
The Economic News Isn't All Bleak - robg
http://online.wsj.com/article/SB123025736834034741.html
======
jerf
No comment on whether the future is bleak or not.

But extending beyond economics, also consider the US political commentary of
the past year and a half. It was, not to put too fine a point on it, _shit_.
Take the conventional wisdom for any day of your choice four weeks before the
election to a year before the election, then come back to it two months later.
Uniformly, the boldly-made predictions and much-blabbered conventional wisdom
were horribly, horribly wrong. As I like to say, if it had been right, we'd be
awaiting President Clinton's swearing in after defeating Guiliani 75-25.

Future predictions have never been that great, and maybe it's just that I'm
paying attention now, but the "horizon of wrongness" seems to have moved a lot
closer to the present now. Pundits are rarely even close to right for events a
month in the future now, and it's getting to the point that I can't understand
why anybody even _listens_ to them, because they are so wrong, I can't hardly
even point out the people who were _right_.

Play it conservative. Keep your savings up. Any techie after 2001 should know
that anyhow. Maybe the future will indeed be awful, but at this point, I'm
burned out on punditry, and I would say that at the very least, try not to let
this doom and gloom depress you too unduly. The people selling you doom and
gloom... and I use the term "selling" on purpose, because it's the literal
truth... have a _horrible_ track record. Let's wait and see what happens.

~~~
timr
Great post. One thing I found interesting about this piece was the blatant
revisionism on display in the second paragraph of the article:

 _"less than two years ago, conventional wisdom dictated that the housing
bubble would be painful but that global economic growth would remain stable."_

Forgive me, Mr. Writer, but my recollection is that less than two years ago,
few people in the mainstream were acknowledging that a housing bubble even
existed. Hell, even a year ago, half of the mainstream press was essentially
reprinting press releases from hacks like Lawrence Yun (widely quoted "expert"
for the National Association of Realtors), who never saw a bad housing
statistic that he couldn't spin for the positive. Those who were calling a
bubble a bubble early on (as early as 2003) were labeled jealous curmudgeons
who missed out on the easy-money party.

I keep trying to come up with a lesson from this, but the only thing I can
think of is that our society doesn't reward dissent. No matter how insane and
extreme the conventional wisdom, it doesn't pay to be the guy who vocalizes
against the herd. If you're a contrary thinker, it's best to just keep your
head down, your mouth shut, and do whatever you were going to do anyway.

~~~
tokenadult
"my recollection is that less than two years ago, nobody in the mainstream was
acknowledging that a housing bubble even existed."

My recollection is different, because I was reading Business Week more than
three years ago. The housing bubble has looked like a bubble for a long time
to people who considered how much faster house prices increased than wages.

Michael Lewis's collection of articles, Panic,

[http://www.amazon.com/Panic-Story-Modern-Financial-
Insanity/...](http://www.amazon.com/Panic-Story-Modern-Financial-
Insanity/dp/0393065146/)

includes articles that foresaw the housing crash more than two years ago.

~~~
timr
Yes, there were a few people who were calling the bubble early. However, their
view wasn't in the mainstream two years ago. It certainly wasn't "conventional
wisdom".

I have edited my post to replace the word "nobody" with "few". Mea culpa.

~~~
fallentimes
They focused on the exception; you focused on the rule.

It's entertaining watching the tulip bulb story happen over and over again.
Hopefully next time I'll have more capital to take advantage of the situation.

------
medearis
A few months ago, Goldman Sachs "experts" were predicting oil at over
$200/barrel. Obviously, things didn't work out that way, which is why the
concluding paragraph is exactly right -- information now travels faster than
ever in our economy, which will affect the way the economy rebounds. Still,
nobody knows exactly what will happen.

