Beware the hidden agendas of financial 'experts'

There are other sources of advice and analysis where the conflict isn't as visible. Financial economists may be honest, but their forecasts inevitably will be colored by the interests of the large banks and brokerages that issue their paychecks. An economics professor confidently calling an economic top or bottom, or the imminent demise of capitalism, may be hoping his latest book has a shot at the best-seller list.

So, whom to trust?

The urge to follow someone else’s advice remains strong, especially when the outlook is so murky. After all, if the “expert” advice turns out to be wrong, you won’t have to blame yourself.

But in the end, you have only your own judgment to rely on. When it comes to borrowing and investing, if you’re not willing to step up and act on that judgment, maybe you should hold off until you are.

"What is a 'back-to-normal' economy?" (Answer Desk, May 18) gave a good side/bad side answer that seemed to pussyfoot around the issue. I know that it was the journalistically correct thing to do, but I cannot help but think you could have done so much better by simply giving your opinion and labeling it as such. If I can say what I think, why can't you? I'm not advocating throwing the rules of good journalism out the window, I'm simply saying that the priority is to answer the question to the best of your ability within the parameters imposed by space and time.

Personally, I don't think the doom-and-gloom predictions about our economy are going to come true. ...  I also do not expect that high unemployment will linger. We are far too resilient for that to happen.
-- Fred D., Address withheld

Gee, I thought I did say what I think. To be clear, what I think is that there are several possible outcomes and — as I wrote — a lot depends on how we all respond from this point forward.

I think what you’re asking is: Which one of these outcomes do I believe is going to happen. The only honest answer (which I also wrote) is: “No one knows.” Since I have a very dim view of economic forecasting, it’s hard to see how I could offer up a forecast of my own.

To do so, I would have to know how all of the global constituents — governments, consumers, voters, bankers, investors, trade unions, CEOs, etc. — will respond to the ongoing recession. That’s beyond my capabilities. And I have yet to meet anyone who has has this gift. (Making a prediction or two that later comes true doesn't count: A broken clock is right twice a day.)

The forecast for persistently high levels of unemployment is a little easier to make. For one thing, it's happened after most modern recessions. This time, the math is pretty simple: There have been some 6 million jobs (net) destroyed by the downturn, and another million or so needed every year just to keep up with the growth of the population.

During the peak job growth of the last expansion — in 2005 and 2006, when GDP was growing about 3 percent — the economy created a little over 4 million new jobs a year. So even if this economy comes roaring back next year (which few forecasters are expecting), millions of workers will remain on the sidelines for some time.

I agree with you that technology — and human resourcefulness — have produced solutions that have surprised past generations confronted with serious economic problems. On the other hand, history shows that bad things sometimes befall societies that ignore serious imbalances for too long.

So to answer your question: What do I really think is going to happen?

I have absolutely no idea.

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