Kerry Lutz has got to be right (and anything Paul Krugman has to say
about the figures has got to be wrong). The real situation is serious
-- especially the steady accumulation of the long-term unemployed
(and thus of the increasing redundancy of traditional skills).
The report ought to be coupled with another that came out today --
America's position in the international prosperity league table
according to the independent think tank, the Legatum Institute.
America is not at the top, as it was only a few years ago, it has now
fallen out of the top dozen. t present America has a clear lead in at
least 15 of the leading research sectors (IMO) but, as America did
during the last century with respect to European scientists, one
country (China?) has only got to offer good salaries, top research
facilities and first class habitats and schools for wives and
children for research scientists to be the most foot-loose of all professions.
Keith
.
At 17:09 05/11/2012, you wrote:
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/>http://truthingold.blogspot.ca/
Friday, November 2, 2012
<http://truthingold.blogspot.ca/2012/11/its-complete-farce.html>It's
A Complete Farce
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:
<http://financialsurvivalnetwork.com/2012/11/dave-kranzler-a-reformed-wall-streeter-deconstructs-fraudulent-housing-start-stats/>LINK
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: <http://www.bls.gov/web/empsit/cesbd.htm>LINK
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:
<http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/10-2/Birth%20Death%20%2B90.jpg>LINK
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
<http://truthingold.blogspot.ca/2012/11/its-complete-farce.html>12:07 PM
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