6 ms·

Regarding point 2, an old joke comes to mind: "economists have successfully predicted nine of the last five recessions".

by em500 5y ago

MattGaiser 5y ago
I am constantly seeing articles about how a market crash is coming and have been seeing them since 2014.
- dragonwriter 5y ago
  > I am constantly seeing articles about how a market crash is coming and have been seeing them since 2014. I’ve been seeing them nonstop since the early 80s, and I suspect I would have seen them earlier except that my media consumption before elementary school was fairly constrained.
- qnsi 5y ago
  I think part of this is media enjoying amplifying clickable stories. A lot of people (myself included) just can't help but click about news like "market crash is comming" "housing prices are about to crash" etc. Current media business models sadly are driven by sensational news. See also: all those revolutionary stories like cancer cure, that happen to only work in mice for now and will probably never work in humans, but we still click on those
  - cyberge99 5y ago
    I agree. I think The Great Recession of 2007 created an ongoing paranoid that marketing folks capitalize on.
    - camjohnson26 5y ago
      I think it’s that people realize that the underlying issues that caused the financial crisis haven’t actually been fixed, and the Fed has been experimenting with policies that have never been seen before to prop up markets. While it’s worked so far it still feels like there are structural weaknesses that could cause massive problems, and just because things have been good doesn’t guarantee they won’t eventually fail, but timing is notoriously difficult.
      - majormajor 5y ago
        "Policies that have never been seen before" seem to describe a good part of the last century, which has certainly had booms and busts, but the novelty has been more of a constant. We just don't have that long a history of modern economics. We've been flying by the seat of our pants the whole time.
  - thedudeabides5 5y ago
    Sure, but also, there's a generation of us finance folks who learned how the pipes break. So that when they see something like Evergrande, they go 'well it will probably get bailed out, but if it doesn't.....' https://www.bloomberg.com/news/articles/2021-08-23/evergrande-falls-on-prospect-of-loss-from-hong-kong-tower-sale https://www.bloomberg.com/news/articles/2021-08-23/evergrand... https://www.nytimes.com/2021/08/10/business/economy/china-evergrande-debt-property.html https://www.nytimes.com/2021/08/10/business/economy/china-ev...
- FridayoLeary 5y ago
  crashes happen every ten years or so. Predicting them shouldn't be so hard.
  - RotaryTelephone 5y ago
    Found the millionaire.
  - nsonha 5y ago
    Yes I remember the 2017/18 recession /s
- smt88 5y ago
  Every prediction I see is: a crash is coming but we know with 100% certainty that no one can predict when. It might be tomorrow or 3 years from now. Framed that way, it's less a prediction than a statement of the cyclical nature of economies, but it can still grab headlines!
  - akoncius 5y ago
    better formula would be “in next 20 years we will have economic downturn” :D
  - dragontamer 5y ago
    Nah, I think you haven't been following the permabears. A lot of them talk about crap like the price of gold, the use of BTC as a hedge, PE ratios, "technicals", candlesticks, simple moving averages, charts, commodity prices, QE, negative bond rates, near-zero interest rates and the like. Some get political even, talking about presidents or policies they don't like and why they'll cause a crash. Its pretty easy to weave a story around ill-defined feelings, because none of these things determine the market trajectory. You can be 100% correct in your facts and/or analysis of the present but still make terrible predictions of the future. The permabears always have a good story. They're really good at making stories for why the crash is going to really happen this year.
    - legulere 5y ago
      They might not be wrong though. Irrationally high valuations are signs for a bubble, but do not help predict when the bubble will burst.
      - deleted 5y ago
        [deleted]
  - id 5y ago
    There was a crash last year. The only reason it's not really acknowledged as such is that the recovery was unusually quick. Crashes don't have to be big and the recovery doesn't have to take years or even decades.
- jjoonathan 5y ago
  I have seen articles about an imminent market crash since 2009. I started paying attention to market crash predictions in 2009.
- JohnClark1337 5y ago
  I used to be really into a youtube channel that would go on an on about the coming economic collapse of civilization (back in 2014) and how everyone needed to buy gold to protect themselves. I never bought gold, but I found the channel interesting and some of the 'economists' they brought in were pretty convincing. Then nothing happened. They started shifting the narrative to why the economic collapse was pushed to 2015. That's when I stopped watching. I wonder if they're still around.
- dazc 5y ago
  At least you can't say you were not warned.
- atlgator 5y ago
  Long term near-zero interest rates have fueled unlimited growth for companies. Unlimited growth means no ceiling to stock market prices. A correction will come when the Fed raises interest rates. We started to see it in 2017 but the Fed curtailed. It's inevitable though. But to your point, no one has called it correctly yet.
- pvarangot 5y ago
  And then when a market crash happens articles say "we don't know what's happening". Look at finance news from 2008 and early 2020.
  - da_chicken 5y ago
    And then a year later there are articles saying, "Oh, it turns out that the regulation we created 80 years ago that was specifically designed to prevent exactly this situation was repealed 40 years ago." And then a year after that there are articles saying, "Why isn't Congress fixing this obvious thing that only makes the very rich richer and always leads to economic disaster?" And then a year after that, there are articles saying the next crash is coming....
jbay808 5y ago
It's a lot like predicting earthquakes right? You can measure strain and know that you're due, but you still don't know precisely what the trigger will be or when it will happen. We don't make such jokes about seismologists though. Why not?
- injidup 5y ago
  I had to break up with my Seismologist girlfriend. She kept pointing out all my faults.
  - in_mice 5y ago
    That's a good one.
- TeMPOraL 5y ago
  But we do make such jokes about meteorologists. I suppose it's the matter of media exposure: unlike economists and meteorologists, seismologists aren't constantly on TV telling us bad times are coming soon.
  - jbay808 5y ago
    If the meteorologist says it will rain on Saturday and be sunny on Sunday, and in fact they happen in the opposite order, my weekend plans are ruined. But the seismologist is just saying, "I don't know exactly when but it reeaaally looks like we're going to get a big earthquake someday soon better make sure your building is up to code and you have your emergency supplies ready". And we nod, and check our emergency supplies and upgrade our infrastructure, and when five more years go by without an earthquake, and the seismologist is saying the same thing, nobody says "silly seismologist, predicting twelve of the last three earthquakes!" But when an economist says a crash might be coming soon, and you'd better make sure you have emergency savings set aside, people do make those jokes. What's different about these scenarios?
    - mrtnmcc 5y ago
      Maybe one difference is with the economy there is a lot more obvious benefit to be had for almost any person to expect (pretend?) there won't be a crash. For earthquakes, challenging the seismologists only benefits the niche group of real estate developers. While the cost of worrying about earthquakes is relatively little ostensibly. I'd heard some argument that humans inherent tolerance for risk is much lower than it rationally should be today because it was evolved in an environment where we were much more likely to get killed. I think human discourse is constantly grappling with that biased instinct.