It seems to me that the best predictor of how the economy is doing is the way
that it is perceived. For all the talk of this being the "worst economy since
Hoover," we're not in a depression and not all is lost. I see a lot of
optimism accompanying the incoming administration, which will probably do more
for the economy in the short-term than any sort of monetary or fiscal policy
could.

~~~
unrealwh
$200/barrel is indeed wrong, its a lowball number. i expect $500 or more.
where do you think all those trillions the Fed is printing up now will end up?
what happened the last time the Fed printed up trillions in 2002? commodity
bubbles! excess liquidity ALWAYS creates inflation, and inflation always
chases up the value of finite stores of value, namely commodities. nothing
goes straight up or straight down...the thirty year commodities ultrabubble is
just getting started, and has experienced its first (of many) breakdowns
towards an eventual higher price once this pocket of deflation is monetized.
zimbabwe here we come!

~~~
anamax
> $200/barrel is indeed wrong, its a lowball number. i expect $500 or more.

Where are you stashing what you're buying?

You are putting your money on that prediction, right?

------
markessien
I keep saying it - things are fine. Real value has not been wiped out - the
amount of real value lost is not big when compared to the general economic
numbers. The U.S has a bigger problem than the rest of the world, but the U.S
is still very dynamic, and many world currencies still measure against the
USD.

China is developing fast, but a lot of the development does not go very deep.
So China is not yet ready to function as a counterweight to the U.S.

Europe is doing fine, even if it is sluggish as always. Africa is at it's most
conflict-free of the last 50 years and lots of >5 growths there.

In general, the U.S needs to get a bit more dynamic, modernize it's
infrastructure, take back the production, and it will be as fine as always.

The fundamentals of the economy are fine.

~~~
jfornear
The fundementals of our role within the _global_ economy are anything _but
sound_. Our economy is fueled by consumerism and the service industry. When
shit goes down, which do you think has a chance of surviving when countries
like China decide to stop subsidizing our spending (by holding down their
currencies) in order to enjoy the fruits of their own labor themselves?
Forthcoming political unrest in some of these countries are significant
factors that lie outside of our own control.

(I'm writing this on my iPhone so I apologize for not ellaborating with a more
coherent response, but just think about some of these things. No one knows
what will happen, but things could easily get pretty 'bleak'. I hope not. I
hope we can figure out ways to prolong any mess from occuring.)

~~~
Prrometheus
>"Our economy is fueled by consumerism and the service industry."

You do know our country has the single largest manufacturing output in the
world, right? Misleading soundbites are often repeated until they become
popular wisdom.

~~~
jfornear
Sorry if I sound like a Peter Schiff robot. I've been listening to him too
much lately. I've been meaning to add some more optimistic readings/podcasts
to my list.

China surpassed us recently, and the US losing its hegemon status is very bad
for the dollar. The only thing they have left to do (and are doing) is build
up their military. They do have quite a few domestic political problems
though, but analysts were already confused how capitalism thrives in China
anyway so there's no telling what will happen. I think these problems and what
they produce are the unknown factors that will determine the new world
economy. That is just my pet theory.

~~~
Prrometheus
Nope:
[http://www.dol.gov/asp/media/reports/chartbook/2008-01/chart...](http://www.dol.gov/asp/media/reports/chartbook/2008-01/chart5_9.htm)

~~~
jfornear
I think the data in that chart is from 2006, but I looked it up and I'm sorry,
I must have heard wrong. Apparently, China will surpass the US in
manufacturing in 2009 despite their unemployment rate in manufacturing being
much higher lately than ours. Either way, the general consensus is that the
question is not if they surpass us but when. I would post links but I'm on my
phone. My friend from China says not to trust Chinese numbers anyway, haha.

I'm not trying to spout doom and gloom, I just find this stuff interesting. I
wish I understood macro and history/politics better so I could make my own
predictions that might be worth paying attention to.

------
jfornear
I (along with many of you I'm sure) have been listening to Peter Schiff's
podcast since his predictions from 2004-2006 have materialized, and his
outlook on the future of the US economy is _very_ bleak. <http://europac.net>

Duh, no one knows exactly what will happen or how, but I do believe it is
foolish to write off these 'bleak' predictions from analysts who have proven
their credibility and can back up their predictions with logic and reason.

Plus, this article is self-defeating is it not? If we are supposed to ignore
these 'bleak' predictions because of how innacurate predictions have been in
the past, shouldn't we ignore the optimistic predictions like this one, too?

EDIT: I don't endorse everything Schiff says.

