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Plato's Beard Dulls Occam's Razor
This morning is sovereign morning here on Zero Hedge. Having looked into Dubai the United Kingdom, and Moody's non-assessment assessment of the Aaa gang, we explore the popular notion that treating with deep skepticism the economic pronouncements released by the sovereigns of developed, "western" economies (or their nearest approximation) is something for the "tin foil crowd." Despite the tremendous temptation presented to sovereigns in their role as not only issuer and regulator of debt, but the supervising authority overseeing financial reporting (and the absence of an authority empowered to enforce creditor's rights) it apparently seems quite beyond comprehension to wonder if a bit of rose colored lensing isn't being applied. Well, sure, there might be some fudging of unimportant figures like "jobs saved or created by stimulus," but:
- The very definition of the statistic makes it unfalsifiable.
- Who the hell are you to say that eight pairs of work boots didn't save eight jobs?
- The really important stats just aren't the kinds of things that get "fudged," in developed countries.
Ah, but how short memories are.
Indeed, it's easy to brush off some sell-side antics when one is talking about Dubai. (Isn't that in Iowa somewhere?) but things take on quite a different moment when you start to wonder if wholesale data manipulation isn't going on for a member of the "developed world." A founding member of the OECD, for instance. Maybe a nice, stable parliamentary republic. One of those places that let women actually vote back before it was even fashionable. How about a NATO member? A member of the United Nations Security Council (for what that's worth)? Even, a member of the European Union (for what that's worth).
You know. Someplace like Greece.
Not the place you would expect to, suddenly, reveal a budget deficit of almost 13% of GDP, after having predicted 6% just months earlier, and in spite of the fact that the European Union is supposed to be enforcing a limit of 3%.
Der Speigel is being polite today when they breezily point out that:
In 2004, it was discovered, completely by accident, that Greece had only managed to qualify for entry into the currency union by massaging its budget figures. The Greeks have only complied with the Maastricht criteria once since the introduction of the euro, in 2006.
Even those figures may have been doctored. At the time, the Greeks managed to increase their official gross national product by a hefty 25 percent, partly because they included the black market and prostitution in economic output. This brought down the deficit rate -- on paper, at any rate -- to 2.9 percent.
The figures representing Greece's budget deficit are constantly being revised upward. The most recent uptick, by close to 7 percent, is a record for Europe -- and it comes in a country that was relatively unaffected by the financial crisis. This year, the Greek economy will have shrunk by only 1.2 percent, say Greek economists. Next year they expect the economy to return to grown, albeit modest.
Consequences? After a long string of denial (self and otherwise) they are finally all over the financial news today. Surprise! (That is, unless you read about it here on Zero Hedge back in January).
Yeah well, Greece. Tough break. But that could never happen here.
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Wow - Meredith Whitney on CNBC talking sense - yes, sense - it is unbelievable - at least the barkers can't believe it!
Once again, anyone who doesn't sing from the CNBC hymnal of "Dow 14000" is ridiculed and talked over until their message is completely incomprehensible.
very good compendium peace to this si the article in NYT about the lack of will to do anything about the ratings agencies. Quelle surprise. The triumvirate: treasury, primary dealer and rating agencies. good quote in the NYT article discussing how any change would would threaten the debt that drives the economy. The height of irony.
I learned there are Greek Economists.
"Greek Economics" could be the new slang for:
"The Obama administration released more bullshit numbers on the economy today..."
And let's not overlook the most important stat of all: 83% of statistics are made up on the spot.
Greece has always been the sick man of Europe. No surprise there.
And government can cheat on important statistics. Especially if they are as corrupted as Greece. Color me surprised.
On the other hand, you also need to put this in perspective: Greece has a GDP of US$ 343 billion while the EU has a total GDP of US$ 15.2 trillion. Greece is a midget, like most other East-European countries. Yes, fellow ZHers, the Eastern Europe (or, in this case, Southern Europe) cataclysm is not going to materialize any time soon, I am afraid.
So, as far as the FX and € are concerned, Greece is chump change. But still a bad example. Expect a tightening of the screws by the European Commission. Yeah, right.
Anton,
in isolation that is surely not a big threat.
Add in the lending gone bad in most of Eastern Europe the sums get bigger.
Still not end of the world but might be end of taxpayers patience.
Gunther,
When was the last time you heard a government say to its taxpayers: "You really don't want to pay? Oh well, bummer, we'll have to forget about the whole thing then..."?
Especially given the amazing ongoing democratic process that is the EU: three different countries (France, Netherlands, Ireland) voted "No" against the extension of the EU. So what did it do? Just turn the whole thing into a parliament-approved "treaty" and, presto! No more popular vote!
Trust me, the ECB and the European Commission won't ask European citizens if they want to pay for Greece's follies. All member of the eurozone will have to pay for it.
Also, the main difference between Greece and the Eastern European countries is that Greece is part of the Eurozone. Eastern European countries, with GDPs even smaller than Greece's are not part of the Eurozone. In other words, they can go and bugger off if they run into too much trouble.
On the other hand, if you had mentioned Spain and Italy, which are also in pretty (OK, very) bad shape, I think you would have had a point... But Spain's default (for instance) would mean the end of the Euro as we know it...
