Shiller - More tough times ahead for the US

Great interview with Robert Shiller on the 7:30 report. Shiller is admiringly honest, amongst other things he admits that economic forecasting is a lot of guesswork. He touches on a particularly interesting subject which is basically that in times of relative stability, economic forecasting is easy because you just extrapolate previous trends, However in times such as we are in now, extrapolation doesn't work, so technical forecasting models don't work.

Again these are the same themes that Nassim Nicholas Taleb talks about in the Black Swan. That's why when I hear mainstream economists and other market pundits compare this bear market or recession to previous ones and then try to draw conclusions based on those previous experiences I become very skeptical.

I have to admit I am sucker for this as well, we always try to look for patterns that repeat themselves, however you need to cognizant of the fact that some of the events we are seeing now have no historical precedent and therfore it is unreasonable to think they will play out the same way.