As the Annus Horribilis finally comes to an end, many forecasters in the policy and financial communities have been left licking their wounds. This effort from Moises Naim and his team at Foreign Policy tries to capture the best of the worst and is certainly worth a look…
The 10 Worst Predictions for 2008
in Foreign Policy
Prognostication is by far the riskiest form of punditry. The 10 commentators and leaders on this list learned that the hard way when their confident predictions about politics, war, the economy, and even the end of humanity itself completely missed the mark.
ONE. â€œIf [Hillary Clinton] gets a race against John Edwards and Barack Obama, sheâ€™s going to be the nominee. Gore is the only threat to her, then. â€¦ Barack Obama is not going to beat Hillary Clinton in a single Democratic primary. Iâ€™ll predict that right now.â€ â€”William Kristol, Fox News Sunday, Dec. 17, 2006
Weekly Standard editor and New York Times columnist William Kristol was hardly alone in thinking that the Democratic primary was Clintonâ€™s to lose, but it takes a special kind of self-confidence to make a declaration this sweeping more than a year before the first Iowa caucus was held. After Iowa, Kristol lurched to the other extreme, declaring that Clinton would lose New Hampshire and that â€œThere will be no Clinton Restoration.â€ Itâ€™s also worth pointing out that this second wildly premature prediction was made in a Times column titled, â€œPresident Mike Huckabee?â€ The Times is currently rumored to be looking for his replacement.
TWO. â€œPeter writes: â€˜Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?â€™ No! No! No! Bear Stearns is fine! Do not take your money out. â€¦ Bear Stearns is not in trouble. I mean, if anything theyâ€™re more likely to be taken over. Donâ€™t move your money from Bear! Thatâ€™s just being silly! Donâ€™t be silly!â€ â€”Jim Cramer, responding to a viewerâ€™s e-mail on CNBCâ€™s Mad Money, March 11, 2008
Hopefully, Peter got a second opinion. Six days after the volatile CNBC host made his emphatic pronouncement, Bear Stearns faced the modern equivalent of an old-fashioned bank run. Amid widespread speculation on Wall Street about the bankâ€™s massive exposure to subprime mortgages, Bearâ€™s shares lost 90 percent of their value and the investment bank was sold for a pittance to JPMorgan Chase, with a last-minute assist from the U.S. Federal Reserve.
THREE. â€œ[In] reality the risks to maritime flows of oil are far smaller than is commonly assumed. First, tankers are much less vulnerable than conventional wisdom holds. Second, limited regional conflicts would be unlikely to seriously upset traffic, and terrorist attacks against shipping would have even less of an economic effect. Third, only a naval power of the United Statesâ€™ strength could seriously disrupt oil shipments.â€ â€”Dennis Blair and Kenneth Lieberthal, Foreign Affairs, May/June 2007
On Nov. 15, 2008 a group of Somali pirates in inflatable rafts hijacked a Saudi oil tanker carrying 2 million barrels of crude in the Indian Ocean. The daring raid was part of a rash of attacks by Somali pirates, which have primarily occurred in the Gulf of Aden. Pirates operating in the waterway have hijacked more than 50 ships this year, up from only 13 in all of last year, according to the Piracy Reporting Center. The Gulf of Aden, where nearly 4 percent of the worldâ€™s oil demand passes every day, was not on the list of strategic â€œchokepointsâ€ where oil shipments could potentially be disrupted that Blair and Lieberthal included in their essay, â€œSmooth Sailing: The Worldâ€™s Shipping Lanes Are Safe.â€ Hopefully, Blair will show a bit more foresight if, as some expect, he is selected as Barack Obamaâ€™s director of national intelligence.
FOUR. â€œ[A]nyone who says weâ€™re in a recession, or heading into oneâ€”especially the worst one since the Great Depressionâ€”is making up his own private definition of â€˜recession.â€™â€ â€”Donald Luskin, The Washington Post, Sept. 14, 2008
The day after Luskinâ€™s op-ed, â€œQuit Doling Out That Bad-Economy Line,â€ appeared in the Post, Lehman Brothers filed for bankruptcy, and the rest is history. Liberal bloggers had long ago dubbed the Trend Macrolytics chief investment officer and informal McCain advisor â€œthe Stupidest Man Alive.â€ This time, they had some particularly damning evidence.
