The Global Crisis: Who Saw It Coming?
Armchair economists sprang from their upholstery to respond to our Apr. 27 Cover Story ("What Good Are Economists Anyway?"). Many complained that the article gave short shrift to the forecasters who predicted the current crisis. Others got into a debate about which camp usually gets it right—Keynesians or monetarists. And over at theAtlantic.com, this opinion from a columnist on who else got it wrong: business journalists. —By Peter Coy
Economics has driven itself into a box canyon. It is so stuck on physics envy it has developed Byzantine mathematical models that have no relationship to the real world. Economists need to remember that economics is a social science.
Screen name: AxelDC
Red flags were raised—by economists—but the warnings were trumped by those who advocated the social benefits of easy money.
Screen name: Steve Johnson
"Almost no one predicted" the debacle? Here are a few names: Karl Denninger, Peter Schiff, Nouriel Roubini, Marc Faber, Henry Kaufman, Richard Rainwater (whose wife, Darla Moore, called him "Dr. Doom"), Mike Shedlock, Pete Peterson, Bill Gross, Niall Ferguson, Warren Buffett, Arthur Levitt, Nassim Nicholas Taleb, Gary Shilling. Even Lyndon LaRouche, for God's sake!
Screen attribution: Mike
"[The article] slams the economics industry for failing to predict and explain the economic crisis, which is weird, because that's exactly what any noneconomist could say about the business journalism industry."
Are Bad Times Really Good for the Box Office?
"Box Office Buys?" (Personal Business, Apr. 27) says "as in the Great Depression, consumers are looking to the local cinema for a lift." I'm afraid the facts aren't so rosy. According to The Hollywood Story, by Joel Finler, in 1929 the average weekly U.S. movie attendance was 75 million. That rose to 80 million in 1930, but then fell every year until 1934, when it declined to 50 million.
America's Two Million Temps
"A Hidden Drag on the Economy" (News, Apr. 20) creates a false impression about contract work in America. There's nothing hidden about temporary employment. The number of people working for staffing firms is prominently featured in the Bureau of Labor Statistics' monthly employment report. Although temps have taken a big hit in recent months, 2 million Americans go to work for staffing firms every business day. These talented people will contribute tens of billions of dollars to the U.S. economy this year.
American Staffing Assn
Money Management Without Fear or Greed
Regarding "Jack Bogle's Last Crusade?" (In Depth, Apr. 20): Every time I read Bogle's negative views of active money managers, I feel compelled to respond. The most important service an active manager offers is not achieving a high relative return but preventing clients from making emotional decisions that destroy portfolio value in turbulent markets. Passive investing works for Bogle because he has the wisdom and discipline not to make decisions based on fear or greed.
I agree with Bogle that there will be continued downward pressure on fees, especially if future market returns are more in line with historical averages.
Michael Kayes, President
Willingdon Wealth Management