Truemors
is reporting from
Member
NP Rank:
NP Rank:
Economists Failed To Predict The Recession But They Say It's Over
Share:
by Rory Cripps | October 13, 2009 at 05:01 pm
1199 views | 51 Recommendations | 49 comments
The same economic "experts" that completely and utterly failed to forecast the length and severity of the economic train wreck that America is currently mired in are now telling us that the recession is over.
The economics profession is a world apart from other professions such as engineering and accounting to name a few. In those professions, you have to be right on the money in order to keep your job. Not so with economists! Indeed, they get paid for making stuff up!
Throughout the years economists have received untold amounts of awards for their theories and economic forecasts in spite of the fact that most of their theories and forecasts asserted the complete opposite of what actually occurred in the real economic world.
There was one famous economist (who shall remain nameless here) that lost a fortune in the 1929 stock market crash. He didn't see the crash coming, but after it came, he dusted himself off and went on to predict that the economy would soon rebound and gain momentum. But it took over a decade and a world war before the economy rebounded and gained momentum. His forecast was off by only 13 years or thereabouts and to this day, he's still heralded as one of America's greatest economists.
With the above said, it is true today that certain esoteric economic indicators (that only economists, bankers, and financial experts know about) are showing signs of improvement. And if those indicators continue their upward trend, over the course of the next few months, it's much better economic news than what we've been hearing throughout the past two years.
My opinion, and for what it's worth, is that the American economic system has major structural problems. In other words, the integrity of its foundation has been compromised to the point that it requires much rehabilitation.
More than 80 percent of economists believe the recession is over and an expansion has begun, but they expect the recovery will be slow as worries over unemployment and high federal debt persist.
That consensus comes from leading forecasters in a survey by the National Association for Business Economics released Monday.
Forecasters now expect the economy, as measured by gross domestic product, to advance at a 2.9 percent pace in the second half of the year, after falling for four straight quarters for the first time on records dating to 1947. They expect a 3 percent gain in 2010.
The unemployment rate rose to 9.8 percent in September from 9.7 percent, the Labor Department said earlier this month, the highest point in 26 years.
Forecasters expect the unemployment rate to continue to rise, to 10 percent in the first quarter of next year, before edging down to 9.5 percent by the end of 2010.The recession, the worst since the 1930s, has eliminated a net total of 7.2 million jobs. More job cuts were announced last week.
The housing recovery is one bright spot. Forecasters expect 2010 to be the first year since 2005 that the housing sector will contribute to overall growth.
"The good news is that this deep and long recession appears to be over, and with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation," said NABE President-elect Lynn Reaser, chief economist at Point Loma Nazarene University.
Irving Fisher (February 27, 1867 Saugerties, New York – April 29, 1947, New York) was an American economist, health campaigner, and eugenicist, and one of the earliest American neoclassical economists and, although he was perhaps the first celebrity economist, his reputation today is probably higher than it was in his lifetime. Several concepts are named after him, including the Fisher equation, Fisher hypothesis and Fisher separation theorem.
He graduated from Yale with a B.A degree in 1888, where he was a member of Skull & Bones.
Irving was granted the first Yale Ph.D. in economics, in 1891.
The stock market crash of 1929 and the subsequent Great Depression cost Fisher much of his personal wealth and academic reputation. He famously predicted, a few days before the Stock Market Crash of 1929, "Stock prices have reached what looks like a permanently high plateau." Irving Fisher stated on October 21 that the market was "only shaking out of the lunatic fringe" and went on to explain why he felt the prices still had not caught up with their real value and should go much higher. On Wednesday, October 23, he announced in a banker’s meeting “security values in most instances were not inflated.” For months after the Crash, he continued to assure investors that a recovery was just around the corner. Once the Great Depression was in full force, he did warn that the ongoing drastic deflation was the cause of the disastrous cascading insolvencies then plaguing the American economy because deflation increased the real value of debts fixed in dollar terms. Fisher was so discredited by his 1929 pronouncements and by the failure of a firm he had started that few people took notice of his "debt-deflation" analysis of the Depression. People instead eagerly turned to the ideas of Keynes. Fisher's debt-deflation scenario has made something of a comeback since 1980 or so.
