The Dummies' Guide to Stupid Leaders and Misleading Numbers

Posted May 3, 2008 | 08:05 PM (EST)



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In case you didn't know, the loss of 20,000 American jobs in April is actually good news. You see, economists had predicted 73,000 jobs would be lost last month, so thank God we dodged that bullet, right?!

In fact, the unemployment rate fell to 5.0% from 5.1% in March. Therefore, the unemployment rate is going down!! Surely, a .1% drop in the unemployment rate means America's determined locomotive is chugging toward the dawn of a new economic renaissance...right?

These kinds of figures can mislead citizens, particularly when delivered in sound bites by an ignorantly defiant leader. Let's first consider the possibility that less people are losing jobs because so many people are already unemployed. People can't lose jobs they don't have, and I know very few people that have been laid off the same job twice. These kind of polls also rarely consider the underemployed, who are in as much danger of bankruptcy as unemployed citizens due to medical bills.

Finally, the government doesn't count everyone who is unemployed. Only people who are actively looking for employment are considered unemployed.

Contrary to the philosophy of Reagan Republicans, these unemployed-and-not-looking citizens aren't all welfare queens. They're also spouses, veterans, the disabled, and the retired, all of who have nothing in common other than being screwed by the Bush administration. The "unemployed-and-not-looking" also includes the independently wealthy. Yes, believe it or not, some rich people refuse to contribute to the work force. What do we call those people -- Trust Fund Queens?

During his weekly radio address President Bush declared, "We saw the economic slowdown coming, we were up front about these concerns with the American people, and we've been taking decisive action."

For a moment, let's take Dubya at his word. He saw the slow-down coming. Why then did he spend two terms in the White House providing huge corporations tax breaks in the form of Corporate Welfare, while slashing social spending? A competent leader surveys a bad situation and acts to fix it. Dubya surveys the same situation, kicks it in the balls, and then hides behind Ben Bernanke, while snickering. It just doesn't make sense.

Back to Dubya's radio address. Let us overlook his own words, and this particular exchange with a reporter way back on September 20, 2007:

QUESTION: Do you think there's a risk of a recession? How do you rate that?

BUSH: You know, you need to talk to economists. I think I got a B in Econ 101. I got an A, however, in keeping taxes low and being fiscally responsible with the people's money.

I'll let it pass that Dubya's a douche bag, a condescending, spoiled brat who is more preoccupied with preserving D.C. cronyism than protecting American citizens' interests. But what I won't let slide is how he has treated the American people like children when he dressed up a recession in a clown suit and called it a "slow down." In this regard, President Bush and his sterling troop of economists have executed nothing resembling "decisive action." They have spent their time in denial and casting blame everywhere but at their own failed policies. They certainly have done nothing to fix the economy.

Unless, of course, you count forcing a shotgun wedding with JPMorgan and Bear Stearns with $236 million of taxpayer money. Personally, I see that as the rich protecting the wealth, but I've been called paranoid and moody in the past.

But I know when I'm beat, so if protecting rich people is decisive action, then yes, George W. Bush is the most decisive president in the history of the United States. Call him "the Decisiver." Tell him it's a real word. He'll believe you.

Dubya has been super to the rich, but lousy to everyone else. According to the Center for American Progress, since the Great Depression, Dubya is the only president (serving at least 52 months) who has overseen a net loss in the private sector. He has slashed funding for education, veterans' health care, law enforcement, and environmental protections. Dubya has repeatedly raised the ceiling on our national debt time, and at this rate the debt is on track to reach the $6.5 trillion mark by 2011, according to the Washington Post..

The economy is in the tank and most Americans feel the strain. They don't need pundits or politicians to tell them they're paying more at the pump and grocery store. Hopefully, citizens won't buy into the ridiculous belief that 20,000 lost jobs is a good thing -- a sunny turnaround -- a surge, if you will. The economy, like the war, is toast.

The first step of recovery is recognizing that there is a problem. Americans need to demand solutions from their leaders. The only way to fix the economy is to elect competent leaders to pull Americans out of this country-sized grave.


