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Monday, May 26, 2008
The Crystal Ball of James Dale Davidson

Today I was rummaging through some boxes around the house and came across a booklet I had received in the mail years ago ominously titled "The Plague of the Black Debt: How to Survive the Coming Depression" by a James Dale Davidson. The booklet describes Davidson as "a principal in Strategic Advisors Corporation, an asset management group for wealthy individuals" and touts his ability to predict events.

Davidson co-authored several books with a Lord William Rees-Mogg (he being a member of the British House of Lords), including The Sovereign Individual. I tried to find out more information about Davidson on the Internet. There does not seem to be much information about him. Apparently he founded the National Taxpayers Union.

Anyway, "The Plague of the Black Debt" has a copyright date of 1993, so I received it either that year or in 1994 at the latest. In the booklet, Davidson makes a number of ominous predictions, some that in hindsight were laughably wrong. In fact, I believe I held on to the booklet just so I could check the accuracy of its predictions years later.

My favorite is on page 58, where Davidson confidently claims that "Bill Clinton is going to be a one-term president. He is going to get clobbered in the '96 election, assuming his own party even renominates him. I am as sure of this as I am that the sun will rise tomorrow." (Emphasis mine). Granted, Clinton did suffer a major setback in the '94 congressional election, with the Republicans taking control of both houses of Congress. But Clinton handily defeated a lackluster Bob Dole in the 1996 election.

Davidson continues, "Bill Clinton's failure will take place against a background of deep depression, urban riots, and people losing their homes." None of these things happened on Clinton's watch, though many people are losing their homes under the current administration.

Another amusing little nugget, "ome events I expect in the next few months: Boris Yeltsin will lose his job. Russia will come under the control of a nationalist, militarist regime - in effect, a fascist regime." In actual fact, Boris Yeltsin would be re-elected to a second term in 1996 and he would later voluntarily step down at the end of 1999.

Davidson also makes dire prognostications about how the national debt would increase by a trillion dollars during Clinton's "one-term" presidency. But as we all know, budget deficits turned into budget surpluses during Clinton's second term, and there were even perfunctory efforts to pay down the national debt.

There are a number of other "predictions" that Davidson makes about what Clinton would do that never happened in either of his two terms as president. And of course, all of these alarmist claims were pitched to gullible investors to get them to subscribe to Davidson's monthly STRATEGIC INVESTMENT newsletter.

Now to be fair, not all of Davidson's predictions or analyses in the booklet were wrong. One specter he raises in the booklet as happening "in just a few years from now" is of "millions of homeowners 'upside down' - with the mortgage bigger than the market value of the home. A lot of them will hand the key to the lender and walk away. There will be a lot of empty houses with 'For Sale' signs." And in fact, in recent months, this has indeed been happening. There are even companies now set up to help homeowners to indeed walk away from their houses.

But Davidson made so many specific predictions that were incredibly wrong that it makes me wonder if any investors got hosed in the Nineties following his advice. It just goes to show that a healthy skepticism applies to more than just the claims of religion and the supernatural

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