Fisher was also an ardent supporter of the Prohibition of alcohol in the United States, and wrote three short books arguing that Prohibition was justified on the grounds of both public health and hygiene, as well as economic productivity and efficiency, and should therefore be strictly enforced by the United States government.[2]
SHORTLY after he was elected president, Barack Obama sounded a warning: “We are facing an economic crisis of historic proportions…We now risk falling into a deflationary spiral that could increase our massive debt even further.” The address evoked not just the horror of the Depression, but one of the era’s most important thinkers: Irving Fisher.
Though once America’s most famous economist, Fisher is now almost forgotten by the public. If he is remembered, it is usually for perhaps the worst stockmarket call in history. In October 1929 he declared that stocks had reached a “permanently high plateau”.
To his cost, Fisher remained optimistic as the Depression wore on. He lost his fortune and his home and lived out his life on the generosity of his sister-in-law and Yale. But his work continued. He was prominent among the 1,028 economists who in vain petitioned Herbert Hoover to veto the infamous Smoot-Hawley tariff of 1930.
Yet Fisher’s insights remain vital. They have filtered, perhaps unconsciously, into the thinking of today’s policymakers. On February 8th Lawrence Summers, Mr Obama’s principal economic adviser, called for the rapid passage of a fiscal stimulus “to contain what is a very damaging and potentially deflationary spiral.” His advice bridges Fisher and Keynes.
Advertisement
What is NowPublic?
NowPublic lets people work together to cover news events around the world.
Related Stories
Recommendations (51)
158
St. Louis, Missouri, United States
Babel-Fish
Negros Oriental, Philippines
Hugh Askew
Omaha, Nebraska, United States
Mary Richard
Toronto, Canada
PIM of SPAIN
San Pedro de A, Malaga, Spain
caj1
Philadelphia, Pennsylvania, United Statesnanute
New York, United States
Amitjha
new delhi, Indiaa211423
Clearlake, California, United States
Most RecentMost Recommended Comments (49)
- Sign In or Join to post comments
Karl Gotthardt - albertacowpokeat 17:29 on October 13th, 2009
Just a short definition of economics according to the course I took is this:
Economics is the study of those activities which, with and without money, involve exchange transactions among people.
The problem is that we have made it all about money and money markets. Until we get the financial system sorted out, particularly in the US, we will continue to fail.
at 17:47 on October 13th, 2009
ACP: Yeah, that was one of the things that attracted me to the economics discipline. Economics obviously has a lot to do with actual money, however it goes way beyond that and involves "exchange transactions among people" as you point out.
My maternal grandfather was a small town dentist in the American mid-west during the depression and two of his brothers were country doctors: Their pay for services rendered typically consisted of tomatoes, peach cobblers, apple pies and life-long friendships. They all got by okay and lived to a ripe old age . . . .
- Sign In or Join to post comments
djermanoat 18:06 on October 13th, 2009
They want it to be over so they can begin funding the War effort into Afghanistan, to later wage attacks on China and Iran. I say the recession is good...to stop the progession of War..and to stop giving tax dollars to the US War Machine.
Irony or Resolve.
Rev
at 18:21 on October 13th, 2009
Thanks djermano! I could never figure out what the war stuff was all about! I'm clueless as are many. Is it simply to satisfy egos or is there some rhyme and reason to it in order to affect a greater good?
- Sign In or Join to post comments
djermanoat 04:30 on October 14th, 2009
Rory the guys in the Military are essentially useless bums hanging around if there is no war.
When there is no war, budgets tend to be cut for nonessential services. This amounts to less money and pay to the military guys. Then to see such a thing happen....because they did a good job..just doesn't fit them well...especially the old timers and Vets who served in other wars. They look at cut backs as a unpatriotic thing to do....and an outright attempt to make them frogs in luke warm water.....by seeing the military as a gone by era...amounts to neglect and dishonoring them who served.
