Monday, April 6, 2009
Meredith Whitney has a severe case of cognitive dissonance
Remember cognitive dissonance? I've spoken about it before. That's when an idea or view runs counter to your belief system. It causes stress or internal conflict. The way many people deal with cognitive dissonance is by rationalization, that is, they make up more and more reasons why their view must be correct and the opposing view wrong.
Meredith Whitney has become so famous on her bearish bank call that it has caused her to acquire an acute case of cognitive dissonce. (She's fearful of giving up that view because it has brought her so much success.)
Recently a number of banks reported very strong profits so far for the year. This development is highly contrary to Whitney's view, so she has to rationalize it. And what is her rationalization (explanation)? She says the profits are an "illusion."
An ILLUSION!!
This type of rationalization is similar to the laughable stuff that comes from people like Jim Rogers or Peter Schiff. When the economic data is good or when the facts run counter to their views they simply say, "Do you BELIEVE those numbers??" It's their way of saying that the government is making up the numbers and telling us all lies: That THEY are right and you must believe them above whatever mountain of evidence is presented, because ALL the evidence is made up.
Same with Whitney. When she says that the profits are "an illusion," she's gone completely hyperbolic.
Read article here.
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4 comments:
It's difficult to stomach Steve Forbes. He's smug, condescending, it's just sad! "Last November, he promised " Oh yeah, I remember Bernanke saying "We promise..." not! He said they will AND, between Jan and June. As far as Meredith goes, I mean what took her so long? She made that call on Citibank back in Sept or Oct of 2007, I think. My goodness! The "mortgage meltdown" was already picking up steam since it began rearing it's head 6 months prior or Mar 2007. Unless the two (meltdown and Citi) are completely separate and not in anyway related to each other...
Mike, If the mortgage industry and real estate had not imploded would the Citi still have been a call to make?
Yes, Steve Forbes is a goofy guy who grew up with a silver spoon in his mouth and thinks that as long as his rich friends get to pay lower taxes, that solves everything. If the rest of us are lucky, his privileged buddies will throw us a few crumbs.
He also advocates a return to a gold standard and does not understand the monetary system.
Jill,
I'll go you one up. If the Fed had not raised interest rates to fight a demand-driven rise in oil prices, there never would have been a real estate bust. Inflation targeting by central banks is a fad and doesn't work.
History will show that the Fed's rate hikes did to the economy exactly what Volker's rate hikes did to the economy in the early 1980s: increase inflation and bring on a disastrous recession.
You are still doing economics? Why?
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