Sunday, December 21, 2008

Economists Caught with Their Pants Down

It appears that the academic field of economics is neither a hard nor an exact science:
Some [economists] warned of a housing bubble, but almost none foresaw the resulting cataclysm. An entire field of experts dedicated to studying the behavior of markets failed to anticipate what may prove to be the biggest economic collapse of our lifetime. And, now that we're in the middle of it, many frankly admit that they're not sure how to prevent things from getting worse.

As a result, there's a sense among some economists that, as they try to figure out how to fix the economy, they are also trying to fix their own profession.
I've taken heat here in the past from an academic economist who argues that my musings on economic relationships have little to do with what he does in the field of economics. If the Boston Globe writer's analysis is on target, it seems that his field has little to do with reality, because economists assumed that practical economic questions were answered. In a crisis, practical matters count as so much more than abstract games.

1 comment:

  1. I love your blog! With that out of the way, this post is not accurate. You have two types of economist right now. F.I.R.E. economist and non F.I.R.E. economist. Well first, what is a F.I.R.E. economist? F.I.R.E. stands for (Finance, Insurance and Real Estate). These are the industries that have dominated our economy since the 80s. This entire collapse is a testament to how faulty and corrupt these industries were. So you have to be careful which economist you are listening to. Those of the F.I.R.E. economy type new damn well what was happening and what would unfold, but for self interest they didn't make those realities known. They were to busy forcasting or under forecasting as it were for those in the F.I.R.E. economy.

    Then you have those who were not beholden to these industries and who laid out very clear what was going to happen as early as 1998. Even the economist magazine reported on present events back in 2000 but their mistake was, they thought the collapse would come after the last bubble (tech and telecomm). They underestimated as did many others the ability of those in charge to generate billions in faux wealth via the credit/housing bubble to pull us out of the last storm.

    Anyway, just check out Eric Jenzen, Peter Schiff, Nourel Roubini, Gerald Celente and countless others who predicted this thing spot on.

    I wouldn't look those names up though unless you have a strong stomach and the ability to rationally figure out what you are going to do as things get worse.


    former economics major


    I was thinking of moving to Nashville at one point and wanted to settle in German Town or Salem Town. 1 because of the beautify and character of the area as well as the proximity to the urban core. Also because of your excellent blog. Please keep up the good work. Although I have crossed Nashville off my list of places to live I still visit this blog of yours from time to time.