So they fire up the patriotic hubblub and involve other government agencies and societies such as the CIA, and the Skull and Bones...which elects guys in office who will keep sucking off the peoples tax payer dollars to feed the military. They are leaches in my opinion...and essentially welfare bums who carry guns.. So they create terror... They have done terror in the past...such as when Harry Truman dropped 2 Atom bombs on Japan..
The Military Hardware General Chief of Staff Wacko's say they used the bomb to end the war early....But this is not true...since the Phosphorus Bombs worked as well and were as deadly..when used on Dresden and Tokyo. They just wanted to test this new Superpower weapon on the guinea pigs in Japan.
The fight goes on between Pro War and Anti-War opponents...and the Pro War nuts I believe are essentially delusional out of control Militaristic Terrorists....no matter how sweet they shine their shoes...and polish their buttons.
The greater good is that everyone else is mad and they are not...The American Way will be the only way.. period. They want war..and they want soldiers to die..because the more they kill the more it gives reason to stay in a protracted quagmire war or conflict. OUR boys shall not die in vain is the beckon call of enlistment, and job security. If you remember Vietnam was never called a War...it was a conflict...that took 58,000 US soldiers lives...and over 7 million Vietnamese and Cambodians. They say the US did not win that war, and left in disgrace..but the numbers of dead certainly spell a different story, don't you think? They made us believe America lost...so it would give more incentive the next time around..to overcome that... That's one of the reasons they went to war in Iraq...to overcome the humilation that was created from ending the War...because of Nixon's embarrassment to the nation.
Also the greater good is that they want power and to remain in control. That power they seek they say is peace...but really it is fear. They want people to fear them and bow down to their every command. Sure they love that kind of freedom...That's why they join the Military Butchers.
They think nothing of killing the million of innocent people in Iraq.. If there is a hell on earth, it is certain the door to it is at the Pentagon..How dare they live off Mom and Pop's salary that they struggle to make at a corner store.. These big hucksters can't find better work, except hunt down some poor people in a far off land...And because they see men coming out of their house to defend their wives and children..the M-60 machine gunner shoots them down because he was told they were terrorists...
They are despicable....If the power were mine....and I continually pray to have it someday, it will be to close down the Military permanently, dismantle and tear down the Pentagon, and ban the manufacture and ownership of guns and weapons. All generals and Military personnel will be fired and forced into retirement. Mark my word Rory...I am the real Commander in Chief....No military is going to save them in the long view of things.
Rev Jermano
at 15:07 on October 14th, 2009
Rev. Jermano: JEEZ! Thanks for your insightful comments! I do disagree with you on certain points. One of them is my belief that war, in spite of the horror, is often times the only effective means to prevent those that would seek to subjugate the entire peoples of the world to totalitarian rule and the resultant genocide that that totalitarian rule naturally incurs. On a more pragmatic and personnel level, war is also a vehicle in which one has the opportunity to legally kill some poor SOB before he kills you and your family, quarters himself in your home, and eats up all your food. Don't get me wrong . . . I'm a big fan of world peace and I'd like nothing better! There's never been world peace and I don't expect that there ever will be. But then again, I'm a pessimist at heart . . . .
- Sign In or Join to post comments
djermanoat 04:09 on October 15th, 2009
Rory if you carefully look at humanity and see that mankind was not made to fight, was not made to hate, was not made to intentionally harm people you can understand that there is usually a reason to why people take up arms.
Even past wars and injustices come to mind, to resonate the sword and saber rattling. History is full of the examples. .. to include mental derangement from drug use. Most people say and validate our need for a military due to the past world wars. Those same people will not acknowledge that their fathers had a hand in making those wars come to fruition. Britian and the US were Opium dealers....even using opium as a form of currency in the trade for goods. The US grew it's supply in Turkey, and Britian grew it in India.
