12 of the worst economic predictions ever made by highly intelligent people
"Japan As Number One" was released by Harvard social scientist Ezra Vogel back in 1979. It was not an unpopular view at the time that the United States economy would soon be surpassed by prosperous Japan, but it looks pretty ridiculous now.
Irving Fisher, one of America's greatest ever economists, said in October 1929 that he believed equities had reached a "permanently high plateau." Less than two weeks later, stocks plunged and didn't reach the highs they fell from for 25 years.
In December 2007, Goldman Sachs chief investment strategist Abby Joseph Cohen made a Fisher-like prediction of her own. She suggested the S&P 500 would hit 1,675 by the end of 2008, a climb of 14% — it actually ended below 900.
Paul Samuelson, the first American to win the Nobel Prize in economics, said in 1961 that "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."
In 2010, billionaire entrepreneur Richard Branson issued a warning that "the next five years will see us face another crunch – the oil crunch," predicting a severe supply shortage. Five years later, the price of oil is actually lower than it was then.
James Glassman and Kevin Hassett's 1999 book "Dow 36,000" predicted that the Dow Jones stock index would more than triple in the years ahead. Even now, 16 years later, the index is only just halfway to 36,000.
Former Fed chair Alan Greenspan warned in his 2007 book "The Age of Turbulence" that the world might need double digit interest rates to control inflation in the near future. Rates have been near zero for the vast majority of the time since.
Joan Robinson, one of the 20th century's most prominent Keynesian economists, visited the Koreas in 1964 and said "as the North continues to develop and the South to degenerate, soon or later the curtain of lies must surely begin to tear."
Joseph Cassano, who ran insurer AIG's financial products division, had his own financial crisis howler. In August 2007, Cassano said he couldn't see AIG "losing one dollar in any of those (credit derivative) transactions." AIG was bailed out in 2008.
Professor Ravi Batra wrote a book called "The Great Depression of 1990," predicting global turmoil. It was a New York Times number one bestseller in 1987, and Milton Friedman said he wouldn't "touch (the book) with a ten foot pole"
George Soros said Chinese inflation was "somewhat out of control" in 2011, with a danger of it spiraling further — but Soros pretty much called the top and four years later, people are more worried about deflation than inflation in China.
Former National Association of Realtors chief economist David Lereah published a book called "Why the Real Estate Boom Will Not Bust—And How You Can Profit from It" early in 2006. It has not aged well.
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