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Note to Obama: First thing, suspend the trading oil futures immediately

favoriteFavorite Flag as abusive Posted 05:16 PM on 05/06/2008

The "POLLYANNA CREEP" in government economic reports --------
It"s much worse than most realize, as the following quotes indicate:

Indeed, it may already be showing up there; the seasonally unadjusted consumer price
index for March was up 0.9% (an annual rate of around 11%) and only a heroic seasonal
adjustment of 0.6%, DOUBLE THE NEXT-LARGEST SEASONAL ADJUSTMENT for
any month in the last 10 years, brought the figure down to an acceptable 0.3%.
http://www.atimes.com/atimes/Global_Economy/JE07Dj02.html


The article goes into such frauds as "imputed income" (such as the "value" you receive
from living in your own home, or the "value" of your free checking account), the total of
which Mr Williams calculates was 15% of total GDP in 2007! Wow! "Imputed income"
was 15% of GDP?
...
Then, finally, we get to how magically to reduce inflation with "product substitution" in
the consumer's shopping basket ("if flank steak gets too expensive, people are assumed to
shift to hamburger, ..., the inflation-reducing scam of "geometric weighting" of the items
still in the shopping basket ("goods and services in which costs are rising most rapidly get
a lower weighting for a presumed reduction in consumption"), and concluding with the
infamous "hedonic adjustment", (which even the author says is "an unusual computation
by which additional quality is attributed to a product or service").
http://www.atimes.com/atimes/Global_Economy/JE07Dj01.html

favoriteFavorite Flag as abusive Posted 09:57 AM on 05/06/2008

Allison, W may be a douche bag, but you are clearly an ignorant slut.

favoriteFavorite Flag as abusive Posted 12:04 AM on 05/06/2008

I just got my $600 stimulus check!! Awesome, thanks W. Oh, wait, my cat got sick last week and had to have unexpected surgery on Thursday. Surgery + 3 days in hospital: $1018. Four visits to vet leading up to surgery: $800. I've already given up going to the movies, eating out, buying national brand grocery items, buying clothes, driving to work, birthday gifts, medications....

favoriteFavorite Flag as abusive Posted 01:04 PM on 05/05/2008

Gee, the smart thing would be to put the cat to sleep, and get another one instead of spending so much money on the cat. mmmmmmmm good example of poor choice by you, and only you.

favoriteFavorite Flag as abusive Posted 06:20 AM on 05/06/2008

One swing of a shovel would have taken care of your cat problem weavy. I'd a done it for free.

favoriteFavorite Flag as abusive Posted 12:05 AM on 05/06/2008

Well, if you didn't own a cat you'd be 600 ahead (just kidding, but I couldn't resist). I know how attached people are to their pets, but it's something I've never understood.

favoriteFavorite Flag as abusive Posted 06:55 PM on 05/05/2008

Plus, that $600 was borrowed from China.

favoriteFavorite Flag as abusive Posted 01:15 PM on 05/05/2008

First law of economics, politicians can't make a utopia.

Second law of economics, given choices, it is amazing how people can adapt and change and make things better, if politicians don't put too many rules on them.

Third law of economics, politicians running for office always say the economy is worse than it is when they are out of office and trying to get in power.

favoriteFavorite Flag as abusive Posted 07:01 AM on 05/05/2008

Those aren't the laws of economics, but Photofarm's laws of economics. The natural laws of economics are:

by Fred E. Foldvary, Senior Editor
A natural law is a proposition that is universal to a subject matter. In science, a natural law consists of propositions describing and explaining observed regularities. There are in economics some basic regularities which have been designated as natural laws of economics. These include:

1. The law of demand.
2. The law of supply.
3. The law of diminishing returns (law of decreasing marginal productivity).
4. The law of one price.
5. Gresham's law.
6. The law of reflux.
7. Law of supply and demand.
8. The law of diminishing marginal utility.
9. The law of unintended consequences.
10. The law of iterated expectations.
11. Engel's law.
12. Wagner's law.
13. Foldvary's law of inequality. .
14. Say's law of markets.
15. Law of time preference. 16. Law of the market.
17. Pareto's law of distribution.
18. Law of cost.
19. Law of comparative advantage. 20. The law of wages.
21. The law of rent.
22. The law of capital goods.
23. Walras' law.
24. The law of economizing.
25. The law of economic rationality.
26. The Gaffney effect.

favoriteFavorite Flag as abusive Posted 09:41 AM on 05/05/2008

Yawn, bet you don't even know what half of the rules you site mean.

Besides, the ones I listed are included in your list, I just gave them a realistic name.

favoriteFavorite Flag as abusive Posted 06:21 AM on 05/06/2008

Of course the biggest point I saved for last. Basically NBER is using apples to determine a recession when economists use oranges.