~~~
zack
There are a lot of high-powered investment analysts who had proven their
credibility with a string of years of success, guided, I'm sure, by logical
and well-reasoned investments.

That's just not how it works pal. Everyone is bound to be wrong in the long
run. Sorry.

~~~
jfornear
You can't measure credibility through success in the stock market, and that's
not what I was implying.

Do you take any advice? By your logic it doesn't look like it. I wouldn't want
you running our country right now, sorry.

------
michaelneale
I was thinking the other day: lets _assume_ that there is some average
economic cycle that 1 out of 7 years is a recession.

If that cycle is invariant, but via some means the time variable could be
compressed, such that 1 in 7 days was a recession - suddently that seems not
so bad (kind of what the article was hinting at?). So you compress time,
increse the severity of changes but reduce the impact time (which is I guess
where the real human damage is done). Will be interesting to see.

------
gjm11
I've seen maybe half a dozen articles that say "everyone agrees that this
might be the worst economic downturn since the Great Depression" (so
presumably there are far, far more than that, because I don't spend a lot of
time reading that sort of article).

I haven't yet seen one that acknowledges the possibility that it might be
_worse_ than the Great Depression.

That seems to me to be obviously wrong. If what we're in is likely to be worse
than everthing _else_ since the 1930s, can it really be so clear that it's not
actually worse than the G.D. too? It seems like the readily available
journalistic cliches just don't allow for that possibility...

~~~
unrealwh
i believe not only will this be worse than the depression for the US, it will
indeed do in the US entirely. a nation's most important piece of paper is not
its constitution (you can burn and rewrite one of those anytime you want one),
it is its _currency_. you can only burn your currency once.

there is a very strong historical parallel - the french revolution. no matter
what interpretation of this event you find in literature, they will all point
to _excess debt_ as one of the key, if not _the_ key motivation for the
revolution. weimar germany is another scenario where excess currency abuse
literally did in the nation, and incidentally ushered in nazism.

there is no way the US can now get out of debt or even hope to slow down
deficits. the rate of growth of the debt is astounding. one must wonder where
the death bond lies...that dollar of debt that we issue that is rejected by
all buyers and signals the end of the US. once the US dollar is rejected by
all buyers, the US govt immediately ceases to exist by definition. police,
army, firefighters...none of their paychecks have value anymore, so none of
them will report for work.

how much is too much? our debt is around twelve trillion now, my guess is that
at around twenty five trillion, its game over. we will reach that point by
2018 at the _latest_. the US is gone by 2020 at the _latest_. if any political
structure survives, it will be helmed by an american stalin who will gorge on
the nation and utterly obliterate it.

it will take the world one hundred years to reconstruct after the obliteration
of the USD-backed fiat-debt financial system. pax romana was nothing more than
a promise and a hope...once it went away the west lost centuries. the USD is
no more than the pax romana of our era...a idea backed only by faith, not
values

~~~
gjm11
You point out the parallel with Germany -- perhaps it's worth also pointing
out that despite losing a major war, having its currency totally wrecked,
falling into deranged totalitarianism, and losing _another_ major war, Germany
is still around and not doing too badly. So "do in entirely" and "utterly
obliterate" seem a bit too strong to me. For that matter, the French
Revolution doesn't seem to have destroyed France either. I think the majority
opinion is that it was an improvement overall.

(Of course, if anything like the same thing happens to the US as happened to
Germany then that would be very, very, very bad. I just think you're
exaggerating.)

------
anewaccountname
>As the credit system eases, historically low interest rates also augur debt
refinancing and constructive access to credit for those with good histories
and for small business creation in the year ahead.

As though we can just "augur" that. Small business loans might not pick up
even in a low interest environment if banks reveal more off-balance sheet
holdings and run into more troubles with capital requirements.

>The rush to declare the future bleak has obscured the fact that no one knows
the outcome of an unprecedented event. No one.

I think he (minorly) slipped up and didn't follow his own advice a little
earlier in the article =P.

