When Meredith Speaks, You Should Listen

By Greg Hunter’s USAWatchdog.com 

I was pulling up to a store yesterday in my car, listening to CNBC on XM Radio, when an interview with banking analyst Meredith Whitney came on as a guest.  I shut the car off and listened because, over the years, I have learned when Whitney talks, everybody should pay attention.  There are only two reasons why I think this way:  (1) Whitney has a track record of many good calls on the economy and banking.  (2) Her predictions are usually spot on.

For those of you who are not familiar with Ms. Whitney, in November of 2007, she first raised the specter that Citigroup might have to cut its dividend because of losses in mortgage backed securities.  At the time, Citigroup stock was trading for around $50 a share, and everybody looked at her like she had two heads.  Whitney never backed off that call in her many interviews in the months that followed.  Citigroup, of course, did cut the dividend and almost went bankrupt.  The stock now sells for less than 4 bucks a share.

In June of this year, when everybody in the mainstream media was still hyping “Green Shoots” and the so-called “Recovery,” Whitney predicted on CNBC, “Unequivocally, I see a double-dip in housing.  There’s no doubt about it . . . prices are going down again.”  Bang!–another direct hit.  I wrote about this in a post called “Double Dips Coming Everywhere.”

 Yesterday, as I sat and listened in my car, Whitney predicted tough times coming for state governments.  I wrote in February (America Has Its Own Pigs) that many states are basically bankrupt and, in an election year, will probably get a bailout.  Fast forward to today.  Whitney says underwater states will need a trillion dollar bailout.  That is another thousand billion added to the taxpayer tab!  Whitney said, “You have to look at the states and the risk that the states pose, because the crisis with the states will result in an attempt at least for the third near-trillion-dollar bailout.  That has consequences on the dollar that has consequences on just about everything. It certainly has consequences on the US recovery.”

 Whitney also predicts 80,000 financial sector layoffs coming for Wall Street.  She also predicts puny profits and more real estate trouble coming in fourth quarter for the banks.  There was one bright spot in Whitney’s predictions–Bonuses for Wall Street Bankers are going to be “really, really bad at year end.”  If you want a road map of what is going to happen between now and the end of the year, you should listen to Meredith.  Below is Whitney’s complete CNBC interview.

Comments
  1. Jimbo

    Greg,

    I watch CNBC almost every morning and I have seen Ms Whitney’s “Cameo” appearances. In the normally mindless banter that lulls the brain to sleepful stupor, three brilliant minds stand out…Meredith Whitney, Becky Quick and Erin Burnett. The guys on that program seem to be Simpsonesque.

    The ladies seem to see the trends and truth behind the analysts disinformation and reverse-psychological propaganda. Meredith is seemingly kept in the background too much. Bet it was a corporate “Business Decision” that made sense to some executive.

    • Greg

      Jimbo,
      I agree. I am shocked they let her talk but one thing I did not like is she could not bring herself to say the economy is heading into a double-dip! That fact is painfully obvious, and yet Ms. Whitney pulls her punches when it come to that topic. Thanks man!
      Greg

      • Kevin

        She has predicted a double dip but may have changed her mind about it. Regardless, things are a lot worse than they look, which has been the case since this imbroglio started.

        • Greg

          Thank you Bob and Kevin for weighing in.
          Greg

    • TrevTones

      You dummies. Meredeth Whitney DOES NOT WORK FOR CNBC! She runs a hedge fund. Pay attention.

      • Greg

        Trev Tones.
        You are correct, and I am sorry. This is really my fault, I should have clearly identified her as a guest on CNBC, so I am the real dummie here. I asummed people new she did not actually work at CNBC. My bad. However, the CNBC video in the post clearly identifies her as head of the Meredith Whitney Advisory Group. Here is the link to her company: http://www.meredithwhitneyllc.com/index.php Thank you for your comment and pointing this out.

        • George

          Greg, I missed where you said she worked for CBNC. Did you alter the article or is Trev the real dummy for assuming? I can break down assume for him….ass/u/me
          Not to mention anyone with a good track record by default can not work for CNBC. It is absolutely not allowed by the CEO of GE. ;-)

          • Greg

            Thank you George but I should have said Ms Whitney was a “guest.” My bad but I have corrected the post now.
            Greg

  2. John Bernard

    You are correct about Meredith and her ideas; how in the world she has stayed at CNBC is a mystery. Most of the talking heads there are shills for the administration’s view that all is well and getting better.

    • Greg

      John,
      I agree, but as I told Jimbo, “I am shocked they let her talk but one thing I did not like is she could not bring herself to say the economy is heading into a double-dip! That fact is painfully obvious, and yet Ms. Whitney pulls her punches when it come to that topic.” Thanks John!
      Greg

  3. George

    Damn, according to NEBR, the recession ended. The problem is that no body listened and or believed them. Got Gold?

