It was February 2007 when we warned of the coming subprime collapse and the impending doom that we’re now party to. And even though the warning signs were clear as day, elected officials were blind and instead offered the following.
And if you think the following quotes are funny, bad, or just outright maddening, check out our free report on the Culprits of the Financial Crisis.
As reported by Yahoo:
“Here are some of the worst predictions that were made about 2008. Savor them — a crop like this doesn’t come along every year.
1. “A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!” — Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.
2. AIG “could have huge gains in the second quarter.” — Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008
AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.
3. “I think this is a case where Freddie Mac and Fannie Mae are fundamentally sound. They’re not in danger of going under I think they are in good shape going forward.” — Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008
Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.
4. “The market is in the process of correcting itself.” — President George W. Bush, in a Mar. 14, 2008 speech
For the rest of the year, the market kept correcting and correcting and correcting.
5. “No! No! No! Bear Stearns is not in trouble.” — Jim Cramer, CNBC commentator, Mar. 11, 2008
Five days later, JPMorgan Chase took over Bear Stearns with government help, nearly wiping out shareholders.
6. “Existing-Home Sales to Trend Up in 2008” — Headline of a National Association of Realtors press release, Dec. 9, 2007
On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million — down 11% from a year earlier — in the worst housing slump since the Depression.
7. “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.” — Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008
In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup needed an even bigger rescue in November.
8. “In today’s regulatory environment, it’s virtually impossible to violate rules.” — Bernard Madoff, money manager, Oct. 20, 2007
About a year later, Madoff — who once headed the Nasdaq Stock Market — told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.”
Unfortunately, the quotes, the people involved in the market malaise, the market failure, and tightened credit go much deeper than the people mentioned in the Yahoo article. And for that we direct you to this report.