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The World Economy Goes Hollywood

15 5 2
18.01.2019

LONDON – If there is one useful conclusion that economists and investors can draw from the crazy year that has just ended – indeed, from the whole crazy decade since the Global Financial Crisis of 2008 – it is this: As they say in Hollywood, “Nobody knows anything.” In the film industry, the richest and most experienced studios and producers spend vast amounts of time and money on audience research, but still have no idea if their latest creations will turn out to be hits or flops. So why be surprised if the same is true of financial markets – or, for that matter, of commodity prices, policymaking, and corporate performance?

Jan 16, 2019 Yanis Varoufakis argues that none of the main players will agree on a deal until the March 29 deadline is upon them.

Jan 8, 2019 Joseph S. Nye questions whether the US president is capable of understanding the risks that the US faces in 2019.

Why be shocked if the world’s richest company admits, as Apple did after Christmas, that it has no idea how many iPhones it will sell in China? Or if the world’s best-informed energy traders predict a global supply shortage that will boost oil prices above $100, just when a supply glut sends the market tumbling to $50? Or if the US president doesn’t know if he hates or loves global trade? Or if stock markets predict a global economic boom when bond markets predict recession and then both reverse suddenly, contradicting each other in the opposite direction?

At this time last year, economic expectations were almost universally optimistic. Every region of the world appeared to be simultaneously........

© Project Syndicate