Jason Rines (iThinkBig)

Goldman's Wonky Oil Predictions: What Gives?

Yep. It didn't take a rocket scientist analytic model to know that on top of all the consumer debt, $4 gas and $5 heating oil would finish killing off consumer spending. To me it seemed the straw that broke the camels back.


On Dec 18 08:50 AM Chris Butler wrote:

> Mr. Banks-
>
> Your comment "An interesting question here is what would have happened
> to oil prices if there had NOT been a macroeconomic meltdown. Well,
> I dont see why they wouldn't have reached $200/b" makes the author's
> point.
>
> There WAS a macroeconomic meltdown and anyone making economic forecasts
> should account for that probability in their models. Because economists
> have never been able to forecast these meltdowns consistently, the
> problem is with (a) the models they use, or (b) the whole enterprise
> of econometric forecasting.
>
> Given that these wonderfully intelligent folks employed to do this
> kind of work make premium incomes for their labor, I'd discount possibility
> (a). These people know how to build models using state-of-the-art
> techniques.
>
> Perhaps Buffet is correct on this one. The answer is (b). Complex
> social systems like global financial markets should be even more
> difficult to predict than complex physical systems, like the weather.
> And we all know how hard the weather is to predict even over a one-week
> time frame.