by pup55 » Wed 31 Mar 2010, 07:57:54
$this->bbcode_second_pass_quote('', 'D')o such models even exist?
I just have to comment on this point. I was working in a big chemical company at one point, and there was always a handful of young bright Ivy-league MBA's with offices in one corner of the basement that were put in charge of the long term forecasts, and they annually prepared the medium-term outlook for interest rates and that kind of thing....
The actual departments that did things, namely the sales, manufacturing and those sort of people that actually made and sold products used these forecasts as the basis of their budgeting every year, and also to prepare medium and 10-year forecasts of where the business was going to be.
So, it was a pretty important function, and here is why: The number they predicted for the 5-year in advance interest rate was used to calculate the ROI for any project that you might need to do. Example: If you needed to spend money to do a debottlenecking project to make the process more efficient, and get a little more capacity, you used these interest rate projections to do the analysis to decide whether or not to do the project. Also, since there was a pretty big lead time for any new projects to happen (up to 2 years in some cases) you had to know a couple of years in advance what your demand was going to be to know whether or not you were going to have capacity issues.
So, at least where I was, some effort was put into trying to predict what was going to happen in the future.
Now, here is where I am going with this: Being, as they were, young MBA's these forecasts tended to be "what the boss thought was going to be reasonable".... Even if their little computer models were predicting armageddon, they would not dare go to the CEO and tell him that. Invariably, the forecast would look more or less like what had happened with the economy the last couple of years, and assume that the same conditions would prevail into the future, particulalry if they got wind from some conversations around the coffee machine that the CEO thought the economy was picking up.
That is why everybody (except the radical PO community and some others) did such a crappy job of predicting the economic collapse that happened and is still going on. Too many of the corporate planners in these businesses are so inbred, and entrust this important job to their youngest employees, there is such groupthink that even if you did come up with a forecast like this, it is quite likely that you would miss your promotion opportunity and no one in the company would ever take you seriously again.
So what I am saying is: It is possible that some major corporation is paying a lot of deep thinkers to sit around in some corner of the place and make up movie script scenarios, but I think it is pretty unlikely, and also, it is unlikely that any of it would ever see the light of day.... and it would be a far stretch of the imagination to think that anything like this would actually be taken seriously or acted upon by anybody in any kind of position of authority within these companies.
I have been around some of these people, at the "C" level, as they used to say, in some of these big businesses, and the one thing you can say about them is that they are 100% certain that they reached their lofty position because they themselves are management geniuses. They know everything, they can predict the future with certainty, and so if someone emerges from one of the cubicles with a forecast like this that is contrary to their experience, they are going to laugh it off....
This, of course, is exactly why the current economic collapse situation happened, and also, exactly why the climate change stuff is going to happen, and why oilmageddon is going to happen, and even though there are plenty of warnings, 90% of the businesses in the country are not going to be prepared for the changes that are going to come in the next 20 years...
I suppose it was Campbell that said "sometimes there actually is a wolf".