Analysts were predicting a mistake by shooting down somebody Ministry of Finance.
Of the economists came to worthless. Meteorologists, at least, those who at least cares a little weather in the UK do not trust the method of extrapolation. They just know that even if the sun shines today, tomorrow may still be rainy and windy. Certainly some of what analysts have learned to meteorologists, in particular, they adjust the data, taking into account seasonal factors: but sometimes does seem that they make their forecasts almost blindly. How many economists correctly predicted a turning point in economic activity? I suspect that a bit. They also believe that the economy is capable of self-regulation. Of course, the economic processes, sometimes out of control, but most usually a long time back in a stable condition. In fact, all mathematical models used by analysts to predict the dynamics of the national economy is based on the judgment. A year ago, when Britain's economy has teetered on the brink of a credit crisis, the Ministry of Finance analysts still believe that 2009 will be better than 2008, in which they predicted economic growth of 2% (real growth rate of only 0.7%). Analysts Ministry has acknowledged that 2008 was not a normal year for the country, but they said "... the stability of the UK economy demonstrates the effectiveness of macroeconomic policies and the benefits of flexible and open labor markets and capital, goods and services. Therefore, projected after 2008 to a normalization of the situation in the financial market and adapt to new market conditions, you will begin to rise in GDP. " According to British analysts' forecasts, economic growth in 2009 amount to 2.25-2.75%. Meanwhile, independent analysts are more cautious in their forecasts, expecting growth to only 1.9%. Now, nine months later, it became clear that economic growth in Britain will fall by 3-4%. In general, the entire community of analysts badly mistaken, but the MoF has bypassed all, promising a significant improvement in 2009. At the other end of London, on Trednidl Street analysts have done their work a little better. The Bank of England, unlike the Ministry of Finance does not publish a detailed economic forecasts, but still matches the data in reference to quarterly inflation. In February 2008, analysts predicted the Bank of England in the second half of 2008 economic growth will fall sharply (to 1.5%), but, then, in 2009, restored in him peculiar V-shaped manner. It should be noted that the forecast allows for the possibility of a recession, but few analysts believed the Bank of England that recession at this stage is a real threat.
Three months later, the Bank of England has revised the short-term prognosis for the worse: now acknowledged the existence of a threat of a recession, but it is still not part of the "main scenario" the Bank. Moreover, CB is still seen the chances of economic recovery in 2009. The Bank of England was able to recognize that a recession is still a "core script" of events in August last year, but by that time the UK has seen a crisis. This is more like an attempt to get a finger into the sky, rather than on accurate forecasts. Another forecast of Ministry of Finance was published last week, when the Minister announced his budget. Yes, he acknowledged that the situation is deteriorating, however, with the expressed hope for a noticeable improvement in the future. What, in general, quite obviously, because even after the Great Depression, a period of recovery. Ideally, analysts should work much better, but, alas ... Very few were smart or lucky enough to make the correct forecast for the past year and a half. What is taught their mistakes?
The first mistake - this is arrogance. This is a very reliable last year's budget shows. The Ministry of Finance is inclined to believe the view, first expressed in a report on the budget for 2006 that the British economy can grow steadily to 2.75% per year. The longer the recession will last, the less plausible is that assessment of capacity growth. Meanwhile, the Ministry of Finance piously believed that the economy has become much more flexible and that "the result is macroeconomic stability, providing a foundation to combat the current crisis. These findings appear to be totally wrong: the main problem of instability and financial system, rather than the flexibility of the economy, labor, goods and services. The second error - it is shortsighted and lack of planning. Perhaps, analysts and are not able to accurately predict the onset of a recession, but this does not mean that it did not occur. Instead, it is a sign of great instability, and forecasts to the contrary - no more than wishful thinking. The main rule of money: "a little good", thus it is important to use large cash surplus in the favorable economic situation. However, until now, only a few countries, the government has managed to come to such results ( basically, it was the Government who are interested in winning the next election). So, when the economy suddenly gives a crash, the financial situation, often can not count on strong support.
Third mistake - this is wishful thinking. When the economy is "stray from the path, of course, want to believe that the Government simply click your fingers, and all problems will be solved. It would not. The economic crisis is usually a snow dump on the head (otherwise, the prediction would be a matter of very light). This, in turn, means that the policy in a hurry to seek appropriate ways to begin to address the problem. A year and a half ago, for example, only one offered to make the quantitative easing. Recession in the UK are rare, but tend to be protracted, despite the praises flexible economy. Since the mid 70's and until now, a recession (defined by long periods of lower quarterly values of GDP), continued from five to nine quarters. Subsequent recovery (the time that took a return to the previous peak of activity) lasted from five to ten quarters. Even when activity is restored, begins a long time working on the final normalization of the situation. The fourth problem - the indifference of the rest of the world. Governments and heads of central banks like to pretend that they are all under control. Of course, something they can change, but, ultimately, the UK economy is dependent on changes in the global economy. Meteorologists know that the events that took place in another part of the world can affect the weather conditions in the UK. Analysts, however, to think, perhaps, that the island of Great Britain, not only geographically but also economically. Let's hope that the experience of the past year and a half, finally to make and believe the opposite.
