Did the economists screw up?

Does our economist really know what they’re doing? No and Yes. In a resent article in Business Week they put another way:”What Good is economist anyway?” I found some very interesting points on why this economic down turn happened so fast.
There will be enough blame to go around for what happened to the economy, but blame is not what we need, we need answers to why it happened, so we can correct the problems so we don’t have to go throw this again.

Here is one possibility that could have triggered the down turn, and I think it has merit. Our economist are trained to think of financial markets as efficient, most economist weren’t primed to see the dangers in lax mortgage lending, overleveraged financial institutions, and the super complex derivatives. So as the deck of card started to collapse they didn’t see the problem and to this day no one is really sure caused this mess.

One of the questions is why such lax mortgage lending? Could it have been because government wanted everyone to have a home? Could people that should not have bought a house due to lack of income gotten mortgages? The questions go on.
Others feel that the financial instructions packaged tonic mortgages as mortgage backed securities and sold them around the world. Then there are the derivatives. They are complex and are not for beginners. I did a little research on derivatives and found out I could make a whole career out of learning them. Thus I choice to not be in that market and let others play that game.

What we have learned that there is still much to learn. Boys is that’s an understatement. You know that is the way it has always been. Just the time we think we know what we are doing there is something that pops up that make what we thought was right wrong.

But all is not lost. There is some light at the end of the tunnel, but it is very faint. With all the things that are being done to improve the economic situation know one is sure that what we are doing is right. I guess that is the way it should be. I’ll will make one prediction. Things will get better. But I don’t know when and or how good they when they will get.

Why can I make this brash predication? Graphs go in two directions and at present it is going down so some day it will go up. I hope that makes you feel better.

Happiness with Wealth to you

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