It’s the economy, stupid! no, it’s the psychology…

English: Incremental capital output ratio, wor...

English: Incremental capital output ratio, world economy (Photo credit: Wikipedia)

Paris, France, May 28th 2013

Put a worldclass economist on a bike and you will get a brilliant blog: aneconomicsense.com

The blog is written by Frank Lysy, a retired chief economist at World Bank, whom I met in summer 2010 on the coast to coast ride. Like many people in our group, Frank had just retired and had time to bike across the US, and as soon as I spoke with him I saw he had a great knowledge and experience of the economy. As everybody knows, the World Bank funds infrastructure projects around the world by lending money to the governments. Like any banker, they  assess the risk- political as well as economical- of their loans as well as the relevance of the projacts for the development of the countries. In the decades that Frank spent as an executive at the Bank, Frank gathered an impressive understanding and knowledge of the economy. What a gift for his readers that he now cares to share his observations and analysis in his blog! Frank is not biased: he  starts from the facts and figures and then makes a comment. Of course the economy is no science and the choices made by the govenments are partisan: typically today the big discussion between austerity and buget deficit. No one knows exactly what people decide to do with their money when they have to tighten their belt: are they going to save more for fear of the future? are they going to spend more in order to maintain their standard of living? so yes, the economy plays a dominant role in today’s world, but the economy is tightly linked with the psychology, individual or collective. At the end of the day, whether you launch a business or whether you  drive the economy of the country, you never know how consumers are going to react. And that is what makes the world exciting: its unpredictability. It is great to have wise and knowledgeable experts like Frank to give us clues to understand , if not       predict, the bumpy economic roads!

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