Finally, the NBER does not use the mechanical rule of two consecutive quarters of negative GDP growth in determining whether we had a recession or not. The NBER looks at a variety of economic indicators and puts more emphasis " among other variables " on employment and labor market conditions. We do know that employment in the private sector has now fallen for four months in a row and that overall non-farm employment (including the government employment) has fallen for three months in a row. So I do expect, leaving aside possible future downward revisions in the Q1 figures, that the NBER will eventually date the beginning of the 2008 recession to the first quarter of 2008.

favoriteFavorite Flag as abusive Posted 06:28 AM on 05/05/2008

Fourth, fifth, and sixth points he makes

Fourth, since the quarterly GDP figure compare the average GDP in the first three months of 2008 to the average GDP in the last month of 2007 even a flat or slightly falling GDP in some months of Q1 is consistent with the average being positive relative to the previous quarter (that is the average of three growing months). And data on monthly GDP (say from Macro Advisers) show that GDP started to fall in February of 2008. This is the typical inertia in growth figures that comes from looking at quarterly, rather than monthly, figure. Thus, the Q2 GDP contraction will be larger than otherwise.


Fifth, both durables goods consumption and non durable goods consumption grew at a negative rate in Q1. What boosted an anemic 1% growth in Q1 consumption was a still positive growth in services consumption. Durable consumption spending is clearly collapsing (-6.1%) But the fact that spending on non durable goods is falling " something that has not happened in decades " is an ominous sign.


Sixth, the only good news on growth came from net exports. But with sharply rising oil prices in the last few months you are going to see a sharp rise in imports of oil and energy goods in Q2 that will further depress Q2 growth.

favoriteFavorite Flag as abusive Posted 06:26 AM on 05/05/2008

Next he talks about investment

Third, now all components of fixed investment (residential investment, non-residential investment in structures and capex spending by the corporate sector (i.e. non residential investment in software and equipment) are now in negative growth territory. This is a major difference relative to 2007 when structures investment and capex spending were significantly positive. The investment recession is now clearly spreading from housing to non residential commercial real estate and to real capital spending by the corporate sector.

favoriteFavorite Flag as abusive Posted 06:25 AM on 05/05/2008

Then he talks about housing

Second, residential investment is in total free fall, collapsing at an accelerating annual rate of 26.7%. But GDP figures underestimate the true fall in aggregate demand as they do not separate residential investment into true final sales of new homes and into the unsold inventory of new homes that are produced and not sold. Thus, all production of new homes is assumed to be sold in the national income accounts data. But we know that home sales are falling more than production of new homes, that cancellation rates (running at a rate of 20-30%) are not included in the new home sales figures and that the inventory of unsold new homes is actually rising. Thus, if the BEA had correctly measured final sales of domestic product, by having a separate line for the change in the inventories of new unsold homes (the equivalent of the change in business inventories), the figure for final sales of domestic product would have been even more negative than the already negative 0.2%, probably a negative 1.0%. So the national accounts make a methodological mistake in measuring final sales of domestic product by assuming that the change in inventories of unsold housing is always zero, something that is obviously wrong especially during a severe housing recession.

favoriteFavorite Flag as abusive Posted 06:24 AM on 05/05/2008

Got this from economist Nouriel Roubini's website

Apr 30, 2008
The official headline for U.S. Q1 GDP growth says a positive 0.6% growth but the details are ugly and confirm that we are in a recession.


First of all, if you exclude the increase of inventory of unsold goods (that moved positive after a negative figure in Q4) the Final Sales of Domestic Product were a negative 0.2%. In other terms, inventories of unsold goods added an artificial 0.8% to Q1 growth boosting it from a negative 0.2% to a positive 0.6%. So actual aggregate demand (Final Sales of Domestic Product) " the actual measure of growth of true demand - fell in Q1. And this build-up of inventories in Q1 means that the fall in GDP in Q2 will be larger than otherwise as firms will have to reduce that large inventory of unsold goods via a further reduction in production and employment.

favoriteFavorite Flag as abusive Posted 06:23 AM on 05/05/2008

Robert59, you left out the most important factor vis-a-vis the BLS (Bureau of Lying Statistics). The 0.6% positive growth is based on an inflation rate of 2.6%. The real inflation rate, even with the price of residential housing plummeting, is at least double that, putting the GDP in major negative numbers.

favoriteFavorite Flag as abusive Posted 08:37 AM on 05/05/2008

Well, my feathered friend. The economist I quoted, not I, left it out. I need to do some researching to see how inflation factors into GDP calculations. I would think it has to be a part of the equation, but if it's factored into the value of the what's been produced I'm not sure it strengthens your argument or weakens it.

Either way, I've thought the same thing and also wonder how the official inflation rate never made any sense.