Regarding point 2, an old joke comes to mind: "economists have successfully predicted nine of the last five recessions".

by em500 5y ago

Regarding point 2, an old joke comes to mind: "economists have successfully predicted nine of the last five recessions".

MattGaiser 5y ago

I am constantly seeing articles about how a market crash is coming and have been seeing them since 2014.

dragonwriter 5y ago
> I am constantly seeing articles about how a market crash is coming and have been seeing them since 2014. I’ve been seeing them nonstop since the early 80s, and I suspect I would have seen them earlier except that my media consumption before elementary school was fairly constrained.
qnsi 5y ago
I think part of this is media enjoying amplifying clickable stories. A lot of people (myself included) just can't help but click about news like "market crash is comming" "housing prices are about to crash" etc. Current media business models sadly are driven by sensational news. See also: all those revolutionary stories like cancer cure, that happen to only work in mice for now and will probably never work in humans, but we still click on those
- cyberge99 5y ago
  I agree. I think The Great Recession of 2007 created an ongoing paranoid that marketing folks capitalize on.
  - camjohnson26 5y ago
    I think it’s that people realize that the underlying issues that caused the financial crisis haven’t actually been fixed, and the Fed has been experimenting with policies that have never been seen before to prop up markets. While it’s worked so far it still feels like there are structural weaknesses that could cause massive problems, and just because things have been good doesn’t guarantee they won’t eventually fail, but timing is notoriously difficult.
    - majormajor 5y ago
      "Policies that have never been seen before" seem to describe a good part of the last century, which has certainly had booms and busts, but the novelty has been more of a constant. We just don't have that long a history of modern economics. We've been flying by the seat of our pants the whole time.
- thedudeabides5 5y ago
  Sure, but also, there's a generation of us finance folks who learned how the pipes break. So that when they see something like Evergrande, they go 'well it will probably get bailed out, but if it doesn't.....' https://www.bloomberg.com/news/articles/2021-08-23/evergrande-falls-on-prospect-of-loss-from-hong-kong-tower-sale https://www.bloomberg.com/news/articles/2021-08-23/evergrand... https://www.nytimes.com/2021/08/10/business/economy/china-evergrande-debt-property.html https://www.nytimes.com/2021/08/10/business/economy/china-ev...
FridayoLeary 5y ago
crashes happen every ten years or so. Predicting them shouldn't be so hard.
- RotaryTelephone 5y ago
  Found the millionaire.
- nsonha 5y ago
  Yes I remember the 2017/18 recession /s
smt88 5y ago
Every prediction I see is: a crash is coming but we know with 100% certainty that no one can predict when. It might be tomorrow or 3 years from now. Framed that way, it's less a prediction than a statement of the cyclical nature of economies, but it can still grab headlines!
- akoncius 5y ago
  better formula would be “in next 20 years we will have economic downturn” :D
- dragontamer 5y ago
  Nah, I think you haven't been following the permabears. A lot of them talk about crap like the price of gold, the use of BTC as a hedge, PE ratios, "technicals", candlesticks, simple moving averages, charts, commodity prices, QE, negative bond rates, near-zero interest rates and the like. Some get political even, talking about presidents or policies they don't like and why they'll cause a crash. Its pretty easy to weave a story around ill-defined feelings, because none of these things determine the market trajectory. You can be 100% correct in your facts and/or analysis of the present but still make terrible predictions of the future. The permabears always have a good story. They're really good at making stories for why the crash is going to really happen this year.
  - legulere 5y ago
