Reader Comments

sredni_vashtar

March 22, 2006 10:32 AM

The Economist's "The World in 2006" has a nice two-page article by Niall Ferguson, called "Looking back on the future", on the various "hits and misses" on the publication throughout the years.

Lord

March 23, 2006 03:03 PM

Reminds me of the analysis of Delphic predictions and how successful they can be when they are not predictions but prescriptions.

Frank Drake

March 25, 2006 12:36 AM

Whichever political party is in the majority, by belief if you are not, you will be bearish on the economy, GDP, inflation, and interest rates.

I fully expect unexpected results to occur.

For instance, the 30 year rate may be the same or lower than the 15 year rate. I also expect interest rates to reach new relative lows compared to 2004 and 2005 with the Prime Rate 1% higher than fixed rate mortgages. I still expect Oil to be $60+/barrel for another year with no recession until 2008 or later.
The Middle East will soon become the least of our worries.

Mike Reardon

March 25, 2006 03:08 PM

A good project for the Wikipedia, the peer editing online encyclopedia folks to get behind. There may be! (fact) investment in economic visions. A peer editing program lets all sides cut to the facts.

There can be backward review of past predictions, that can kick start the economic data base. There are really ten sides to every economic view, so ten sets of editors may be needed.

brad

March 28, 2006 11:11 AM

Michael -- I took up your challenge.

Ryan Merrill

March 6, 2009 01:35 PM

The issues notwithstanding herein, Mr. Roubini has made many predictions over many years that have simply been wrong.

See: http://www.erictyson.com/articles/20081024_1

For the life of me, I don't understand why more people in the media don't get this point and warn the public.

jcage

March 6, 2009 08:26 PM

Peter Schiff saw it coming! He saw it coming many years ago since 2002!!
Not many listen to him

http://www.youtube.com/watch?v=Z0YTY5TWtmU
http://www.youtube.co/watch?v=HvEVV9lL6Is&feature=related
http://www.youtube.co/watch?v=zz_yw0kq3MM&feature=related

CompEng

March 7, 2009 12:05 AM

Jcage,
and do you agree with the rest of what he says?

jcage

March 7, 2009 05:22 PM

CompEng

Peter Schiff about the possibility the USA will fall into a hyper-inflationary depression due to massive printing of trillions of Dollar? There is a possibility that it would occur if the Federal Bank start to irresponsibly print money like there is not tomorrow! I hope that it won't become true since it would terrible for any countries in the world!
Peter Schiff predict this whole mess and he explained very well on the housing bubble, the bank toxic asset etc..

CompEng

March 9, 2009 03:48 PM

Jcage,
I think that part is partially right. Investors in US debt will ultimately take a haircut because, as with many US homeowners, the cost of walking away will eventually become less than the cost of servicing the debt. The chosen form of "walking away" will in fact be deliberate inflation (which will lead to a much weaker dollar).

But I don't agree with Schiff on the solution. I think the mess we're in is a necessary outgrowth of America's trade and government debts, which are an almost necessary outgrowth of the developing world's effective pursuance of export-led growth. What most people don't understand is the whole world had a hand in this mess: countries like China, India, Brazil, South Korea, and Malaysia as much as countries like the US, the UK, France, and Germany.
No one country had a real chance of dodging this mess alone. The US was arguably the keystone, but could not have avoided the problem without taking a significant deliberate dive in standard of living: which is what we're essentially going to get now anyway.

No, it's too late to avoid a trade restructuring and a sizeable write-down on the part of debt holders.

My point is that even people like Schiff still don't understand the problem enough to have avoided the problem years ago or solve the problem now, because it's *global* mess.

jcage

March 9, 2009 06:33 PM

CompEng

I am not so sure that Peter Schiff has the perfect solution for this present economic mess but at least he understood the source of this problem! He predict that reckless borrowing and spending with little saving done by American companies and at an individual level are not sustainable and right now he is proven right in that respect.

Now, there is the theory that the glut in saving and that refer to Japan, China and many Asian countries that save a lot and all the saving translated into purchase of the Treasury bill that lead to lowering of interest rate and encourage lending! Reckless lending was done by American bank and that was an American banking decision and people can not blame it on the Asian nations for saving money and buying American bond and treasury bill!
Imagine that American saver deposit their money into American banks and those banks lent money to people who have not business owning luxury car and mansion, then those loan became bad loan! Then the question, is the fault of the American savers that deposit their money into the American banks or the American banks and the reckless borrower?! Blaming other for this type of failure is silly! Imagine now if the Chinese and Japan and the Arab decide to stop lending to the USA, would that fix the problem? If lending too much money to the USA that cause this real state melt down, then the solution would be stop lending money to the USA financial system. People can't have it both way!
Thank you for reading!

CompEng

March 10, 2009 01:23 PM

Jcage,
My points are:
1. Asians didn't just put their money in American banks, they bought American debt which will turn out to be bad debt. Much as the big banks bought American debt that will turn out to be bad debt. It is wrong to borrow money and not pay it back, and it is foolish to buy the debt of someone who won't be able to pay it back.
2. One of the reasons Americans cannot pay back the debt is because Eastern protectionism and dumping have wiped out American industry. China, etc. don't want America's goods (except to put in finished products to sell back to America or the EU). Since they don't want our goods and services (except technology transfer) and will only take our money, we will give them little pieces of paper. And if they keep taking pieces of paper, but won't take goods, we'll start printing more paper since that's what they want. Most of the world is invested in this system, but in the long term it will help no one.

