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I hate it when I'm right

mcgrew (92797) writes | more than 5 years ago

United States 11

I can't believe that a layman can call something that the educated professionals can't see. I'd just like to say right now, if you recieved a degree in economics you wasted your money learning quackery. If there was anything real to the study of economics, there would be no more poverty anywhere; nobody would be hungry, nobody would be homeless, there would be little use for war.

I can't believe that a layman can call something that the educated professionals can't see. I'd just like to say right now, if you recieved a degree in economics you wasted your money learning quackery. If there was anything real to the study of economics, there would be no more poverty anywhere; nobody would be hungry, nobody would be homeless, there would be little use for war.

"Forward!" he cried from the rear, and the front rank died. The General sat, and the lines on the map moved from side to side.

As Pink Floyd noted in that insightful lyric, wars are fought over money and men's personal power over other men.

Down and out: It cant be helped if theres a lot of it about. With, without: and who'll deny its what the fightings all about?

Out of the way, its a busy day, I've got things on my mind.

For the want of the price of tea and a slice the old man died.

I wrote over a month ago that I feared another global depression was imminent, based on one single history book that I had to read in a general studies undergraduate class some thirty five years ago. The update to that journal is here, and today is yet another update.

The first update quoted the Treasury secretary parrotting Herbert Hoover. Hoover, in case you never had a 20th century American history class, was President when the US stock market crashed in 1929 and started the "Great Depression", a worldwide depression that lasted until Hitler and Hirohito declared war on the world and the world was forced to ramp up and defeat them. After the "war to end all wars" (quickly followed by the Korean War) the world's economy finally staggered to its feet.

Today the AP writes:

"The fact is people are scared and the only thing they're doing is selling," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working."

The selling was so extreme that only 98 stocks rose on the NYSE -- and 3,092 dropped. That's a telling sign considering the stock market is considered a leading economic indicator, with investors tending to buy and sell based on where they believe the economy will be in six to nine months.

Monday's steep decline on Wall Street indicates that investors are becoming more convinced that the country is leading a prolonged economic crisis that is spreading to other nations. Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits.

Historian Frederick Lewis Allen wrote, in his 1931 history of the 1920s

Fear, however, did not long delay its coming. As the price structure crumbled there was a sudden stampede to get out from under. By eleven o'clock traders on the floor of the Stock Exchange were in a wild scramble to "sell at the market." Long before the lagging ticker could tell what was happening, word had gone out by telephone and telegraph that the bottom was dropping out of things, and the selling orders redoubled in volume. The leading, stocks were going down two, three, and even five points between sales. Down, down, down.... Where were the bargain-hunters who were supposed to come to the rescue at times like this? Where were the investment trusts, which were expected to provide a cushion for the market by making new purchases at low prices? Where were the big operators who had declared that they were still bullish? ere were the powerful bankers who were supposed to be able at any moment to support prices? There seemed to be no support whatever. Down, down, down. The roar of voices which rose from the floor of the Exchange had become a roar of panic.

United States Steel had opened at 205 1/2. It crashed through 200 and presently was at 193 1/2. General Electric, which only a few weeks before had been selling above 400, had opened this morning at 315 -- now it had slid to 283. Things were even worse with Radio: opening at 68 3/4, it bad gone dismally down through the sixties and the fifties and forties to the abysmal price of 44 1/2. And as for Montgomery Ward, vehicle of the hopes of thousands who saw the chain store as the harbinger of the new economic era, it had dropped headlong from 83 to 50. In the space of two short hours, dozens of stocks lost ground which it had required many months of the bull market to gain.

Meanwhile, the credit crunch has my mortgage payments through the roof. I made a mortgage payment and paid my $145 bar tab and now I'm flat broke; if Charlie pays me the ten bucks she owes me I might not have to walk to work before next payday. I called Felber's yesterday to see if I could run a tab until payday, and the answer was "nope". Mike had told me that he'd had trouble getting folks to pay up.

Of course, like the rest of the credit crunch, it only hurts his business. That's probably close to a hundred dollars he won't be making. I'll be staying sober, and if I do get any beer it'll be drank at home.

