Thursday, 15 July 2010

The marvels of forecasts

They are wonderful things those economists' models. Tweak a figure here and a figure there and billions of dollars just jump in. We saw that yesterday when Treasurer Wayne Swan gave us his update on economic conditions. Take a cheerful view of future iron ore and coal prices and suddenly things look much better. Thank you China.
But what goes up can also go down so I wish that Treasurer Swan would stop talking as if a projection about what things will be like in two or three years time was some kind of fact. It isn't. It is just today's best guess.
And I wonder how much weight was given to this factor, as reported in the International Herald Tribune, in the latest optimistic modelling?
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