If the East would stop buying debt and start buying goods, yes, it would help. And the US must start living within its means. Unfortunately, the debt and the current system has been addictive for everyone. Withdrawal will be painful, and fast withdrawal even more so.

jcage

March 10, 2009 03:42 PM

CompEng
My answers:
Your first point:
I agree with your first point about not paying debt or lending money to deadbeat!
A lot Asian and European thought that American banking to be rock solid with AAA rating and part of their debt (CDO, derivative) guarantee by AIG and watched over by the SEC and FDIC for any sign of corruption and guaranteeing the solvency of the American banks institution! Also, American T-Bill is as good as the government, right now we know that it was just smoke and mirror! The European banking are suffering the most since they bought most of the American mortgage backed securities!

Your second point:
I agree with you partially about Asian protectionism(Japan and Korea market come to mind) but it would be naive to assume that America has not trade barrier or protectionism either with legal reason or invalid reason.
China internal market is more open than Japanese and Korean market, for example, American car companies are free to sell their cars and truck in the Chinese market! Actually, GM is making money in China while losing money in the USA! There are other American companies in China such as Wal-Mart, Deere tractors, Caterpillar that open store and sales their product in China, they have bought even Chinese companies as well!

However, Chinese companies are not allow or restricted in the type of American product that China can buy due to securities reason! For example, buying 3Com by Huawei by blocked by Congress, the intention to purchase of American Oil company by CNOOC several years ago raise alarm bell in Congress and it sent a clear message what China can actually buy from the USA! T-Bill, some high end CNC, Boeing, and farm product and not more since it make no sense to buy shoes, t-shirt, cars, consumer product since China can produce it or buy it from Europe and other Asian countries! There is a restriction on what Chinese are allowed to buy from American companies and that limit export to China from the USA. Still, China is the third biggest export market for American product after Canada and Mexico! Imagine if the trade export is gone, then the trade deficit with China might go away! You can not reduced trade deficit what you don't produce or what you are not willing to sell.
Thank you for reading!

CompEng

March 10, 2009 05:36 PM

Jcage,

"it would be naive to assume that America has not trade barrier or protectionism either with legal reason or invalid reason."
Absolutely correct. Agriculture is a good example. However, America is generally more open towards importing. Also, America's taxes are mostly income taxes, while most other countries use VATs where exports are rebated. That's a huge effective tariff on American goods.

Your point is that China is actually very open to American brands. That's true. However, it's much less open to
goods produced in other countries. A good slice of China's exports are actually American and other globally owned corporations exporting to America and Europe. Accordingly, many of China's imports are parts which are assembled or finished in China and then sent to the US. I believe I've read that the US's #1 export is scrap... which is processed into new products and then sold to the US. That doesn't sound like the basis of a great reade relationship :)

Yes, Chinese and other companies are restricted in the companies they can buy. Likewise, most big Chinese companies must remain Chinese majority-owned.

The US. used to have a high-end manufacturing base that could compete even with the likes of Germany, Taiwan, and Japan. Not just planes and cars but computers, circuit boards, semiconductors not limited to x86 cpus, medical equipment, steel, pigment manufacturing, industrial chemicals, nylon spinning machines, etc. Some of these industries had sufficient technology to compete, but protectionism has crippled or destroyed them over a course of years as new technology investment became too costly in the face of the Asian storm. Caterpillar, GE, and the Detroit car companies are exceptions that still are somewhat American-made, but they are also moving their production steadily overseas.

Don't get me wrong: without protectionism, Asia would still be quite competitive! With it, much of America's production capacity has been gutted. It's not impossible for a developed economy to compete in these areas: Japan and Germany still do. Of course, they have their own protectionism helping them.

Perhaps America is to blame for not having more protectionism, too. Perhaps there is more we should be willing to sell to China, but honestly, aside from selling away "American" global corporations, there really isn't that much to sell. But when China joined the WTO, you could not make that claim.

jcage

March 10, 2009 08:35 PM

CompEng

"Also, America's taxes are mostly income taxes, while most other countries use VATs where exports are rebated. That's a huge effective tariff on American goods."

True! But the USA does provide help to American farmer and made their product more competitive in the world. China, India, Brazil and many African countries have been complaining for many years of the subsidize that American and European farmers get to make their product much cheaper than other third world countries agricultural products.

"A good slice of China's exports are actually American and other globally owned corporations exporting to America and Europe. Accordingly, many of China's imports are parts which are assembled or finished in China and then sent to the US. I believe I've read that the US's #1 export is scrap... which is processed into new products and then sold to the US. That doesn't sound like the basis of a great reade relationship :)"

True! China import a lot of component to be finally assembled in China so I read that around 50% of the Chinese export are from imported material! However, most of the export (around 60%) are done by American, European, Korean, Japanese multinational in which they get most of the profits (70% or more of the product revenue go America e.g $10 cost for a Nike tennis shoes made in China that is sold for $100 in the USA) while China just get salary and export taxes.. Both side get benefit and not one is doing any charities in here.

"Yes, Chinese and other companies are restricted in the companies they can buy. Likewise, most big Chinese companies must remain Chinese majority-owned."

100% in agreement with you! Fair enough, and that apply to any countries...at least in China does not use the word threat or competitor to block a sales ..

"The US. used to have a high-end manufacturing base that could compete even with the likes of Germany, Taiwan, and Japan."

The USA still is the greatest manufacturer of high tech such as turbofan, military equipment, car, planes, material science and the USA lead the world in patent filling and year many of the best and brightest around the world go to the USA to study and to do R & D! The USA will lead in R & D and high tech manufacturing for years to come so nothing to worry about!

"Japan and Germany still do. Of course, they have their own protectionism helping them."

True!

Well, it was pleasure to chat with you and let's hope that this crisis end ASAP.

CompEng

March 10, 2009 11:13 PM

Jcage,

Yes, let's hope the crisis does pass as soon as it may. Thanks for your thought and your ear :)

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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