Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

From The King Report last evening:

Hi TJ,
I'll bet you were thinking that I forgot about you w/r to the King reports. Not so..... they just haven't been quoted for a while by my sub source.

"We have mentioned that more and more people are talking and writing about the mendacity of government economic data. It appears we have moved to the next stage where economic and statistical professionals reveal second-hand accounts of pressure on government statisticians to rig the numbers. The next stage will be the appearance of first-hand accounts of the manipulation.

Jim Willie (non de plume for a PhD statistician with over two decades of corporate experience including stints at Staples and Digital Equipment) writes "The Hat Trick Economic Report". He offers some insight into the fraud that is AKA government economic statistics in his current letter:

"After much corporate experience, it is easy for me to see how political pressure and influence can come to falsify the Gross Domestic Product, Consumer Price Index, and Jobs Reports, to make them look good…All too often, economists operate as charlatans who bask in the limelight of public light, who have sold out their integrity for power and status. Surely, many function with competence in a true spirit of adherence to the truth in data, and wish to fully utilize the leverage of refined filters from advanced statistical methods. Some of the best economists are people whom you never hear about, whose identities are unknown, whose work is designed to capture enormous profits for private brokerage firms and hedge funds…The system has failed us. Institutional economists have fast become a political priesthood, which has sold out solid defensible analysis methodology in favor of adaptive malleable political ideology."

"A competent former colleague escaped from the Bureau of Labor Statistics, replete with war stories. Steve reported first-hand experience on dynamic scoring, whereby rising components in price are substituted by more stable alternatives. We joked over lunch about substituting cat food for beef steak. He talked about the heavy hand of directors to keep the CPI low, since federal budget costs (raises, Social Security, pensions) are tied to cost of living adjustments."

"A current friend used to work at the Cleveland Federal Reserve. Randy is one very sharp fellow, at work in a private consulting firm after 20 years of govt service…He claims the NY Fed is shockingly behind the times in analytic methods, with evidence being constant mention of mfg capacity slack and productivity as excuses for low interest rates, despite large scale layoffs and the service outsource trend. Talk centers on their earned reputation of not possessing skills with the PC or email. They still live in the 1980 decade, reliant upon old formulas and assumptions no longer relevant with a fast changing economic structure disturbed by globalization forces." http://www.financialsense.com/Market/daily/monday.htm

"I have followed developments of major changes in recent years being made regarding how key indicators are measured and reported -- such as for GDP, national income, inflation, productivity, savings, and other important economic items. Criteria changes in the 1990s have been most dramatic, and the truth about the validity of those changes is now coming out. Basically, many of today's economic measurement items have no relation to the past. Such gives a false sense of economic matters appearing better off than they actually are, when compared to the past. This causes many to make wrong decisions regarding current economic trends -- potentially a very dangerous situation." Michael Hodges in "Statistical Revisionism and Wizardry – a danger to a nation" http://mwhodges.home.att.net/statistic-wizardry.htm#top

More evidence of the US productivity miracle: Reuters: "A motion sensor found on Philadelphia rail tracks that raised concern about possible terrorism was planted by an employee hoping to be warned of approaching bosses while he slept on the job, officials said on Monday." http://news.yahoo.com/news?tmpl=story&u=/nm/20040524/us_nm/odd_rail_dc_1

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