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The Latest Contribution To US GDP: Promises... No Really
Sadly, we are not making this up: as part of the BEA's latest revision to the way it calculates GDP, the government will no longer count the amount of pension funding that is actually allocated to retirement accounts (counted as wages in the GDP calculation): i.e., an actual cash outlay. Instead, what the Bureau of Economic Analysis will count are corporate promises of how much companies will (may? might?) pay... eventually. The bigger the lie and the promise, the higher the GDP. And presto.
Elliott Management's Paul Singer explains this pathetic adjustment as follows:
We have commented in the past on government statistical fakery and fudges, in the inflation numbers, in employment and long-term budgeting. But recent changes to the national GDP accounts by the Bureau of Economic Analysis may “take the cake.” As part of the revisions, they change the way pension payments are counting in GDP. Previous to the change, when a company paid money into a pension plan, the money was counted as wages in the GDP calculation. After the change, what companies have promised to pay in the future, not what they are actually paying, will be added to GDP. This is fantastic. The bigger the unpayable promise made to unsuspecting retirees (promises that are not fully funded), the more GDP supposedly goes up!
Said otherwise, if US companies promise "infinity", GDP will grow by a comparable amount. At least in a thought experiment... Right?
. . .
What else is there to say?
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I guess it's finally time to buy stocks, because even though upcoming GDP numbers will be even more fake than usual, the Momo twirps of the world will still buy up the stock market based on the awesome new numbers.
What would a cornered rat not do?
Resistance is futile!
The FASB now allows banks to just make up asset values, so why can't regular businesses just make up payrolls?
Holy shit. This is getting fucking rediculous. But that's because the status-quo is fucking rediculous. When oh when do we get to see reality?! My brain hurts! Zimbabwe here we come! Prosperity for all! Billionaires for all! Fuck shit fuck!
You know, there was a former Soviet defector who siad that the government of the USSR claimed that eventually the ocean would turn to lemonade. Fucking shit-loads of investors believed it. I went to the ocean the other day and it was just salt.
"So how did you become a trillionaire?"
"Gradually, then all at once."
Very nice!
+1 funny.
Love the Picard pic.
"Number 1, shields up! Brace for maximum stupidity!"
Full Faith and Credit..
It’s a good thing.
Well, we now know for sure where all those Arthur Andersen accountants ended up working.
I have a one man LLC (I work for myself).
I have just promised myself a 1 trillion dollar retirement package.
Who should I contact at the Federal level to let them know about America's now higher GDP?
First tell them your pension program needs a $1T bailout, they may pay you on the spot.
When the gov prints the dollars to fund the PBGC takeover of these pension plans, will that count as monetary inflation? Or will it be categorized with the $85bil/month as just the cost of getting re-elected.
What else is there to say?
"Economics is fraudquackery practiced by paid shills, charlatans, unabashed con men, and Bankster Mafia wannabes.” –Lee Adler
Some people pay to visit La La Land others live there permanently.
discount all promises to PV and add it to the GDP! This is the biggest fraudlent shit i have read today
As an encore, the BEA will have its Jerry's Kids employees don ruby slippers and chant a stunning rendition of " There's no GDP like Homey's GDP" whilst clicking their heels together 3 times. If that doesn't get the economy going nothing will. /s
Yes, and thank you for saving America!
Don't forget to contact the IRS with that news.
These are the dying days of our banana republic. In the near future, Obama will probably start wearing some blingy, fake military uniform.
Now that is funny. I cannot wait to see that in this world. For those who have already awakened from the matrix however, he already does.
LOL! +1984
Like this one?
No this one
Paging WB7...
Every time a unicorn shits skittles, a banker gets its wings!
Every time a unicorn shits skittles, a banker gets bat wings!
Jamie and Lloyd have multiple wing pairs.
It would be better if the unicorns were on ice.
Or on your bbq. Certainly going to be cheaper than beef at this rate. Nt'l avg. $5.49 a/lb thus far.
It's crazy not to buy quarters or halves these days, Who can afford supermarket prices?
HH,
Do you know of a FASB rule which makes all my income turn into debt so i don't have to pay any taxes, or should i look for rumplestilsken (since we are in the lala land of star trek and unicorns)
Magic always comes at a price, dearie.
