US recovery is not what it seems

[gWbush is Mabus]

It seems that the Bush Administration has been fiddling with the numbers again...massaging science as usual.

on edit:
Also, I just realized two days ago that Bush actually WANTS HIGH UNEMPLOYMENT!!! This makes labor cheap which is good for big business. Make sure you tell people this.



FYI, I did not write this:


In today's FT (sept 5), Kurt Richbacher (former chief economist of Dresden Bank)raises serious concerns on the way GDP growth is calculated by the Commerce department. Here is a summary of the article:

1. Much of the growth in GDP is due to a big jump in defense spending/ cost cutting, and lower dollar

2. The strengths of increased capital investment spending as published by the Commerce department is due to annualising figures. In other words, quarterly data are about four times the reality that would be reported in other countries. Without the annualising process GDP would have grown by 1.68% instead of the revised 3.1%.

3. The commerce department claims that investment in computers soared by $38.4 billion or 12% from $319.1 billion to $357.5 billion. Much of this boom like increase in computer investment never occured in reality. the surge is caused by the hedonic deflator that the Commerce Department uses in its meausrements. The aim is to capture quality improvements by calculating how much it would have cost in 1996 to buy a computer of equivalent power to today's machines. Measured in current dollars, however, this spending rose by only $6.3 billion

4. None of a sustained economic recovery (excess consumer/business spending) is happening in the US. Economic and financial fundamentals such as profits, national savings, debt levels, balance sheets, and trade deficits continue to deteriorate.

5. The real economy is heavily dependent on asset inflation to fuel borrowing and spending. These conditions are more favorable to recession than recovery.

[Ilsa]

1. I heard another 93,000 jobs were lost last month.

Under the faith-based MisAdministration, they were praying for a net increase of 12,000 jobs.

Oh yeah, and productivity increased over 6% for the last quarter. Increases in productivity with decreases in jobs means we're all working too f__king hard. Thanks George, doing one job wasn't enough.

[Beetwasher]

2. Got a link?

This is probably more of a GD topic but it's definitely dead on.

[tom_paine]

3. Of course, that's a given

Bushevik corruption has permeated all levels of Imperial governemnt.

Will the Imperial Subjects of Amerika fall for it?

Of course they will.

Of course they will.

[Rollins]

4. Bait n Switch

Running these numbers of the economy is what this Administration is good at. Bush says we are in a sustained economy yet many of the indicaters including profits, national savings, debt levels, balance sheets, and trade deficits say we are just above the waterline.

[mhr]

5. See My Related Post

Here

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=104&topic_id=282552

[screembloodymurder]

6. Very interesting

and I suspect the increased productivity numbers are based on cheaper labor costs. A bust all around. I wonder how many of those increased investment dollars (you know, the ones from the rich man's tax cut) are actually going into plant and equipment in the US. Is there any record of increased investment spending in America?

[damnraddem]

7. The recovery is exactly what it seems ...

a job-losing fantasy of the Bushistas. Voters don't vote based on statistics, they vote based on how they are doing, how their families & friends are doing, how others they know are doing. True, when they're doing better (as in 2000), they may not vote on the economy. But when they're doing lousy, as now, they do vote on the economy. If voting based on the economy seems to conflict with the ideology they have been spouting, they look for an excuse to say something else -- Dubya seems to be giving them that excuse with Iraq.

[scarletlib]

8. Enron Accounting Tactics brought to the USA

Classic Enron tactics: Inflate value of "assets"/productivity while the boys at the time are looting the bank.

[Nottingham]

9. We are in the Midst of a Depression! Soup Kitchens are here!

The Bush administration can lie for only so long till the people know
that most of the neighborhood is out of work!

Unfortunately Americans need to feel this pain of a Republican President so they don't revote them in!

:bounce:

[VolcanoJen]

10. Not really LBN... moving to Economics Forum

There's some great discussion in here, but nothing in the original post would truly qualify as Latest Breaking News. Please continue discussion in the very worthy Economic Issues forum, where it's sure to receive a better response.

