63% probability of a 60%-80% decline in stock prices within two years? Really? (And, given that, why so little probability attached to a smaller decline? What’s the underlying model here?)
Systemic overvaluation of stocks relative to risk as a result of tax benefits combined with overdue bills from the last three economic shocks. The full extent of the drop will require including inflation in consideration.
And what exactly is OrphanWilde’s mental model of the WHO’s attitude to US healthcare, that predicts such a huge influence of the existence of a US national health database on how the WHO assesses countries’ health?
It’s not the WHO’s attitude towards US healthcare, it’s a difference in attitudes towards national pride between the US and… everybody else. In the US, outward patriotism is combined with criticism of our institutions; representatives of the US are all-too-happy to say what we should do better, but still insist we’re great anyways. Elsewhere, it’s dangerous and right-wing (in the European rather than US sense) to be outwardly patriotic (unless the government is dangerously right-wing already, which is to say, requires patriotism of this form), but that gets combined with a resentment of any implication that there’s anything wrong with their country or culture.
So ranking systems tend to accentuate the things Europe (which is powerful enough to get its say) does well (such as national health databases, repeatedly, for every category of health) while making sure the US ranks below them so they can say they’re doing better than the central modern superpower (because Asia doesn’t count and nobody wants to annoy China).
What I don’t understand is that you can attach a 63% probability to a decline of at least 60%, but at most a 7% probability to a decline of, let’s say, 20%-60% (can we agree that a 20% decline would count as a “market slump”?).
while making sure the US ranks below them
So, in fact, it is the WHO’s attitude towards US healthcare that’s relevant here. Anyway, your cynicism is noted but I can’t say I find your argument in any way convincing. (In fact, my own cynicism makes me wonder what your motive is for looking for explanations for the US’s poor ranking other than the obvious one, namely that the US actually doesn’t do healthcare terribly well despite spending so much.)
The Wikipedia page on this stuff says that the WHO hasn’t been publishing rankings since 2000 (which I think actually makes your prediction pretty meaningless), and that the factors it purports to weigh up are health as measured by disability-adjusted life expectancy, responsiveness as measured by “speed of service, protection of privacy, and quality of amenities”, and what people have to pay. I don’t see anything in there that cares about national health databases (except in so far as they advance those other very reasonable-sounding goals).
What I don’t understand is that you can attach a 63% probability to a decline of at least 60%, but at most a 7% probability to a decline of, let’s say, 20%-60% (can we agree that a 20% decline would count as a “market slump”?).
They’re separate predictions.
The Wikipedia page on this stuff says that the WHO hasn’t been publishing rankings since 2000 (which I think actually makes your prediction pretty meaningless), and that the factors it purports to weigh up are health as measured by disability-adjusted life expectancy, responsiveness as measured by “speed of service, protection of privacy, and quality of amenities”, and what people have to pay. I don’t see anything in there that cares about national health databases (except in so far as they advance those other very reasonable-sounding goals).
I went through its ranking criteria about a decade ago, and the database thing came up in every single ranking, dropping even our top-caliber cancer treatment to merely average.
(And the real weirdness here, actually, comes from the second prediction more or less on its own.)
It’s not that weird. Think about predicting the size of the explosion of a factory filled with open barrels of gasoline and oxygen tanks. I think the global economy is filled with the economic equivalent of open barrels of gasoline.
Interesting. Do you have more information?
Not at the moment. It’s been literally years since I’ve done any serious research on global healthcare. (Working in the health industry tends to make you stop wanting to study it as a hobby.)
I think the global economy is filled with the economic equivalent of open barrels of gasoline.
So (if I’m understanding your analogy right) you expect that any drop in the market will almost certainly lead to a huge crash?
From the 17th to the 25th of August last year, the S&P 500 dropped by about 11%. This led to … about a month of generally depressed prices, followed by a month-long rise up to their previous levels. That doesn’t sound to me like an economy filled with open barrels of gasoline.
So (if I’m understanding your analogy right) you expect that any drop in the market will almost certainly lead to a huge crash?
Any given spark -could- set it off, which is not the same as any given spark definitely setting it off.
From the 17th to the 25th of August last year, the S&P 500 dropped by about 11%. This led to … about a month of generally depressed prices, followed by a month-long rise up to their previous levels. That doesn’t sound to me like an economy filled with open barrels of gasoline.
If the stock market were responding appropriately to the conditions, then there wouldn’t be the equivalent of open barrels of gasoline all over the place. The issue is more structural than that: Interest rates and limited investment opportunities have driven money into the markets, driving prices up, and then keeping them artificially high. Some of this pressure has been relieved by amassing inventory, but that’s reached its stopping point, which is starting to cause international trade to falter.
If Pr(crash|drop) is not quite large, then Pr(smallish decline|any decline) should be reasonably big. Each observation of a drop without a crash is (some) evidence against the antecedent.
If the stock market were responding appropriately to the conditions
It sounds as if you think I was assuming that it is or should be, and I’m not sure why. Could you explain?
