FTSE 100
Dow Jones

Wednesday, 2 November 2011

Another one-way bet, this time against your gullibity

At the weekend the papers, well, actually the Observer, was full of talk about recessions, falls in GDP or perhaps the rate of growth of the GDP, the economy grinding to a halt (although they were actually referring to the rate of growth grinding to a halt), but most of all to a letter in the Observer from "100 leading economists" that the government was pursuing the wrong economic policies.

As it turned out, most of the authors weren't economists at all, but sociology lecturers and Labour party hacks, unseated MP's and other malcontents. Their prescription:
  1. Don't sack any public sector workers
  2. Spend more on welfare.
  3. Borrow like there is no tomorrow.
  4. Spend it all on projects we don't need and can't afford.
Does that remind you of any party's economic policy over the last 5 years?

So the press was well and truly primed for the announcement of GDP figures, when blow me, instead of showing a 0.1% increase, up popped a figure of 0.5%, confounding the "experts", and leading one to wonder from where they had pulled their 0.1% prediction, which they so confidently claimed was the cause of the malaise in the economy.

The truth is that this was just another bunch of left-wing chancers who had no more idea about the state of the economy than they knew about the weather on venus, but feeding a line at the weekend offered them a one-way bet. If the figures went down they would have made a successful pop at the government, while if the figures went up it would all have been forgotten by next weekend, and since none of them were "leading economists", no reputations would have been lost.

Back to the figures, as soon as they were released, the BBC ran a whole series of excuses, essentially that the Q3 figures looked good because of the royal wedding in Q2 (conveniently forgetting the national riots in Q3). But even that doesn't ring true. Given that the 50% of the economy that feeds directly of the government's teat (welfare recipients, public sector workers, pensioners) would have felt absolutely no difference because of the extra public holiday, that most self employed workers and manufacturing firms decided to decline the royal family's offer of a public holiday (the self employed pay for their own days off and manufacturing firms have to keep up production), the only firms who saw a reduction in output were salaried service workers (accountants and office cleaners).

But there is still one unanswered question:  How did "100 leading economists" fail to spot the Royal Wedding?

1 comment:

A K Haart said...

But there is still one unanswered question: How did "100 leading economists" fail to spot the Royal Wedding?

They weren't invited - so it never happened.