Thanks!
VolcanoJen
DU Moderator

[rapier]

11. Link to RIchebacher

http://www.dailyreckoning.com/home.cfm?loc=/body_headline.cfm&qs=id=1548

Tab near top of screen points to he daily colmum, The Daily Reckoning.

Richebacher is of the 'Austrian School' of economics. This is a popular variant of conservative economics often embraced, rhetorically anyway, by all sorts of people from libertarians to supply side true believers.

I mention this not to damn him and his ideas but to put them in perspective. His saving grace is that he is NOT a political ideolog. He is not anti government in the usual sense. Rather he is anti politician in the most general sense, combined with a keen appreciation for the folly of all people, in this case economic.

Austrian School economics has much to recommend it till it becomes an ideology. Ideology is the enemy of clear thinking and freedom itself. For the most part RIchebacher isn't an ideolog. Read his stuff and you might learn a lot about basic economic theory and also how the most basic conservative economic ideas have been overthrown by our modern so called conservatives.

Also in his daily missives are ads for get rich quick invesemtment plans of one sort or another. Ignore them. A partner of some sort, Bill Bonner, also includes comments daily. He is in some trouble with the SEC for something I can't quite recall but having nothing to do with the usual crimes of Wall St. which go on daily without comment nor action by regulators.

I can't seem to find now, except for the blub at the top of the page, his classic indictment of the Cult of Sharholder Value. This was priceless. A point he hammers often is that corporate profits have beedn falling relentlessly for years. All the talk about earinings is BS folks.

[German-Lefty]

12. Yeah, that's not a bad read.

Still you would think that if other smart guys like him would see this folly they would cash out of companies that inflate thier stock values with these tactics, at least if you believe the market is smart. There's a whole lot of collective stupidity out there. Those that knew it was a bubble didn't speak up, because they wanted to profit off of it.

"This devastating judgment arises mainly from two recognitions: first, that simply too many possibilities exist to manipulate reported profits and stock prices with a plethora of accounting tricks and other devices; and second, that these strategies widely implemented to lever shareholder value have effects that impair economic growth in the longer run. "

I've been concerned about this. It seems investors are having to worry so much about the random fluctuations in the market, they can't do what they're supposed to do, look at companies and see if what they are doing makes sense. I used to compare AMD and Intel's chips to decide what I wanted to invest in. Now I just don't bother, because everything hinges on these big market wide fluctuations. Unless I hedge really well (I'm not a pro, and it's expensive), there's no way for me to profit from the research.

If nobody bothers to do research, companies will be on autopilot and some will do more stupid crap.

[whathappened]

13. what bothers me the most

is the big push to refinace your home on tv , put all them bills together and pay less is what we are hearing from all these adds , well this is just a trap to me to get peoples home when they fall , this is going to be such a big crash for people when times get ruff and there will be no place to turn to bail out of this mess , dam we need to think about this , most of this money is'nt u.s. money that is being loaned out , could we as a nation be taken over by default if this keeps going like they are pushing so hard to do

[rapier]

14. notes

Don't worry about that ulterior motive. NOBODY wants to foreclose and take possession of a home. It is too much work. The banking and mortgage industries make money by pushing paper. So clean, so easy. Having possession of a repossessed property, or dozens or hundreds or thousands is hard work and requires vast amounts of money and people. All the clean up and maintainence. Taxes, etc. etc. That would be the industries worst nighmare.

Well falling prices are their worst nightmare.

Most of the credit bubble money is home grown. Foreiners are still buying quite a bit of corporate and agency debt(mortgage ones like FannieMae). THe big dog there is now treasury debt, which China and Japan are buying heavily, recycleing those dollars they get from selling stuff to us. The Chinese central bank now has about $300 bilion. Nobody can foreclose on Uncle Sam.