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It is no coincidence that as the backlash gathers steam, analysts and other economic thinkers are a special point of focus. In 1999, economists --scratch that; we mean bullish economists -- emerged as the new ?superstars of academia.? Now a Newsweek column calls economics ?the illusion of knowledge? and reveals, ?Economists are clueless.? In June, Congressional hearings were conducted to dissect the inaccurate opinions of securities analysts. A team of professors from four major California universities produced a paper showing that the stocks analysts liked the most fell 31% in 2000, while their least favorable recommendations rose 49%! The detailed analysis calls into question the ?usefulness of analysts stock recommendations.? As we said months ago, this is not news. Has there has ever been a time when average Wall Street analysis has been useful as anything more than a contrary indicator? The news is how much of the academic and media firepower that supported Wall Street notions is now directed against Wall Street. This defrocking appears to be an inevitable response to the reversal of a mania.

As The Wave Principle of Human Social Behavior points out, people tend to ?live in the limbic system, particularly with respect to fields such as investing where so few are knowledgeable and the tendency toward dependence is pervasive.? This was at least doubly true in the mania, as even the most highly developed neocortex was at a loss for prior experience to draw upon. The failed images of the previously bullish social mood now induce jilted investors to destroy the advisors upon whom they have grown so dependent. It is fascinating to see how much sense the neocortexes of the attackers can make as this limbic-based process plays itself out.

November 30, 2001

Enron Corp.?s imminent [bankruptcy] will easily be the largest bankruptcy ever, topping the old record (Texaco in 1987) by almost 70%. The ?forensic accountants? have been called in to sort out a mess that will lead on to a seemingly endless series of financial catastrophes.

February 1, 2002

All Enron, All the Time: ?Twenty minutes ago, the only topics on the nation?s radar screen were Afghanistan and terrorism. Now there?s Enron,? says a USA Today column on ?How Enron Stole Center Stage.? One of the big mysteries is why the public suddenly cannot get enough dirt on Enron. ?A few years ago, it would hardly have seemed possible,? Business Week notes. ?The nation?s attention, from the halls of Congress to Main Street, has been riveted on an accounting scandal, a subject so abstruse it rarely makes the front page.? But there it is on page 1, day after day after day. The Enron scandal and its recent ?spread to other large, complex companies? shows that investors are waking up to what they did not want to know during the bull market.