We are aware of the 2 Opium Wars waged on China. It was China who did not want opium traded in their country, while Britain and the US fought to keep the opium drug trade alive and well in China. They won the War against China....and are literally responsible for the breakup of the China government...and responsible for gang wars in China fighting for the drug market territory. They tried to do this to Japan as well...and Japan was known to not want Opium in it's country as well... The Drug markets in China caused a spiralling conflict to evolve, in which the China government was subjugated to being controlled by Britain and the US. They took territory from China; namely Hong Kong... Japan knew this and were really the ones to start the process in getting the West out of China. They invaded Nanjing...killing 300,000 chinese with the intent to defy the West control of China. We know Nanjing was the Capitol of China at that time... Japan was successful...seeing their attack grow the passion for Chairman Mao Zedong and the Communist Party to evolve. Chairman Mao was successful in regaining control of the China government and expelling the Kumintang who were nothing but the West's military drug trade security henchmen.
To coverup these mistakes by the West.. Harry Truman was sure to make Japan most hated and drive a wedge between Asian Nations. He dropped the Atom bombs on Japan....as a vote of confidence to China as justice for the acts Japan did to China in Nanjing. And did we ever hear why Britain returned Hong Kong to China back in 1997? No not a peep to why they even had it....no mention they stole it because they forced Opium down the throats and up the asses of the decent chinese people... such a tragedy and farce by Britain and the US....who do not speak about this crime that has never come to justice.
Also:
Did you know this Rory? Did you know the fight between Germany and the West were in the differences between how Opium would be used? A German Scientist Dr. Fredrich Seuter discovered morphine and codeine from the poppy. Germany wanted to legitimize the use of the poppy plant in using in for medical purposes, while the US and Britian wanted to maintain it's use as a recreational drug. Germany was seeking membership to the Ottoman Empire. They sought the assistance from Arch Duke Ferdinand. It boiled down that if Germany became an Otto member they had the first rights to use Turk land to grow poppies to exploit their medical discoveries.. In effect this would mean the US would be booted from growing Opium...which would close down their supply railroad route from Turkey through Iraq to Kuwait..where they shipped the Opium out to China.
Now you know why the hatred eminates for years from Iraq and the West....because the US and Britain stole the area Kuwait from Iraq to promote their Opium trade. We know what happened; the British told it's trade partners in the Balkans and Serbia that if the US is ousted and Germany becomes an Otto member it will mean economic ruin to us and them. We know what happened they assassinated the Arch Duke. .and WWI began.. They accused Germany for the War....and levelled the severe Versailles Treaty which threw the people in Germany in obscure poverty....and grew the passion for Adolf Hitler.
So in the end America has given us this fake lie of being the worlds Military Hero's by defeating dictators such as Hitler...and always degrading China and the Communist Party.
In deed the US and Britain caused this....and is why they take no responsibility or acknowledge they all along were the troublemakers on the world stage that claimed billions of peoples lives. The lie these people caused has been generationally handed down...and people are not smart enough to see it....and or remain silent, because of what they have to lose. Major Universities in the US got their start from the Opium Drug trade in the US. Harvard and Princeton are two that come to mind. There were many more.
War has been engineered by the West....ever since the downfall of Rome..and it continues on it lying course..because people are not aware. Hitler hated the Jews..because many of the Jews were in charge of the banks who were in the opium drug trade. Who really stopped Hitler, it was Stalin... Stalin killed as many Jews to gain power in Russia, but it was Stalin who stopped Hitler..because Hitler knew Jews were Communists coming from Russia. But people do not label Stalin as the Holocaust King. They give it to Hitler... But in fact it was the Jews who caused the Holocaust...as they did many bad things to Germany and well as China.
Cause and effect..is the result in mans interaction to man, which includes men representing nations. There can be world peace..when we stop to examine clearly the history...and ask yourself why so called bad people did what they did? In fact they were fighting and struggling for their own survival... that is the injustices waged against them, by the lying hucksters in the West.
Ask yourself would you vote Jesus out of office? I know I wouldn't....and that makes me a totalitarian.. So being a totalitarian dictator is not a bad thing...because the Good is just that. You are only a pessimist because you have not arrived at finding or thinking out the real answer.. War and the Military are totally against the human spirit. Better to give love in exchange for hatred..because as I explained above...there is a reason why hatred raises its head...
