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11.16 Scotland was first Industrialized Country to Run wholly on Wind in October

11.16 How pesticide bans can prevent tens of thousands of suicides a year [how many thousands more die early from eating pesticide-laced food?]

11.15  The long read:  The plastic backlash: what's behind our sudden rage – and will it make a difference? [the world wants to throw-up...]

11.15 Claws out: crab fishermen sue 30 oil firms over climate change [workers are waking-up...]

11.15 Trump administration to cut air pollution from heavy-duty trucks

11.14 Backed by Ocasio-Cortez, Youth Climate Activists Arrested in Pelosi's Office Demanding Democrats Embrace 'Green New Deal'

11.13 What would a smog-free city look like?

11.13 Global report highlights Australia’s renewables potential amid mixed signals for coal

11.13 Interior department whistleblower: Ryan Zinke hollowed out the agency

11.12  This Land is Your Land:  The Zinke effect: how the US interior department became a tool of industry [behaving ignorantly again...]

11.12 Planned Parenthood's new president warns of 'state of emergency' for women's health

11.11 Trump responds to worst fires in California’s history by threatening to withhold federal aid [behaving ignorantly again...]

11.11 Interior department sued for ‘secretive process’ in at-risk species assessment [behaving ignorantly again...]

11.11 Keystone XL pipeline: judge rules government 'jumped the gun' and orders halt [behaving ignorantly again...]

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11.16 As 'Green New Deal' Demand Grows, Democrats Have Choice: Confront and Defeat Fossil Fuel Industry or Take Credit for 'Doomed' Planet [Two choices: Save life-on-Earth or help Republicans let it die?]

11.16 Trump’s latest interview shows a president who’s in way over his head

11.16 Why the political fight in Georgia is far from over

11.16 Florida judge sides with Democrats, giving thousands a second chance to fix their ballots

11.15 Democrats Won Big. Can They Go Bold, Too? [it's about suppressing the influence and leadership by Republican-like Democrats who counsel 'íncremental' (no) change, such as Nancy Pelosi, Steny Hoyer, Hillary Clinton, Chuck Shumer and Joe Biden]

11.15 Pentagon Officials Forced to Make Fewer Public Appearances to Avoid Provoking Trump [...by revealing Trump's huuuge ignorance]

11.15 REPUBLICANS USED A BILL ABOUT WOLVES TO AVOID A VOTE ON YEMEN WAR [if there are 'defense industry' profits to be made—including congress-critter insider-trading—and political 'donations' to be had, we mustn't stop killing innocent civilians!]

11.15 Big Oil v the planet is the fight of our lives. Democrats must choose a side

11.14 The Real Florida Recount Fraud

11.14 Telling NRA #ThisIsOurLane, Doctors' Photos Show Blood-Soaked Reality of America's Gun Madness

11.14 At Freshman Orientation, Young and Growing Progressive Caucus Makes Clear It Will 'Fight Like Hell' for Bold Democratic Agenda

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High Crimes?

11.14 The Guardian view on Yemen’s misery: the west is complicit [WAR CRIMES]

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11.16 Amazon’s HQ2 Will Get a Tax Break Designed to Help the Poor [a Republican program that directly helps participating wealthy companies—but only helps workers if and when 'trickle-down' occurs.]

11.16 Trump doesn’t want to punish Saudi Arabia over Khashoggi. His new sanctions prove it. [George W. Bush made a similar immoral decision for the same oily reasons after 9-11, protecting Saudi defense contracts while facilitating the slaughter of poorer Arab "terrorists" in the region.]

11.15 The Earth is in a death spiral. It will take radical action to save us [fossil fuel burning, un-recyclable plastic production/use and methane gas release must cease ASAP.]

11.14 Brexit: May tells her cabinet, this is the deal – now back me

International & Futurism

11.15 Cuba to pull doctors out of Brazil after President-elect Bolsonaro comments [terms must be negotiated for fairness to Cuba's health professionals without disruption of healthcare for Brazil's poor]

11.14 'Appalling' Khashoggi audio shocked Saudi intelligence – Erdogan [Exposing a psychopath?]

11.14 Israel and Hamas launch hundreds of attacks in Gaza clash

11.14 Mueller seeking more details on Nigel Farage, key Russia inquiry target says

11.13 Austin's Fix for Homelessness: Tiny Houses, and Lots of Neighbors

11.13 Portugal Dared to Cast Aside Austerity. It’s Having a Major Revival.

11.13 Caravan marks one month on the road: ‘We keep on going, laughing or crying’

11.13 Letter Shows Einstein’s Prescient Concerns About ‘Dark Times’ in Germany

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  How Fake is the ''Recovery''?
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ECONOMIC COMMENTARY:

How Fake is the "Recovery"?

