Economic Numbers And Reality: "You Gotta Keep 'Em Separated!"

Numbers, numbers, numbers.  Numbers are quite a magical thing in my opinion.  

• You can walk into once crowded restaurants, shopping malls and find them nearly empty.    
• You can have a friend or two every week that loses his or her job.
• You can walk into a car dealership and have eight salespeople descend on you like vampires who haven't had a meal in a week....because they haven't. 
• You can walk down the streets of New York City and have rental agents, that just a year ago had YOU pay THEM two months of astronomical rent just to find you a apartment, beckon you with the promise of no fee and two months FREE rent at 75% of last years price. 
• You can talk to real business owners who tell you that their bank treats them like a proctologist would a patient, while squeezing them royally by jacking up their revolving credit lines. 
• You can see that your state and your town have to go on austerity measures while they raise your taxes in order to balance their budgets  (In my town the mayor is actually pushing a "tag sale" to raise money!).

I can keep going for a while right?  My point is it seems like everywhere you look things are bad and trending worse.  The only "positives" seem to be from some moronic government program like "Cash for Clunkers" that are aimed at solving our national problem of too much leverage (debt) by leveraging some more.  Banks are getting better?  Maybe the real big guys are but you're paying for it, big time. Rather than make them move toxic assets we've decided to take the "Japanese Route" and change accounting rules and pump up earnings with about $2 trillion of free cash.  Viola, great earnings for the major banks!  Big deal if most of the "trading gains" they are making are coming from trading with the Fed and the Treasury department. If we look with our eyes and our own life experience it seems like we are living in a sort of limbo or eye of the storm.  

Numbers however, numbers that come from our government, foreign governments, public companies, etc., cast a spell over many that things are getting better.  The question is, do we believe the numbers?You ever read Alan Abelson from Barron's?  This Saturday, as he does every Saturday after the Friday U.S. employment figures are released, he will go through the Bureau of Labor Statistics numbers and find all sorts of horrifying adjustments, plugs, fudges, etc.  By the time you're done, the number is usually a lot worse than you thought.  I've only been reading him for two years, but he seems to be dead on every month, as proven by later revisions.  The same sort of process goes on with the all important quarterly GDP numbers.  Insane adjustments and assumptions (like this month's export/import numbers that managed to add about 1.4% of growth because imports declined at a sharper rate than the rate exports declined) make these number very highly suspect.  Didn't it scare you when they told us that we OFFICIALLY entered a recession in December 2007.......about a year later!  I also find the same thing with housing numbers.  They come out, I read them and then I go to www.housingdoom.com to find out that most of the time, the numbers make a series of generous plugs and assumptions.

Anyway, my main point is the same point Richie and I made at the beginning of 2008.  Turn the TV off, put the government statistics in a drawer and take a serious look around you.  As Dylan said, "You don't need a weather man to know which way the wind blows."

Meanwhile, read about G.E., "Cash For Everything that is Clunking and China's numbers and then listen to The Offspring!

GE Settles Claims of Fraud in Accounts

China's Growth Figures Don't Add Up.

Don't Stop With Clunkers...Just Bail Out Everybody!

Comments

[Bruce Weinstein]

Well written. What is going to get us out of this mess? Another stock market boom? Another dot com tech boom? Another real estate boom? These were the engines of growth over the last 30 years? What could be next? Oh its happening already...a government spending boom. A boom to end all booms!