Common Sense and The Perils of Predictions
Forbes, “Absolute Return” column, April 21, 2008, page 246:
Less than five months later, Freddie Mac’s stock was worth 25¢ per share, a loss of 99%. It has since recovered to 70¢ per share, so the loss is “only” 97.6%.
A forecast of a stock of a single company five months into the future seems easy. The company had government backing (federally sponsored corporation). What could go wrong?
Yet, the forecast published by Forbes, short of an outright bankruptcy, could not have been more inaccurate. It is worth examining how a situation that seemed rock solid (government-backed securities!) became catastrophic to see if there are any lessons that might apply to the atmospheric sciences.
The assumptions that Freddie Mac (and other financial stocks) were low risk was primarily a result of computer models. As one expert stated (using pseudonym at http://blogs.zdnet.com/Murphy/?p=1265 ),
The problem is inherently complex – imagine being asked to value a portfolio of 10,000 residential mortgages issued to a total of something like 17,652 individuals. Each mortgage balances some issue amount against some payment stream; each has had zero or more payments recorded against it, each has an initial interest rate; an interest computation method; zero or more early payment opportunities; some mention of late or missed payment penalties and conditions, and an expiry, renegotiation, or call date.
While I do not doubt that is “complex,” the level of complexity is miniscule when compared to the complexity of the earth-atmosphere-ocean system and their interactions.
Full post at Watts Up With That?
Plus, the next installment of Tim Flannery Prediction Watch!
See how this prediction, made just last year, is going:
The water problem is so severe for Adelaide that it may run out of water by early 2009.
But I think you can guess
 Which only goes to make this comment by Flummery, just a few weeks ago, not just strange, but really, quite disturbing. This man is clearly not telling the truth.
Australian scientist and campaigner Tim Flannery, one of the conference organisers, said climate change was harming his home country. “Water resources have dried out to the point where they’re now affecting the future of some of our cities.”
And while Flummery is a scientist, his field is palaeontology and his particular area of expertise the evolution of kangaroos.
But his real talent is obviously in marketing.
Andrew Bolt checks out a prediction made by the CSIRO:
Remember the CSIRO’s claim that global warming would kill the Australian ski season? Six years on, the snow is actually even better:
At the same link there's something wonderous and unexpected to behold - an ABC journalist covering both sides of the argument! What is the world coming too?
"One ABC program, however, is now trying to cover the other side of the argument. Brave journalist, that."
And who said Queensland was backward?
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