Whew mercy, I’ve been busy of late. However, the the unsleeping eye picked up this short post (and graph) from my ancient nemesis and it illustrates perfectly what I am always trying to talk about.
I’ll say it bluntly. Economic forecasting, economics, market predictions, financial analysis and all other related jobs are all complete bullshit. You’d be better off relying on astrological charts or shaking magic stones and peering into a fucking hat.
But of course nobody ever believes me because the “science” that they use is cloaked in complicated mathematics and only the opinion of an “expert” counts.
Well, look at the linked article:
Two years ago economists thought Germany’s economy would grow by 1.5% in 2011. They underestimated the country’s output by as many percentage points; GDP grew by 3% according to the Bundesbank, Germany’s central bank.
In other words, they were dead wrong. They weren’t even close! They were off by billions and billions of dollars (euros). Oh well!
More from Ye Olde Economist:
Our pollsters were pretty accurate in forecasting GDP in the euro area throughout the two-year forecasting period [once you remove from the results what] they could not have foreseen, the earthquake and tsunami that hit Japan a year ago.
This is exactly my point. They cannot foresee certain things. It is literally impossible. And these unforeseen things always, always change what’s going to happen. Billions and billions of euros changing hands, pension funds, stock market choices, treasury bond sales, even government policy all depend on these kinds of analyses.
Want to see some more magical thinking? Check this out (all links in Romanian):
Romanian economy will shrink in the first four months of 2012 – How much? The Chief Economist of Raiffesen Bank (in Romania) says 0.5%. But the Chief Economist of ING Bank (Romania) says 0.3%. So which is it? BCR “analyst” Eugen Sinca can’t even come up with a number at all. But wait, Andrei Radulescu of SSIF Broker says the economy might grow in the first four months! So should I invest my money or not? Quit fucking around and tell me.
Remember folks, these are the experts and I am just a humble blogger.
But wait, what about this?
Romania’s GDP will grow by 2% in 2012 – Chief Economist of BRD bank (Romania). The IMF says Romania’s GDP will grow from 1.5-2% in 2012. Sounds good!
But wait a goddamn minute. Now who here remembers this besides me?
We completely failed to predict 2009′s economic recession – BNR (Central Bank of Romania)’s vice governor Cristian Popa. Yeah, no shit because the IMF, those Wise Old Elves who now tell Romanian politicians what to do, predicted a 3.5% increase in the GDP for Romania in 2009. Actual GDP in 2009? 7.1% loss! They were wrong, wrong, wrong! Meanwhile a year ago Jeffrey “Pig Man” Franks of the IMF said Romania’s economy is like a “sick patient”. Well who was giving the patient the bad medicine?
Of course I’m not allowed to criticize (and neither are you) these Wise Old Elves because don’t you know that it’s hard work being a banker? And you thought you could understand it, fool? Think of the risks they have to calculate so efficiently and correctly! Wise words indeed from Dan Pascariu of Unicredit Tiriac Bank, reminding us little people never to dare question our financial masters.
I will let you know, in case you are unaware (if you are unaware it’s probably because you’re not a Big and Important Person) that the CFA is holding a conference in Bucharest on April 4 for people who want to invest in Romania. Actually it’s for people who want to make enormous profits in Romania, not really invest in this country’s future or its people. I’m half tempted to go to this conference just to report on all the bullshit.
I notice that the prime speaker they’re so proud about is none other than Jim Rogers, the guy who along with George Soros, nearly bankrupted the British government back in 1992 and walked away with a cool profit of 1 billion (yep, billion) dollars. I am sure he will have delightful advice for those who wish to feast on Romania’s assets so get your reservation made today!
The organization hosting this conference, CFA, is an offshoot of an American organization of Certified Financial Analysts. See? They are officially certified in how they calculate bullshit so that makes it okay. I took the time to read through their website and found their “charming” history (PDF) to be amusing:
Notwithstanding heavy foreign ownership of the railroads, three-quarters of the $2 billion invested in American corporate securities on the eve of the Civil War  came from domestic sources.
Intelligence about how it all worked and about how securities prices might be expected to behave grew along with the markets themselves. While no one then called himself a “financial analyst,” there were, pretty clearly, market observers out there thinking the way analysts think and using some of the same constructs, like business cycle forecasting, to make judgments about the investment business.
It reminds me of the old joke about the fortune teller. If they can see the future, why don’t they play the stock market and get rich? Well I’d ask the same thing to these “wizards” who have failed to predict anything reliably since 1860.
But just like the Economist article linked at the beginning, there’s always a reason to “explain” their wrong guesses, always some “unforeseen” event or factor, always some new calculation, always some new theory and if you just will trust them with all of your money one more time then tomorrow by golly, tomorrow they (and you) will make a huge profit.
Ah well, what can I say except sing along with me if you know the words.
God have mercy on us all.