Michael Tobis wrote:
I picked up an end-of-year copy of Business Week yesterday, and it
polled some experts on the economic prognosis for the next year. The
variety of expectations was astounding. For instance, the predicted
value of the Dow at the end of 2007 across several dozen experts
ranged smoothly from 10400 to 14400 (or something on that order). This
is a one-year uncertainty in the market value of twenty huge
corporations chosen to be representative of the corporate sector of
20%, not in rate of change but in absolute value!
It is as if climatologists could not agree on the global mean
temperature in a year's time to within +/- 60 degrees Kelvin (108 F).
In fact, such a coarse prediction of the earth's mean surface
temperature is possible with very high confidence over tens of
millions of years at least.
This sounds rather like the "you can't predict the weather beyond a
week, why should we believe long term climate forecasts" fallacy. ISTM
that economic growth forecasts of about 2% pa (averaged over several
years) are probably of a similar credibility to global warming of 0.2C
per decade (again, averaged over several years).
(I just guessed at 2% pa, I don't claim this is the "consensus" or anything)
James
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