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Expect the Unexpected
From The Daily Capitalist
UPDATE:
GDP revised UP from 5.7% to 5.9%! Damn, that must make me an economist.
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Today there was a lot of unexpected news.
Unemployment claims increased by 22,000 last week and the culprit is ... global warming. This was unexpected.
Orders for durable goods fell 0.6%, the biggest drop since August. This was unexpected.
Here is the report on unemployment:
The number of Americans filing first-time claims for unemployment insurance unexpectedly increased last week ...
Initial jobless applications rose by 22,000 to 496,000 in the week ended Feb. 20, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance gained and those receiving extended benefits decreased. ...
Continuing claims rose 6,000 to 4.62 million in the week ended Feb. 13. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.5 percent in the week ended Feb. 13, today’s report showed. Nine states and territories had an increase in claims for that same week, while 44 had a decrease. ...
A Labor Department spokesman said part of the reason for the increase in weekly claims was the processing of a backlog of applications in mid-Atlantic states and New England, where snowstorms hit earlier this month. ...
Economists forecast weekly claims would fall to 460,000, from a previously estimated 473,000 for the week ended Feb. 13, according to the median of 43 projections in a Bloomberg News survey. ...
“Strong manufacturing is not enough to support the labor market as a whole, it seems,” Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said before the report. [Ya think, Mr. Shepherdson?]
Then durable goods orders decreased:
Orders for durable goods excluding transportation unexpectedly fell 0.6 percent, the most since August, while a measure of bookings for business equipment showed its biggest decrease in nine months, the Commerce Department in Washington said. The Labor Department said new claims for unemployment insurance rose to a three-month high. ...
Factories may be taking a pause to gauge demand after boosting production in the second half of 2009 to replenish inventories. ...
Orders for motor vehicles and parts dropped 2.2 percent in January after a 5.5 percent gain. ...
Economists forecast orders for durable goods excluding transportation equipment, which tends to be volatile month to month, would rise 1 percent, according to the median of 42 economists surveyed by Bloomberg News. ...
“There’s no reason to think this is the start of a double- dip -- some back and fill is standard operating procedure in recoveries,” Chris Low, chief economist at FTN Financial in New York, said in an e-mail to clients. “ [Wait, if it's SOP, then why didn't the economists expect ...]
You may wish to ask yourself why we even listen to economists' forecasts. I read them because I need to be entertained. Maybe I should take Nassim Taleb's advice and just ignore the news. But then I couldn't get filthy rich writing this blog and entertaining you.
But, I pose a serious question. Why do we listen to these guys?
Last April I wrote an article "Why You should Ignore Economists." I gathered housing forecasts for the past five years from The Daily Capitalist's Research Vault, and showed why the NAHB fired David Seiders too late and why the NAR fired David Lareah too late. In my opinion they guys were pimps for the industry. Let it not be said that I think all economists are pimps. But for the most part their method of analysis is flawed because their basic economic theories are flawed (neo-Keynesisn, econometrics, Monetrarism).
What most economists do is read all the reports of the other economists, get a feel if the trend is positive or negative, and then extrapolate last month's data into a prediction for the future. As I said in the article:
Economists like these operate on historical data. The idea is that by looking at the past you can predict the future. They failed to look at what was happening right in front of their eyes. They failed to see that massive money pumping by the Fed created a classic boom in housing that went bust when money supply declined.
If they are right they are just lucky. If they are wrong, they are unlucky.
Hayek and Mises taught us that you just can't sit down with a hunch and see if the data fits. If you have billions of economic actors, it's hard to know which data are the correct data. So, you've got to start with a theory, test it with logic, reason, and the general law of economic, and then look at data. Even then you can only paint with a very broad brush. Please read Hayeks Nobel speech, or my article on this subject.
I have the luxury of being a writer about economics and not an economist. Since you're not paying for my forecasts you probably don't think highly of it. Which you shouldn't. But I am going to make a forecast. The GDP preliminary numbers for Q4 2009 are coming out tomorrow (Friday). These numbers will replace the advance report which showed a 5.7% increase. The final number come out on March 26.
I predict the preliminary GDP will be revised lower than 5.7%. Let me say that I have the luxury of being a writer on economics not an economist. Since you're getting my forecasts for free you should, rightly so, consider the value of something that's free.
If I'm right I'll be considered smart (lucky). If I'm wrong I'll be an economist.
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Down the old memory hole I guess....
Why was this story moved from the top of the page????
Congrats! You're an economist!
GDP revised UP to 5.9%
Nothing is going to happen to the upside except for political smoke and mirrors....
Note this simple equation....
Income + debt = valuation
Now ask yourself this....
What is it that banks need the most ?
Lots of new...fairly marked....sustainable bankable valuations on the books....
What is the number 1 contributor to banks to date ? Relaxed accounting standards.....ie giving bad debt a more positive value.....however comparatively not real....
...................................
Now ask yourself this....
What is the sole thing that government can do to be causal in the formation of sustainable new business....particularly manufacturing...?
Answer ....permanent tax structure change
What type of change ?
ie eliminate all individual and corporate income taxes....to be replaced by a simple 15% consumption tax....absolutely no other taxes....
........................
What would this do ?
This would immediately make manufacturing competitive with BRIC prices....
.......................
What is the govt. currently doing ?
Just the opposite....every single item that the govt. has presented has added to the tax take....and has thereby reduced the number of businesses....and has made the one remaining less competitive....
So by raising taxes...and having the wrong structure....the govt. has guaranteed financial failure....
.................................
It is that simple folks....
