johnking3's  Instablog

by: Glenn Holderreed www. quacera.com glenn@quacera.com

"There are three kinds of lies, lies, damn lies and statistics " a quote attributed by Mark Twain to British Prime Minister Benjamin Disraeli although subsequent research failed to find it in any of Disraeli's works. So, while the authenticity of the quote is questionable the sense certainly applies to Friday's Employment Report issued by the Bureau of Labor Statistics, wildly cheered as proof the U.S. economy is enjoying a sustained recovery.

Well, maybe, but there is some controversy; it may not be a lie, or a damn lie, but it certainly is statistics. See Link: http://www.bls.gov/news.release/empsit.t17.htm

Note: according to the "not seasonally adjusted" data in December there were 132,962,000 people receiving some kind of paycheck while in January there were only 130,263,000 on the payroll. Seems a bit bleak, but not so! According to the "seasonally adjusted" data 132,166,000 employed in December jumps to 132,409,000 by the end of January, and increase of 243,000. This is all statistically proper. January layoffs from the holiday season were below normal so the statisticians show that as an employment gain. It wasn't as bad as usual so it must be better than expected. Of course, there may not have been as many holiday employees added in December so the layoffs would be low, but that will come out in a revision, which no one will see. Statistics!

Still, those 243,000 statistical souls are not collecting real paychecks. No matter how you look at it there are approximately 2.7 million fewer individuals receiving wages at the end of January than there were in December. But the statisticians are pleased, Wall Street is elated, and the mainstream media is thrilled; the mythical seasonal soul may not be real but he/she/it is statistically significant. Finding them at the mall, or the auto dealers may be a bit tough as they seem to fit the official definition of "poltergeist." A poltergeist is a paranormal phenomenon which consists of events alluding to the manifestation of an imperceptible entity. So there we have it:

The increase is poltergeist employees, which are also much cheaper than the regular skin and bones type and everyone is happy. Mark Twain may have lied about Disraeli but they both seemed to understand something about the relationship of statistics to reality.

Apparently Economic Illiteracy is catching. For the past 5 or so years, getting a ticket to see a Phillies game in Philadelphia has been nearly impossible. Not so in Washington DC where its team, the Nats, have been doing poorly and where the stadium remains largely empty during most home games. Since Philly is less that a two hour drive from DC, Philly fans make the journey any time their team plays there. Now, according to the Washington Post, the management of the Nationals has decided to ban Philadelphia fans in what they are calling a 'Take Back the Park' campaign. This means that if you buy your tickets with a credit card it has to be registered in Maryland, DC or Virginia otherwise they will refuse to sell it to you. This not only smells illegal under the plethora of "rights" laws we live with but eerily, also rhymes with the kind of thinking that emanates from the rest of the seat of government and has put us into the financial condition in which we find ourselves. The proximity and similarity of this kind of loopy economic thinking is too close to excuse. We may be on the verge of a medical discovery that, if proven, will explain much about what happens to seemingly normal people who wind up working in the Capitol

It has been demonstrated that when put into water that is slowly heated, a frog can adjust its body temperature so that even if the water reaches boiling the creature will not recognize it and die rather than hop out. We are not sure that all frogs would fail to remove themselves but as this Youtube link demonstrates there is something that happens to make it impervious to ever increasing heat: http://www.youtube.com/watch?v=svpsLZDgFK4

Our reason for bringing this up is that we believe the investing & even the non-investing voters are being gradually & systematically anesthetized to the risks and consequences of Fed & Treasury policies. Beginning in our experience with the inflation & stagflation of the 1970s, these well intentioned plans for income redistribution and economic control have given us failed wage & price controls, inflation in the teens followed by huge increases in interest rates, several major recessions, investment bubbles in commodities, stocks & real estate; collapsing S&Ls & major banks, auto company bailouts and not a few wars. Each episode has reached a point where our salvation arrives in the form of some government intervention that includes de-facto devaluation of the currency that lowers the value of labor & savings in the name of propping up the status quo. We have become used to it and as we all know, the more pain or inconvenience we suffer the more we ignore it & adjust our behavior to divert attention and assets in a positive direction. We generally - most of us - understand the possible consequences but the longer we go without having to deal with those, the less likely we think they will come about. Unfortunately, like the outcome for our Mr. Frog, the water will boil and those who haven't extricated themselves in time will suffer the same fate as previous generations who were anesthetized to the economic significance of government folly.