For the third straight session the ‘Stupidity index’ added triple digits in the first hour of trading, again, for no discernable reason.
According to the MSM, the markets spiked today because the G-20 agreed to keep the stimulus money flowing…but that’s a bad thing good citizen, so why the hell are investors so ‘pleased’ with this, er, ‘non-news’?
You see good citizen, if the economy can’t stand up on its own without ‘government assistance’ then it proves the ‘economic recovery’ government statistics indicate and the mainstream media is crowing about IS A LIE!
Actually good citizen, it’s more than a lie… it’s a damn outrage! as we see in this piece from yesterday’s NY Times.
Economists Seek to Fix a Defect in Data That Overstates the Nation’s Vigor
By LOUIS UCHITELLE
Published: November 8, 2009
WASHINGTON — A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation.
The shortcomings of the data-gathering system came through loud and clear here Friday and Saturday at a first-of-its-kind gathering of economists from academia and government determined to come up with a more accurate statistical picture. [This is pretty ‘thin’ good citizen, to suddenly ‘pretend’ that no one was aware of the distortions created by the way imports were accounted for. But these are the same assholes who similarly ‘pretended’ they could ‘hedge’ risk away simply by buying insurance against it! Worse, the dopes didn’t even ensure the ‘counter-party’ was good for the money before paying them a premium that had no relationship to the amount of risk actually present!]
The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.
American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics. [There’s nothing ‘new’ here, good citizen, this is the kind of ‘slight of hand’ that has been at work for three decades. Now that our manufacturing base is gone, the dickheads decide it is time to ‘fix’ the accounting process…so they have something to point to when the dollar suddenly becomes worthless!]
“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.” [STOP! Go back and read that last statement a couple of more times, it doesn’t make sense the first time through and it makes less sense every time you re-read it. It’s difficult to put your finger on what she’s complaining about, isn’t it? Off-shored is pretty self-explanatory but ‘in-shored’? That seems to mean the same thing as ‘imported’…sending work out of house to a vendor inside the same country is known as ‘out-sourcing’, sending work to a different nation (even if it remains on the same continent) is called ‘off-shoring’. Um, yes, nobody is currently ‘tracking’ who, exactly, is shutting down domestic operations and moving them off-shore, only to later ‘import’ finished product made by an overseas subsidiary…]
The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do. [Um, I tend to believe the gaps are much larger than the 2 tenths of a percent claimed here…but you can be sure nobody wants to admit just how ‘hollowed out’ this nation’s ‘Heartland’ has become…]
That may help to explain why the recovery from the 2001 recession was a jobless one for many months and why the recovery from this recession is likely to generate few jobs for many months. [Contrary to the ‘sales pitch’ for globalization, industries that moved jobs to cheaper labor pools didn’t ‘make room’ for better, higher paying jobs to replace those that we ‘off-shored’.]
In addition, more detailed import data would help to explain wage inequality, by linking some low wages more accurately to particular industries exposed to import competition. [Excuse me but wouldn’t the correct phrase here be ‘import non-competition’? Why don’t these foreign workers starve to death? We certainly would if we had to try and live on what they are paid! There’s only one answer to what economists call ‘competitive advantage’ and that is currency manipulation!]
On another front, many argue that labor productivity is rising faster than the pay of workers who made the greater productivity possible. That argument would be watered down if more accurate data showed that productivity had been overstated. [Totally moot point, US workers aren’t being ‘rewarded’ for productivity gains made by their off-shore replacements…it’s a Chimera, an illusion.]
“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics. [There’s a reason why this has been kept quiet and that reason is to prevent the retail operations of off-shored products from being burned to the ground…]
The federal agencies that compile the nation’s statistics increasingly acknowledge that they lack the detailed data needed to calculate the impact of imported goods and services as imports rise from an insignificant 5 percent of all economic activity 35 years ago to more than 12 percent today, not counting petroleum. As a result, many imports are valued as if they were made in the United States and therefore higher in price than their imported counterparts. [As written, this situation raises some interesting tax issues but we haven’t heard anyone ‘complaining’ they are being taxed on their imports…probably because there aren’t any…]
The problem is particularly acute in manufacturing. Imported components constitute an ever greater share of the computers, autos, appliances and other finished merchandise that roll off assembly lines in the United States — and an ever greater share of all of the nation’s imports. [Again, hardly anything is actually ‘made’ here in the US, why do you think there are no jobs? But that doesn’t stop the media from trying to give the public ‘the impression’ that certain jobs are still performed in the US…like packaging and final assembly…]
But the statistical system is not yet up to the task of sorting out which components are made here, which are made overseas and the resulting impact on employment. As Lori G. Kletzer, an economist at the University of California, Santa Cruz, put it, “We don’t know what jobs have been off-shored.” [Which is a bit more, er, ‘mis-direction’ While nobody is in charge of tracking who vends what to whom, the billing system has all of that information. And certain disclosures must be made for shipping purposes so this isn’t quite the ‘blind alley’ the media is painting it to be.]
The same holds for services. An accounting firm in New York with 50 employees outsources some of its functions to less expensive accountants in India: the paperwork on an income tax return, for example. That work comes back to New York by computer transmission and is billed at New York rates, as if it were value added in this country.
Grappling with these blind spots, nearly all of the 80 experts at the conference, which was sponsored by the Upjohn Institute and the National Academy of Public Administration, agreed that the statistics now published tend to overstate the strength of the economy. That view was shared by those who attended from the Bureau of Economic Analysis, the Bureau of Labor Statistics and the Federal Reserve, all big players in measuring economic performance. [Ironically, all big players in distorting economic performance for political purposes too…]
The stated goal, among those at the conference, is to repair the statistics, but that requires several years, lots of money (from Congress) to gather more information about what companies are doing, and whole new procedures for measuring imports. Much of the conference was devoted to an analysis of the gap between existing data and reality, and ways to close that gap. [Um, doesn’t that sound more than a little ridiculous? All we need here is legislation that requires US corporations to disclose their off-shore suppliers and the quantity of product shipped by them. Look at that, problem solved and it didn’t cost a penny!]
Imports and exports are recorded, of course, as they enter and leave the country. The American trade deficit speaks volumes. But when it comes to who gets what import — particularly which manufacturer gets what component or what metal or what machine — these details are not gathered. [Excuse me? Why are they trying to cloud the issue by bringing up what ought to be a rare occurrence? Most of the time the shipping address is also the final destination, it is extremely rare for imported product to be moved even short distances by the importer.]
Instead, the federal agencies use an import price index, much of it imputed from small samples, that fails to capture just when an auto company switches from a domestically made carburetor to a less expensive Chinese model, and whether that shift is in all of the company’s plants or just those in Michigan.
“We can’t pick up the price shift,” Mr. Alterman said. “We are not designed to do that
Understand good citizen what we are seeing here is precisely where capitalism and self-interest cease to benefit anyone EXCEPT that specific individual, the rest of society be damned!
Go back and look at who ‘wins’ in the Indian accountant example? The customer pays as if someone in New York did the job so they don’t get the ‘win’, the ‘winner’ here is the accounting firm, not the customer.
Let’s suppose this is a big time operation, who wins now? Wouldn’t the ‘premium’ go directly to the company’s bottom line, there to be split amongst the partners? So what have we got? Another example of corporate executives raking in cash they did nothing to earn…
This benefits the nation/society you belong to how? Yep, it doesn’t…it merely makes it a little bit uglier and cruder than it already was.
Rewarding swine is great if you want to live in a land run by pigs!
Fortunately, people are better than that…and outnumber the pigs by a significant margin…
Thanks for letting me inside your head,
Gegner
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