The Most Important Economic Questions for Investors

We all know that the stock market is not a futures contract on GDP, but there is a relationship.  Investors who are frightened about the economy really need some answers.

We would all like to raise the most important questions to a group of the best experts, so I invite you to help me.

The Annual Kauffman Conference

Each year I have the opportunity to mingle with a group of leading economic bloggers in a conference sponsored by the Kauffman Foundation.  Here is the mission as they describe it:

The Kauffman Economics Bloggers Forum brings together select economics, finance and technology bloggers for an event in Kansas City to discuss key policy issues and cutting-edge research on topics related to entrepreneurship, innovation, and growth. The aim of this conference is to foster a consensus around economic growth strategies for U.S. and global policymakers.

I have a somewhat different perspective.  I spend my entire life in an unusual world of extremely intelligent people who are specialists --- traders, academics, or business leaders with their own companies.  This makes me a skeptic on smarts.  I see it all the time.  Despite this personal background, I find the Kauffman Conference special and valuable -- well worth the time taken to attend.  Here is why:

• The group has wonderful diversity!  It includes, to start with, people that I call economic bloggers and those who are blogging economists.  Totally different!  There are leading journalists -- Felix Salmon, Matt Yglesias, and Megan McArdle -- but that is only one interesting subset.  Kauffman has strong leadership in entrepreneurial activity, so there are many participants who represent that perspective.

• Being together with so many people who combine intelligence, ambition, and the drive for success.  My only complaint is that the participants do not have more understanding  of each other's objectives, but I guess that comes with the territory.

• Extended conversations with top experts --Bob McTeer, from whom I got some frank answers about the inner workings of the Fed; Donald Marron, an expert on the CBO and economic modeling; and  Dean Baker, who has tremendous economic insight as well as a D.C. insider's understanding.

• The great contingent of professional economists, where George Mason is well-represented.  Tyler Cowen was a featured participant last year, mostly based upon his exciting research and recent book.  A personal favorite is Bryan Caplan, a thoughtful academic with wide-ranging interests.

• And of course -- Mark Thoma -- a pioneer among academic bloggers. Mark has done more than anyone to legitimize blogging activity for academic economists.  He provides wide-ranging links to important topics, and also writes some of the best and clearest summaries of current issues.

For reference, here is the most recent survey of the leading economic bloggers.

My Personal Agenda

I feel like I have a rather unique role in this group.  I genuinely respect everyone else.  I am interested in learning.  But.....

I am on a mission!

Where many of my blogging colleagues start with the idea that they know the answers, I am seeking enlightenment and especially, help for the individual investor.

Where my journalistic colleagues are measuring success in page views, I measure it by investment returns.  (This means that when one of the big-time journalists encourages me by referring to my "little blog" I do not take umbrage.  I do not bother to explain the value metric, and how many investors have learned how to meet their goals by reading my work.  They have a salary and also get paid by their traffic -- a different world.)

The Key Questions

Here are some things that I see as important:

• How do others perceive the recession forecasts?  What methods make sense?
• What is the attitude about Europe?  Systemic risk off the table?  Drag on growth?
• Does anyone really know about China?  Is it all speculation?
• What about oil prices?  How big is the threat?
• How rapidly must we deal with reducing worldwide debt?  Is there a magic blend?
• Election 2012 and the effects.  How much difference will this make?

Following Up

Everyone else at the conference has TweetDeck up and going and is doing live blogging.  I am not going to make any promises, but maybe I'll try to do something in real time this year.

Meanwhile, I invite questions from readers.  Maybe I can get some answers from your favorite expert.

 

 

Comments

[Angel Martin]

Jeff, I agree with your key questions. Those are basically the top ones that come to mind for me as well.

What I would ask in addition is the following:

What do you consider to be a big source of financial or economic risk that is not widely recognized?

I would suggest that, since you have a very diverse group of people at the Kaufmann conference, that produce proprietary intellectual content and they are innovative thinkers, I think that collectively they have the potential to identify some "tail risks" that the rest of us should consider.

I would be very interested in seeing their list of "underrated risks".

also, on the same line, you could ask them what economic and financial situations have an underrated upside.

[David Dean]

With all the posturing about the ever increasing cost of gasoline, why don't the politicians get to the root of the problem and that would be speculation in commodity market. There are rules on the books. Why do the powers that be ignore them? Is it the big money interests that subvert the solutions because they are making a killing at the expense of the driving public? This speculation is adding 30 to 40 percent to the cost of a barrel of oil.(some will say only 15%,but it is still too much) Is it to difficult for the media and politicians to explain how to stop this?

[Proteus]

Jeff, I'd rather have a carefully thought-out analysis posted next week, compared to a hasty summary this afternoon. The world is not going to end in the next 30 seconds.

As for topics, almost anything from Econbrowser (or even Bruce Krasting) from this year sounds good to me - and you could rank them by the number of comments.

[57andrew]

I always struggle with the interlnkages and correlation risk. Nowadays it seems increasingly as if we have one market that moves around the time zones. Yet I don't see the coordinated response that ought to be in everybody's interests. I hear an awful lot of doom mongering and this has a propensity to be self fulfilling. What will it take to restore confidence which will itself drive some degree of recovery. Or is the best case scenario a long grinding muddle through?

[derek]

Why do administrations going back 40 years(!) cave to big oil? Lobby money? We could so easily convert big rig trucking to cheap, cleaner, home-grown liquid nat. gas. It's such a no-brainer it boggles the mind. So many American families destroyed from oil-based foreign wars, so many terrorists born daily because we occupy their lands.
We could quickly build the infrastructure for the major freeways in 3 months, resulting in a game-changer for the U.S. economy. We have the technology.
Why do you think Americans are so cynical about their congress people? The growing consensus is they could give a crap about the country, it's children, it's future. All about getting pig-rich with lobbyist cash.