When does unicorn hunting season begin?? I just zeroed my scope on a new Ruger American Rifle 7mm-08
As individuals, we should all do our patriotic duty and incorpotate and promise to pay ourselves x million and thus adding to GDP. While I'm at it I'm going to revalue my 2001 truck to say 100k and take out a loan against it.
So this is how they will show positive GDP in the face of a collapsing labor force..
Brilliant!
No job's required to show productivity................
Well then they get what they want. They don't care who the fool that buys is and how he rationalizes it.
Time to stop betting on other people's stupidity. The best you can achieve would be to become the king of stupid.
Assimilation, bitchez!
moar!
What else is their to say?
"beam me up scotty, there's no intelligent life down here"
Scotty never beamed anyone up or down.
Can we add the $123.8 trillion in US unfunded liabilities for Medicare and Social Security (promises) to the US GDP then?
Yes, apparently. This is bat-shit nuts. I suspect the timing of this is due to the fact they know we're headed for another leg down in the economy (so as never to officially acknowlege another recession again- as I have speculated would be the case for a long time now).
I realize two things: 1. When this thing blows, it's gonna blow big. 2. It's going to take YEARS for it to happen. There will be millions starving in the streets and roving gangs driving around the suburbs in Mad Max cars before anyone acknowleges things may not be going quite as well as the numbers would indicate.
It doesn't matter anymore. It's anything to produce the next rally.
Increasing the GDP allows more debt. Won't have a negative GDP and look like a recession.
In the time the trading houses need to step up the ante and go order prostitutes for the SEC from the porn their viewing. A gift for all that illegal trading and activity the SEC let pass.
Try depression - not recession.
gdp soap opera
so flash forward. 2 years from now the true Unemployment rate is 20% but the reported one is 6.7% because of dropoffs etc. actual gdp is -5% but reported gdp is 2.5% because of promises. the market is still breaking new highs....are we still going to be talking about "when tshtf"?
UE is already ~ 23%. It's only going up from here.
at what point has the shit splattered all over the fan?
I kind of think the shit has already hit the fan, but TPTB have been working overtime with the Febreze. It's getting whacky, like something bad happened behind the scenes, and they don't know how to react so they're just winging it.
We've reached the perfume on a turd stage.
It's 300 million little fans getting hit one at a time.
Hey McMolotov,
Did the feds raid your garage today ???
You'll never be able to see SHTF looking at government-issued data sets. Probably the only valid number in the current mainstream number is the labor participation rate, which says we collapsed in 2008 and have never recovered. This is a slow-boiling frog scenario, rather than a wake up and it's over scenario.
I think there's a few key milestones that are meaningful, though. All revolve around sustainability and debt-funding feedback loops.
For example, US Tax receipts are $2.4B. We already know we have a deficit that's 1T due to spending $3.5T. From a SHTF perspective -- the last official transfer payment number was $2.1B. So we're nearly at the point that the US is using 100% of taxes to support the personal incomes of some segment of the population. That's obviously a bad feedback loop -- you have to either print, tax, or cut transfer payments, all big negatives.
You could look at taxes v. debt service costs, but once you do, you know why interest rates will be "ZIRP 4 EVA." That's another pretty obvious feedback loop that forces interest to be close to zero because the government goes into hyperinflationary print mode with even a small interest rate increase on debt.
Ultimately, we know they print. So pick your benchmark for SHTF on printing, the dollar's purchasing power, and the standard of living. Until we have an actual dollar collapse you won't have a day where the SHTF is obvious. You just wake up every day to a world that's slightly worse off than the day before, repeated thousands of days on end.
When they run out of people to tax, should be appearing by next year.
Maybe sooner as the Ocare panic sets in around September.
Not just UE but Under Employment!
and gold will probably be 500 again and i will sell my house , cars, watches, etc etc to convert to the barbaric relic
@GROUNDHOG-------oh no dont sell the house........my real estate broker said homes are going up 20% a year!!!! we will all be rich again.......home equity lines of credit galore!!!!!!......more family disney cruises!!!......endless buffets!!!!!................new 2 year car leases!!!!!!!...................................ohhhhhh THANK YOU GREAT AND BENEVOLENT GOVERNMENT FOR SAVING US FROM HARDSHIP AND REALITY!!!!!...................AMERICA IS REBORN!!!!!!!!!!!!!!!!!!!!!!!!!
