Tuesday, August 02, 2005

A Dose Of Financial Reality....

One of the links in my blogroll is to Barry Ritholtz's "The Big Picture." I highly recommend this website. Barry is a financial professional who has a reputation as a no-BS straight shooter, which is rare on Wall Street these days. He has a good record of calling major market turns, and his writing is accessible to financial pros and novices alike. Here's an excerpt from his latest post about the increasing manipulation of almost every type of important economic data released by the government:
We have been watching, with no small degree of skepticism, a stream of improving Macro-economic data. Color us unconvinced. Many of the key releases have been fraught with misleading headlines obscuring much weaker data beneath, and last month was no different. From Inflation to Federal Deficit to Unemployment Rates to Industrial Output to recent GDP (and its revisions), nearly every data point comes with an asterisk.

When we look back at this period of economic home runs, we will call it the season of steroids. Like Major Leaguers, the Data is on the Juice.
Read the rest here. Of course, these optimistic data points justify continued interest rate increases by the Federal Reserve, as well as provide the Bush administration with a set of favorable talking points on its stewardship of the economy. Judging by how poorly Bush polls on the economy, the public sees things differently. Federal agencies and departments increasingly are "politicizing" data to fit an existing agenda, so getting to the truth is more difficult and important than ever.

23 Comments:

Anonymous thrideye said...

For as long as government statistics have been kept, a vocal minority always questions their veracity. It always comes out in the wash and there has yet to be any proof that government statistics were skewed for any appreciable length of time on American history. So these guys babble on and are always WRONG.

8/02/2005 7:09 PM  
Anonymous Anonymous said...

Been reading his site for a few months and I agree, it's great. He's good at taking apart a lot of the minutae and spelling it out clearly.

8/02/2005 7:15 PM  
Anonymous Anonymous said...

What's happening over the last few years is that the numbers are published .. usually favorable in whatever category is reporting and it hits page one of the NYT, WaPo, WT, WSJ, FT, etc. Then just before the next months figures are being released (usually favorable), these same numbers are being revised - apparantly to reflect what is close to "actual" but that news is relegated to C8.
This manipulation must keep a lot of people busy.
While out on "Main Street" there's a complete disconnect because, these favorables do not and have not matched reality.
That's actual, on the ground, day to day reality.

8/02/2005 9:30 PM  
Anonymous Anonymous said...

I've often wonder why anyone would invest in I-bonds for this very reason - the government manipulation of the CPI data, as it suits them. But whoa, what's long-term bond rates telling us? Deflation in our future? I think it was Greenspan that said the yield curve has outlived its usefulness. They are bringing back the 30-year bond, so inflation?

But it isn't just financial data that is being manipulated, it is ALL data - it is environmental, as we know intelligence, scientific; it is really disgusting. Is this Bush's definition of "integrity". Bush misused the word "disassemble" in a speech. He meant to say "dissemble". The first is what we did to Iraq, the later is, well, Bush is very good at. The biggest deception of them all is our actual budget deficits and debt. Reagan cut taxes too much, but didn't cut spending; Part of their solution was that Greenspan recommended raised Social Security taxes. Those funds were allowed to be used in the general fund - all smoke and mirrors. We could make all the fun we want of Gore, but he was right, that money should be in a lockbox.

I recall someone saying that this administration has broken new grounds in making everything political.

I haven't lost faith in our government or institutions, I have lost faith in the current Republican party. When will the Republican party become the conservative party again?

8/02/2005 11:39 PM  
Anonymous thirdeye said...

Yeah, right, everything is being manipulated. Have you looked under your bed lately?

8/03/2005 12:36 AM  
Blogger Mark Jones said...

You think the gov't pumps up its data, try watching CNBC for a day. Its laughable. You'd think that we should already be at DOW 12000, if only the Fed would stop tightening and investors would start dumping money back into the market. Any time there is even a slight dip in the DOW/S&P, its always on "low" volume, so it doesn't count. Only the up days have any significance.

8/03/2005 10:10 AM  
Anonymous Anonymous said...

Washington Post has a good article on the Republican spending spree,
"In Congress, the GOP Embraces Its Spending Side". It is after all the Republican spending why they brought back the 30-year bond; we, our children, our grandchildren are going to be paying for Bush's and the Republican Congress spending spree for years and years to come. Do you think Bush doesn't use his veto power because he doesn't read?

Okay, so why when Republicans control our government that they are not practicing Conservative principles? Got me; they certainly have the power too if they wanted. If you can by-pass the title of this article, the content is interesting. The Republican party has mastered the art of the snake-oil salesman. I'm not a big fan of BS whoever delivers it; but the article is saying get use to it. I thought of CR and wondered why can't we have intelligent discussions. They can't make it on Conservative principles, so they use marketing savvy in their massive media network. How about some fiscal conservatism in that Republican party?

The scariest thing I saw the other night was Pat Robertson standing in front of a picture of our Supreme Court (flag and music too) saying soon it will be ours and we will finally live by our rules. Holy smokes! Whatever happened to "We the People" meaning ALL of us... Separation of Church and State anyone!

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