Forecasting Economy..hmm..er..what the heck is that?

The big economic news a few weeks ago was that Dubai was in big economic soup and that it has a debt of over $80 Billion or roughly 3 times the debt declared by AIG in US in 2008. And then I see some really top notch economist, from peppy news papers like the WSJ, Reuters, Business Week and more.. spelling out predictions and forecasting how this mega news is going to affect the stock market and how Dubai will have to deal with this mess, and then on to if Dubai is good place to invest or not and what not about Dubai economic futures!! ..

When I read such prediction and economic forecast, I get amused, irritated and then finally annoyed.. that why can’t these folks just stop this gibberish!!?

I distinctly remember reading, a couple of years ago, in this same news journals and website their lavish praises and admiration for Dubai’s Free Economy and how they have built almost a dream country with flushing richness and hi-tech sophistication that it almost serves as an example to the wealthy and developed nations. The economist gave a “two thumbs up” to the economic policies and free economy that Dubai has adopted, and served as pioneer and role model for the neighboring Arab countries. Dubai’s Palm Islands , The to-be tallest tower in the world Burj Towers and Dubai’s underwater restaurant were highly buzzed all over the internet and news media and cited as the next-generation architectures. Apparently, all these were not too long ago, but barely few years ago in 2007!

And then the great economic depression of 2008 came by, I came across a few magazines which although pointed to some scrapes off the golden plate, were still bullish about Dubai.

One clear night the government releases an official report of Dubai’s dept and dismal financial figures in stark contrast to the flushing economy so hyped by the media. All of a sudden, the same financial news behemoths start on elaborate column on how the whole economy was mis-handled, was all castles built up in the air with no strong base and so on. Go on to “predict” n “forecast” Dubai’s economy in the future and how it will affect the world economy!

A basic control system, such as air conditioner (AC) in our homes, are called “reactive” systems as they react to inputs – blows hot air or cold air after comparing the current room temperature to the preset desired room temperature. Advanced control systems employed in Air traffic and Flight route determination are more of “predictive” systems as they have to be very accurate in predicting the wind patterns “well in advance” to be able to determine the air borne flight routes. Just imagine if the flight route predicting systems became reactive and gave warnings like “OMG – you are in the middle of tornado. Please do not take this route” – “Yea Right! I know that already – i am stuck in the middle of the storm – Thank You.”

The economic forecasts are more like it.. becoming more n more use less and irrelevant! I wonder how and from where do these journalist and analyst get their source data from. From the reactive response pattern it doesn’t seem like they do have some inside information nor their analysis are based on sound, substantiative justifications.

In the days of Royal Kingdoms rules, the king throws out a bag gold coins to his royal poet and order him to concoct a beautiful, lavish song in praise of his “own” royal highness – spill over traditions apparently still being continued?

I sincerely wish these Yale and Harvard grads and peppy economic analysts stick to their basics – Evaluate, Report and maybe even go as far as Analyzing – but stay away from Forecasts!