Expose Economists

[Marq]

I now realise why I generally do not start new threads.
I never know which section to classify these subjects into.

Take the attached as an example - my favourite subject 'economists'. This should be a serious subject, could be state of the country stuff or possibly business philosophies and that sort of thing, perhaps even a warning beware of economists type subject thread. There could even be an 'I told you so' section.

So after great consideration and a whole minute thought on this problem, I figured that they should just be relegated to the Jokes section. Oh now I have denigrated the Bar Rail section with this decision and thought pattern.........

Anyway - this is from the May issue of the Rand Exposé – the Fundamental Truth

For FAR too long now, the South African public – and yes! – you and the investing and business world – have been fed up with the biggest lot of mumbo jumbo from hamstrung economists and out-of-touch “financial experts” regarding the South African economy and the inherent value of the Rand.

These are the very same persons that painted a rosy picture week after week of an economy that was rollicking along, with a future as bright as a thousand candles (before or after Eskom).

And now, SUDDENLY, the Rand’s sudden and unexpected fall catches them totally by surprise, forcing a change of
tune and a looking for all sorts of excuses as to why this has happened, and perhaps why it shouldn’t have.

Now, this might have been all right, because the beauty of being an economist is that your job is always secure, no
matter how much gobbledygook you speak and write.

I had a good chuckle anyway.....and have given up taking anything about or by economists seriously which is why this post is here under the bar rail section.

[Dave A]

The Bar Rail is only for 50 post+ members. Perhaps the business finance and sa economy forum? I'll move this thread if you want me to.

I have to agree that economists of late have seemed more like soothsayers. Do these folk get paid for this?

[Graeme]

Economics

Making predictions about a country's economy is rather like predicting the weather - there are just too many variables to ever hope to make a spot-on prediction. Economists do their best but really all they can offer is a likely result of an action: "do this and that will probably happen". I guess they keep their fingers crossed a lot of the time, but their opinion is better than nothing.

[Marq]

Dave - you can move it if you like - I have no problem.

Graeme - Talking about weather, you reminded me of that old one - Why did they invent economists? To make the weathermen look good.

[wynn]

My pet 'peeve' is accountants.

They see small business as a white page with a black line down the middle with income on one side and expenses on the other.

Now as all SME's know the page is grey with a thin white line on either side with the income shaved to the minimum and the expenses loaded to the max.

The grey area is where we try to make the income and try to cover the expenses, why don't they realise this?

[Dave A]

Maybe it's a goals thing. There is a big difference between building value in a business and merely making a living out of it. I've got no complaints about the advice I've got from my accountants over the years.

One thing is for sure, though - it's easier counting the money than making it.

[Karenwhe]

About economists, I have read a few articles lately.

Now you'll know that John Loos (excuse spelling) was the economist at FNB that was saying over and over again how properties will grow, etc. etc. for at least the last 2 years (which is as far as I can remember right now). I even personally heard him speak and give a presentation mid last year (not to mention that I was in total shock).

Since mid last year, I read recently an article when now he is no longer presented as an economist but a "property strategist" (for the same bank). I wonder why?

Now don't get me wrong. I have full respect for those that learn so much to become an economist (heck my father is one), but when one goes so WRONG in predictions, I guess "property strategist" is a better title.

But taking into consideration that he was a little bit wrong in all his predictions (yes sarcasm noted), I wonder if "property strategist" suits. He preaches now on the increases in prices seen in the townships.

Ok, so does FNB now have a township strategy?

Quote from article: (In Gauteng, these include Tsakane (56%), Mamelodi (48%), Soshanguve (44%), Kathlehong (41%) and Vosloorus (40%). Khayelitsha in Cape Town recorded a hefty 57% price growth in fourth quarter 2007 while the Durban townships of Kwa-Mashu and Umlazi saw house prices surge by 55% and 48% respectively.)

I think this guy just missed a few classes in university when they spoke about down turns, because he doesn't seem to want to see them. When he is wrong he goes to the next place he can talk about massive growth. So, I guess any time a journalist needs someone positive to balance the article, they just call him and they are home free.

In case you want to read the article it is on Property24.com just can't remember the link.

Now that said, I have nothing against economist, but I do think that most people don't even understand them.

As far as they are concerned I do like reading By Cees Bruggemans, Chief Economist FNB. He he take economies (not only SA as stand alone) in perspective without making "fortune telling" predictions.

His last article I think was :Rumors of Mayhem, pretty cool stuff. But you be the judge.

The point is:

Economists are not supposed to be fortune tellers. They present the options from what happened in the past and what is in the present.

What could happen in both ways. Professional strategists also do that.

Strategists then also present various solutions to what they see as best action to the possible outcomes.

But they are not fortune tellers. We sometime look at economists to tell us fortunes and then act on those "fortune telling" stories.

This is because as human beings we need certainty to act, otherwise we don't know what to do.

But in reality we should have plans to several probable outcomes and be flexible to each. The world is in motion at all times and certainty does not exist but only probable outcomes from a some facts from past and present that we can see.

Any economist that engages is fortune telling is not an economist because they can't possibly be 100% sure of what will happen. No one can, absolutes don't exist. Loos tried to do that with conviction, that is wrong - and his fortune telling predictions were also wrong as the present shows.

P.S. this is my own post somewhere else because i didn't feel like re-writing everything again .

[Marq]

An Accountant's Life and insurance - next in line after economists for me:

He was a very cautious man, who never romped or played.
He never smoked, he never drank, nor even kissed a maid.
And when up and passed and away, insurance was denied.
For since he hadn't ever lived, they claimed he never died.

