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204 Million Economists cannot be Wrong

October 9, 2012

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Dear reader, I believe that after thorough investigation and great expense I have discovered to the solution to the debt crisis and the economic malaise that currently afflicts the global economy. My ‘Nobel Prize Worthy’ effort will, I believe provide guidance to our leaders to navigate out of the economic swamp we find ourselves in.  Before I unveil the solution to the world’s problems I beg your indulgence. I ask that you allow me to explain the methodology I used to arrive at my conclusion.

The answer was hiding in plain sight

It occurred to me that the solution to our problems was hiding in plain sight on the internet. I ‘googled’ the words ‘economic commentary’ and received 204 million hits in 2.2 seconds. This was of course my Eureka moment.

A Beautiful Mind

All I needed to do was to read through all this commentary, and determine a consensus from the collective beautiful economic minds that had produced the commentary.  If I could do this I would surely have the correct course of action for the world to follow. After reading the first three commentaries though, I did some math and determined that at a rate of 5 minutes per website it would take me over 900 years to properly review the information. I needed the capability of thoroughly analyzing millions, if not billions of pages on information and then deriving rational conclusions from all the data. Clearly this would not be possible. But wait, maybe it would be possible. Surely there was someone in the world who could analyze this much data and then provide me with a coherent summary in a short time span. Then it hit me like a lightning bolt.

Data analysis, our specialty

I immediately dialed the three major bond ratings agencies and asked of if I could speak with the students who had been retained to rate the billions of documents that were lovingly referred to as subprime mortgages. These students had a proven track record of being able to comb through millions of mortgage files in an afternoon and pronounce the mortgages Triple A before leaving for soccer practice. My hopes were soon dashed as I was informed that the students had all graduated and were now working for the Congressional Budget Office helping to analyze Republican and Democratic budget proposals.

Dismayed and disheartened I despaired that I would never be able to unlock the information contained in the 204 million websites related to economic commentary.

Dances with Numbers

Then, in an inspirational moment worthy of Thomas Edison, I decided to call my good friend Gustavo La- Framboise-Pierre, the Director of Statistical Analysis and Bank Stress Testing at The European Central Bank [ECB].  Gustavo, or ‘Dances with Numbers’ as he is known to his friends, had been my bookie for years until he was offered the job at the ECB two years ago. [According to Gustavo, a senior member of the ECB bet large on the wrong side of the recent world cup and could only settle his obligation by offering Gustavo this highly paid job.] I suppressed my temptation to ask Gustavo who he liked to win the World Series and quickly explained my predicament. Gustavo, “I need someone who can analyze millions of documents quickly and provide a summary and conclusion. I was wondering if the members of your team, who had analyzed 38 million loan files while completing the stress test on Spanish banks were available.”

You don’t need to speak Spanish

I was relieved when he said that the students responsible were available as they had a reading week coming up and would not be at school. Then he explained that due to concerns about the stability and safety of the Euro, the ECB would need to be paid in dollars for the students work. The fee would be 30 million dollars. Gustavo, I pleaded, “There is no way I can afford that fee; I am paying it out my own pocket”. Gustavo’s response was music to me ears, “David why didn’t you say so. I thought you were representing a sovereign nation, if the research is just for you, just call the students directly. They will probably do the work for about $250.”  “OK Gustavo”, I replied, “That would be great, and by the way in addition to Spanish what other languages do these students speak?” Puzzled Gustavo asked me, “Why would you think they speak Spanish?” “Well Gustavo” I responded, “Were not all the documents at the Spanish banks in Spanish?”

Here is where it got strange

Gustavo paused for a moment and then swore me to secrecy. What I am going to tell you David must never be made public.

The ‘Weight Watchers’ Stress Test

“David, perhaps I better explain how a stress test is done. We first determine that a good loan file weights 1 kg. We then weighed all the loan files at the Spanish banks. Once we had determined the total weight and number of all the loan files we subtracted from the total projected weight of an equal number of good loan files. Each kilogram variance between the projected weights of an equivalent number of ‘good’ loan files was multiplied by $10 million Euros to determine the capital deficiency of the Spanish banking system. You do not need to be able to speak or read Spanish to weigh 40 thousand filing cabinets full of loan documents.  This speeds up the time required to complete the stress tests. As well, it ensures that we do not need to pay extra for someone who actually speaks Spanish to review the files. Furthermore no one could possibly review 38 million loan files”.  I was so relieved that it was only going to cost me $250  to have the work done for me I did not bother questioning Gustavo regarding the accuracy of the ECB’s methodology.