Of the economists came to worthless. Meteorologists, at least, those who at least cares a little weather in the UK do not trust the method of extrapolation. They just know that even if the sun shines today, tomorrow may still be rainy and windy. Certainly some of what analysts have learned to meteorologists, in particular, they adjust the data, taking into account seasonal factors: but sometimes does seem that they make their forecasts almost blindly. How many economists correctly predicted a turning point in economic activity? I suspect that a bit. They also believe that the economy is capable of self-regulation. Of course, the economic processes, sometimes out of control, but most usually a long time back in a stable condition. In fact, all mathematical models used by analysts to predict the dynamics of the national economy is based on the judgment. A year ago, when Britain's economy has teetered on the brink of a credit crisis, the Ministry of Finance analysts still believe that 2009 will be better than 2008, in which they predicted economic growth of 2% (real growth rate of only 0.7%). Analysts Ministry has acknowledged that 2008 was not a normal year for the country, but they said "... the stability of the UK economy demonstrates the effectiveness of macroeconomic policies and the benefits of flexible and open labor markets and capital, goods and services. Therefore, projected after 2008 to a normalization of the situation in the financial market and adapt to new market conditions, you will begin to rise in GDP. " According to British analysts' forecasts, economic growth in 2009 amount to 2.25-2.75%. Meanwhile, independent analysts are more cautious in their forecasts, expecting growth to only 1.9%. Now, nine months later, it became clear that economic growth in Britain will fall by 3-4%. In general, the entire community of analysts badly mistaken, but the MoF has bypassed all, promising a significant improvement in 2009. At the other end of London, on Trednidl Street analysts have done their work a little better. The Bank of England, unlike the Ministry of Finance does not publish a detailed economic forecasts, but still matches the data in reference to quarterly inflation. In February 2008, analysts predicted the Bank of England in the second half of 2008 economic growth will fall sharply (to 1.5%), but, then, in 2009, restored in him peculiar V-shaped manner. It should be noted that the forecast allows for the possibility of a recession, but few analysts believed the Bank of England that recession at this stage is a real threat.
Three months later, the Bank of England has revised the short-term prognosis for the worse: now acknowledged the existence of a threat of a recession, but it is still not part of the "main scenario" the Bank. Moreover, CB is still seen the chances of economic recovery in 2009. The Bank of England was able to recognize that a recession is still a "core script" of events in August last year, but by that time the UK has seen a crisis. This is more like an attempt to get a finger into the sky, rather than on accurate forecasts. Another forecast of Ministry of Finance was published last week, when the Minister announced his budget. Yes, he acknowledged that the situation is deteriorating, however, with the expressed hope for a noticeable improvement in the future. What, in general, quite obviously, because even after the Great Depression, a period of recovery. Ideally, analysts should work much better, but, alas ... Very few were smart or lucky enough to make the correct forecast for the past year and a half. What is taught their mistakes?
The first mistake - this is arrogance. This is a very reliable last year's budget shows. The Ministry of Finance is inclined to believe the view, first expressed in a report on the budget for 2006 that the British economy can grow steadily to 2.75% per year. The longer the recession will last, the less plausible is that assessment of capacity growth. Meanwhile, the Ministry of Finance piously believed that the economy has become much more flexible and that "the result is macroeconomic stability, providing a foundation to combat the current crisis. These findings appear to be totally wrong: the main problem of instability and financial system, rather than the flexibility of the economy, labor, goods and services. The second error - it is shortsighted and lack of planning. Perhaps, analysts and are not able to accurately predict the onset of a recession, but this does not mean that it did not occur. Instead, it is a sign of great instability, and forecasts to the contrary - no more than wishful thinking. The main rule of money: "a little good", thus it is important to use large cash surplus in the favorable economic situation. However, until now, only a few countries, the government has managed to come to such results ( basically, it was the Government who are interested in winning the next election). So, when the economy suddenly gives a crash, the financial situation, often can not count on strong support.
Third mistake - this is wishful thinking. When the economy is "stray from the path, of course, want to believe that the Government simply click your fingers, and all problems will be solved. It would not. The economic crisis is usually a snow dump on the head (otherwise, the prediction would be a matter of very light). This, in turn, means that the policy in a hurry to seek appropriate ways to begin to address the problem. A year and a half ago, for example, only one offered to make the quantitative easing. Recession in the UK are rare, but tend to be protracted, despite the praises flexible economy. Since the mid 70's and until now, a recession (defined by long periods of lower quarterly values of GDP), continued from five to nine quarters. Subsequent recovery (the time that took a return to the previous peak of activity) lasted from five to ten quarters. Even when activity is restored, begins a long time working on the final normalization of the situation. The fourth problem - the indifference of the rest of the world. Governments and heads of central banks like to pretend that they are all under control. Of course, something they can change, but, ultimately, the UK economy is dependent on changes in the global economy. Meteorologists know that the events that took place in another part of the world can affect the weather conditions in the UK. Analysts, however, to think, perhaps, that the island of Great Britain, not only geographically but also economically. Let's hope that the experience of the past year and a half, finally to make and believe the opposite.
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