The website of forcastglobaleconomy.com is to relay to readers the findings of investigations into macro-economics by treating the discipline as a real science. A real science means to investigate a subject based on empirical evidences. It usually starts from a set of evidence (data) and derive some regularities from the data. The discovered regularities combined together form a model. The data set is then expanded, requiring the model to explain the expanded data set as well. If the model fails to explain the expanded data set, the model must be modified, or abandoned and a new model searched. This check and double check process continues relentlessly until the model explains a huge set of relevant data, and only then the model is elevated as a theory. Even after a theory is established, this check and double check processes never ceases. Only through such rigorous scientific process, the true nature of the subject will gradually be brought out. The main stream economics also starts from a set of data and regularities derived from the data set. However, once a model is established, the follow up check and double check processes are easily abandoned. When some inconvenient data come along, it is rather the inconvenient data that is thrown away or push under the rug. Thus main stream economics has failed not only to anticipate but even not be able to explain major economic phenomena since the onset of globalization process in early 1980s. This failure is due to the fact that main stream economics dwells on pre-globalization data and ignores the most important ingredient of the globalization process, that is, the runaway trade imbalances.
To relate the findings from rigorous scientific processes, the writing inevitably involves tedious data analysis and the maze of logic that leads to the final conclusion. Such papers are naturally far from one-liners so they are difficult to comprehend for layman, casual investors and experts not used to rigorous scientific approach alike. Thus, some crucial ones for investors, like various warnings about the onset of recessions, are unfortunately overlooked by many readers. In order to remedy this kind of deficiency this "Area for Investors" is created.
The papers that we deem to be important for investors are tabulated. The title, the date of posting, the link to the original paper, and a one-liner type summary are given to each listing in a table. Users of this area should scan through the summary of each listing and then decide whether want to read the full paper and whether want to take appropriate actions, for example, like lighten up stock holdings when the onset of a recession is predicted.
Originally only two tables, "About Recessions" and "Various" will be posted here. Later on the number of tables may be expanded depending on the necessity. Within each table listings are arranged in the reverse-chronological order, so a new addition to a table always appears at the top of the table. When the conclusion of a listing turns out to be wrong, a P. S. note in red will be added in its summary section.
The onsets of recessions are especially important to investors since the onsets are always coincide with the tops of major bull markets. In the following table the writings that predict the coming of recessions are tabulated:
|Title||Date of Posting||Link to the paper||Summary|
|A sober interview||March 1, 2013||The Interview||On March 1, 2013 edition of online Bloomberg.com, there is an interview with the most successful hedge fund manager of past 30 years. It is worth reading.|
||June 14, 2012||article 17||U. S. economy is now in "Japan Syndrome American Style"|
||January 27, 2012||Seminar Notes||A Summary Review: How to predict recessions. The origin and the demise of bubbles. Where are we and where are we going?|
||August 2, 2011||Comment 82||Another recession watch is issued based on the behavior of a mechanical indicator|
Recession Watch; serious cut of government budget deficit will induce a recession
|July 23, 2011||Comment 81||A recession watch is issued|
Anatomy of Economic Bubbles
|March 6, 2008||article10||A recession is inevitable|
A Recession Watch
|July 28, 2007||USA_Update2007_07_28||A recession watch is issued based on substantial downward revision of GDP data
in the annual revision issued by Bureau of Economic Analysis on July 27, 2007
|Comment 25: Is a recession coming?||October 18, 2005||Comment 25||Quote from the original article: "...., so if a recession should come, it will be
in 2008, but not withing next 12 months."
|article 1: SUPER LOW INTEREST RATE OF JAPAN ….||December, 1998||article 1||The (dot-com) bubble will burst in the summer of 2000|
|Title||Date of Posting||Link to the original paper||Summary|
More about the "January Barometer"
|November 30, 2010||Comment 79||January does retain special allure as long as there is no major reversal during the year.|
Valuable lessons from 2000 – 2001 recession
|July 20, 2009||Comment 70||A usual powerful stock market rally started before the end of the recession,
but the rally fizzled and new low was made about a year later
due to the lackluster economic recovery.
An Indepth Study of "January Barometer"
|February 3, 2009||Comment 65||The mystery of so called "January Barometer" is resolved.|
Endings of bear markets
|December 10, 2008||Comment 64||Around the nadir but before the end of a recession, a powerful stock market rally
has always taken place. Most of the time this rally becomes the first leg
of a lasting bull run. However, if the recovery from the recession is
sluggish, the rally may fizzle and new lows made.
Why the recent violent gyrations?
Is "Synthesized unwinding of yen-carry
trades the answer?
|October 31, 2008||Comment 62||Violent gyrations of the stock market from the summer to the fall of 2008
is tied to the unwinding of "synthesized yen-carry trades", a kind of
maneuver of professional speculators like hedge funds.
How far will US stock prices fall?
|October 7, 2008||Comment 61||The technical analysis says that SP500 index at 800 (Dow Jones Industrial Average
at 7000) is a good support. In the worst case scenario SP500 may drop to 500 and
Dow Jones Industrial Average to 4000.
A prognosis of China's stock market:
What have we learned from Taiwan's
stock market movements?
|June 14, 2007||Comment 44||Compare China's stock market in 2007 to the run up of Taiwan's
stock market toward 1974 energy crisis.
How oil price gyration has triggered the unwinding
of yen-carry trades that in turn has induced the global
stock market debacle
|March 7, 2007||Comment 41||Gyrations of crude oil price are the culprit to cause the gyrations of
stock prices with yen-carry trades serving as the role of the middleman.
Dollar and stock prices
|November 30, 2006||Comment 37||Explains how the movement of U. S. Dollar against foreign currencies will affect
U. S. stock market.
Stock Markets and the Demographic Change
|September 4, 2004||Comment 13||Explains how stock prices are tied to both the demographic changes
and the movement of Dollar versus the currencies of its trading partners.
The danger of an economic downward spiral
when stock markets become the driving force
|August 23, 2004||Comment 12||Discuss the danger when the consumer spending is tied too closely
with the stock market performance.
P. S. This comment is in contradiction with Comment 2
listed below. This comment is wrong. Every major crash of stock prices
is due to underlining economic reasons.
Stock market dances around the real economy
|November 8, 2003||Comment 2||The title explains all.|