[Marq]

But they are not fortune tellers. We sometime look at economists to tell us fortunes and then act on those "fortune telling" stories.

Karen is quite right here. I don't know whether its the media or the economists that are to blame. The problem being, that if there is a tax issue, an economists has a view somewhere not a tax expert, if there is a interest rate hike and they are discussing property prices, an economist is hauled out to explain the situation not a property expert. I am sure there are many finance guys (accountant types, Wynn not the insurance types) that would be able to give a better picture on the various financial subjects rather than a banks economist who is guessing all the way.

Perhaps economists are their own worst enemies in their quest to hog the limelight on views of the world around us? Or is it the media who are unskilled in finding the correct or alternative people and turn to the old faithful economists for an opinion?

[Karenwhe]

In my humble opinion (and my opinions are often not popular), the fault is ours (as people, as citizens as humans).

We believe them therefore we give them power and we fail to apply our own common sense for many reasons, but the main ones usually are:

1. We need people to tell us stuff (guess where that comes from)

2. We need certainty to move forward (most people in an non-certain world are paralyzed and can't act, they need validation to what they do and are looking for it in economies, economists and much more).

3. We like the scoop and are addicted to it (that is why headlines drag our attention and media does everything in its' power to give us more and we buy more and the cycle goes on).

Try not watching TV or listen to any news or radio or read a paper for 1 year - can you?

Yes some economists are can be blamed at being bad their job, but we are to blame for listening to them and not widening our understanding and horizons to make decisions for ourselves after looking, reading and analyzing the data in front of us.

I could go further to even discuss the way we take data in. Most people hate with a passion "dry data" they need the story, the explanation to it and then the action points on what to do after they read. That is self imposed lack of empowerment, people want it/need it therefore others provide it (economists, media... you name it).

Then you will have to take the emotions into account. One person may read a positive economic outlook and say "this economist is right" because it matches his emotional state of positive outlook. But the same person may read another story that is negative economical outlook and say "this story is wrong" because it does not resonate with his or her emotions.

In reality the "dry data" has to be looked at to draw possible outcomes (and there will always be more than one possible outcome) from what has been learnt from the past and current present.

Much like technical analysis on the stock market, together with fundamentals and a few possible outcomes. Then take action while having a plan for more than one outcome/scenario (best case and have plan for worst case).

But of course to do that, one has to invest in self education and then one would no longer fall pray to media opinions (economists or otherwise).

[Karenwhe]

Or is it the media who are unskilled in finding the correct or alternative people and turn to the old faithful economists for an opinion?

Media is skilled and may I add very skilled at one thing: Selling newspapers, which in turn is selling stories that make people read them - so that they can stay in business.

Once people get that we are 90% home free from BS and 50% free to self-empowerment.

A very close family member worked for newspapers she said: "the only thing you believe in a newspaper is the date in which it was printed and the name of the newspaper (and even then you need to assume there are no miss-prints)".

I heard this when I was around 10 years old. I still till this date can't forget it.

[Dave A]

I wonder how much of the problem then is deadlines and the pressure to produce something, even if you haven't had the time to really scope out the real situation. Something of an indictment against the pace of life nowadays.

Karen, I wonder if you ever found/read an article I did ages ago - Business lessons from surfing. It's kinda related and I'd be interested in your thoughts.

[Karenwhe]

Hi Dave,

Thanks for pointing out the article. Nope, I didn't see this yet.

It is brilliant article and very true.

Most entrepreneurs fails at the "know yourself". When you say strengths and weaknesses, I am not sure if you mean personal or business/product/service in terms of positioning.

But unfortunately most fail at the "know your personal strengths and weaknesses".

The first thing as a basis for everything that has to come an entrepreneur has to work with the tools he or she has and at that beginning the only thing that the entrepreneur has: his or her professional skills, emotional stability and mental ability (as a side note: everything can be compensated externally to some extent or another other than emotional stability/intelligence that is something that only consistent personal growth can achieve).

As a surfing analogy, imagine a beginner surfer that wants to learn and makes all the plans and watches techniques and surfers and the day he wants to surf the dies because he doesn't know how to swim, but didn't take that into consideration as a weakness. He should have learnt to swim first (too late now). I know that in surfing is the most ridiculous example, but in business things are not as obvious as this.

At the beginning of a business the entrepreneur is pretty much on his/her own, they have to build something. At the early stages of startup the plans, decisions and actions are crucial to build/grow to the next stage.

But at the same time the entrepreneurs are alone and should know themselves and their own weaknesses and strengths insider out to make objective decisions and take actions that support their abilities until such time as they have help without running themselves into the ground (e.g. someone can be a brilliant engineer with the best product ever and marketing but loses clients because his client service skills suck or their cash flow management skills are very bad).

I strongly believe that because entrepreneurs do not know themselves, but keep focusing on only knowing the market and the business environment, they simply fail within the first 3 years.

So, imho, the first thing an entrepreneur should do is know himself of herself very well to maneuver to success until such time as the organization is self-standing.

The best plan on the face of the planet can fail due to execution and personal weaknesses which have not been taken into consideration to compensate for in that plan.

For example: if one is bad at cash flow management, sit with an accountant monthly or someone that is good at it and take notes and learn and do what is necessary to survive until the business takes off - do this as a rule.

In short if one doesn't know their personal strengths and weaknesses with the best plan on the face of the planet - all bets are off.

P.S. Sorry I didn't have many surfing analogies, but I don't know much about surfing.... of course other than surfing the web that is .