    • Greg

      George,
      You are too funny. Thanks for the comments.
      Greg

  4. George

    and the article you posted in the news section,U.S. Economy “Close to a Destructive Tipping Point,” great

  5. Victor

    Thanks for sharing this with us. It shows that by listening to alternative resources for the news, you can get more meaningful information. The talking heads in the first quarter of this year said gold was boring and today it hits $1311.

    I think government needs to bite the bullet and slow down spending. Ron Paul of Texas has the right idea, full audit of the Fed banking system.

    Printing another trillion dollars reminds me of the 1930s and this guy named Hitler.

    My guess: double dip is coming fast.

    • Greg

      Thank you Victor, and Claude!!
      Greg

  6. claude de joybert

    Greg,
    If there was any reason to follow your morning emails, it would be today.
    I missed completely the interview on cnbc (I do not watch it anymore and feel a constant sense of relief!).
    But Whitney is with David Rosemberg and Shiller one of the rarest person I would listen to.
    Thanks for posting this interview
    CDJ

  7. MarkM

    Hello Greg,

    We need to discount everything Merideth Whitney says because she obviously believes in “Reaganomics.” Only Keynes economic theory works; ask Bernanke. Wow, small gubmint, live within means… The only problem with Reagan economic theory is that Reagan let Tip O’Niel spend him under the table with social programs and give aways.

    Whitney paraphrases:
    Texas is in the best shape by a mile because they live within their means and they have no unfunded pension liabilities. Texans and Nebraskans don’t want to bail-out irresponsible states like Kalifornia. Double-dip in housing is coming. Revenue increases of 45% for the states but states have increased spending by 60%. Gubmint layoffs are neccessary and unemployment will go up. Debt service interuptions with local muni bonds. Bank layoffs and low earnings for banks.

    I am thinking that Ms. Whitney uses the eigth-grade-math model of economics. It really works.

    She is good!

    markm

    • Greg

      Thanks MarkM.
      Greg

  8. Roger

    Being a Californian, this scares the hell out of me! But, I’ve been scared for a while! Nobody seems worried by this.The seriousness of our situation is really not appreciated by Californians. Oh well!
    R

    • Greg

      Roger,
      Everybody in CA will find out soon enough. See if you can find a way to use this fact to your advantage. I don’t mean to do anything bad, but try to use this to put yourself in the best position possible before the SHTF. Thank you for sharing your perspective from the West Coast!!
      Greg

  9. Martha Matthews

    Well I’am going to my grocery store and pickup some frosting buckets with lids to store more flour and beans in.The flour will make bread, biscuits, cakes, piecrusts, noodles, dumplings and cookies.The beans will make soups, chilies and casseroles.My tomatoes are still ripening and I’am putting them into the freezer. Next week I’am picking apples to can applesauce, dry apples and bake pies.This is the way our grandparents got thru the Great Depression and this is the way to get thru these hard times.

    • Greg

      Martha Matthews,
      I hope people follow your lead. Thank you for the comment.
      Greg

  10. stephan

    Hi Greg,

    I am wondering: is she really Meredith Whitney ? Is really CNBC ? Or may be the trailer of next surreal movie… ” USA collapse ” ….starring Melanie Griffith !

    Kind regards

    Stephan

    • Greg

      Stephan,
      It is all becoming surreal isn’t it? Thanks.
      Greg

  11. agneaux

    I, too, live in California and work for the state government as a scientist. Our pay is down 15% from 3 unpaid furlough Fridays/month, with no sign of the state budget being approved anytime soon. I expect that the state will either declare bankruptcy or plead for Federal bailouts. I also see mass layoffs coming, of government workers, who will soon join the existing 22% of un- and under-employed private sector jobless. I did just refinance my mortgage for 3.75% for 15 years; we’ll see if I keep my job to pay it off. My wife works for a Mortgage Title Co., and they are getting 700-800 new orders/day, mostly foreclosures and short sales. We’re buying bulk food and water and storing it in 5-gal. buckets, just in case the SHTF. I put all my retirement IRA into gold, silver, oil, and mining stocks in Feb. 2008; so far I’m doing well. I read DollarCollapse.com and http://www.SurvivalBlog.com to get ideas on how to cope with the coming economic collapse. I was a boy scout in my youth, and their slogan, “Be Prepared,” is ever in my mind these days.

    • Greg

      Agneaux,
      I hate to see anyone lose a job in this environment. I hope you keep yours. I think you are doing the right thing, but I’d be careful of what you have in the brokerage. That might not be totally safe. Read some of the comments and answers in this post and you will get some more info on this subject. Thank you for your perspective from the West Coast. I wish the news was better.
      Greg

  12. zippythepinhead

    Maybe it’s just me but I’m really not all that impressed with Ms Whitney. Most anybody who stays on top of things (ie zerohedge, SHTF, Jim Sinclair) could see all these things coming. Sinclair has called this out for probably two yrs. Peter Schiff was way ahead of Ms Whitney by several yrs as well. Does she speak the truth? Undoubtedly. She’s just a little late to the party for my taste.