The case for deflation
And the bad things that can happen because of it
"When the teat runs dry ---- people will start to bite"
http://www.investorvillage.com/smbd.asp?mb=3532&mn=39199&pt=msg&mid=8643722
Close the foreign military bases and spend that money in the USA, to provide jobs (Wait: that sounds bad. Here: provide business opportunities. That sounds better.) for Americans instead of foreigners. Fix roads. Build hospitals, libraries, and science laboratories. Pay teachers. Beef up the staff of the agencies policing Wall Street.
Economic data and the predictions of them are 80% politics and 20% economics. It seems like the game is played to make the markets react as they want it to, so we get strangely high estimates when we are in "risk aversion mode", i.e. when they are trying to sell bonds, and low estimates that can plausibly be beaten when we are in risk on mode.
I don't believe either the estimates or the reported numbers have a strong correlation with reality but without this cynicism, I think I would lose my mind and my money pretty damn fast.
"Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally."
Book 4, Chapter 12, Section 5, pg.158
The General Theory of Employment Interest and Money (1935) [JMK]
Que dit le mouton ? — Le mouton dit « Bêê, bêê ».
What says the sheep? - The sheep says "Baa baa".
I could listen to them. Or I could wait until my mother calls and informs me why she should be inequities because of what said economists have been saying. It's good to know how the odd lot herd is thinking. Not implying that I'm a RoboTrader.
But trying to get the bullshit past me is as futile as extracting water from a grain of sand.
How many people are on food stamps?
"But then I couldn't get filthy rich writing this blog and entertaining you." I sense a little sarcasm (sarcastically). It's less entertainment than it is therapy. Just thinking about how we can get you compensated under health "care" "reform."
You are right. Period. The puck will come to you.
More analysts should also use technical analysis as it's a leading indicator and tells us where the economy is headed.
The proprietary indicators I use can identify trend changes before they occur.
In early 2007 I warned of an impending stockmarket crash.
I confirmed an equity bottom by early April 2009.
From mid 2009 onwards I warned of an impending USD rally.
The uptrend since March 2009 is a bear market rally contained within a much larger bear cycle that started in 2000.
http://www.zerohedge.com/forum/market-outlook-0
Long time no see GS,
I was just starting to sleep better, welcome back to my nightmare.
It's the same old idiots, predicting the same old idiocy.
There will be no recovery until America repatriates it's manufacturing base.
No base, no jobs, no tax base and no economy.
Outrageously, our politicians are fighting (with each other) on the same old lost battles, talking nonsense -green shoots, jobs created (none) or saved (huh ?) while the country slips deeper into an irreversible economic depression.
Families and marriages are being destroyed, people are struggling with their individual depression(s), while our politicians dance to the tune of their masters on Wall Street.
Unexpectedly, the homeless, the unemployed, will turn on their lying politicians.
So, in a way, it (unexpected) is a good economic word, widely available for general application.
Expect the Unexpected ! For just as the USSR (unexpectedly) collapsed and the Berlin Wall was (unexpectedly) knocked down, American politicians should (expect) angry and vengeful constituents.
Global warming took our jeeerrrbbss!
It will be revised lower because of the weather.
"It's the weather, stupid!"
If that's true, we'd better all leave our A/C and Hummers running all night. We've got to get some global warming fast for the sake of the economy
Here is the language of modern economic "journalist": "Unexpected, less than expected, seems to be improving, appears to be. less bad, better than expected, less worse, feels like, it appears to be, we think we see, looks like, etc. etc. etc. This language makes the headlines look positive and keeps the journalists from having to report the facts. If a company's 2008 revenues were $100 million and its 2009 revenues were $50 million instead of reporting the revenue drop of $50 million, it gets reported as better than expected because some analyst predicted the drop would be $60 million. Of course on the 'better than expected" news, the stock goes up. This has been game on for the past 2 years.
100% agree, but the sheeple like to hear feel-good things plus it allows the PPT to do their actions and have it not seem as suspicious so their action are better than expected yet looks like normal market action within this seems to be improving economy.
'Revised Lower' is the theme song that everyone has been humming for two years now. And we have been drifting lower in nearly every respect, globally, as a nation, as States, as towns, and as families. We are approaching Lord Williams Reese-Moog's Great Reckoning and we are in for rebalancing.
The energy infrastucure has been beaten down and won't be there to fuel progress if progress needs some fuel. The prices for fuel will rise with demand, but we will turn our pockets inside out like the Greek youth. Our roads and highways are deteriorating and supervision over them is neglected. Snowplowing is only as most needed. Drive around potholls, please. Farmers can't get the loans they need to plant and even if they squeek by and produce good crops, they'll have problems getting them to market. And soon, we may begin to fight over the store of food as our priorities shift from paying mortgages to paying for groceries.
All of the high living of the past few decades is coming back to haunt us. If gross domestic product isn't revised downwards, then its simply not being reported accurately, because there is tension in practically every news report on every country around the world.
Greece is an indicator. That's all.
I remember reading Lord Reese-Mogg's "Great Reckoning" years ago. All of this has played in much slower motion than I would have ever guessed, but it looks like his (and his co-author Davidson) scenarios are playing out...
Bears! Jim Willie CB has a new piece out. I wish I had thought to recommend Jim Willie and others to the Master Bates of our ZH world. He says Buy Gold!
Super Bears! Now is as good a time as any to be looking into the rather fascinating world of survival blogs and "prepping". Food storage, 9mms, rural land with a well. Fascinating.
What if the system dies? What happens then? Those with kids or grandkids might want to think this over...
And, yes, Greece is the canary (or perhaps Iceland or Dubai were). 2010, as I have mentioned before, is going to be a rough year, better have a lot available to drink.