I also think that some prominent economic experts only say what the public wants to hear, instead of giving an objective and detailed analysis of the facts and telling the truth about a certain situation. We saw in the past that experts, who should have seen the signs for the economic crisis, gave a lot of misinformation to the U.S. citizens about the country???s economy. So why do we listen to them? I read an interview in CEO Magazine with the economic oracle of the International Institute of Management, Med Yones, who foretold the economic crisis accurately in January 2007. The interview gives a detailed overview about the economic crisis by mentioning the causes, the impact of Obama???s policies on the economy, a best and worst case scenario, solutions and a future outlook. For more information, please take a look at
http://www.ceoqmagazine.com/2009Q1/economics/financialcrisis/index.htm
Confessions Of A Pundit
Economic commentators may be insightful, but they're not neutral. Market forces shape their views.
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With the financial system in tatters and trillions of dollars of public financing at stake, economic experts have become a priestly caste. Every day, on air, online and in print, dozens of economists and strategists proclaim their views on how bad the crisis will get and how long it will last. But there's reason to be skeptical. Even though a fair number of these economic forecasters are informed and astute, they are not objective or neutral. I should know, because I've been one. And while I have always said what I believe, what I believe sometimes has been subtly shaped by who pays the bills.
Economic experts should be viewed much the way we treat politicians and corporate executives—or anybody else with something to sell. Howard Schultz, the CEO of Starbucks, recently made the rounds of television news programs to announce a plan to sell instant coffee. He talked at length about trends in coffee consumption and consumer tastes. No one disputes his knowledge of the industry, but we understand that he's in the business of selling coffee.
Many professional economists are employed by major investment firms. Some are on staff, while others have their own research firms that sell analysis to hedge funds, mutual-fund companies and pension-plan managers. They are rarely interested in abstract academic questions, but instead apply economic data to investing decisions, such as what effect rising unemployment will have on bond yields or stock prices. Yet they are often called on by the media to comment on precisely those questions.
Like Schultz, all of these experts have agendas—not pernicious, but still instrumental to how they view the world. For many years, I was the chief economist for an investment firm that focused on growth stocks. By nature, managers who invest in growth stocks focus on the potential upside. They look for companies who are on an upswing. In representing the company, I tended to emphasize the cup-half-full view of the world, which was both in sync with how I actually view the world and in harmony with the imperative of the organization to convey to current clients a level of confidence and to inspire new ones.
Now take an economist or strategist employed by a bearish manager or a bond manager. They are likely to look for companies that appear strong but are actually weak, or at the relationship between interest rates, inflation and government policy. They may look to the credit markets rather than the stock market for signals and may be more cautious, conservative or pessimistic.
Other experts are in the business of selling their research. Alan Greenspan made his reputation and career as a partner of Townsend-Greenspan, whose clients were a who's who of old Wall Street. Successful research firms can command substantial fees, and buyers demand clear, succinct and unequivocal analysis and predictions. Investors want "actionable" ideas, not vague academic musings. Greenspan presented himself as someone who saw what others do not; he offered his clients clarity, not ambiguity, and they paid well for it.
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