Economists, bankers, Treasury officials, financial wizards of various kinds, they like to pretend that they know what they’re talking about. All too often they don’t. There’s a reason economics is called the “dismal science”. There’s a reason why their predictions are usually about as accurate as chucking darts at a board. There’s a reason why so few of them managed to predict the financial tsunami that swept he world recently (and is likely to do so again soon). The reason is that predicting the behaviour of complex systems is hard, and financial wizards, for all their sharp suits and Excel spreadsheets, really aren’t very good at it.
Want more proof? How about the Football World Cup according to bankers:
We all read on Slashdot about the investment banks using their massive computer power and clever modeling techniques to predict the FIFA World Cup outcome. Now that Goldman Sachs’s, UBS’s and Danske Bank’s favorite, Brazil, has been eliminated, and with JP Morgan’s England long gone, the question that begs to be asked is: can we really trust these guys to predict the financial markets any better than they did World Cup?”
Not only did banker’s favourites Brazil and England not win, they didn’t make the final, they didn’t even make the semis. England didn’t even manage to get to the last 8! Delve in to the fine print and Italy and France were also tipped to do well. Ooops.
So, the next time time you read financial forecasts, or the pronouncements of Treasury on growth or inflation, just remember the Football World Cup 2010 according to bankers. Give them the raspberry they deserve. You could use a vuvuzela for added effect.