Economists can not predict

The ponytail that had made such a stir among the Swedes when they handed the Nobel Prize in 2002 no longer exists. There remain a few silver rings, a medallion of Adam Smith’s neck, the desire to understand the origins of the crisis and the passion to explain. Yesterday, Vernon Smith, who makes his students read Smith (Adam) and David Hume held a dialogue with the editors of Il Sole 24 Ore on issues related to the crisis of the state and the market (in the afternoon will be available the recording of the forum).
The American Nobel laureate, 83, always uses laboratory experiments to test the truth of economics. “We learned about the crisis day by day – debuted -. Economists, despite not having foreseen the tragedy of the situation, they did a good job because they have adapted to events: we have become experts in experiments. Without forgetting the lessons that come from history. Between 1922 and 1926, recorded an increase in costs to buy homes, to reach the minimum close to the outbreak of the Great Depression, the same situation just before the current crisis. But still to be deciphered in its complexity.
He could foresee the crisis? We were careless or was a new event so as not to be deciphered?
This crisis was not foreseeable, is part of the nature of bubbles, which are also unpredictable. People leave sucked into a kind of expectation continues that feeds itself on prices increasing: it was always like that in centuries past. The crisis is not sustainable will come to an end, although we do not know the times. We understand the rules in the stock market: the bubbles hurt investors and, therefore, banks and other stakeholders. You can not predict the bubble, but to protect those who participate in the market, you should limit the damage.
What will happen to the euro?
For some ‘time I thought that the decline of the dollar could not last and that there would be a reversal in the ratio dollar / euro, not because the U.S. economy was going well, but because I thought the Europeans had learned how not doing things the wrong way.

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Eli Wads is one of our expert authors in technology and business fields.Currently living in San Marino, Eli has graduated at Southwestern Academy with a Bachelor Degree in business in 2008. Contact him by dropping him an e-mail at

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