Su gallo calzonazos

favoriteFavorite Flag as abusive Posted 08:53 AM on 05/05/2008

maybe just maybe when the economy is toast we will give up our imperialism. it will take a force like a economic depression may end our war mongering for profits.

karma is doing its thing. the atheists dont see karma as a reality and the religious are too self rightous to see it.

listen carefully to rev wright many of his words are right on track but his way of presenting them misses the mark. hate and ego have overwhelmed him.

the chickens are truly coming home to roost. maybe we americans are willing someday to give up our victim status. but dont count on it.

jesus said it best what we sow we reap. reap time in america.

favoriteFavorite Flag as abusive Posted 05:14 AM on 05/05/2008

There's a few things Wright said I found difficult to swallow (government creating AIDS, blacks learning differently than whites which sounds to me like he's blaming teachers instead of parents for Johnny being unable to read, or lumping all whites into the slave owner category when most Europeans didn't even set foot in this country until after the civil war).

All that said he is right when he says the chickens have come home to roost. If you think our energy, trade, and even domestic policies are linked to our foreign policy it's obvious he is onto something.

We support governments all over the world who deny their citizens the freedoms we have and undermine those who do, and it's all done to fatten the wallets of multinational corporations who haver ZERO allegiance to this country or what it stands for.

favoriteFavorite Flag as abusive Posted 06:43 AM on 05/05/2008

Dang, I like the way this kid (compared to me) writes. I read a previous article and was waiting for one more and I have just become a fan. Call it like it is and no one can ever beat you.

Allison, I hope you jump into politics. Soon. A few thousand more young, honest, brilliant leaders who aren't afraid to tell the truth and Obama CAN turn the country around.

favoriteFavorite Flag as abusive Posted 02:13 AM on 05/05/2008

In the Ownership Society, anyone who can't find a job is given the option of enlistment or imprisonment.

favoriteFavorite Flag as abusive Posted 12:46 AM on 05/05/2008

As long as you are on the subject, why don't you suggest some ways for us to understand this business of "negative growth." Some people likes to see "growth," and don't mind the negative kind.

favoriteFavorite Flag as abusive Posted 12:01 AM on 05/05/2008

Petroleum costs keep going up, meaning everything that is brought to your neighborhood store by truck or rail is going to cost more. The dollar keeps losing value, so the cost of a barrel of crude oil keeps going up. Companies are being hit with higher costs for everything, so they're cutting corners anywhere they can, especially in personnel. People without jobs are buying only what that must, so companies that sell items that aren't absolutely necessary are feeling the pinch and cutting corners, so they're laying people off - who won't have jobs, and income, so they won't be buying stuff.... Oh, my... The recession is upon us, but it's going to get a lot worse before it gets better.

favoriteFavorite Flag as abusive Posted 08:21 PM on 05/04/2008

There is no place for smart, reasonable *moody* people like you in the blogosphere.

favoriteFavorite Flag as abusive Posted 06:55 PM on 05/04/2008

"The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in March, before seasonal adjustment"

http://www.bls.gov/news.release/cpi.nr0.htm

That is an annual rate of 11% inflation not the 3% reported after the "seasonal adjustment".


"Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.6 percent in the first quarter of 2008"

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

The 0.6% increase was based on the aforementioned bogus inflation data. Had the untampered data been used the resulting GDP number would have been -1.2%. Likewise, the prior quarter would also have registered and negative number.


U-3 (official unemployment rate), April 2008 - 5.0%

U-6 Total unemployed, April, 2008 - 9.2%

http://www.bls.gov/news.release/empsit.t12.htm

The underlying unemployment rate is almost twice the headline rate. Thus with inflation and unemployment running at about 10% each the misery index is at 20%.


"the debt is on track to reach the $6.5 trillion mark by 2011,"

The National Debt is already over 9,350,000,000,000 today.

http://www.brillig.com/debt_clock/

favoriteFavorite Flag as abusive Posted 10:12 AM on 05/04/2008

How truly destructive. I've noticed a clear pattern in your posts. You're presenting factual arguments. Cogent.

What if the MSM behaved this irresponsibly?

Please share a bio.

And pls continue. We so need a real cultural revolution.

favoriteFavorite Flag as abusive Posted 12:17 AM on 05/05/2008

C'mon Ole' one. You know how important it was for that GDP to be positive. It buys them another quarter to make their getaway without meeting the "R" word standard of the NEBR.

