Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21
Why Tether USDT, Stable Scam Coins Could COLLAPSE the Crypto Markets - Black Swan 2021 - 6th Jun 21
Stock Market: 4 Tips for Investing in Gold - 6th Jun 21
Apple (AAPL) Summer Correction Stock Trend Analysis - 5th Jun 21
Stock Market Sentiment Speaks: I 'Believe' We Rally Into A June Swoon - 5th Jun 21
Stock Market Russell 2000 After Reaching A Trend Channel High Flags Out - 5th Jun 21
Money Is Cheap, Own Gold - 5th Jun 21
Bitcoin and Ravencoin Cryptos CRASH Bear Market Buying Levels Price Targets - 4th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Academic Economists Lead Governments to the Edge of the Abyss

Economics / Economic Theory Sep 19, 2009 - 02:04 AM GMT

By: Nadeem_Walayat

Economics

99.9% of academic economists living in ivory towers lost in world of their own formulae's and theories of what should happen and what could not happen not only did not see the crisis coming but far more dangerously led the government and central bank policy makers down a long winding garden path towards the edge of the financial and economic abyss. It was only after all of the economic theory was binned i.e. that which the academics had worked on and spouted for decades was financial armageddon avoided.


Chief amongst the Academic Economic culprits who unfortunately was for many years the most powerful man in the world is Alan Greenspan. Whilst Academic Economists continued to idolise Greenspan right up until Financial Armageddon, the Market Economists had long since come to to deride Greenspan's reckless actions of ever blowing bubbles that would lead to an even bigger eventual crash.

Wait ? What's that I hear ? What's a Market Economist ?

A Market Economist (such as yours truly) is an analyst who was never born to live in an ivory tower playing with theories and formulae's of what should happen but one who came to economics as a means to reacting to the need to better interpret market price action, and as all successful traders know, where the markets are concerned there are no absolutes, as one is always looking towards the price for relative strength or weakness against the scenario being traded.

A market economist would never put theory before the price action, unlike Academic economists which see nothing but theory even after the theory has long since failed, still they plod along making excuses or stand completely oblivious to the fact that all of their theory and research is worthless. Whereas a market economist is always aware that their analysis could always be negated on x condition, and therefore be completely scrapped, that just does not happen with Academic Economists! Who do NOT have a mechanism to correct inherent errors in their economic models namely PRICE. An market economist's do not have the luxury of sticking to a conclusion that is wrong for they LOSE money, okay some do and they are called perma bears or perma bulls, but successful market economists do not stick to an incorrect scenario as they LOSE MONEY ON THEIR TRADING ACCOUNTS, which tends to act as STRONG CORRECTING MECHANISM.

Back to Alan Greenspan, despite what Greenspan says today about how the derivatives markets should have been better regulated, it is a fact, IT IS A FACT THAT ALAN GREENSPAN went out of his way to PREVENT REGULATION OF THE OVER THE COUNTER DERIVATIVES, namely CREDIT DEFAULT SWAPS as long ago as 10 years ago! The most powerful man in the world FOUGHT TOOTH AND NAIL against attempts by the Commodity Futures Trading Commission to regulate CDS whilst the market was barely a 100th of the $62 trillion it had reached by September 2008. The reasoning behind this was that regulation would hamper Wall Street profits and that the markets were able to self regulate / correct.

Although now Greenspan admits that he was partially wrong, as he stated "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms." Instead as we all knew right from the days of Northern Rock going bust that bank officers had proceeded to turn the banks they worked for into hollow shells as they banked billions in bonuses based on fictitious non existant profits.

Have Economic Lessons been learned ?

Not when we see the Keynesian Zombie rise from the grave that looks hell bent on sowing the seeds of a 20 year Economic Depression! Which I I will cover in my next always free newsletter (subscribe now). Academic economists will probably soon come up with a new theory that models and explains the LAST financial crisis, which will be totally useless as the academic economists blindly drift into the NEXT crisis.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 300 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in