Good enough for the ECB is good enough for me

I contacted the students as Gustavo suggested. They were most helpful. Their only question was whether the work needed to be done at a high school equivalency level of quality or at the ECB quality level. Naturally I asked them to explain the difference. They indicated that to perform at a high school level would require a great deal of work, due diligence and accuracy. A report of that nature would take a couple of months to prepare. Alternately, if I just wanted to have it done at ECB standards I could have the report in a couple of hours. I always say “What is good enough for the ECB is good enough for me”.

Given the urgency of the global economic crisis I opted for having it done to ECB standards.

Sure enough two hours later the students emailed me their complete synthesized analysis of 204 million websites relating to the search term economic commentary.

And the Survey says

Dear reader the following is a summary of what 204 million economists recommend needs to be done to solve our problems:

  • · Reduce government debt and deficits
  • · Stimulate the economy by increasing debt and deficits
  • · Reduce regulation and let free enterprise blossom, unbridled and unfettered
  • · Regulate industries to prevent behaviors such as  polluting, bribing, scamming,  underpaying employees, making employees work in unsafe and unreasonable working conditions, overcharging on government contracts, and utilizing child labor
  • · Reduce the size of government by laying off civil servants
  • · Maintain the purchasing power of the general public by keeping the civil service head count at its current level.
  • · Reduce government expenditures on the military
  • · Increase government expenditures on the military as this industry employs just about everyone who does not work for the civil service.
  • · Pursue a growth strategy
  • · Attract foreign investment
  • · Increase exports

Reality Bites

Dear reader like you, I turned the page over to find out more but sadly there was no more. 204 million economists had done an excellent, albeit, confusing job of identifying the ‘What’ but had no suggestions relating to the ‘How’.

Growth comes from Mars and exports are to Venus

We can not all attract foreign capital, increase exports and grow our economies simultaneously  Attract foreign investment, good idea but with every country in the world trying to attract foreign investments, unless we start trading with Martians that will be problematic. Increase exports. Absolutely, but unless residents of Venus discover an appetite for shopping at Walmart, that could be a challenge. Reduce the size of the civil service, worth considering but most of civil servants have jobs that are ‘guaranteed for life’.

You should see someone about your broken leg  

Pursue a growth strategy. I must admit I chuckled a bit at this one. An economist saying that a country needs to pursue a growth strategy and ending their advice at that statement is a bit like a Doctor telling a individual in the a hospital’s emergency room who has a broken leg that they ‘should have someone take a look at their leg’.  Increase military spending, actually this one is easy. Every government is able to whip up a little fear and nationalist sentiment to justify the purchase of more jets and aircraft carriers to battle a motley, yet fierce and dangerous crew of insurgents 10,000 miles away.  Imagine if the insurgents started to build their own aircraft carriers.

Perhaps honesty, [just kidding]

While I am impressed with the work done by the students recommended by the ECB, and I am of course dazzled by the brilliance of the recommendations provided by the world’s 204 million economists, I cannot help wondering if there is a more realistic solution.

We ‘the People” are in deep on this one

Perhaps the world’s leaders could begin to explain honestly, that, we ‘the people’, are ‘in deep’ on this debt crisis thing. The standard of living we have enjoyed can no longer be sustained.

Dial it down

We are going to have to significantly dial down our lifestyles and expectations for the next 5 to 10 years. It will not be pleasant but it is inevitable. If the population is forewarned it will make the transition slightly more palatable. At this point the world’s population is still under the impression that governments will be able to fix the problem. Ask yourself this dear reader is your government, in their current form the solution or are they the problem?

Socialist Rubbish and Hippie Groupthink

Before you start mumbling socialist rubbish and hippie groupthink I should say that I believe that as Winston Churchill said, “Democracy is the worst form of government except for all others.” The simple truth is that democracy must evolve into a system where the government and its people must live within its means even if it means less aircraft carriers, less corruption, fewer ‘Bridges  to nowhere’, less jobs for life, less gerrymandering, more one person one vote, more free and fair elections. Whether you want more health care for everyone or more battleships you can be assured that democracy can deliver both. However without debt and deficits the electorate will have to make some rather significant choices as to how many battleships and how much health care they want.  Deficit spending has removed difficult decisions from the democratic process.

There is a Reason they call it the Dismal Science

As you can see from the previously highlighted summary of conflicting and obtuse advice from 204 million economists, permanent deficit spending has made the study of economics obsolete.  The transition back to a representative responsible democracy that makes difficult decisions to determine the type of society one wants will not be easy. Maps will be redrawn, but in the end democracy will prevail. The electorate will be forced to make difficult decisions to determine their future.

Denial really is just a river in Egypt not an economic strategy

The key to our future starts with honesty. Denial as a strategy will not succeed. Dear reader, rest assured the world will prosper again. The study of economics will be replaced with the study of reality and a new Golden Age will be upon us.  [Eventually]

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