FIVE. â€œFor all its flaws, an example to others.â€ â€”The Economist on Kenyaâ€™s presidential election, Dec. 19, 2007
The week before Kenyaâ€™s presidential election, the erudite British newsweekly ran an ill-conceived editorial praising the quality of the countryâ€™s democracy and predicting it might â€œset an exampleâ€ for the rest of the continent. If only. The ensuing election was rife with examples of voter fraud and ballot-stuffing. What followed was a month of rioting and ethnic bloodshed that left more than 800 dead and 200,000 displaced. The carnage ended in a messy power-sharing agreement between President Mwai Kibaki and his challenger Raila Odinga, leaving the country deeply divided and its government delegitimized.
SIX. â€œNew York Mayor Michael Bloomberg will enter the Presidential race in February, after it becomes clear which nominees will get the nod from the major parties. His multiple billions and organization will impress votersâ€”and stun rivals. Heâ€™ll look like the most viable third-party candidate since Teddy Roosevelt. But Bloomberg will come up short, as he comes in for withering attacks from both Democrats and Republicans. He and Clinton will split more than 50% of the votes, but Arizonaâ€™s maverick senator, John McCain, will end up the countryâ€™s next President.â€ â€“BusinessWeek, Jan. 2, 2008
No part of this prediction from BusinessWeekâ€™s â€œTen Likely Events in 2008â€ turned out to be even remotely true. After weeks of hints and press leaks, Bloomberg declared he would stay out of the race, saying that Barack Obama and John McCain showed signs of displaying the â€œindependent leadershipâ€ needed to govern effectively. After overturning New Yorkâ€™s term-limits law, Bloomberg seems likely to run for a third term as mayor instead.
SEVEN. â€œThere is a real possibility of creating destructive theoretical anomalies such as miniature black holes, strangelets and deSitter space transitions. These events have the potential to fundamentally alter matter and destroy our planet.â€ â€”Walter Wagner, LHCDefense.org
Scientist Walter Wagner, the driving force behind Citizens Against the Large Hadron Collider (LHC), is making his bid to be the 21st centuryâ€™s version of Chicken Little for his opposition to the worldâ€™s largest particle accelerator. Warning that the experiment might end humanity as we know it, he filed a lawsuit in Hawaiiâ€™s U.S. District Court against the European Organization for Nuclear Research (CERN), which built the LHC, demanding that researchers not turn the machine on until it was proved safe. The LHC was turned on in September, and it appears that we are still here.*
EIGHT. â€œThe possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.â€ â€”Arjun Murti, Goldman Sachs oil analyst, in a May 5, 2008, report
The vaunted predictive powers of Murti, dubbed the â€œoracle of oilâ€ in a glowing New York Times profile, failed him this time. Oil prices peaked in July at about $147 a barrel before beginning a long decline. Thanks to a decrease in demand because of the global recession, prices are now nearing the $40 mark, and some experts even see $25 as a possibility next year.
NINE. â€œIt starts with the taking over of South Ossetia and Abkhazia, which has already happened. It goes on to the destruction of the Georgian armed forces, which is now happening. The third [development] will probably be the replacement of the elected government, which is pro-Western, with a puppet government, which will probably follow in a week or two.â€ â€”Charles Krauthammer, Fox News, Aug. 11, 2008
Krauthammer immediately followed this inaccurate forecast (Russia eventually agreed to a cease-fire and pulled out its troops several weeks later, leaving Mikheil Saakashviliâ€™s government in place) by predicting that Ukraine would be next on Russiaâ€™s hit list and suggesting that the United States station troops there. As for Saakashvili, his approval rating was at 76 percent in September.
TEN. â€œI believe the banking system has been stabilized. No one is asking themselves anymore, is there some major institution that might fail and that we would not be able to do anything about it.â€ â€”Henry Paulson on National Public Radio, Nov. 13, 2008
The U.S. Treasury secretary entered November with guns blazing. After much hemming and hawing before Congress a month earlier, he came out with what he called his â€œbazookaâ€ â€”a $700 billion mandate to scoop up bad assets from troubled banks. By mid-November, he had already discharged $300 billion in munitions, albeit mostly via the kind of direct equity stakes he had rejected earlier. Unfortunately for Paulson, shortly after his vote of confidence, Citigroupâ€™s stock price plunged 75 percent in one week, closing below $5 for the first time in 14 years.
*Wagner has written in to point out that the LHC broke down shortly after it was activated and that the particle collision experiments heâ€™s worried about havenâ€™t been conducted yet. â€œThe experiment has not yet even been performed, so of course its outcome remains uncertain,â€ he writes. So, weâ€™ll have to wait for 2009 to see if he is proved right.