    • Greg

      Zippythepinhead,
      Fair enough. I am not saying she is the best or the first to make a call but she has made some good calls. I respect and admire zero hedge, Jim Sinclair and Peter Schiff and have quoted them all on this site. That said, there is some value in what Whitney says. I look at her as one of many sources to get a read on what is happening in the economy. Thank you for your comment.

  13. Agent P

    Greg –

    Meredith Whitney didn’t make very good ‘calls’ when she called for $bailouts…

    And not to discredit her work, but there were many, many ‘unheard of’ analysts in the field that had these outcomes nailed, long before the cameras and Meredith Whitney.

    When she started chiming in for $bailout nation however, that basically pulled the plug on the credibility tub as far as I was concerned. What bothered me about that was the fact that when the rubber meets the road, she (like many others in the finance arena who otherwise were stalwart fiscal conservatives) got weak in the knees.

    You want to hear a good bank analyst? Check out the past few interviews with Chris Whalen on Kingworld –

    Best -

    • Greg

      AgentP,
      Heres what I wrote to Zippythepinhead,
      “Fair enough. I am not saying Whitney is the best or the first to make a call but she has made some good calls. I respect and admire Zero Hedge, Jim Sinclair and Peter Schiff and have quoted them all on this site. That said, there is some value in what Whitney says. I look at her as one of many sources to get a read on what is happening in the economy. Thank you for your comment.” I hear Mr. Whalen is very good and I will try to quote him in the future. Thank you for your input AgentP.
      Greg

  14. William Koysaki,Hilo, Hawaii

    We all should give more weight to the opinions of people Like Meredith Whitney, and Peter Schiff, they have been spot on this century, called the .com, real estate and stock bubbles, would have saved investores alot of money and heartache if we listened. Yet still CNBC runs the same old names (Abbey Cohen, Art Laffer etc) that not only got it wrong, but actual promoted the bubbles we are payiing for today. Consider the source and make modification.

    • Greg

      Thank you William Koysaki!
      Greg

  15. Jan

    This link is to a very well written explaination of why my state, Oregon is sinking fast:

    http://www.oregoncatalyst.com/index.php/archives/3536-The-Oregon-Budget-Unavoidable-Choices,-Unwilling-Choosers.html#extended

    What a mess and it will only get worse. Our legislators know the poor and kids do not contribute to their campaign war chest, but the state unions do.

    • Greg

      Jan,
      You have this nailed. I hope you are taking steps to protect your wealth. Thank you for the comment and info.
      Greg

  16. emma

    Man things getting interesting now, I bought gold at 870 now look where it is. Up over 1300 the investment guy I listen to was right, he called the stockmarket crash back in 2007 and has been spot on with things.

    Check out his video below. he is calling for higher prices. When the SHTF then what??. Many most the fat obese people in the US are so asleep. They aint got a chance.

    http://www.youtube.com/watch?v=-OSXpSGSz5M

    • Greg

      Emma,
      Thanks for the comment and the link.
      Greg

  17. BRIAN

    A good looking woman that knows money. I want one!!!!!

    • Greg

      Brian,
      Your are a man with a sense of humor! LOL, Thank you.
      Greg

  18. Jan

    Thanks Greg, you bet I am doing everything to protect my wealth and that is my family.

    A customer recently came back from Africa he brought me a Zimbabwe Reserve Bank Note for Fifty Trillion Dollars. US value about three cents! This bank note is simply a pretty piece of paper. Our dollars are not this pretty and not worth much more.

  19. Roger

    Greg, its what she didn’t say that bothers me. I want to know, “so if this, then what?” What does this look like playing out. What happens when states default? How is Visa and MasterCard a good buy in this environment like she said? She seems to talk out of both sides of her mouth.
    Thanks

    • Greg

      Roger,
      Good point. The stock market in general will be hit hard in a systemic crash. Thank you.
      Greg

  20. Mountainaires

    When Meredith Whitney speaks, people listen. At least smart people do.

    Thanks for this site. Love it!

    • Greg

      Mountainres,
      Thanks for the support and comment.
      Greg

  21. Denarius

    For the nay-sayers of Ms. Whitney, I submit this: she has three things that make her as valuable to us as Sinclair, Chapman, Schiff, … and all the rest. The first thing is ACCESS to the MSM. And if you don’t believe that is valuable, just ask the 36,000 lobbyists in Washington D.C. They will tell you that access is not only the most valuable thing, it is the ONLY thing.
    As far as her other two valuable attributes, I will leave to others the discussion of her knowledge and accomplishments.