I've taken in boarders, Tami and Linda. Linda says she's paying me Friday, and if so it will be a relief, as next weekend is a three day weekend for me. She got in a fight with her boyfriend over the weekend; he stormed in Saturday morning and I threateded to call the police on him. So I don't really think I can count on her rent payment. Charlie's feuding with Linda and I haven't seen her since Linda moved in.

I had a total of five beers over the weekend. I imagine Anheuser-Bush stock will tank now...

11 comments

You might be wrong on one part... (1)

damn_registrars (1103043) | more than 5 years ago | (#25275687)

Anheuser-Bush stock will tank now...

I've heard reports before that when the markets go down, shares of alcoholic beverage companies go up. Apparently when it really hits the fan, people believe that they can still afford to find solace at the bottom of a bottle. After all, even when you have very little money, cheap beer is still, well, cheap.

The increase in booze revenue also parallels observations of a decrease in people seeing mental health professionals, unfortunately. Apparently there are people who are much more willing to pay $10 for a case of beer than a $10 co-pay for real help.

Re:You might be wrong on one part... (1)

mcgrew (92797) | more than 5 years ago | (#25276381)

I've read the same thing, and the entertainment industries do well during bad times, too. I was making a joke about my personal drinking habits ;)

Depends on whose economics you're reading (1)

rk (6314) | more than 5 years ago | (#25276621)

If anybody's still buying Keynesian school economics after the 1970s, then I want their contact info, because they'll buy pretty much anything. Unfortunately, I hear that's what they're still pushing on the kiddies at college these days.

I dispute the notion that there's nothing real to economics because we don't live in a perfect economic utopia. That's like saying there's nothing real about physics because we don't have in-home anti-matter power generators and Infinite Improbability Drives in our cars.

Re:Depends on whose economics you're reading (1)

mcgrew (92797) | more than 5 years ago | (#25277263)

I dispute the notion that there's nothing real to economics because we don't live in a perfect economic utopia. That's like saying there's nothing real about physics because we don't have in-home anti-matter power generators and Infinite Improbability Drives in our cars. I can't agree. We know enough about physics to set off a hydrogen bomb, to build a workable Saturn V and send it to the moon, to build planes, tranes, and automobiles and dishwashers and freezers and all sorts of stuff. But what have economists spawned that actually worked? Half of them still subscribe to the "trickle down theory of economics" which pretty much says that water flows upwards. Wealth doesn't trickle down, it flows up. Wealth isn't created by the wealthy, it's created by the working class on the factory floor, the programmer's cubicle, and behind the fry cook's grill. The wealth simply aggregate and control the wealth. The actual wealth is created by the working stiff.

Re:Depends on whose economics you're reading (1)

rk (6314) | more than 5 years ago | (#25278919)

I think I need to clarify what I think economics is about. There are at least a dozen major schools of economic thought, and they all agree or disagree in many important ways.

Economics is nothing more than the study of human action with respect to limited resources. Everything else is window dressing on this simple statement. Without humans making decisions[1] and taking actions, there's simply nothing. Without resources, there's nothing to take action with (time is a resource). If resources were all unlimited, there would be no need to allocate them.

My study of economics (purely avocation, apart from a default year as an undergrad 20 years ago, I have no formal training) has greatly informed my decisions in my life, and told me that the system was headed to a fall like this years ago. You don't hear the economists who talk like this, because they're not the ones with cushy jobs working for the government, or the mainstream think tanks whose job it is to tell us things will be all right if you "just follow our latest bromide". With respect to those guys, hell, I'm with you. I got no use for 'em either. Most of the economists I read have been dead for years, and most of them were poo-pooed by the establishment for their entire career.

I think you're holding a soft science to a higher measuring stick than a hard science, and I still don't think it's fair say that there's nothing to economics because it's not perfect, or even close to it. Your own observation "The actual wealth is created by the working stiff" is economic thought (informally put, but nonetheless). Should it be therefore disregarded, since there's "nothing to economics?" The problem comes when people get the bright idea to treat economics as a prescriptive rather than a descriptive discipline. The economist as social engineer, frankly, scares the bejezus out of me.

[1] - Yes, there has been observations of other primates and other animals engaging in activity we would recognize as trade... even the oldest profession. For the sake of simplicity, let's ignore other animals since their economies do not really interact with ours.

