of a Doomed Economy
investing used to be a profitable endeavor. Things have changed. The doom business is in full swing as many financial prognosticators
seek to hedge their normally ecstatic outlooks in order to sell their advice. When tragedy becomes a consensus sentiment,
it used to be the time to buy. Now that formula has to factor in a different set of risks. Namely the incoherent political
intrusions and stimulus-austerity gyrations has to head the list. Has forecasting become a lost art or did it evolve into
an algorithm supercomputer project? In either case, the doom factor is sure to continue to be a stable from the Cassandra
circle as long as an economic recovery allures the former members of the middle class. Nevertheless,
the bulls want you to believe that economic indicators are guardedly improving. The Global Economic Intersection boldly portends.
are back in vogue as spending flows. Yet, Tom Stevenson writing in The Telegraph recommends Take forecasts with a pinch
of salt...or move to Omaha, for those who have the courage to bet their money on picking particular
"Our September 2013 Economic Forecast shows a change of
trend. Many portions of our economic model started to expand over the previous month’s baseline.
We continue to warn that consumer spending increases are expanding at a much faster pace
than income – and that eventually either a jump in income or a fall in consumption must occur to close this gap. This
remains an economic headwind for 3Q2013."
problem for investors is that very often, at the individual stock level, good news is not built into valuations for some time
after it has become publicly available.
This means that contrary to markets
as a whole, where it can be better to travel than to arrive, good company news can trigger sustained outperformance as investors
slowly accept the improved outlook.
This might sound like a counsel of
despair for investors, but it shouldn't. Awareness of the limitations of knowledge is actually strangely liberating when it
comes to managing your investments."
Woe is me, what
opportunities are missed by sitting on the sidelines? Almost moves one to subscribe to some of those pricy newsletters. But
before you brush off the dust on your wallet, heed the lesson that Ian R. Campbell references when he asks Economic forecasting –
The prediction record of most experts is dismal at best. Therefore, when Charles Colgan,
former chair of Maine’s Consensus Economic Forecasting Commission is cited in On economic forecasting
as a ‘forlorn hope’. He "humbly admitting he’s botched the past several annual
forecasts, Colgan compared himself to Charlie Brown, ever the optimist, who repeatedly tries to kick the football being held
by his friend Lucy."
"Frequently in this Newsletter I have
said I believe that many economists wrongly advance a theoretical forecast framework based on irrelevant history when reaching
conclusions on what is prospectively going to happen in any particular economy at any given point in time – and hence
many economists inherently are doomed to get things wrong before they put pen to paper."
Yes, the small investor is just as dimwitted as Charlie
Brown. The fate of most plays in the M A R K E T S, are sealed before they get started. In a corporatist economy, the balance
sheets of companies swell, but the return on equity to stockowners often falls short.
One needs to admit, before placing funds in the hands of Wall Street money managers, that the game is speculation,
not investing. Fortunes are made by knowing the insider decisions before the public is even aware of the news that a stock
is in play. Even bigger sums are extracted from shorting a vulnerable public company as the vultures sense a ripe carcass.
Any thinking citizen with even a modest understanding of economics
and commerce must conclude that the consumer patience is still gravely ill. Sophistication in interpreting trend forecasts
is not necessary when CNNMoney provides the evidence. "The average age of vehicles on America's
roads has reached an all-time high of 11.4 years, according to the market research firm Polk. And that average age is sure
to keep climbing, the firm said."
If the financial sages deem the consumer superfluous and define a healthy economy by a growing public sector, the
prospects for a doomed system are inevitable.For those who reject
this analysis and want to be informed about the latest perspective from The Economist, signup for the Global Forecasting Service. Get unrestricted access to full, updated and interactive coverage
of our world economic outlook, including projections of key indicators and analysis of developed and emerging markets.
Reading such international
financial establishment pronouncements usually provide a reassuring crutch even when countries are going bankrupt. Telling
as it is for the spin you are meant to accept, the forecast for personal success in the investment jungle is wrath with predators
of all species.
Now all this caution is moot if the global
economy enters into a new golden age. Duplicating the prosperity of the industrial revolution with a cyber collection matrix
that digitally spies on propitiatory business secrets is not exactly the formula that generates wealth, which is shared by
the masses.The incomparable Paul Craig Roberts is the best political
and economic forecaster. In his 2011 article, How the Economy was Lost, Doomed
by the Myths of Free Trade, he explains the basic reason for the doomed forthcoming financial
meltdown end game.
"As the issuers of swaps were not required to reserve against them, and as there is no limit to the number of
swaps, the payouts could easily exceed the net worth of the issuer.
was the most shameful and most mindless form of speculation. Gamblers were betting hands that they could not cover. The US
regulators fled their posts. The American financial institutions abandoned all integrity. As a consequence, American financial
institutions and rating agencies are trusted nowhere on earth."
This is the forecast that you can bank on.
– September 11, 2013
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