The government, having control over the statistics agencies, and being dependent on the FED's QE (don't forget it is now officially targeting "mild" price inflation and low unemployment numbers), has a very strong incentive to fudge the inflation number to always stay low and actually keep the unemployment number where it is or higher, and not fudge it too much. Also, if real unemployment somehow fell too low, I bet that rather than undo all the fudging (they don't want to use the same tool too often due to issues of perceived cost, risk of implicitly admitting the fudging, loss of effectiveness, risk of being seen as inconsistent - better fudge only in one direction and never step back, etc.) they would actually work to increase real unemployment. They have plenty of ways, and indeed a lot of experience doing precisely that.
As for GDP, again thinking about the incentives, both the government and the FED would want to show rising GDP numbers, because to show a recession during unprecedented money printing would undermine the foundations of their Keynesian religion.
Ironically the Dow below 5000 would mean the economy is actually about to grow again. Up here it just means massive,unending unemployment. The higher it goes it heralds the ruin of the Republic. Weird.
dont count on growth for a very long time........the whole idea of growth in this country has been based on extraction and exploitation of the entire world to keep americas piece of the pie as big as possible......that piece is getting smaller everyday....but the peoples appetite has not adjusted........growth will have to be redefined in america..............no sutton.....below 5000 will not mean growth.......
"Ironically the Dow below 5000 would mean the economy is actually about to grow again"
not necessarily. it may stay low for many years to come.
Moar paper shuffling.
And we make fun of the Chinese.
You don't seem to be satisfied with the gold bars that were offered to you, made by China Tungsten??? They look and weigh exactly the same, what the hell more could you possibly want? What's up with you?? The bars are like exactly the same. Weird guy. What a bunch of fussy weirdos you westerners are.
/sarc
/sad
US Governments, from city to federal throw promises around like confetti and have been for many a year. Why should one more even raise yer eyebrow; after all, our whole economic system is based upon promises to pay. A FRN in itself is a promise to pay.
Yes but we haven't counted promises as part of GDP. This is step across the line to the realm of unbridled bullshit.
Mark to model at least had some plausible obscurity: ie. since there is no market for most of the crap one price is as good as another.
However to count payment not made, but deferred as if it were paid, is just a deviation from the obvious fact.
Let's make this retroactive, and count contributions promised in the past by employers like Enron, Pan-Am, and Studebaker-Packard Motorcar as a one time adjustment to current GDP.
the impression of reality.... is reality since we are told it is reality. I 'dlove to see a wet shirt contest happening on the north pole since the reality will tell us that is it a hot place as the 7 miles beach in Cayman.
time to legalize prostitution so that blowjobs can be counted as GDP. maybe its time to start including things like: mowing the grass, cooking dinner for the kids, playing with wife's boobs as GDP as well?
Wait....what did you just say?
"...maybe its time to start including things like: mowing the grass, cooking dinner for the kids, playing with wife's boobs as GDP as well?"
Yup, that's what I thought you said. Can't wait to try this out on Mrs. Cog.
"Oh HONEY!!! Wanna inflate some GDP?"
Board meeting in bedroom! My pant's graph has a hockey stick working right now!
"Oh HONEY!!! Wanna inflate some GDP?"
Is that short for gross domestic penis?
During the last Depression, they used to give them away for free just to have a warm meal in their stomach.
or something like that....
what?!!?!?!?!? no wounder my dad had a smile when he talked about the depression
GDP in DC would go up by 1000pct, easily
"After the change, what companies have promised to pay in the future, not what they are actually paying, will be added to GDP."
I will gladly pay you on Tuesday (of 2045) for a bigger GDP today.
.GOV forgot to insert disclaimer.
* You will get nothing and like it Bitchez.
I don't understand. If everything is so fucking great, just pull the QE punch bowl
Remember when our glorious leaders decided to add itunes sales and kinder-garden refrigerator art to GDP. Well I guess that wasn't enough.
Get ready to see a great improvement in our Debt/GDP ratio this summer. Obama. He's like the Dali Lama, Santa Clause and Papa Stalin all rolled into one. Gee I love that guy!
(Snif, snif)
Unfuckingbelievable...again
I had to get a notary to sign off on a little financial windfall so I go to Chase(wife's bank, dropped when we leave sucknetticut). Sit for 30 minutes because three people in front of me were all dealing with EBT issues....card didn't work, lost benes....yada yada yada. This thing will fall and when it does, there are gonna be a lot of hungry zombies. "Aim for the whites of their eyes" as John Brown once said.
