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Economists: They Can Add But Can't Put Two & Two Together
Once again I found myself bewildered while watching financial discussions on television. Normally I would name names or point out which show I was viewing for context. However, this is no longer needed. Now it seems the depth of understanding on the very topics these supposed “experts” are schooled in – is borderline dreadful if not outright deplorable.
As usual following the immediate reporting of released data on economic activity (e.g., jobs report, consumer spending, et al) the prerequisite panel of economists are touted onto the stage to espouse why the “numbers” show or mean what they believe based upon their “expertise and knowledge.” It would seem the makeup and breath of insight on these panels has more in common with what’s typical of a reality show roundtable interview rather than anything that approaches true reality.
Usually there’s one economist from the “outside” which means; doesn’t work directly for the show, yet is a professor at one of the “go-to” producer sanctioned Ivy league alumni. Another will be the “resident” lead economist (i.e., actually does work for the show) followed by the next in rotation “everything is awesome” fund manager to decree after every economic data point (whether good or bad) that stocks are clearly “reasonably priced” and poised to go even higher.
All one needs to do to follow along is forget your rational objective analysis at the door, have another glass of the proverbial “Kool-Aid™, and chant with the congregation panel “everything is just awesome!” Why? Because it’s in the “numbers!”
Over, and over again the “numbers” are touted as if they have the same intrinsic value today as they did previously. Today the most common example to show the lunacy of how numbers are viewed by today’s economists is the now laughable 5.6% unemployment rate when compared in actual intrinsic value terms as a measurement of economic health as a print of 5.6% represented just 5 years ago.
When you listen to most of these debates by economists using today’s “numbers” one can’t help but think any release of data must be taken as holy writ. Again, from what I’ve viewed more often than not has more in common with discussions of religious doctrine more than anything resembling economic insights. For if it’s “in the book” (e.g., a government data release figure) the discussion is over and anyone taking the other side is not viewed as a contrarian. Rather: as a non-believer or heretic that now must be converted or cast away in shame.
The latest example of this occurred when the household spending numbers were released. The data revealed U.S. household spending didn’t just contract – it fell off a cliff. As broken out in a quick detail format by Zero Hedge™ it tumbled the most not in a month over month comparison basis. But dropped the most since the so-called “financial recovery” began in 2009!
How could such a statistic even be possible since the markets are at lifetime, never before seen in human history highs, job creation that allows for an unemployment rate of 5.6%, and a recent GDP print of 5%? How can this happen when “everything is awesome!?”
I listened to many discussions by economists enthralled in the minutia of the details of both the consumer spending reports, and GDP figures and was left astounded on just how they added and viewed both the “numbers” along with what they should, or should not have produced.
The most perplexing meme enveloping most of these discussions were not just their initial reaction to the data points. But rather in the way they seemed to be aghast as well as dumbfounded at the conceivability such a print could even occur within the all-encompassing ritualized mantra “the drop in crude oil is a massive tax cut to the consumer allowing them to “spend more, and spend more often.”
They all espoused how they added this, that, and the other thing. Divided for this, subtracted for that, carried the 1, adjusted for “the weather” then “seasonally adjusted” and what did they come up with for an answer as per known economic doctrine?
It was obvious this report (from their view) seems to not capture what they “know” must be taking place. And wagered this anomaly or noise laced figure will smooth itself out in the next report. For it must be assumed as fact: The consumer must have more money in their wallets if the same purchase of gasoline in now basically cut in half. And that half equals real money.
Sure sounds reasonable and bulletproof as far as economics would have one think. For 2+2 must =4. Unless of course you need it to equal 10; then you either “seasonally adjust” or state non-GAAP metrics. But I digress.
The true issue is the numbers did show exactly what the math does show. It’s in the putting of two and two together where the reasonable assumptions of objective analysis can show where that money has materialized as well as where it’s been spent.
All of that so-called new-found “savings at the pump” money that’s supposed to be burning a hole in consumers pockets to by more goodies has indeed resulted in more spending. Just not where the economists believe it should.
As added proof to this hypothesis that It is indeed being spent into the economy, the personal savings rate showed once again: It ain’t going into their bank accounts. As a matter of fact the data revealed not only was personal savings down. It was to the lowest it’s been in months. “So where’s all the money?” ask the economists perplexed and bemused. For surely if their math is correct it must be somewhere? Right?
Yes, it is right. And it’s also right there – under their noses. But either they’re blind to the observation as to make a calculus. Or, just like the gospels of yesteryear that were denied canonization, they must be neither recognized – nor spoken as to have ever existed in today’s version of economic theology. For admission of such an observation would be blasphemy, possibly punishable with banishment, as well as excommunication from the televised “financial” media.
So again, where ‘s the proof for my claim? Simple: Healthcare spending. i.e., required new out-of-pocket expenses relating to that tax (which should not be spoken) “ObamaCare.”
Household spending is down in direct proportions (if one really wants to look at correlations) to the increased out-of-pocket outlays now mandated for households as well as individuals, and businesses in accordance to the now never-ending rollout of new payments and penalties required to stay in compliance with the effects mandated by the new healthcare laws. And these new mandates for one to spend their “gas savings” on – are just getting started.
Remember it is this same choir of economists relentlessly chanting the homily of “Everything Is Awesome” when GDP prints miracle numbers such as 5% with such zealousness – it would make a backwoods styled congregation leader envious. For it would seem if the numbers appear in the “canonized” report: It’s to be viewed as gospel and free from question. For one must have “faith” the numbers are real. Period.
