Monday, April 6, 2009
Meredith Whitney has a severe case of cognitive dissonance
Remember cognitive dissonance? I've spoken about it before. That's when an idea or view runs counter to your belief system. It causes stress or internal conflict. The way many people deal with cognitive dissonance is by rationalization, that is, they make up more and more reasons why their view must be correct and the opposing view wrong.
Meredith Whitney has become so famous on her bearish bank call that it has caused her to acquire an acute case of cognitive dissonce. (She's fearful of giving up that view because it has brought her so much success.)
Recently a number of banks reported very strong profits so far for the year. This development is highly contrary to Whitney's view, so she has to rationalize it. And what is her rationalization (explanation)? She says the profits are an "illusion."
This type of rationalization is similar to the laughable stuff that comes from people like Jim Rogers or Peter Schiff. When the economic data is good or when the facts run counter to their views they simply say, "Do you BELIEVE those numbers??" It's their way of saying that the government is making up the numbers and telling us all lies: That THEY are right and you must believe them above whatever mountain of evidence is presented, because ALL the evidence is made up.
Same with Whitney. When she says that the profits are "an illusion," she's gone completely hyperbolic.
Read article here.