  22. Mark

    Here is a real stimulus plan, that will actually work!
    The “One – Year Mortgage Holiday” 9 Point Stimulus Plan as fully detailed at
    http://www.saveoureconomy.com is the silver bullet solution to solve the current housing, credit, banking, financial crises, that will immediately jump start our economy, create millions of new Jobs, stimulate growth and generate long term economic prosperity through out America! The Mortgage Holiday Plan is the bold, ingenious ultimate “Trickle Up” stimulus plan that will help all home owners, renters and small/medium businesses that will actually work to stabilize the housing market and get America’s economic wheel of commerce rolling again, which will also help balance the Federal budget and help start reducing the National Debt, which will strengthen the American dollar.

    The Mortgage Holiday is a fair and balanced legitimate stimulus plan, Of, By and For the People, Main Street that empowers We The People, allowing us to have a well deserved one year time out from making our monthly mortgage payment, so that we can decide how best to save, spend & invest our own money. Renters of apartments, office & retail space will also receive a monthly savings and partial rebate in rent.

    If you should agree, then we urge you to speak out in support of the “One – Year Mortgage Holiday” 9 Point Stimulus Plan, that is supported by a majority of American’s across the country, that actually take the time to simply read the Plan at http://www.saveoureconomy.com!

    Mark

    • Greg

      Mark,
      I am not sure I agree with this. Why do we coddle and protect mortgage holders and give them a break, when we don’t do the same for renters? If somebody took out a mortage and can’t pay for it, I don’t know why they should not face the consequences. Besides, people are already not paying their mortgages and squating in thier homes for months until they are foreclosed on right now. This plan is death to the few honest bankers that are still out there. Are taxpayers supposed to cover the payments? Are we simply going to print money to do this? People have to pay their bills. I’ll put this out to the group here and see what they think. Thank you for sending this in.
      Greg

    • UncleJoe

      I’m a little late getting to this article; my apologies.

      While a mortgage holiday sounds like a wonderful and simple solution on the surface, people are creatures of habit. In the majority of cases this new found money will not be used to get their financial house in order. It will be used to take extravagant vacations, buy more worthless gadgets to impress the neighbors and only push back the day of reckoning; much like the U.S. government is doing with the nations finances.

      Greg, thank you for providing an alternative source of information. I found you about 8 months ago and read every article.

      • Greg

        Thank you Uncle Joe for your comments. And as far are reading “every” article, I am impressed and grateful!!
        Greg

  23. Chris

    I’m not shocked by Whitney’s assessment of the states’ finances. NJ and CA have already admitted they have serious fiscal issues. I imagine now is a bad time to be in a public sector union. I know she doesn’t work for CNBC but I am amazed Whitney is invited to appear on CNBC given her blunt financial assessments. I guess someone upstairs likes her candor.

    • Greg

      Chris,
      Thank you for giving us your view on this. I think she is always worth a listen when she is on. I have to admit though, I am a little frustrated with Ms. Whitney when she cannot bring herself to admit there is going to be a double-dip when it is painfully obvious. Thanks again.
      Greg

  24. Bob

    She said Texas an Virginia have little debt. I can understand Texas but Virginia must be full of people Who’s work is payed for with tax dollars. If a state needs federal tax dollars of any kind , it should be counted as part of there debt. PEACE

  25. nm

    Greg,

    Yes, we all have to pay our bills and this includes bankers. The moral dilemma was created when washington decided to use OUR money to bail out a few rich bankers. So, why should I be stuck with my bad debts while a rich millionaire on wall street gets a bailout with my money?

    Most people would like to pay their bills, but after those bailouts, guess what? screw the banks and screw the politicians. Why should people sweat and suffer while bankers live up the high life with our tax money?

    • Greg

      nm,
      I am talking about small home town bankers that did not get TARP money or bailouts. I couldn’t agree more with you about the big banks. I am just as angry as the next guy about the theft of our nations money by the banksters. Thank you for the comment.
      Greg

  26. nm

    I’m assuming the small home town banks were more responsible in terms of their lending and if so, those people should still be paying their mortgages or (unlike the big banks) they’ll be willing to work with them if they’re out of work or if they’re having financial difficulties.

    What is the answer for someone who doesn’t have savings, but has debt? has a job yes, but with limited income?

  27. Mike

    Thank you for a great article, Greg. Ms. Whitney has been consistently accurate in her analyses and predictions. She called the trillion $ personal credit contraction in the U.S. before it started. Readers might also find the following breaking news story of interest:

    Complaint Filed with U.S. Justice Department Against Standard & Poor’s, Moody’s –
    S&P, Moody’s Complicit in Hiding Billions of Dollars of China’s Debt:

    http://www.istockanalyst.com/article/viewarticle/articleid/4548858

    • Greg

      Mike,
      Thank you for the comment and info!
      Greg

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