    They might not be wrong though. Irrationally high valuations are signs for a bubble, but do not help predict when the bubble will burst.
    - deleted 5y ago
      [deleted]
- id 5y ago
  There was a crash last year. The only reason it's not really acknowledged as such is that the recovery was unusually quick. Crashes don't have to be big and the recovery doesn't have to take years or even decades.
jjoonathan 5y ago
I have seen articles about an imminent market crash since 2009. I started paying attention to market crash predictions in 2009.
JohnClark1337 5y ago
I used to be really into a youtube channel that would go on an on about the coming economic collapse of civilization (back in 2014) and how everyone needed to buy gold to protect themselves. I never bought gold, but I found the channel interesting and some of the 'economists' they brought in were pretty convincing. Then nothing happened. They started shifting the narrative to why the economic collapse was pushed to 2015. That's when I stopped watching. I wonder if they're still around.
dazc 5y ago
At least you can't say you were not warned.
atlgator 5y ago
Long term near-zero interest rates have fueled unlimited growth for companies. Unlimited growth means no ceiling to stock market prices. A correction will come when the Fed raises interest rates. We started to see it in 2017 but the Fed curtailed. It's inevitable though. But to your point, no one has called it correctly yet.
pvarangot 5y ago
And then when a market crash happens articles say "we don't know what's happening". Look at finance news from 2008 and early 2020.
- da_chicken 5y ago
  And then a year later there are articles saying, "Oh, it turns out that the regulation we created 80 years ago that was specifically designed to prevent exactly this situation was repealed 40 years ago." And then a year after that there are articles saying, "Why isn't Congress fixing this obvious thing that only makes the very rich richer and always leads to economic disaster?" And then a year after that, there are articles saying the next crash is coming....

jbay808 5y ago

It's a lot like predicting earthquakes right? You can measure strain and know that you're due, but you still don't know precisely what the trigger will be or when it will happen. We don't make such jokes about seismologists though. Why not?

injidup 5y ago
I had to break up with my Seismologist girlfriend. She kept pointing out all my faults.
- in_mice 5y ago
  That's a good one.
TeMPOraL 5y ago
But we do make such jokes about meteorologists. I suppose it's the matter of media exposure: unlike economists and meteorologists, seismologists aren't constantly on TV telling us bad times are coming soon.
- jbay808 5y ago
  If the meteorologist says it will rain on Saturday and be sunny on Sunday, and in fact they happen in the opposite order, my weekend plans are ruined. But the seismologist is just saying, "I don't know exactly when but it reeaaally looks like we're going to get a big earthquake someday soon better make sure your building is up to code and you have your emergency supplies ready". And we nod, and check our emergency supplies and upgrade our infrastructure, and when five more years go by without an earthquake, and the seismologist is saying the same thing, nobody says "silly seismologist, predicting twelve of the last three earthquakes!" But when an economist says a crash might be coming soon, and you'd better make sure you have emergency savings set aside, people do make those jokes. What's different about these scenarios?
  - mrtnmcc 5y ago
    Maybe one difference is with the economy there is a lot more obvious benefit to be had for almost any person to expect (pretend?) there won't be a crash. For earthquakes, challenging the seismologists only benefits the niche group of real estate developers. While the cost of worrying about earthquakes is relatively little ostensibly. I'd heard some argument that humans inherent tolerance for risk is much lower than it rationally should be today because it was evolved in an environment where we were much more likely to get killed. I think human discourse is constantly grappling with that biased instinct.