Are Economic Predictions Worth Anything?
The answer to the title question is, "Yes, to those who get paid to make the forecasts."
Continuing unemployment claims are now at the highest level on record; nearly 5 million. Many, if not most, American workers are scared to death that they may be next to join the unemployment line, followed by potential bankruptcy or foreclosure, or BOTH, or if they rent, that the next knock at the door they hear will be the landlord with an eviction notice in hand. There seems to be little debate that the United States is in the most serious economic crisis since the 1930s, although some are still loathe to admit it. If you go back over the economic forecasts by many economists, both private and governmental, of the last couple of years, you'll find that almost all never predicted that any such thing could happen, let alone would happen. All predictions have been far too rosy, and there are still some who are in denial about what is happening, or where we are headed, at least in the near term. For regular readers here, I hate to tell you, "I told you so," but "I TOLD YOU SO!" I wish with all my heart that I'd been wrong.
Now, I'm not an economist or financial expert. I had a high school class in economics ***, and a few courses in economics in college. That was it! The details of economics and finance can be complex, but the basics are not really all that tough. Just start with an evaluation of what's going on in your own life and in the lives of people close to you, and in the neighborhood or area where you live. That can tell you a lot. Are you having difficulty paying your bills? Are your kids or grand kids struggling? Did your neighbors lose their house to foreclosure? Did the plant a few blocks away just layoff some people? Are prices so high that you have to cut back on things to get by? Well, any one of these things, or even a combination of some of these things may not be a true predictor of where the American economy was headed, as you do have to listen or read some things about other parts of the country too.
In recent years, it didn't take someone with the mind of an Einstein to see that the country was headed in the wrong direction economically, and no one will EVER confuse George W. Bush's mind with that of an Einstein; now with the mind of Einstein's dog? Maybe. Alright, I know that was brutal, so an apology is in order: "I'm sorry for the comparison, Einstein's dog." Income statistics from the U.S. Government, not progressive or liberal groups, showed that the rich were getting richer, and that basically, the rest of us were losing ground at some varying degree. Debt stats also showed that Americans were deeply in debt. The rise of oil, gas, heating oil, and natural gas prices were going to strangle the budgets of many Americans, and that these prices were causing a tremendous transfer of wealth from poor and middle class Americans to the wealthy and to other countries; namely, the oil producing countries. For better or worse, America is dependent on oil and gasoline. When gasoline rises as dramatically as it did during the Bush years, the price of just about EVERYTHING ELSE had to go up, too, as just about everything we do is related in some way to gasoline. Then a few years ago, the foreclosure stats started to tick up; slowly at first. Those economic forecasters I mentioned earlier said, "Bah! This is just a blip. Everything will be fine." Then foreclosures increased even more. "Bah! This is such a small percentage of homeowners that it means nothing significant." As energy costs escalated, those raking in enormous profits couldn't see that the situation could bring down the economy, as they were too dizzy with glee over the many millions they were making (millions I might add, that most could never spend in their entire lives, even if they could start over in the womb). Home prices soared and so did the stock market.^^^ The rich were giddy as one egomaniac tried to make more money than the other egomaniacs. Meanwhile, foreclosure stats crept a bit higher, and there was also a slight uptick in late payments and defaults on other types of credit, like credit cards and car loans.
Further, there were many stories about the decline of American manufacturing jobs. Now, some of these jobs were lost due to technology, but others were sent overseas, the result of the ever increasing free trade agreements negotiated by the Bush Administration and approved by the Republican-majority Congress (That's not to say that all Democrats were innocent, however, when the Dems took control after the 2006 elections, Bush had much more difficulty getting his trade agreements approved by Congress). Not only were manufacturing jobs being lost to other countries, but even service industry jobs. Ever had a computer problem or Internet service problem where you had to call for the company for help? If so, chances are you reached a customer service person India, not that I have anything against India.
All the while we heard the continuing mantra from the Bush Administration and many Republicans that there was nothing to be done to solve these problems, because they believed in what can be summed up in this basic philosophy: "The free markets can regulate themselves, and they're never wrong. Government can't interfere. If gasoline prices go so high that you can't go to work, the hell with you! Get another job closer to home, you loser!. Do you think we're going to cut back on the amount of money the TRULY SUCCESSFUL people of this country, the investment class,### can make? With all the mounting statistics and the do nothing philosophy of Bush and many Republicans in Congress, something was going to have to give...and it did.
*** A little side note: Just to point out how the Depression had so traumatized many people, the high school teacher wanted his class to learn the basics about the stock market. He asked that every student give like a quarter (I think that was about the amount, but hey, this was in the 1960s; I can't remember what I did thirty seconds ago....now let's see...what was I doing?), and he would then purchase one share of stock that the class would then follow throughout the school term. At the end of the year, he would sell the share and divide whatever the proceeds were among each of us. My mother had lived through the Depression, and I casually mentioned to her what the teacher was doing. Now, my mother knew absolutely NOTHING (zero, zilch) about the stock market, or how it worked. However, she remembered the "Crash" of 1929, and all I had to do was mention that the teacher was going to buy stock, and she was TERRIFIED. Even my explanation that the worst thing that could happen was that I'd lose a quarter didn't calm her. My dad understood financial matters very well, but his assurances didn't satisfy her either. That's how much fear many people of the Depression era had about events of those times. By the way, if I remember correctly, the stock price didn't change much, and we all got about a quarter back (Hmm, I wonder if the Cleveland Browns should try this...they need a "quarterback"...get it?).
^^^If she were still alive, I'd have to say, "Sorry about that, Mom."
###Known to me as "the sit on their ass class."
