For answers as to where the economic tsunami is sweeping us, the International Monetary Fund should be the place to go. The organisation oversees the global financial system. Its formidable team of economists are among the world's best paid and they have at their disposal a mammoth amount of data to drive computer models. Their predictions should be the most accurate.
With this knowledge in mind, on Wednesday I turned to the fund's world economic outlook report, issued on January 28, for the latest low-down. I found that global growth this year was expected to fall to 0.5 per cent when measured in terms of purchasing power parity and to turn negative when measured in terms of market exchange rates. There would be a gradual recovery next year, with growth picking up, to 3 per cent.
Then I read the rider: 'However, the outlook is highly uncertain and the timing and pace of the recovery depend critically on strong policy actions.' An uncertain outlook? Such words should not follow so confident an assessment - and certainly not from so high and mighty a body. I clicked back to previous reports: the November one had been gloomy, but far less so; it said global growth would be 2.2 per cent, down 0.75 per cent from the forecast made the previous month.
Such a sharp revision in so short a time rocks confidence. Keep in mind that modelling is driving these predictions. Years of information have been shovelled into the programmes. Then, I encountered the statement 10 months ago from the fund's managing director, Dominique Strauss-Kahn, to the Progressive Governance Summit in London - that the US and Europe would experience a slowdown, but not a loss of growth.
This exercise raises a searching question: why should we bother reading such forecasts? There are countless others, and we each have our favourite, which we pore over to guide our decision-making. Ultimately, they and the IMF are no better a predictor of the global financial direction than a tea lady or my nearby office colleague (a stock market speculator of the most rabid variety). In essence, they are presenting speculation as fact. We would do as good to use a blindfold, darts and a dartboard for guidance. There clearly has to be a better way.
For inspiration, I turned to one of the world's foremost practitioners of unorthodox economics, Ha-joon Chang. Mainstream economists got us into the present mess, so we should not trust their assessments. Better to listen to people like Dr Chang, a reader in the political economy of development at Cambridge University, whose latest book is Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. He agreed that we should not believe IMF predictions, but the same should be said of other forecasters. Developments in the financial crisis were moving so fast, in so many directions, and in such a complicated and unpredictable way, that no one could claim to have the foresight that others did not, he said.