Indeed I believe as you do that Greece is chump change that in itself will not bring down E Europe. Even with all the fudged numbers Greece as yet has not defaulted. Regarding the certain coming default, any players in the Greek market surely believe as they do here that there will be a greater fool upon which one can offload before things really hit the fan. So to date the status quo of blue pill investing in Greece and other shaky sovereigns remains in tact.
The implications here are more setting the stage for some larger confrontation/conflagration. Why would any Latvian stand for the austerity measures forced on them if they know they can just fudge their numbers to get EU membership? Why should they? There are intense resentments brewing amongst the haves and have not soverigns in Europe and E Europe. This is a huge step towards the mentality that each country is out for itself, and making concessions aimed at satisfying the EU (whether the country is on the inside or outside) is nothing short of a suicide pact.
Greece is on that level, as is the US as marla points out. If lies and accounting fudges can ameliorate one's problems, its a cheaper and faster acting solution than actually DOing something.
The masseuses are sure making a killing these days.
But in Copenhagen
Prostitutes Offer Free Climate Summit Sex
http://www.spiegel.de/international/zeitgeist/0,1518,665182,00.html
not surprising. if there was any doubt about greece's continuing third-world status, just look at the pack of wild dogs that just ran by you in central athens
The idea of trusting numbers made by the government to show how well the government is doing is like trusting someone of loose moral character about their STD status. After all no need to use protection, he/she told me it was safe, and he/she wouldn't lie to me!
I'd trust a used car salesman before I'd take gov numbers at face value. Hell at least the salesman has to lie to my face, rather then just put their falsehoods on paper.
Why invite Meredith Whitney on CNBC if you are just going to talk over here and sit there with your mouth open like a fly eating mongoloid from Asshole, Arkansas?
"...fly eating mongoloid from Asshole, Arkansas?"
That is too much anony. +1.
I look at CNBC especially Fast Money and I swear they are the used car salesmen from the local Chrysler Plymouth with all the slicked back hair and ugly ties...
For a minute I thought you were picking on Mike Huckster-bee... who admitted to frying up squirrel in the the bottom of a popcorn popper in his dorm room while in college...
Now that's a..."fly eating mongoloid from Asshole, Arkansas."
When you're running a confidence game with other participants (let's call them countries) regardless of your own individual best interest, it's in every country's best interest to lie, lie, lie. And then lie some more.
To assume a government is telling the truth about anything is to assume the 5 year old caught with his hand in the cookie jar but telling you it isn't his hand is telling you the truth.
The difference is we so dearly wish to believe our government, so it's in our best interest to believe (otherwise we would be compelled to do something about it) while it's not in our best interest to believe the child with the hand in the cookie jar, thus we begin instructing and training him in honesty and integrity.
It comes down to what we "believe" we can control and that which we "believe" most directly effects our daily way of life. A child lying to us on a daily basis pulls us into all kinds of problems, a government doing the same thing is much removed, at least in our minds.
How could anyone possibly argue that prostitution is anything short of "output"?
"This tangled doctrine might be nicknamed Plato's beard; historically it has proved tough, frequently dulling the edge of Occam's razor." Quine
Marla's heds rock!
Wherein in time past ye walked according to the course of this world, according to the prince of the power of the air, the spirit that now worketh in the children of disobedience: Ephesians 2:2
Ye are of your father the devil, and the lusts of your father ye will do. He was a murderer from the beginning, and abode not in the truth, because there is no truth in him. When he speaketh a lie, he speaketh of his own: for he is a liar, and the father of it. John 8:44
And the great dragon was cast out, that old serpent, called the Devil, and Satan, which deceiveth the whole world: he was cast out into the earth, and his angels were cast out with him. Revelation 12:9
"There is no such thing, at this date in the world's history, in America, as an independent press. You know it and I know it.
There is not one of you who dares to write your honest opinions, and if you did, you know beforehand that it would never appear in print. I am paid weekly for keeping my honest opinion out of the paper I am connected with. Others of you are paid similar salaries for similar things, and any of you who would be so foolish as to write honest opinions would be out on the street looking for another job.
If I allowed my honest opinion to appear in one issue of my paper, before twenty-four hours my occupation would be gone. You know it and I know it. And what folly is this - toasting an independent press? We are the tools and vassals of rich men behind the scenes. We are the jumping jacks, they pull the strings and we dance.
Our talents, our possibilities and our lives are all the property of other men. We are intellectual prostitutes."
John Swinton - New York Times - New York Press Club
"The news and truth are not the same thing."Walter Lippmann, American journalist, 1889-1974Rubin Frank, former president NBC News
"News is what someone wants to suppress. Everything else is advertising."
"We tell the people what they need to know, not what they want to know." Frank Sesno, CNN NewsRichard Salent, former pres. CBS News
"Our job is to give people not what they want, but what we decide they ought to have."
Rev. 18:2 And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird.
Rev. 18:3 For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies.
Rev. 18:4 And I heard another voice from heaven, saying, Come out of her, my people, that ye be not partakers of her sins, and that ye receive not of her plagues.
"This morning is sovereign morning here on Zero Hedge. Having looked into Dubai the United Kingdom, and Moody's non-assessment assessment of the Aaa gang, we explore the popular notion that treating with deep skepticism the economic pronouncements released by the sovereigns of developed, "western" economies (or their nearest approximation) is something for the 'tin foil crowd.' "
Such eloquent prose with just a whiff of sarcasm... I wish I could write like that.
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