Heck, we haven't even gotten to revisions yet. Down you say? They still have the All-Conference Record jobs number revisions for August to beat. The 1Q GDP should go up, easily, a point or 2. They can make up chit in their sleep that would cover a measly couple of points. A quick substitution or adjustment to a hedonic model and Voila!, "Houston, the "V" recovery has been attained". Ya know cowflop is going to have an imputed value soon.

Maybe all 90,000 of the teachers they missed in August, bought cars and HDTVs in February. And they missed that. Plus some government contractor has been building expensive widgets for the past two months to fill warehouses they can say they missed. The possibilities are only limited by their imaginations. Proven both capable and boundless.

BTW, with house prices falling, resales dead in the water, soon-to-be non-owners going bankrupt, and walk-aways occurring everyday, I didn't hear any note of severe negative impact from imputed owner-occupied housing. We got a hell of a boost in past GDPs on value that didn't exist. Only seems fair to ratchet it back out.

favoriteFavorite Flag as abusive Posted 09:04 PM on 05/04/2008

Oh, did I mention the Birth/Death jobs adjustment for April was 267,000 including 45,000 new construction jobs? This despite a 12 % drop in home building, layoffs increasing by 67% and claims for unemployment rising. The 20,000 job loss would have been a 287,000 job loss without this adjustment.

favoriteFavorite Flag as abusive Posted 10:51 PM on 05/04/2008

I have been biting my tongue on this for a while. I need for you all to take a look at who they put in charge of the Economics and Statistics Administration. That includes all of your BEA and Census Bureau numbers. Gross domestic product, retail sales, personal income, housing starts, inventory levels, international trade.....Cynthia A. Glassman

https://www.esa.doc.gov/under_secretary.cfm

She was a disruptive power at the SEC for 5 years. Some superficial research catches her at times, against regulation on principle alone. Her operative method was to demand statistical evidence that a regulatory action was needed, before it should be considered. .... you would have had to prove that those CDO trash bags of sub-prime mortgages were WMDs. Or the Auction Rated Securities were actually not "as good as cash".

She was key to the familiar Rich Big Guys' plan... to avoid obviously invoking non-regulation, but turning it into bad regulation.

Bush's people appointed her temporary Chairperson of the SEC in 2005. Cynthia couldn't get a confirmation. Why?

Because Cynthia has had dinner and spoke more frequently at The Heritage Foundation than Dick Cheney.

As far as I'm concerned, they sent her ahead to the ESA to cover the numbers until everybody could get out of town.

Check out her Head Economist. Dr Kennedy was a legal mouthpiece for MAPI . He has only published one purely economic paper. Guess who funded the paper and publishing.... You got it!.... The Heritage Foundation.

favoriteFavorite Flag as abusive Posted 09:22 PM on 05/05/2008

This is exactly the point. While a few moronic conservatives have been touting the low unemployment rates as symptomatic of a healthy economy, the fact remains that such percentages pertain strictly to those receiving unemployment benefits. Thus, the minute the benefits have exhausted, those who have been chronically unemployed "drop off the radar", and thus give conservatives all the more reason to gloat over a series of misleading figures..

favoriteFavorite Flag as abusive Posted 11:50 PM on 05/03/2008

Those numbers also fail to include the two million plus sitting in prison (highest per capita in the world). Makes you wonder if the reason we lock up nonviolent, petty criminals for years on end is just to hide the fact that our economic system is completely broken (that would also explain the fanatical push to cut the already meager benefits offered to the unemployed)

favoriteFavorite Flag as abusive Posted 12:34 AM on 05/04/2008

The unemployment rate is at least partly determined by a survey--people called to ask questions.

Some years ago, anyway, people without land telephone lines, people who were rarely home when the phone call from the official surveyers called, etc. were also not considered unemployed. Or at least they weren't asked. Which would tend to skew the results towards higher employment rates.

I don't know if cell phones are currently called. I do know a fair number of people who have only cell phones.

Also not among the unemployed were those who had given up. They may have networked, researched, called on everyone they knew, sent out 400 resumes in order to get two interviews. Neither of them resulted in even a bad job offer.

favoriteFavorite Flag as abusive Posted 11:37 PM on 05/03/2008

According to the article in Business Week, there were "strong employment gains in the service sector, which rose 90,000" - and as noted, "the loss of 20,000 American jobs in April is actually good news."

Astonishing. Truly astonishing. I'm no economist, but I coulda sworn that the loss of jobs was BAD news... and aren't "service jobs" usually things like burger-flipper and house-cleaner? Having strong gains in those areas is good news?

What has the business community been drinking, and can I have some?

favoriteFavorite Flag as abusive Posted 11:21 PM on 05/03/2008