Continuing unemployment claims are now at the highest level on record; nearly 5 million. Many, if not most, American workers are scared to death that they may be next to join the unemployment line, followed by potential bankruptcy or foreclosure, or BOTH, or if they rent, that the next knock at the door they hear will be the landlord with an eviction notice in hand. There seems to be little debate that the United States is in the most serious economic crisis since the 1930s, although some are still loathe to admit it. If you go back over the economic forecasts by many economists, both private and governmental, of the last couple of years, you'll find that almost all never predicted that any such thing could happen, let alone would happen. All predictions have been far too rosy, and there are still some who are in denial about what is happening, or where we are headed, at least in the near term. For regular readers here, I hate to tell you, "I told you so," but "I TOLD YOU SO!" I wish with all my heart that I'd been wrong.
Now, I'm not an economist or financial expert. I had a high school class in economics ***, and a few courses in economics in college. That was it! The details of economics and finance can be complex, but the basics are not really all that tough. Just start with an evaluation of what's going on in your own life and in the lives of people close to you, and in the neighborhood or area where you live. That can tell you a lot. Are you having difficulty paying your bills? Are your kids or grand kids struggling? Did your neighbors lose their house to foreclosure? Did the plant a few blocks away just layoff some people? Are prices so high that you have to cut back on things to get by? Well, any one of these things, or even a combination of some of these things may not be a true predictor of where the American economy was headed, as you do have to listen or read some things about other parts of the country too.
In recent years, it didn't take someone with the mind of an Einstein to see that the country was headed in the wrong direction economically, and no one will EVER confuse George W. Bush's mind with that of an Einstein; now with the mind of Einstein's dog? Maybe. Alright, I know that was brutal, so an apology is in order: "I'm sorry for the comparison, Einstein's dog." Income statistics from the U.S. Government, not progressive or liberal groups, showed that the rich were getting richer, and that basically, the rest of us were losing ground at some varying degree. Debt stats also showed that Americans were deeply in debt. The rise of oil, gas, heating oil, and natural gas prices were going to strangle the budgets of many Americans, and that these prices were causing a tremendous transfer of wealth from poor and middle class Americans to the wealthy and to other countries; namely, the oil producing countries. For better or worse, America is dependent on oil and gasoline. When gasoline rises as dramatically as it did during the Bush years, the price of just about EVERYTHING ELSE had to go up, too, as just about everything we do is related in some way to gasoline. Then a few years ago, the foreclosure stats started to tick up; slowly at first. Those economic forecasters I mentioned earlier said, "Bah! This is just a blip. Everything will be fine." Then foreclosures increased even more. "Bah! This is such a small percentage of homeowners that it means nothing significant." As energy costs escalated, those raking in enormous profits couldn't see that the situation could bring down the economy, as they were too dizzy with glee over the many millions they were making (millions I might add, that most could never spend in their entire lives, even if they could start over in the womb). Home prices soared and so did the stock market.^^^ The rich were giddy as one egomaniac tried to make more money than the other egomaniacs. Meanwhile, foreclosure stats crept a bit higher, and there was also a slight uptick in late payments and defaults on other types of credit, like credit cards and car loans.
Further, there were many stories about the decline of American manufacturing jobs. Now, some of these jobs were lost due to technology, but others were sent overseas, the result of the ever increasing free trade agreements negotiated by the Bush Administration and approved by the Republican-majority Congress (That's not to say that all Democrats were innocent, however, when the Dems took control after the 2006 elections, Bush had much more difficulty getting his trade agreements approved by Congress). Not only were manufacturing jobs being lost to other countries, but even service industry jobs. Ever had a computer problem or Internet service problem where you had to call for the company for help? If so, chances are you reached a customer service person India, not that I have anything against India.
All the while we heard the continuing mantra from the Bush Administration and many Republicans that there was nothing to be done to solve these problems, because they believed in what can be summed up in this basic philosophy: "The free markets can regulate themselves, and they're never wrong. Government can't interfere. If gasoline prices go so high that you can't go to work, the hell with you! Get another job closer to home, you loser!. Do you think we're going to cut back on the amount of money the TRULY SUCCESSFUL people of this country, the investment class,### can make? With all the mounting statistics and the do nothing philosophy of Bush and many Republicans in Congress, something was going to have to give...and it did.
*** A little side note: Just to point out how the Depression had so traumatized many people, the high school teacher wanted his class to learn the basics about the stock market. He asked that every student give like a quarter (I think that was about the amount, but hey, this was in the 1960s; I can't remember what I did thirty seconds ago....now let's see...what was I doing?), and he would then purchase one share of stock that the class would then follow throughout the school term. At the end of the year, he would sell the share and divide whatever the proceeds were among each of us. My mother had lived through the Depression, and I casually mentioned to her what the teacher was doing. Now, my mother knew absolutely NOTHING (zero, zilch) about the stock market, or how it worked. However, she remembered the "Crash" of 1929, and all I had to do was mention that the teacher was going to buy stock, and she was TERRIFIED. Even my explanation that the worst thing that could happen was that I'd lose a quarter didn't calm her. My dad understood financial matters very well, but his assurances didn't satisfy her either. That's how much fear many people of the Depression era had about events of those times. By the way, if I remember correctly, the stock price didn't change much, and we all got about a quarter back (Hmm, I wonder if the Cleveland Browns should try this...they need a "quarterback"...get it?).
^^^If she were still alive, I'd have to say, "Sorry about that, Mom."
###Known to me as "the sit on their ass class."
Labels: economy, George W. Bush, Republicans
posted by Randy at 12:11 PM
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