"Never tie the Dow to a specific date," author James Glassman advised in a weekend interview from last February. The former Washington Post columnist and undersecretary of state for President George W. Bush was referring to his now discredited book Dow 36,000.
If only bank analyst Meredith Whitney (left) had received similar advice a few months earlier. Bloomberg continued its campaign on Wednesday to hold her accountable for her prediction that "hundreds of billions of dollars" of municipal defaults would occur within 12 months of her "60 Minutes" interview, noting that one fallout of her prediction was to allow banks to cash in.
"Investors, spooked by bank analyst Meredith Whitney's prediction of 'hundreds of billions of dollars' of municipal defaults in 2011, started fleeing the market in record numbers, sending interest rates soaring," according to the news service, quoting sources who were looking for loans at the time. "As bond buyers ran, JPMorgan Chase & Co. (JPM) and other underwriters stepped up with offers of loans, letting the institution bypass the public markets."
Bloomberg notes that, "Refuting Whitney's forecast, which helped send borrowing costs to two-year highs in January, the $3.7 trillion municipal-bond market rebounded this year, generating an average total return of 10% through Dec. 12, better than U.S. Treasuries and corporate bonds, Bank of America Merrill Lynch indexes show."
