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The Map and the Territory by Alan Greenspan

The Map and the Territory

The Map and the Territory – Risk, Human Nature, and the Future of Forecasting

The Map and the Territory
The Map and the Territory by Alan Greenspan

Like all of us, though few so visibly, Alan Greenspan was forced by the financial crisis of 2008 to question some fundamental assumptions about risk management and economic forecasting. No one with any meaningful role in economic decision making in the world saw beforehand the storm for what it was. How had our models so utterly failed us?

To answer this question, Alan Greenspan embarked on a rigorous and far-reaching multiyear examination of how Homo economicus predicts the economic future, and how it can predict it better. Economic risk is a fact of life in every realm, from home to business to government at all levels. Whether we’re conscious of it or not, we make wagers on the future virtually every day, one way or another. Very often, however, we’re steering by out-of-date maps, when we’re not driven by factors entirely beyond our conscious control.

The Map and the Territory is nothing less than an effort to update our forecasting conceptual grid. It integrates the history of economic prediction, the new work of behavioral economists, and the fruits of the author’s own remarkable career to offer a thrillingly lucid and empirically based grounding in what we can
know about economic forecasting and what we can’t.

 

No map is the territory, but Greenspan’s approach, grounded in his trademark rigor, wisdom, and unprecedented context, ensures that this particular map will assist in safe journeys down many different roads, traveled by individuals, businesses, and the state.

The Map and the Territory

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The Map and the Territory
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2 thoughts on “The Map and the Territory by Alan Greenspan

  1. Mr. Greenspan’s inside-out view of the economy I read this book from the perspective of an investor who specializes in real estate investment trusts (REITS). I was a REIT investor in 2008 when the economy failed, as I am today. I was near the financial center of the financial collapse of 2008 and able to observe it closely as it unfolded. Earlier in my career I worked as an IT company owner who studied the progress of business in the USA and globally by observing my client companies’ businesses through the computer systems I developed.Thus, I have a close up view of the financial collapse AND a broad-based view of the real world economy that underpins it. This perspective has made me a successful investor. But I do confess to having been blindsided by the 2008 collapse, as Mr. Greenspan and most professional economists were. This book explains Mr. Greenspan’s opinion of WHY so many professional economists were caught napping during the Great Recession that began in 2008 and casts its long shadow over the economy today…

  2. Interesting Insights, Delivered without Finger-Pointing Greenspan begins by stating that the 2008 financial crisis represented a crisis for economic forecasting. Worse yet, we now face serious long-term economic problems involving underinvesting in our future. Our biggest problem of all – our broken political system.Modeling the nonfinancial sectors of market economies have worked tolerably well, in the main. Finance, however, operates in a different leveraged environment where risk is significantly larger, and its modeling failed to anticipate the 9/2008 crisis. The Federal Reserve, IMF, and JPMorgan models all failed; further, months after the crash the President’s Council of Economic Advisers predicted declines in the 12/2011 unemployment rate – instead, it rose. Incorporating the interaction of euphoria, fear, panic, herd behavior, time preference, and optimism with rational economic behavior was more complicated than believed.Not all collapsing bubbles create the degree of havoc experienced in 2008. The…

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