If Pr(crash|drop) is not quite large, then Pr(smallish decline|any decline) should be reasonably big. Each observation of a drop without a crash is (some) evidence against the antecedent.
Each time you strike a match without blowing up might be evidence that you’re not in a building full of gasoline, but if you see the gasoline, the match-striking evidence doesn’t weigh nearly as heavily.
I was slightly more specific in another question chain about what I meant by slump, and a 10% drop isn’t quite what I had in mind (neither is today’s slump, which could rally again), which was more along the lines of a recession.
To clarify my prediction: I expect at least a recession. Given a recession, I expect a depression. If we don’t get a recession (which would surprise me somewhat), the absence of a depression won’t surprise me, but if we do get a recession, the absence of a depression will surprise me a lot.
Systemic overvaluation of stocks relative to risk as a result of tax benefits combined with overdue bills from the last three economic shocks. The full extent of the drop will require including inflation in consideration.
It’s not the WHO’s attitude towards US healthcare, it’s a difference in attitudes towards national pride between the US and… everybody else. In the US, outward patriotism is combined with criticism of our institutions; representatives of the US are all-too-happy to say what we should do better, but still insist we’re great anyways. Elsewhere, it’s dangerous and right-wing (in the European rather than US sense) to be outwardly patriotic (unless the government is dangerously right-wing already, which is to say, requires patriotism of this form), but that gets combined with a resentment of any implication that there’s anything wrong with their country or culture.
So ranking systems tend to accentuate the things Europe (which is powerful enough to get its say) does well (such as national health databases, repeatedly, for every category of health) while making sure the US ranks below them so they can say they’re doing better than the central modern superpower (because Asia doesn’t count and nobody wants to annoy China).
What I don’t understand is that you can attach a 63% probability to a decline of at least 60%, but at most a 7% probability to a decline of, let’s say, 20%-60% (can we agree that a 20% decline would count as a “market slump”?).
So, in fact, it is the WHO’s attitude towards US healthcare that’s relevant here. Anyway, your cynicism is noted but I can’t say I find your argument in any way convincing. (In fact, my own cynicism makes me wonder what your motive is for looking for explanations for the US’s poor ranking other than the obvious one, namely that the US actually doesn’t do healthcare terribly well despite spending so much.)
The Wikipedia page on this stuff says that the WHO hasn’t been publishing rankings since 2000 (which I think actually makes your prediction pretty meaningless), and that the factors it purports to weigh up are health as measured by disability-adjusted life expectancy, responsiveness as measured by “speed of service, protection of privacy, and quality of amenities”, and what people have to pay. I don’t see anything in there that cares about national health databases (except in so far as they advance those other very reasonable-sounding goals).
They’re separate predictions.
I went through its ranking criteria about a decade ago, and the database thing came up in every single ranking, dropping even our top-caliber cancer treatment to merely average.
So what? If you hold that
Pr(slump) ~= 0.7
Pr(decline >= 60% | slump) ~= 0.9
then you necessarily think there’s at least a ~63% probability of at least 60% decline and at most a ~7% probability of a decline between 20% and 60%.
(And the real weirdness here, actually, comes from the second prediction more or less on its own.)
Interesting. Do you have more information?
It’s not that weird. Think about predicting the size of the explosion of a factory filled with open barrels of gasoline and oxygen tanks. I think the global economy is filled with the economic equivalent of open barrels of gasoline.
Not at the moment. It’s been literally years since I’ve done any serious research on global healthcare. (Working in the health industry tends to make you stop wanting to study it as a hobby.)
So (if I’m understanding your analogy right) you expect that any drop in the market will almost certainly lead to a huge crash?
From the 17th to the 25th of August last year, the S&P 500 dropped by about 11%. This led to … about a month of generally depressed prices, followed by a month-long rise up to their previous levels. That doesn’t sound to me like an economy filled with open barrels of gasoline.
Any given spark -could- set it off, which is not the same as any given spark definitely setting it off.
If the stock market were responding appropriately to the conditions, then there wouldn’t be the equivalent of open barrels of gasoline all over the place. The issue is more structural than that: Interest rates and limited investment opportunities have driven money into the markets, driving prices up, and then keeping them artificially high. Some of this pressure has been relieved by amassing inventory, but that’s reached its stopping point, which is starting to cause international trade to falter.
If Pr(crash|drop) is not quite large, then Pr(smallish decline|any decline) should be reasonably big. Each observation of a drop without a crash is (some) evidence against the antecedent.
It sounds as if you think I was assuming that it is or should be, and I’m not sure why. Could you explain?
Each time you strike a match without blowing up might be evidence that you’re not in a building full of gasoline, but if you see the gasoline, the match-striking evidence doesn’t weigh nearly as heavily.
I was slightly more specific in another question chain about what I meant by slump, and a 10% drop isn’t quite what I had in mind (neither is today’s slump, which could rally again), which was more along the lines of a recession.
To clarify my prediction: I expect at least a recession. Given a recession, I expect a depression. If we don’t get a recession (which would surprise me somewhat), the absence of a depression won’t surprise me, but if we do get a recession, the absence of a depression will surprise me a lot.
Since approximately when?