
Listen Carefully for Hints of the Next Global Recession - Osiris30
http://www.nytimes.com/2016/05/01/upshot/listen-carefully-for-signs-of-the-next-global-recession.html?pagewanted=all
======
jusben1369
"Beliefs and stories passed on by thousands of individuals are important
factors, maybe even the main ones, in determining big shifts in the economy."

We've known this all the way back to Keynes. That's why he wanted the
government to step in and pick up the slack created by individual consumers
creating a self fulfilling prophecy of cutting back their own spending by 10%
in preparation for a possible bad economy. Not only would the government
spending help offset reduced consumer spending but the knowledge, within the
broad population, that the government would do this would reduce fear of a
recession and thus reduce the recession inducing behavior.

~~~
matt_wulfeck
That logic only makes sense to me if I start with the presumption that the
market should only ever go up _ever_.

------
shostack
I don't know how to measure this, but I'd be curious what impact all of these
news outlets writing doom and gloom actually have. I'll bet it is quite a lot.

There is a very palpable sense of people wanting the economy to collapse, and
I'll bet a lot of it is spite from renters who are having their rents jacked,
and being completely priced out of even entry-level homes in many markets.
They can't get a fair shake at things, so they want to watch things burn.

Not to say that I entirely blame that mentality, but I'm just very curious
what tangible impact that has and how to measure it from a quantitative
standpoint. Are there any good sentiment analysis tools for this sort of thing
and correlating it with the market/economies?

~~~
dforrestwilson
There is no magic formula but here's an example using negative rates in
Denmark: [http://www.bloomberg.com/news/articles/2016-05-01/world-s-
lo...](http://www.bloomberg.com/news/articles/2016-05-01/world-s-longest-
negative-rate-experiment-shows-perversions-ahead)

------
carsongross
_Beliefs and stories passed on by thousands of individuals are important
factors, maybe even the main ones, in determining big shifts in the economy._

This sort of ooga-booga is why it's almost impossible to take economists very
seriously.

Any sort of study with pretensions to scientific rigor (look at all that fancy
math!) that, at the end of the day, falls back on something like animal
spirits, deserves quite a bit of mockery.

~~~
oli5679
It is worth noting that a majority of economists are studying narrower and
more tractable problems than predicting business cycles/asset prices.

Take a look at Al Roth's work on matching markets (useful for organising more
efficient organ donation or school attendance systems) or Jim Heckman's work
on policy evaluation (useful for measuring the impact of educational policy on
lifetime earnings children.

[http://www.economist.com/blogs/freeexchange/2015/06/alvin-
ro...](http://www.economist.com/blogs/freeexchange/2015/06/alvin-roths-new-
book)

[http://www.sciencedirect.com/science/article/pii/03044076859...](http://www.sciencedirect.com/science/article/pii/0304407685901393)

~~~
__derek__
> a majority of economists are studying narrower and more tractable problems
> than predicting business cycles/asset prices

This is a good point: macro and micro are rather different beasts, especially
when it comes to the "science" question.