.
If you weren't aware those EBT people waiting in line can also get SNAP for their pets.
Pet Food Stamp Program Started For Low-Income Familieshttp://dfw.cbslocal.com/2013/05/06/pet-food-stamp-program-started-for-lo...
Do they categorise that under "intangibles" or "imaginaries" or "inventions" ?
Things get more surreal by the minute.
A child asks her father, "Daddy can we go to Disneyland this year?". He replies, "Honey we're living in Neverland already".
"Honey we're living in Neverland already".
"Honey we're living in FantasyLand already". Fixed it fer ya
"Notional" GDP should ABSOLUTLEY be included....Or at least I THINK it should, you know, from a NOTIONAL perspective...!!
yeah we should include the forcast of GDP growth in the GDP !!!
Careful, Krugman might steal this idea.
Ok, The question we all want to know the answer to...
Can I count a Promise to Pay on my TAX BILL???
Rather,
will you have to declare promised payments as current taxable income?
as long as the bullmarket trend is intact there is no reason not to go long (if you have the money though).
but don't be too late if the music stops to play. then it will be worse than 2008/2009 imo
Where is the positive GDP adjustment for unpaid internships, because there is a promise of paid work in the future?
I heard they were going to count Monopoly money as real currency to increase the monetary supply
and the winner of the dumb motherfker of the week award goes to...
"Stop attributing all of the stock market’s gains to the Fed’s quantitative easing policies, says Brian Wesbury of First Trust Advisors.
Wesbury, whose forecasts have been good enough to win him a spot in MarketWatch’s poll of top-15 economists, says in a blog it doesn’t make sense to say the S&P 500 is up 161% from its lows because of QE alone.
“This defies logic. How can money boost stocks, but not the economy or inflation? This is a mistake in monetary logic. If money were so easy then the economy, inflation and stocks would be lifted together,” he tells clients.
“Stocks are cheap. They are rising because that’s what cheap things do,” he says
I read up until "Marketwatch".......
Or was it you can now use real currency in your Monopoly game?
Don't be so stupid Tylers. This is fractional GDP. Not yet used to fractional banking?
The hell with this crap. I'm going to go brush up on my prepping skills. I recorded all the episodes of "Naked Castaway" last week for life on my island when SHTF...
We are going down to Panama in January to buy a plot. I hope this crackhead on crutches economy lasts that long.
Yeah, sure, why not? Never mind the fact that, promises WILL be broken. With our glorious 'last man standing' strategy, what else even makes sense anymore? Race to the bottom, bitchezz!
Why so glum, Picard? Starfleet break another promise? Do what I did: Go on vacation to the Virgo Cluster, where all parties and events have a Happy Ending, and your headaches will go away.
I prefer Risa
fraud is not an actual data point.
Let me guess, you're not a central banker.
So when a bankrupt company funds its pension obligations with treasury stock at last quarterly price of $60 and employees receive shares at end of bankruptcy at market value of $1 per share how will this effect GDP? Will the Fed promise to buy this stock at 60 from the trustee?
As Bernanke says: "Reality sucks, we need to read a Fairy Tale to the American children and MAKE them believe they are insane if they are not happy in HAPPY LAND"
Most ZHers, including me, are insane watching this tragedy.
It's quite an innovative approach really, I do so like the panache, its audacity of grand hopery!
Say what, couldn't they do something similar with Bond yields to get around that simply awful little debt-ceiling thingy-ma-jiggery-pokery ... couldn't they sell some derivatives of that sort of thing or something, hey what?
How almost Socratically Ironic some of my posts can be
http://www.bea.gov/scb/pdf/2013/03%20March/0313_nipa_comprehensive_revision_preview.pdf
http://www.zerohedge.com/news/2013-05-06/sec-charges-broke-harrisburg-fraudulent-public-statements#comment-3535158
Which of my new terms applies here?
And I continue to see we are using China as our model for GDP calculation for quite some time now.
http://www.bea.gov/papers/pdf/china_source_data_estimating_methods.pdf
Note: The 2006 PDF title "China Source Data Estimating Methods"
Yet, the description inside says "This paper provides an overview of the source data and the estimating methods used by the Bureau of Economic Analysis (BEA) to prepare the quarterly estimates of the U.S. gross domestic product (GDP)."