The Dismal Science (1)

Slashdot Parent (995749) | more than 5 years ago | (#25287997)

I'd just like to say right now, if you recieved a degree in economics you wasted your money learning quackery. If there was anything real to the study of economics, there would be no more poverty anywhere; nobody would be hungry, nobody would be homeless, there would be little use for war.

I have a degree in Economics from a fine University a bit north of your present location.

I think your expectations out of the field are far too high, but I'll also point out that the general human condition has improved dramatically over the centuries, and particularly over the last hundred years or so. Poverty, real poverty, Third World poverty, is largely nonexistent in the United States. You may protest that your bank account is currently on empty along with your gas guage, but yet you still have a house, a car, computer, internet connection, plenty of money for entertainment, alcohol, recreational drugs, etc. I don't mean this as criticism in the least--I only wish to point out just how well-off you are.

I own several rental properties, and many of them are geared toward low-income residents. These people, and again this is not criticism--just the facts, have large high-definition television sets, multiple video game consoles, satellite television, brand new trucks... the whole nine yards. I don't really care how you slice and dice the situation. Explain it or justify it however you want. Just don't use the word "poverty".

I wrote over a month ago that I feared another global depression was imminent, based on one single history book that I had to read in a general studies undergraduate class some thirty five years ago.

I wouldn't break your arm patting yourself on the back.

  1. Not a lot has changed over the last month. The reason for the heightened media coverage is the bailout bill--not any fundamental change in the economy. The economy stinks approximately as putridly as it did 1 month ago.
  2. People tend to be biased in their reporting of their own predictions. I hear story after story from people about their homerun stock picks, but I never hear about any of the dogs. But those dogs must be there, because these same people come to the same job they hate, day in and day out. If they were half as prescient as they claimed, they'd be retired on some beach somewhere sipping fruity rum drinks.
  3. So that brings us to you. If you are so confident in your economic forecasts, how come you are not currently short the market?

I'll make a standing offer to you: I'll make you rich. As rich as your predicting abilities, anyhow. If you ever have one of your brillian predictions that you want to capitalize upon, but aren't sure of the right financial move to make it happen, ping me. I'd be happy to advise you, "If [blank] is about to happen, then you'll be filthy-stinkin' rich if you do [blank]".

I won't be expecting any pings.

Meanwhile, the credit crunch has my mortgage payments through the roof. I made a mortgage payment and paid my $145 bar tab and now I'm flat broke;

I don't like to rub salt in people's wounds, but you were the one who decided to pontificate on the worthlessness of the field of Economics. Your microeconomic situation speaks for itself and requires no further comment from me. All I'll do is wish you the best of luck.

Of course, like the rest of the credit crunch, it only hurts his business. That's probably close to a hundred dollars he won't be making.

It's amazing what it takes for Wall St. woes to hit Main St. No longer is Wall St. making risky loans, and apparently Mr. Felber does not deem you to be a good credit risk either. Maybe I should find that less amusing than I'm finding it--I'm not sure.

As an aside, I once heard the claim that economists lack a soul. This claim may have just been confirmed, because the automatic faucet in the men's room just refused to acknowledge my existence, yet it operated flawlessly for a member of the IT department. Thinking quickly, I washed my hands using the manual faucet in the kitchen area. Us soulless folk need to compensate through simple ingenuity, it seems.

Re:The Dismal Science (1)

mcgrew (92797) | more than 5 years ago | (#25289269)

I have a degree in Economics from a fine University a bit north of your present location.

Indeed, we do have some excellent universities in Illinois.

the general human condition has improved dramatically over the centuries, and particularly over the last hundred years or so.

True, but I think that has a whole lot less to do with economics than with advances in science and engineering, particularly agriculture.

I only wish to point out just how well-off you are.

Actually, I have anscestors who were kings, counts, dukes, etc in ancient Europe, and I live far better than they did. Some of my more imppoverished friends (including the three of whom are living with me now) even live better than kings of old. But again, it's not because of economics, it's because of advances in science, engineering, and agriculture.

Most of the world's poverty is a result of politics ("political science", now there's an exymoron of a field). Unlike times past when hunger was caused by a real dearth of food, there is plenty of food today. It's just not well distributed.

Ultimately, all politics are economically motivated - "Forward!" he cried from the rear, and the front ranks died. The general sat, and the lines on the map moved from side to side as Pink Floyd said.