For those that may question the reason I state: they can add, but can’t come to a conclusion based in reality. May I remind you once again where that “everything is awesome” meme stems from? i,e., A print of 5% GDP. To wit:
It would appear that “gas savings” that put money back into consumers pockets came about just in time to make it into the collection plate. So for my money, when it comes to this new theology of economics. I’d rather be with the heretics. Maybe we don’t understand how they can believe the numbers they recite. But we do no one thing above all else.
We won’t partake in the Kool-Aid.
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"We won't partake in the Kool-Aid."
I'm pretty sure we're all going to be force fed lakes of Kool-Aid.
Enhanced data interogation techniques when properly employed will always make the data say whatever you want it to say.
Ocassionally like in Q4 it actually screams...
The Affordable Kool-Aid Act of 2015 makes consumption of Kool-Aid mandatory.
"I wish that I could be like the Kool Kids, 'Cause all the Kool Kids, they seem to fit in."
- "Cool Kids" by Echosmith
Yeah but those elderly stress tests wear me out just waitin in line.
We won’t partake in the Kool-Aid.
Bullshit, you still watch the television.
government reporting lost its credibility years ago. everything that comes out is a story twisted to fit a political purpose. economics, climate, health-care, markets...... how did we get to the point where our government is such a joke?
and before all the usual democratic-party-bashers get into the act, this started long before the present administration.....both parties do it in equal amount. both parties appear pretty indistinguishable to me, actually. is there any hope for a return to common sense and factual reporting?
2+2= 5 Duh...
Its not bad math but good meth.
Bankers and economuffs say "smoke til ya joke, then bring on the coke and ho's".
"Hey babe, is that a loaded nail gun or you just happy to see me?"
Gitmo style.
just wake up and the nightmare will be over. as alan watts explains...
https://www.youtube.com/watch?v=IDqxgU7CbIw
Or another metaphor
www.youtube.com/watch?v=mEUsJRVV-PE
I love that happy red balloon man.....I don't know who he is but he always makes me smile....
koolaid
https://en.wikipedia.org/wiki/Kool-Aid
have fun.
If my memory of Jonestown is correct, there were men with guns where the KoolAid was dispensed - the choice was made long before the jugs were rolled out.
Want to hear my joke about Jonestown? Never mind, the punch line is too long.
To clarify: the 5.0% GDP print was for the 3Q; 4Q is 2.6% (annualized) preliminary.
You nailed it on so many levels.
can we guess that healthcare spending buys a lot of Xanax
Its a death Tax
Your going to die anyway
Your choice.
Last time I put "two & two together", I got arrested.
Looks like a lot of people are now going to the doctor, thanks to Obamadoesn'tcare, and the doctor is telling them not to eat and drink so much. I see spending on food and beverages didn't do too well!
Yes, but what are sales of cat food?
dude - no one watches these mainstream boobus americanus analysis - so why are you? ....... please see their ratings.
Flavor-Aid. Jim Jones was far too much of a cheap-ass to kill his flock with real Kool-Aid. (Sorry, pet peeve.)
I suspect that when the banksters are ready to make all men equal (that aren't banksters) they won't even bother with fruit punch.
STOP whoring for Wall Street. Show these histories:
http://www.showrealhist.com/yTRIAL.html
Rents are the only way to look at the problem. Rents can bre taken in all spheres of the economy.
Normed to our dollar, Japanese heath care is 30% of our cost. That means U.S. health care is 70% rents. When you go into the Dr. office and an army of bureaucrats are shoving papers at another army of bureaucrats at insurance companies, that is heat and waste. It is your labor dollars being consumed and wasted.
Paying for their heat and waste, means that your dollars are misallocated and you don't get the full benefit of your labor. In short, the economy is inefficient.
German health care is 50% of U.S. costs, so at a minimum we are 50% rents.
In actuality if one stripped out all the waste, we could probably get our health care down to 20% or so of todays spend.
How?
Approach medical care as it is. It is a mixed market with both elastic and inelastic components. Approach the problem correctly and the waste can be found.
Of course, both privateers and government want to ignore defining the market, because they want to take rents by confusing the sheeple. For example, drug companies will claim the market is pure competition...it is elastic. Government will claim it is inelastic, and needs heavy regulation and their control. Insurance companies will take rents by denying service, especially at end of life.
Beware a longstanding trick of bankers, economists, and accountants.
They equilibrate. They own both sides of the equal sign and use magick. Magick is taking something and transforming it to something else. The original contract then loses its original meaning.
For example, pension funds in Detroit: The original agreement was to take a lifetime of lowered wages for the gurantee of retirement safety at end of life. But, then the pensions are sold off our bought out, and hence the original contract becomes transformed.
Or, 601 spv's at tbtf banks taking mortgages and re-hypothecating to make MBS's. These securities then warp the original intent of mortgage debt contract. Then QE comes along and buys MBS's holding their prices high and rewarding fraud. Note the transformations that are constantly taking place.
Bail-ins are taking your credit as money and converting it to bank stock. Your savings were magickally transformed, and like a butcher with their finger on the scale, during transfomation bankster take rents benefiting themselves.
A set of debt instruments may be traded out for another, and then presto- the debt contract transforms. This is most likely what will happen in Greece.
Humanity is sorely confused when they hand magick ability to an unelected group of bureaucrats, including privateers, who have no accountability. These unelected and unacccountable take rents, especially in prices - so it is hidden. Beware the transformations about the equal sign.