Just think if Bush said to Saddam..we will buy the weapons back that we sold you...and help you pay your war debt because of the War with Iran. I bet it would be less the amount they spent in invading and killing a million innocent people in Iraq. Think about that.
Think about Obama telling Afghanistan we will supply you aid and help by removing our troops, and giving food and humanitarian aid... No if's and buts. Just an open hand and real friendship....and please pardon our mistakes...
No these fuckers in Washington seek honor, glory, medals, patriotism, and Taliban turban scalps...to justify they are winners and conquerors to continue their Militaristic lies to their children and childrens children.
So we all know America the Superpower is rotten in and out.....until the day comes with hope and prayer that people see the truth to being and making friends with our enemies and simply say......I'm sorry.....
Amazing what 2 words can do to change the world.
Rev Jermano
at 18:27 on October 13th, 2009
I think something happens when money is taken out of the relationship between a person and the provider. In terms of health care, Canadians can probably tell us more about this concept, but my feeling is there is less suspicion and more trust. Like the doctors Rory describes who were paid with what ever country folk had to give. The doctor/patient relationship was about healing, not about how much money someone had to pay or how much a doctor would make if they withhold care and get a $ reward at utilization review.
at 18:44 on October 13th, 2009
a211423: Thanks for your comment. My maternal grandfather was the only dentist for miles around and his brothers were the only doctors. It was a coal mining community and I think that the coal miners made more money than they did. At one point during the depression, according to my mom, the family had only five dollars to their name . . . .
at 15:37 on October 14th, 2009
sara:
Are you saying we can trust the professionals?
I sure can't trust the "professionals"! But with this qualification: In my opinion, there are certain professions that are inherently more trustworthy than other professions. Very few know what economists and financial professionals do. But everyone knows what engineers, doctors, lawyers, and dentists do. And if engineers, doctors, lawyers and dentists screw up it doesn't take long for the average person to figure out that they screwed up. Not so with economic and financial experts . . . .
at 18:55 on October 13th, 2009
Rory
I know there are many stories like your moms in the history of America. And in terms of health care I know we can not go backwards. But I think we can learn a little from the compassion of those who have gone before us. Hospitals like the Cleveland Clinic are the closest thing we can get to it. Coordinated care that is cost effective through early intervention and preventative health care is the only answer.
at 13:28 on October 14th, 2009
a211423: Believe me when I say that if I thought that the present health care reform proposals were done out of compassion and were a sincere attempt to relieve suffering and make the country's health care system better for all American citizens, I'd be 100% for it--no questions asked. And I'd gladly pay extra taxes in order to sustain it. But in my heart of hearts, based on what research I've done, I honestly believe that the current partisan proposals will make the U.S. health care system worse. There are so many wonderful private children's hospitals here in Florida that do a great job. Shriner's and All Children's come to mind. The majority of families that send their kids to those hospitals pay very little (if anything at all) of the hospital costs.
at 19:43 on October 13th, 2009
Sara the professionals in the economist game can not even trust themselves, lol It's a case of place some gold in my hand and I will tell what I see in my Crystal ball.
Some of the less well known economist have been spot on and of course the amateur ones found on the news communities get it right some times.
at 15:39 on October 14th, 2009
Babel-Fish! Your comment is right on the money in my humble opinion!
at 19:48 on October 13th, 2009
Economics is as much guesswork as it is science.
at 14:11 on October 14th, 2009
158: Agreed! One of the major problems with the economics profession along with finance, banking and portfolio management (to name a few) is that often times those in the profession torture the statistics until the statistics confess. They want to keep their jobs and they'll make stuff up in order to do so. A rosy economic scenario is to their advantage. Those in the finance industry especially (i.e. MBAs, etc.) are accustomed to pay scales that are substantially higher than those in other professions such as engineering who have commensurate education and experience.I wonder why that is?
