Site for Free Markets and Free People

Friday, February 27, 2009

Bank Analyst Proves Nouriel Roubini Wrong

Bank analyst Tom Brown corrects the mistake of Nouriel Roubini, the media's latest darling for continuing to predict doom for the U.S. banking system, including in particular, Wells Fargo.

To make a long story short, Roubini claimed that Wells Fargo was a "goner" because you can't put together two "zombie banks" and "make it work." Time magazine carried an interview with Roubini who said that Wells had another $117 billion of losses coming. This helped further exacerbate major stock declines in the financial sector in recent days. Unfortunately, Roubini's math was wrong, as he never included the fact that Wells already took a huge writedown prior to closing the Wachovia deal. Now Roubini claims that it was Time's fault because he only deals in "macro" variables without talking about specific banks.

This is generally what the media does and why Rush Limbaugh's "driveby media" phrase is so appropriate. The media make an accusation, whether factual or not, and then move on, never bothering to correct their previous mistakes. And then someone else has to clean up their mess.