Statistical Deceptions

by Paul Craig Roberts
Originally published on 29 July 2009

One looks in vain to the US financial media for accurate economic information. Currently, Wall Street, the White House, and the media are all over-hyping any possible sign of economic recovery.

Last week on NPR a professor in the Sloan School of Management at MIT explained that what is really at stake in the health care bill is the US government’s ability to borrow. In other words, the bill is about cutting health care costs, not about providing hard-pressed Americans with health care.

The professor said that if we didn’t get health care costs under control, in 30 years the US government would not be able to sell Treasury bonds.

It is not at all clear that the Treasury will be able to sell its debt instruments in 30 months, and it has nothing to do with health care costs.  The Treasury debt marketing problem has to do with two back-to-back US fiscal year budgets, each with a $2 trillion deficit.  The size of the US deficit exceeds in these troubled times the supply of world savings available to fund the US government’s wars, bailouts and stimulus plans. If the Federal Reserve has to monetize the Treasury’s new borrowings by creating demand deposits for the Treasury (printing money), America’s foreign creditors might flee the dollar.

The professor didn’t seem to know anything about this and gave Washington 30 more years before the proverbial hits the fan.

One looks in vain to the US financial media for accurate economic information.  Currently, Wall Street, the White House, and the media are hyping a new sign of economic recovery--”surging” June home sales.  John Williams at shadowstats.com predicted this latest reporting deception.

Here is the way Williams explains how statistics can produce false signs of recovery. The economy has been contracting for so long that a plateauing of the falloff in home sales compared to the previous time period’s more rapid contraction can appear like a gain.

The Census Bureau itself notes that the  reported 11 per cent increase in June home sales might be illusory.  The reporting agency says that the gain is not statistically meaningful at a 90 per cent confidence interval and that “the Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.”

Williams explains other data distortions likely to create false hopes and lead to investment losses.  Financial stresses from the current state of the economy have changed behavior.  This means that normal seasonal adjustments to statistical data can result in misleading information.

For example, the recent decline that was reported in seasonally-adjusted new unemployment claims was a result of the normal adjustments for the retooling of auto lines that did not, in fact, take place to the normal extent, due to the bankruptcies and uncertainties.  Adding in seasonal adjustments that did not in fact take place artificially reduced the unemployment claims.

Williams warns that after a period of contraction, new monthly or quarterly figures are being compared to prior periods of collapsing activity.  “Improvements” are thus artifacts of the prior collapse and not signs of economic rebound.

The “Birth-Death Model” is used by the Bureau of Labor Statistics to estimate the net of the non-reported jobs lost by failed businesses (deaths) and new jobs created by start-up companies (births). Williams explains why the model understates job loss during periods of contraction.  The modeling on which the birth-death adjustment is based consists primarily of periods of economic growth when there are more non-reported start-up jobs than non-reported job losses from business failures.  The BLS model came up with a monthly adjustment of 75,000 new jobs added to the reported number.  That means an adjustment factor of 900,000 new jobs added to the reported payroll jobs number each year.

However, during economic contraction, such as the current one, it is wrong to assume that new start-ups are creating 75,000 jobs each month more than are being lost to business failures.  Thus the job losses are understated by the 900,000 upside birth-death adjustment and by the absence of a downside adjustment to estimate the jobs lost as a result of failed companies that cease to report.

The reported unemployment rate is itself deceptive as it does not  include discouraged workers who have been unemployed for more than a year.  These long-term discouraged workers are simply erased from the rolls of the unemployed.

The Consumer Price Index no longer measures a constant standard of living and is not comparable to pre-Clinton periods.  During the 1990s, the CPI ceased to be based on a weighted fixed assortment.  The principle of substitution was introduced.  For example, under the old measure, if the price of steak rose, the CPI rose.  Under the new measure, if the price of steak rises, the index switches to hamburger on the assumption that consumers substitute hamburger for steak.

Consumer confidence typically is swayed by “good news” hype. The drops in the Conference Board’s and the University of Michigan’s measures of consumer confidence in July suggest that Americans are becoming inured to recovery hype and are realizing that the government and the media lie about the economy just as they lie about everything else.


Paul Craig RobertsPaul Craig Roberts is an economist who served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as the "Father of Reaganomics". He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. He is the author of Supply-Side Revolution: An Insider's Account of Policymaking in Washington; Alienation and the Soviet Economy: The Collapse of the Socialist Era and Meltdown: Inside the Soviet Economy, and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions: How Prosecutors and Law Enforcement Are Trampling the Constitution in the Name of Justice.

This article is published in the Baltimore Chronicle with permission of the author.



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This story was published on July 31, 2009.

 

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