• It began with Mish challenging ECRI’s claims of forecasting the recession.
• Krugman points out that “in a zero-interest rate world — the three-month rate was .066% last I looked — especially one that’s suffered from a collapse of the shadow banking system, conventional indicators don’t mean what they usually mean.”
• ECRI responds with a look at their track record.
As we have tirelessly pointed out, there is no indicator that is failsafe. Things that work on occassion sometimes stop working.
I have found ECRI to be of value to me in my own investing and trading. That does not mean they are flawless or a guarantee — just that they have had value to me.
While Mish and Laksman debate their respective track records — Mish is correct in noting that ECRI wasn’t aggressive enough in predicting this recession, and ECRI could point out that MISH failed to see the recovery (or at least the 60+% market rally).
Traders and Investors should always be looking for the most interesting lesson to be gleaned. In this case, it comes from the Nobel laurelate: There are times when conditions vary so much from prior circumstances that usual metrics are no longer reliable.