Via the WSJ Real Time Economics blog, Jon Stewart interviews Alan Greenspan:
Now check this out: (comments in parentheses mine)
I’ve been dealing with these big mathematical models of forecasting the economy, and I’m looking at what’s going on in the last few weeks. … If I could figure out a way to determine whether or not people are more fearful or changing to more euphoric, and have a third way of figuring out which of the two things are working, I don’t need any of this other stuff (I can't begin to imagine what this other stuff is. It sure is strong, because this sentence ain't makin' sense). I could forecast the economy better than any way I know.
The trouble is that we can’t figure that out. I’ve been in the forecasting business for 50 years. … I’m no better than I ever was, and nobody else is. Forecasting 50 years ago was as good or as bad as it is today. And the reason is that human nature hasn’t changed. We can’t improve ourselves. (what? what does human nature have to do with this? Had it changed to something completely different it would make forecasting easier?)
Three things I need to get off my chest.
1. People just don't know when to quit. It's as true of rock bands as it is of decorated statesmen, scientists and other learned types. Athletes fare much better in that respect, something which can be attributed to the more objective measures used to measure their performance.
2. What's this thing with book deals? I mean, look at Musharraf, look at Campbell, look at Greenspan now. It's always the same recipe: write a massive tome with very little content and throw in a couple of mini revelations/ controversies that will get the book mentioned in the press. Many people will buy it, few will read it, and none will be any the wiser for it. I admit that these deals can be lucrative. But don't these larger-than-life characters feel a bit more special than that?
3. Setting interest rates is the easiest job in the world. Promise. All you need to do is read the financial press from time to time (say 10 minutes on the internet every couple of months) and that's it. Assuming you don't do anything completely bonkers (I said, do spend your 10 minutes on the internet before going to them rate-setting meetings) you'll do a fantastic job; remember that no-one can assess your performance, and almost everyone has an incentive to claim you've done great.
I'll admit that being a central banker is somewhat more difficult than that: you have to look deadly serious at all times, appear knowledgeable and be capable of speaking at length without really saying anything. Formidable qualities, but I will stick with infra-red vision.
A little less deference to central bankers, please.