once again.
Even wearing our customary suit of skeptical armor, we were a little jolted by the fierceness of reality’s sudden reawakening, and with it, the biggest 24 hour run-up in oil prices ever along with a nearly 400 point drop in the Dow. There was also that sharp uptick in jobless numbers. The headlines in The Wall Street Journal and The New York Times on Saturday said it all. They were a stark contrast to the words of U.S. Treasury Secretary Henry M. Paulson, Jr., who told The Times in May that …”we are closer to the end of the market turmoil than the beginning.”
It’s another cautionary tale about placing too much stock in the predictions of the pundits, policy makers and financial wizards who not only never saw the mounting economic train wreck coming but were part of the culture that substantially contributed to the mess.