Putting the Greek debt in perspective

[Igel]

16. Fiction.

"Using the projections" before fall 2008 ... You remember fall 2008, don't you?

In fact, using projections completed about the same time that the first data showing we were entering a recession were about due.

The same kind of thinking was in 2001, 2002: Using projections we'd have a huge surplus. Of course, that really assumed no increase in spending and instead of a recession continued, unabated growth like in the '90s. BTW, at the time all the leading indicators said "recession in 3 ... 2 ... 1."

Look at the projections for the US economy in mid 2009, the effects of the stimulus and TARP. You'll find that Obama, by that measure, cost us far more than the Greek debt.

It's a bad methodology, using assumptions that change in conjunction with a sketchy understanding of the subject; we only use it when it makes us look good, and spot its flaws when it makes us look bad. It's always flawed. The longer the term, the more flawed.

One projection that did turn out to be fairly correct was very short term: In early 2008 there was an anti-recession stimulus. Forecasts that it would lose its effect in late summer/early fall 2008. That came around and nobody did anything. The assumptions didn't change, and it was short-term enough that the sketchy theory had enough predictive umph.