No doubt, the temp jobs generated by Super Storm Sandy clean-up will
further derail these long-term concerns. In a few states.
*Natalia*
http://truthingold.blogspot.ca/
Friday, November 2, 2012
It's A Complete Farce
<http://truthingold.blogspot.ca/2012/11/its-complete-farce.html>
*Statistics are what the powers that be want you to believe them to
be, nothing more and nothing less* - Kerry Lutz, founder of the
FinancialSurvivalNetwork
With regard to the quote above, Kerry Lutz had me as a segment guest on
his FinancialSurvivalNetwork radio broadcast. The topic was fraudulent
Government statistics and you can listen to it here: LINK
<http://financialsurvivalnetwork.com/2012/11/dave-kranzler-a-reformed-wall-streeter-deconstructs-fraudulent-housing-start-stats/>
I honestly don't know how Obama gets up in front of crowds today and
claims that the economy is getting better and that jobs are being
created. I find it exceedingly hard to believe that he doesn't know the
truth about the Bureau of Labor Statistics preposterous calculation of
the monthly non-farm payroll report. I find it even harder to believe
that anyone with functioning frontal lobes would believe the absurd
"report." It is a complete farce that CNBC/Fox Business/News/CNN and
all other media sources discuss and debate this particular Government
economic statistic as if it has any semblance of credibility.
The Government reported this morning that the economy produced 171,000
new jobs in October, well in excess of the average estimate of 125,000 -
the latter number a nonsense estimate based on highly manipulated data,
the former a fantasy beyond any remote rationalization.
The primary driver of the employment report today was the nefariously
mysterious "birth/death model." For today's particular report, the
birth/death model contributed 90,000 jobs to the Government's
statistical stew. Let's take a look to see exactly what this is and how
it is applied. The metric is supposed to measure employment growth
created from new business formations net of business "deaths." Here's
the key definitional sentence from the BLS website:
The sample-based estimates are adjusted each month by a statistical
model designed to reduce_a primary source of non-sampling error
which is the inability of the sample to capture, on a timely basis,
employment growth generated by new business formations._
To save you all the brain damage from translating that sentence, here's
what it means: "A primary source of non-sampling error" means that the
Government has no possible way of figuring out how many, if any, new
businesses were formed during the period of time when the Government
worker bees were calling around to try and figure how many people were
actually hired and fired in the previous month. The data gathering for
this comes from sampling about 1/3 of all Unemployment Insurance tax
accounts. You can read all about the birth/death model here: LINK
<http://www.bls.gov/web/empsit/cesbd.htm>
Essentially, what the Government is doing is using a small universe of
businesses that contribute to the unemployment insurance program to
determine the extent to which new accounts were opened and closed. Then
it extrapolates out from that based on some unexplained statistical
model the number of new jobs, net of jobs lost, that were created by the
private sector from new business being formed and closing. Essentially
the Government is "imputing" the number of new jobs that were created
from an "imputed" number of new businesses that the Government thinks
might have been started during the previous month. I am begging someone
to explain to me how this can be even remotely accurate.
The word "impute" ("imputing") is actually used in the BLS' description
of the birth/death model. Here's the dictionary of the word
"imputation" in reference to its use in business: "to give (a notional
value) to goods or services when the real value is unknown." In short,
to make it up when you don't know the truth and you don't have
verifiable data.
The Government goes on to explain/claim that "research" indicates that
contribution to jobs growth from birthing/dying businesses is
"relatively small and stable." Hmmm. Not only is this claim
completely unsubstantiated, it's makes no sense in the context of
reality. First, here's a chart of the birth/death data on a monthly
basis as compiled by Zerohedge: LINK
<http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/10-2/Birth%20Death%20%2B90.jpg>
Does that look like the picture of stability? Second, in the context of
the standard economic cycle, it would make sense that in a growing
economy a lot of new businesses would be formed and in a declining
economy a lot of small businesses would die. We've had 4 years of a
stagnant economy, with little nominal growth and negative real growth
(after the adjustment for real inflation). It would be realistic to
assume that new business formation during this period would be in
decline and business deaths would be accelerating, especially in
comparison with new business formation from say, 1995-2005. During
the latter period we had new technology mushrooming and then many
finance-related businesses flourishing - both a product of Fed-driven
fiat currency asset bubbles. We've had none of that except for the
expansion of the Government in the last four years.
As John Williams has pointed out many times in the past, the current
Government statistical computation models were constructed during a
period when we had actual growth in the system. The models were never
adjusted and revised to account for decelerating growth and actual
decline, which means that the models are egregiously inaccurate. This
makes sense if you have any background in statistical/econometrics
forecasting theories, which I happen to have had the misfortune of being
forced to study at the University of Chicago. Talk about something
causing brain damage.
Finally, the birth/death definition page at the BLS website notes that:
"Note that the net birth/death figures are not seasonally adjusted, and
are applied to the not seasonally adjusted monthly employment estimates
to derive the final CES employment estimates." To translate, what this
says is that the Government conjures up a b.s. estimate for the number
of jobs created by new business formation, does not make any "seasonal
adjustments" to it, adds it to the unadjusted employment estimate and
then runs it thru it's covert "ARIMA time series model" and produces the
employment report. This is the model that John Williams references as
being entirely inaccurate.
The way I see it, the Government's monthly employment report -
especially when considered in the context of what is going on in the
real economy (growing number of people on food stamps, social security
disability, long term unemployment insurance and student loans) - is not
only completely fictitious, but the fact that everyone discusses the
report in a way that gives it some modicum of credence shows that our
entire system has diminished into a complete farce.
Posted by Dave in Denver at 12:07 PM
<http://truthingold.blogspot.ca/2012/11/its-complete-farce.html>
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