If engineers, for example, were held to the same standards that economists and finance professionals are held to, we'd have buildings and bridges collapsing and power plants blowing up across the nation. Unfortunately the average citizen has very little idea of what goes on in the esoteric world of economics and finance--or for that matter what their mutual fund managers are doing (or not doing) with their portfolios. When their investments go south, "the economy" is conveniently to blame and the finance professionals continue to receive bonuses and commissions. In other words, these "professionals" still make out, however it's much to their advantage to paint the economy in as rosy terms as they can. Engineers, doctors, accountants, and other professionals have to be right on the money in order to keep their jobs. They can't get away with blaming "the economy". And when professionals such as those mess up, everyone knows about it and there's hell to pay. Not so with economists and those in the financial and banking industries. Indeed, those "professionals" are a protected species as it were.
at 16:28 on October 14th, 2009
Source: en.wikipedia.org
Source: economist.com
at 02:00 on October 14th, 2009
Great Piece, time to time definition changes, from need to greed, and in between this lies the so called success and failure.
at 14:45 on October 14th, 2009
Amitjha! Agreed!
at 03:17 on October 14th, 2009
If you can't grow, or afford to buy peaches , you can't make a cobbler.
at 06:40 on October 14th, 2009
No, but if you have an apple tree, you can make pie, which is more better!
at 13:33 on October 14th, 2009
Eat too much of either and you'll definitely need that dentist relative of Rory's. LOL Is that MO BETTA?
at 14:22 on October 14th, 2009
nanute: By BETA, I'm referring to the slope of a regression line as it applies to the corresponding rise or fall of a particular stock relative to market fluctuations. HA! How's that for a bunch of financial/economic gobbledygook? LOL!
at 03:03 on October 15th, 2009
How stupid of me! I thought you might have been making a subtle reference to the current resident of the WH.
at 14:44 on October 14th, 2009
nanute: I bet you never tasted a peach cobbler or had your teeth pulled by a country dentist! HA! In fact, I bet you never went out in the woods and shot a few squirrels for breakfast! Once you've skinned and cleaned a few squirrels in the morning and deep fried them you'll never go back! The economy is so bad here in my section of Florida that it's a rare thing to see squirrels nowadays--or even stray cats for that matter! I can deal with that . . . but when I stop seeing snakes, I'm getting the hell out of here! LOL!
at 03:41 on October 15th, 2009
In the famous words on Joe Wilson: YOU LIE! LOL. I have in fact tasted peach cobbler. I think the way Dr. Rosen up the Blvd. pulled teeth, he could have been consider a "country doctor." The squirrel thing you're right on. I will tell you that I did hunt pheasant and rabbit with bow and arrow down by Roaman's Happy Hunting Ground. This is way too inside baseball for everyone else. Just know that we are talking NYC locale.
UPDATE: I almost forgot: I think it might be time for you to consider moving back "home." The squirrel population is thriving here. Why just yesterday I saw a black one (squirrel that is), in front of my house. And, those wild parrots have migrated here from Whitestone.(How's that for irony?)
at 16:15 on October 15th, 2009
Nanute: HA! LOL! BTW: I shot a kid across the street, back in the day, with an arrow! HA! He lived! In all seriousness though, the economy here in Florida is really in poor shape. One of the reasons for that is the idiot politicians and developers along with the idiots in the real estate industry. The idiots simply didn't think about the ramifications when they put all their eggs in one basket. Wait to the bottom falls out in the commercial real estate market! That will be a hoot!
at 02:30 on October 16th, 2009
Regulation bad, free market good. lol
at 13:30 on October 14th, 2009
Hugh: Did you mean MO BETA?
at 13:49 on October 14th, 2009
Nope, more better.
Gotta be a hi skool dropout to speak the langwich. But if you get the apple pie, it will all be worth it. One of mankind's finest inventions, to my thinking!
Speaking of dentists, i once frequented one that used nitrous oxide, administered for those that didn't terribly enjoy the service he provided. This gentleman had a cartoon that he really liked...i got the feeling that it was his handiwork.
The cartoon was of a dentist, entering the room. The patient being in the reclined position, awaited the dentist. Nothing humorous about it, except that the dentist pictured was wearing dark glasses, and using a white cane.
When the real dentist administered the nitrous, he would trot this cartoon out, to see if you were over sedated. The first time was the worst....thought i broke a rib, laughing.
We were speaking of dentists, weren't we?