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Ten years after the Lehman collapse the necessary reforms to a flawed model have not taken place
As a profession, economists are absolutely hopeless at forecasting recessions. That is true not only in the years before a severe downturn. It happens when the storm is about to break. Back in 2008, the Bank of England failed to predict the biggest postwar slump in the UK’s history even after it had started.
This less than impressive record should act as a cautionary note in the current circumstances when the 10th anniversary of the collapse of Lehman Brothers has generated a thriving cottage industry devoted to predicting when the next crisis will occur. The honest answer is that nobody really knows. Meteorology has improved in the past 40 years, economic forecasting has not. When a weather forecaster says a hurricane is imminent, the public does well to take notice. When an economic forecaster gives a similar warning, the chances are that it is already too late.
Continue reading...from US news | The Guardian https://ift.tt/2QAMWkj
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