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GETTING IT RIGHT….How many people figured out that the U.S. financial system was headed for disaster before the disaster actually struck? Just for starters, I think that if you want credit for “getting it right”:

  • You need to have really gotten it right. For example, predicting a dollar crash due to our expanding trade deficit with China doesn’t count, since that’s not what actually happened.

  • You need to have figured this out in 2004, not 2007. By 2007 the storm clouds were overhead, the Fed was in full panic mode, and it was too late to do anything useful.

  • You need to have a decent track record, not merely one of being a chronic doomsayer. After all, if you’re always predicting disaster, you’ll always be right eventually.

That said, the Wall Street Journal profiles “The Doomsayers Who Got It Right” today, and given my bullet points above, I have to say that fund manager Bob Rodriguez seems pretty spectacularly prescient:

He saw storm clouds gathering in 2005 when newly minted pools of supposedly high-quality “Alt-A” mortgages began acting oddly….He quickly dumped the holdings, reckoning that by the time he figured out what was actually going on, whatever disaster the odd behavior foreshadowed would have already occurred.

….He stopped buying Fannie Mae and Freddie Mac debt and took giant insurer American International Group Inc. off the list of approved commercial-paper investments. He refused to invest in financial-services companies because of what he saw as “a pandemic collapse” in the rules by which lenders approved mortgages.

As of 2004, he began moving his fund to more than 45% cash, even as one big shareholder yanked out $300 million because of his bearish stance.

Not bad! You can read more about Rodriguez from Money magazine, who called him “the best fund manager of our time.” So what’s he concerned about now?

Looking forward, he, too, sees “a massive bubble in Treasurys” forming. “Quite frankly, we do not trust government,” he says, as the U.S. government adds more debt to pay for economic-revival measures. He’s not buying Treasurys because “We will not lend long-term money to a borrower that capriciously erodes its balance sheet.”

His real concern, he recently told shareholders, isn’t the next two years, “but period three through 10.” In an interview, he says it will be punctuated by inflation, and he expects real GDP growth of no more than 2% a year, possibly less.

I too am concerned about years three through ten. As Barack Obama prepares his stimulus plan for years one and two, I hope his economic boffins also explain what they’re doing now to prepare for what they think the economy will be like in 2010. That dollar collapse might still come someday, after all.

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REAL QUICK, REAL URGENT

Minority rule, corruption, disinformation, attacks on those who dare tell the truth: There is a direct line from what's happening in Russia and Ukraine to what's happening here at home. And that's what MoJo's Monika Bauerlein writes about in "Their Fight Is Our Fight" to unpack the information war we find ourselves in and share a few examples to show why the power of independent, reader-supported journalism is such a threat to authoritarians.

Corrupt leaders the world over can (and will) try to shut down the truth, but when the truth has millions of people on its side, you can't keep it down for good. And there's no more powerful or urgent argument for your support of Mother Jones' journalism right now than that. We need to raise about $450,000 to hit our online fundraising budget in these next few months, so please read more from Monika and pitch in if you can.

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