Experts in Crisis?

I don't think it is stupid, when events prove people ( experts)wrong we are bound to be sceptical.

....and nobody can forsee the future!

I think that what Richard Murphy has to say on this is interesting:

www.taxresearch.org.uk/Blog/2017/01/06/a-lesson-to-economists-value-is-not-made-by-discounting-the-future-value-is-made-by-doing-the-right-thing-now/

Particularly:

Andy Haldane, the outstanding chief economist of the Bank of England, has admitted that the Bank got its Brexit forecasts wrong. As he has put it, the Bank’s models could not adequately handle the irrational behaviour of people and so failed to predict appropriately what might happen after Brexit. To put it another way, the Bank forecast an immediate downturn after Brexit because it assumed that people would realise all the risks that this course of action entailed. And that downturn did not happen either because people did not think there were such risks, even if the Bank did or, as likely, they ignored them.

Personally I thought it likely that, given dire warnings of a possible recession, people would be out to take the opportunity to spend and trade while there was still money around for spending and getting. I do note that there has been a big increase in the level of personal debt (though I haven't investigated it in any depth). Which does rather lead me to think there will be tears before bedtime.

I remember when we were told many years ago that we would all be retiring at 55 on huge pensions .....
I did know one or two bankers who did just that but as for the rest of us

Which does rather lead me to think there will be tears before bedtime.
I did say something similar on another thread about the amount of debt being built up again but apparently I don't know much about it

As he has put it, the Bank’s models could not adequately handle the irrational behaviour of people and so failed to predict appropriately what might happen after Brexit.
That is the trouble with everything really - people.

Some economists, including Ann Pettifor, did correctly predict the credit crunch, but people didn't believe her, because they behaved as Andy Haldane claims people are acting now. They didn't want to believe in gloomy predictions and kept on gambling.

Personal non-mortgage debt has increased by £255 per UK adult over the last year. Although this is quite a good time to borrow, because interest rates are low and people expect prices to rise, they may very well struggle to pay back the debt if interest rates rise and they have less disposable income.

Andy Haldane is an outspoken economist, which is why he'll probably never become Governor of the BoE. The BoE predicted correctly that the pound would fall in value and that UK (non dollar) stocks would fall. What they didn't predict is that people would be so confused about what's happening that they wouldn't bother about the future. Haldane still insists that there will be a downturn, but the BoE got the timing wrong. It could, of course, be a result of the QE which was issued after the referendum.

It's interesting to compare different newspapers' 'take' on what Haldane said.

Maisie: You are entitled to believe there may be tears before Brexit. It would be fortunate indeed if there were no visible impact but none of us, nor any expert, can say with certainty what will happen.

There is usually at least one expert who suits our own point of view but sometimes, they all get it wrong!

Economists say people act irrationally when they do not act in their own economic interests but, sometimes, other factors affect decisions. For example, was it a rational economic decision (as defined by economists) for Britain to fight WW2 or, indeed, for the EU to create the Eurozone?

I don't think of myself as irrational but I voted Leave believing that it would be to my short term economic disadvantage. So far, it hasn't been and though it is early days, we should all surely be happy that the dire short term predictions have been unfounded.

Some economists, including Ann Pettifor, did correctly predict the credit crunch, but people didn't believe her
daphnedill DH and I kept remarking that 'it will all end in tears' when the banks were recklessly lending and people borrowing last time - but many of the the 'experts' were very blasé about it. Including the Government (no more 'boom and bust' sounds very hollow now).

and DH and I are no experts - just rather cautious people watching others throw caution to the wild winds.

I really don't think forecasting a fall in the Pound on Brexit would have stretched any economist. If economists failed to take any account of policy action or the effect of a lower value of the Pound after Brexit, it showed a lack of foresight.

UK stock markets fell on Brexit and were hailed by some as evidence of doom; but they quickly recovered. Of course, FTSE 100 has been supported by its major overseas earners but it is not just the FTSE 100 that is standing at record highs. Other FTSE's are too. This is more of a conundrum for doomsters although, of course, the stock market, like experts, can get it wrong.

Unfortunately, Jalima, I don't suppose spending by you or your DH has a major influence on the economy. The biggest issue is housing and people will still pay what they can for it. What has happened is that it's increased wealth inequality, because some people have used inherited wealth to buy, whilst others have resigned themselves to renting forever. I lost my house and know I can't afford to buy again, so am probably one of the few people in the country with money sitting unspent in my bank account, but can't get a mortgage. Sod's Law really!

I have a lot of time for Andy Haldane, who is sometimes described as 'free thinking'. Both my children have met him and are impressed. My daughter met him when she was studying economics at a time when the undergrads at Manchester rebelled about what they were being taught. Haldane listened to what they had to say and said he was interested in their ideas. He founded a charity to promote economics in schools and to a wider audience generally and is a trustee, with Martin Lewis, of a charity to promote numeracy.

I'm not sure what you mean, Cunco. Many UK FTSE companies trading in sterling are struggling.

In any case, what really matters is how much the pound in the 'ordinary person's' pocket is worth. Fuel prices have increased to the their highest level for years and food importers are already reporting higher prices. The prices of these items affect everybody.

As I didn't say 'tears before Brexit', cunco, I don't really think you've got my drift at all.

Brexit hasn't happened ,only the vote.We've a long way to go before we even start negotiations.I believe that leaving is the biggest single mistake the UK has made ...and all for what? Why would any business, and thats what a country is,walk away from 500 MILLION potential customers with few restrictions on imports etc and have no firm offers of business to go to? Madness .Hopefully we in Scotland can find a way to stay in the EU as lleaving will cripple our economy ....and 62% of OUR voters want to remain

It isnt stupid Cunco.
It is only the first people with a new idea that get called stupid.
After that, the idea becomes "cool" and "trendy".

But YOUR voters are part of the UK paddyann it wasn't done on a country by country vote but overall.
like Cunco I expected a short term economic downturn ( which may still happen) when I voted Leave.We shall see.
Oil goes up and down like a yo-yo all the time, nothing anyone can do about that, and although there are dark mutterings about price rises in the shops, prices have always been dependent on competition, and shops who are not competitive may put prices up ( like NEXT) Interest rates have been so low for so long that it is amazing ( and although good for mortgage payers, not so for savers.)

I realise that our spending or non-spending makes little difference to the economy as individuals *daphnedill ( although, for all you know I could be Mrs Ecclestone).

However, even people like us could see that the mad rush for banks to give loans, mortgages and for people to spend, spend, spend was not going to bring fulfilment and security and could all end in tears.

And that this was one of many factors, of course.
I am sorry that you can't get a mortgage now, it does seem unfair that rents could be higher than the cost of a mortgage in many cases.