Managing Economic Uncertainty

Managing Economic Uncertainty
Friday, June 19th, 2009

A couple of days ago I posted excerpts of a speech by Ben Bernanke in which he outlines various reasons for inherent uncertainty and difficulty in economic predictions and forecasts.

It appears that ever since the start of The Financial Crisis, in early 2007, it has been very difficult for forecasters to accurately predict economic performance. For those interested, I have compiled numerous examples of this, which can be found under the “Predictions” title in the "Directory Of Articles."

In light of this inherent uncertainty (and what some may call inability) of economic forecasting, and by extension efforts to “manage” the economy, how can this uncertainty be best managed given that the country has embarked on such a large, and expansive, intervention (including bailouts, guaranteed loans, stimulus plans, etc.) effort?

Months ago I put together a framework on how to best manage the risks and uncertainties inherent in the various intervention measures. Just like businesses can successfully manage business plan risk, our country can, and should, seek to manage risks inherent in the various intervention measures.

The article is entitled “Business Planning Principles Applied to the Stimulus / Intervention Efforts” and can be found under the “Directory Of Articles” heading.

Please note this is not necessarily an endorsement of these intervention efforts; it is suggestions as to how best manage the efforts as the stimulus/interventions are put into effect.

SPX at 926.51 as this post is written