Ben Stein’s Four Lessons Learned From the Recession

From the mouth of a real genius

We write a lot about the recession as it relates to real estate- how the commercial sector has taken such a huge hit, how the government has intervened and improved and harmed the real estate industry as a whole, but one of the best analysis pieces I’ve seen regarding the lessons to learn from the recession is written by the incomparable Ben Stein in his CNNMoney.com column.

What is interesting about the lessons he offers is his ability to see things from such a bird’s eye view that takes into account all pieces of the puzzle whereas many analysts hone in too closely on one piece or another. While we encourage you to read the entire piece, the four main points are listed below.

And now for the four lessons:

“1. Economic forecasting is still an extremely difficult gambit and nowhere near a science. It is a lot more like astrology than mathematics. As the recession bore down on us, the great majority of economic seers said it was not going to happen or if it did happen, it would be mild.”

“2. Financial market forecasting is even more troublesome than economic forecasting. Hardly anyone I am aware of got the recent stock market recovery right. No one saw a recovery of roughly 60% in broad indices in the span from early March to mid-November. To the contrary, even in the spring, I was getting e-mails from people “in the know” seeing a bottomless pit for the stock markets.”

“3. The amount of lying and deception by the financial sector of this country has been breathtaking. The banks lied about the risks they were taking on, about the amount of their exposure, about how well capitalized they were, and about their prospects for survival. Throughout the financial sector there was similar deceit.”

“4. The government has no special abilities to forecast or predict a darned thing. Alan Greenspan, former head of the Fed, a truly wonderful man and a smart economist, not only did not see the crash, but did not see the bubble preceding it. Not only did he not see it, he thought it was an economic impossibility.”

Times have been difficult lately, and we each take our own lessons from the recession. I’ve learned not to take the good times for granted, to remember to extend a helping hand any time I can despite good times or bad (even if it isn’t monetary), and to do my own analysis of market stats and not to listen to paid pundits. What have you learned from the recession?