They can’t forecast! They can’t forecast the economy!
At least that is what Nassim Nicholas Taleb says. He is one of those financial engineers that could have been an economist. He is not just a financial engineer, but he is a teacher of financial engineers at New York University. So, he is the smartest guy in the room, at least today.
He says that the investment crisis could have been forecasted. He also says that the Obama stimulus made things worse, and that the proper course of action would have been to pay down debt.
So, we have administration officials saying that as many as 3 million jobs were helped from the stimulus. While there is great difficulty finding supporting data to their claims, there is at least one leading financial engineer who says the stimulus hurt the recovery.
Though this dialogue could have been forecasted, there is an ongoing issue here that has been a recurring theme in my blog. There are those who believe in Keynesian economics that more government spending yields greater overall consumption, and those who take more of a balance sheet view that excessive levels of debt may restrict increased consumption. We will revisit this tension in future posts.