Anyone who has followed perpetually troubled companies has no doubt experienced one of their favourite (and surprisingly effective) tricks:
Continually publish rosy forecasts of future recovery that sound great at the time but never actually materialise. As the happy forecasts fail to materialise, revise them, pushing the recovery to the next year. And so on.
This trick, of course, is not only a favourite of companies. Wall Street analysts and governments love it, too.
In the early years of the Great Depression, for example, Herbert Hoover was fond of saying that prosperity was just around the corner.
And it was. As long as you measured in decades.
Today, President Obama is selling his new budget. It includes a horrifying deficit for this year, but then a smaller deficit in all the following years. Prosperity, in other words, is just around the corner. Check out this chart from the WSJ (click through for interactive version)
But it was just around the corner last year, too. Check out this chart from the WSJ that shows what President Obama’s soothsayers foresaw for future deficits at this time last year:
Last year at this time, 2009 was going to be the worst year, followed by a happy reduction in the deficit in 2010 and 2011 and so on.
This year, 2010 is going to be the worst year, followed by a happy reduction in the deficit in 2011 and 2012. And so on.
And next year?
Never mind. Just rest assured: Prosperity is just around the corner.
(This isn’t an Obama problem, by the way. President Bush was saying the same thing.)
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