“When the blind lead the blind, both shall fall into a ditch.” – Old Proverb.

In July 2007, I went to an event where the keynote speaker was a former Federal Reserve Board governor who had worked with Alan Greenspan for many years.

I had had a hunch since early 2006 that the housing bubble would end badly. However, the market had proven me wrong month after month. Bewildered, I felt an expert of that caliber could help prove or disprove my hunch once and for all.

The speaker spoke of “concentrated drag, resilience elsewhere.” The drag he mentioned was the cooling real estate market. He predicted that the drag would be “diminishing.” In any event, he said, the drag would help loosen economic constraints that were causing inflation. This would move the economy closer to “macroeconomic nirvana.”

During the Q&A, someone from the audience asked if he was concerned about a recession. He answered that a recession could “theoretically” happen, but he saw no reason why there would be a recession in the next two years. (See my meeting note here.)

We all know what happened a few months later.

We listen to experts because we fear that we are blind to what will happen with the economy and the markets. But what if the experts are also blind?

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