Greed is the 20th and 21st century's worst sin, causing more misery in our time than anyhing else.

Explain it or justify it however you want. Just don't use the word "poverty".

The homeless are poverty stricken. Most are mentally ill, three out of four of them are veterans of stupid, senseless wars like Vietnam and Iraq, fought so some rich asshole (who you are in poverty by comparison) can become even richer. Some lost limbs, some lost lives, the homeless have mostly lost their minds.

If you are so confident in your economic forecasts, how come you are not currently short the market?

I'm not. I just read one scary book thirty years ago.

I once heard the claim that economists lack a soul.

I never made that claim, and I need to point out that the faucet detects not souls, but movement.

But like I said, I wish I hadn't been right.

Re:The Dismal Science (1)

Slashdot Parent (995749) | more than 5 years ago | (#25289609)

True, but I think that has a whole lot less to do with economics than with advances in science and engineering, particularly agriculture.

How are technological advances brought to market? How is equipment purchased? How are the goods bought, sold, and paid for?

Take your example: agriculture. Advances in technology were driven by profit-seeking enterprises. Complex farm machines are financed through the banking system. The resulting commodities are bought and sold on the commodities markets. Of particular importance is the futures market, which allows agricultural businesses (from family farms an one of the spectrum to massive corporate farms on the other) to manage price fluctuations.

Take away any one of these, and whole system falls on its ear. Without the futures market, farmers couldn't financing for their machines. If no one bought the machines (GM seeds, etc.), there would be no research.

It's impossible to escape Economics. It invades nearly every aspect of your life.

The homeless are poverty stricken. Most are mentally ill

I agree with you here. I have relatives who are mentally ill and are poverty-stricken. One, in particular, has all the help he could ever need (food, shelter, medical care (including mental)), but he lacks the mental faculties to accept any of it. Despite the fact that his condition is treatable, he is currently homeless.

I never made that claim, and I need to point out that the faucet detects not souls, but movement.

I never attributed that claim to you... it was an "aside". And believe me, I was moving, agitating, and jumping around quite vigorously. It's conceivable that the incident caused my colleague do develop doubts regarding my own mental soundness.

Re:The Dismal Science (1)

Falconhell (1289630) | more than 5 years ago | (#25438829)

It is said you that if you laid all the economists in the world end-on-end you would never reach a conclusion. (-:

What we see today is a direct result of the theories of economists, particularly the naive "Free market" variety.

Ironically, before there was such a thing as economists, we seemed to manage to acheive all the same things we do know.

Golgafrinchan "B" ark material I think Steve.

Re:The Dismal Science (1)

Slashdot Parent (995749) | more than 5 years ago | (#25440095)

It is said you that if you laid all the economists in the world end-on-end you would never reach a conclusion. (-:

"Give me a one-armed economist." -- Harry S. Truman (-:

What we see today is a direct result of the theories of economists, particularly the naive "Free market" variety.

I won't fault you for this, because most laymen tend to lump together "anyone who deals with money" as "economists", but my guess is that the true objects of your ire are probably really the quantitative analysts. These people are in the totally separate discipline of Finance.

Also, what do you mean when you say '"Free market" variety economist'. This is not a discipline in Economics that I am familiar with. Could you please give me some examples of these '"Free market" variety economists', and why you think that they are "naive"? I would be very interested to hear your asserted wisdom regarding free markets.

Anyhow, the truth of the matter is that you are witnessing something of a financial perfect storm. There is unquestionably some blame to be assigned to the economists at the Federal Reserve that kept interest rates artificially low, resulting in too much available money supply. On the other hand (see? one-armed economist needed!), the only reason that excess money was chasing sub-prime mortgages instead of better types of investment was that returns on those "safe, AAA-rated" MBSs was so high. After all, if you had money to invest, would you invest it in some type of business venture that has risk? Or how about AAA-rated bonds? You get the same return either way. What would you choose?

Ironically, before there was such a thing as economists, we seemed to manage to acheive all the same things we do know.

Could you please tell me what you mean by that? In your answer, please give some specific examples of things we used to "acheive[sic]" before economic theory. Also, please don't fail to address the fact that we currently have economic theory that dates back to ancient Egypt (circa 2000 BCE).

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