Today is the 300th edition of At the End of the Day. This is stuff I tend to post in the evenings….but at the same time, it represents some kind of  bottom line in the twilight of mad Friedmanite capitalism.

Is there any point at all in doing economic forecasts?

Commentator Lee Adler wrote yesterday that “the market woke up today to just how clueless, delusional, manipulative, and incompetent Ben Bernanke really is.” Harsh but fair, I think. Picking up on the theme, Dylan Matthews at the Washington Post correctly judged that “the Fed is wrong all the time….in 2009 the Fed was predicting 4.2 percent growth in 2011. Awesome! But then in 2010 it revised that down to 3.85 percent growth. And in 2011 they revised it further to 2.8 percent growth. And when all was said and done, the economy only grew about 2.4 percent that year. The Fed projected growth almost twice as fast as what actually happened. Same deal for 2012. The Fed’s first forecast, in 2010, projected 4 percent growth. 2011′s projections reduced that to 3.5 percent growth. 2012 knocked it down to 2.15 percent growth. And the final number was about 2 percent.”

Yup, it’s good stuff this predicting lark, eh? And you wouldn’t bet the farm on the eurozone’s efforts either: the Troika and other Centres of Competence within Brussels-am-Berlin have been making predictions in one form or another about Greece, for example, since early 2010. The inaccuracy of these prévisions make the British Met Office seem a model of 99.9% accuracy by comparison. The ECB has had to cut every forecast of growth it’s handed out since 2009.

Nor are things any better in the United Kingdom. Six weeks ago, MPC Bank of England member Ben Broadbent made this startling admission in a major speech:

“The first Budget forecast I went through was in 1989. That year’s “Red Book” predicted that, three years later (in 1992-93), the government would be running a small financial surplus. What we got, as things turned out, was the (then) largest peacetime deficit on record.”

Sadly, the Treasury isn’t getting any better at it: two years ago one frustrated member of a Commons Treasury committee said, “I wouldn’t wish the forecasting job on anyone; you are just always wrong.”

The Adam Smith Institute concluded three years ago that ‘Treasury forecasts are not likely to accurately predict any large changes in GDP in either direction. Bearing in mind that the treasury bases forecasts for borrowing and debt levels on forecasts for GDP growth, this is particularly worrying. Forecasts for public sector net debt and  borrowing can be a long way off target.’

That’s a masterpiece of understatement, and of course since then every single forecast has had to be cut. But when, in January of this year, The Observer’s William Keegan asked Sir Nicholas MacPherson whether – given Treasury forecasts are always wrong and the Bank of England’s inflation target is always missed – he was apprehensive about the value of forecasting, he said no he wasn’t. We’ve already seen today that of which Sir Nicholas is capable, but even discounting that I find it hard to reason out why he didn’t say yes. However, words like survival, job, pension and so forth are probably involved.

In his January evidence to the Commons Treasury Committee, however, MacPherson offered an interesting observation:

“[The] Treasury tends to rely on quite young people – people who come and work in the Treasury for a few years, get it on their CV, and then use the brand to go and make money elsewhere. You have those forces at work, but what has happened over the last couple of years is that resignation rates have increased. If I am honest about what is causing that, I think there were two things going on. One was we had the most challenging Spending Review since the 1920s. People in the Treasury are quite good at understanding numbers, and they look to their promotion prospects, so they all concluded that because the Treasury was getting a lot smaller, their promotion prospects would deteriorate, so some people just voted with their feet. There is also an issue about pay……one of the interesting things is that HMRC pays a lot more for the job than the Treasury”.

Or to say it in a line like normal people, “Poor continuity – plus: pay peanuts, get monkeys”.

My problem is that this problem doesn’t pertain in the US Fed – and it definitely doesn’t apply in Brussels or at the ECB. I think there are several factors involved here:

1. Fear among government forecasters of public and market reactions to the truth

2. An inability to see that we’re heading into completely uncharted waters

3. A likelihood this will be even stronger with young employees who’ve only ever known growth

4. Unjustified interpretations applied by politicians under electoral pressure

5. Commitment to economic theories that no longer apply

6. Here and there, corruption: getting a cut from insider trading

7. Sheer incompetence.

But perhaps that’s just me being an old misery – I’m not sure. It’s hard to be sure about anything any more. As I write this, however, there is one thing of which I am sure: in the current economic environment, all forecasting is a mug’s game.

Earlier at The Slog: Why it’s easier to negotiate with fat cats than fat rats