Any other new terms apply here?
Holy crap! ... emphasis on the latter.
Your list is rather comprehensive.
After revue, all apply.
The spread between http://www.shadowstats.com and official stats will widen some more, just in the nick of time to redefine recession as normal.
http://www.bea.gov/scb/pdf/2013/03%20March/0313_nipa_comprehensive_revision_preview.pdf
wherein they assume a 7% discount rate (ha ha ha), and propose to estimate the future value of Hollywood movies so that revenues can be counted as soon as expenditures occur, and more. The special treatment of feature film making which has annual revenues of $30B seems peculiar. By contrast, the change to treat the real estate broker fees as "fixed investment" (!) affects $150B per year. Perhaps there will be lobbying to change tax rules for the movie industry based on the new BEA treatment.
I saw a similar story about a month ago:
http://confoundedinterest.wordpress.com/2013/04/21/when-all-else-fails-change-the-accounting-rules-us-gdp-to-rise-3-in-july/
It is really shocking ,,, and it came from the UN!!!!!!!!!!!!!!
I wish I could apply for a loan this way.
Now you know why the DHS is stockpiling ammunition like it is going out of style. It is not the free shit addicts that are going to be the problem when the promises made can't be delivered on.
I thought the ammo was to make sure the feudal citizens continued to work to keep those EBT cards full. Serfdom is what's for dinner...
If jerking off counted toward GDP, Ben and Barry could easily cover the country's GDP shortfall.
Make it so!
The US economy is just one big lie. People in a few decades will look back at this point in history asking each other "what were those imbeciles thinking?"
This is one of those signs that reminds us the end of the empire can't be too far away.
If things get too good, they stop printing; if things don't improve the sheeple get an angry inflection in their bleats. They have to show improvement in unemployment and GDP somehow, but just not too much to stop the printing press.
Oh, like 6.5% unemployment was some arbitrary number.
1) the imbiciles were not thinking
2) Moe, Larry and Curly are running things
3) anyone for moar slapstick?
Helm, warp one - enga... never mind.
Just found an explanation of GDP on the Atlanta Fed's website and laughed so hard I nearly peed myself. Have a look:
"http://www.youtube.com/watch?v=7GJ0TFd_aw8"
The juggling federal statistician in that vid is perfect......
If the rules constantly change, what is the point of following them?
Thus, we ensure everyone has broken the law and subject to criminal sanction as/when necessary
Secession is an answer.
OK, but only if we can tax those promises as income. Amirite?
Don't worry. This can't be abused because no one can have a retirement income over $205,000. All the safeguards are in place
I think ZH should start a "You can't make this shit up" section.
So the Social Security Trust Fund will add to GDP, and so the unfunded liabilities will never impact the debt/GDP ratio. problem solved!
Started writing this as a joke, but now that I think about it, it is true.
Slightly OT, but I just realized that adding artistic intellectual property to GDP makes Hollywood TBTF. Bail-outs anyone?
It's in the bag.
Remember children, intellectual property is now infinite till the end of time, even if you didn't make it yourself.
Disneyland is REAL, sheeple!
GAG A MAGGOT
...I did tell you it was going to go up.
Once again, lies, lies, lies, all the way down.
I only hope that they are deluding themselves as much as they THINK they are deluding us.
Benny Boy...just fricken Zimbab Me and get it over!!!!!!!!!!!!!!
An earlier poster said he is a 1 man LLC, so he could promise to pay himslef $1 trillion from his pension plan and thereby increase the GDP by $ 1 trillion.
I'm sorry, but why only 1 trillion? Don't you want to become "too big to fail?" Claim, oh, say $72 trillion, then admit you can't pay it, and have Obama give you a big fat bail out. Make sure you have some union members who will benefit, make some campaign contributions to congressmen (out of the pension plan),invest in their favorite charities, hire their children and wives to manage and advise your pension plan, and collateralize your $72T pension plan with big 5 bank assets and CDO's from government controlled entites. Then, collateralze all that and use the proceeds to buy $14,501 trillion (leveraged) of S&P market puts, then sell your $72T pension plan assets all at once, and end up making $984,98,281 trillion. I am sure you will en up as the keynote speaker at Davos next year, and be on the short list for dinners out with Soros and Buffet.