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When ‘Statistics’ Become Gibberish

Articles & Blogs - US Commentary

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This is a topic which was pushed to the back-burner in favor of larger, more important news items. However, it is an important issue to cover since it perfectly symbolizes the trend away from providing informative data and toward ever more mindless propaganda.

Case in point is a new “statistic” which Bloomberg felt compelled to trumpet a couple of weeks ago: the Citigroup Surprise Index. Even before I learned what this propaganda tool was supposed to represent I had to laugh. Given the endless, serial-fraud from Wall Street, I couldn’t help noting that a “Citigroup Surprise” sounded like the sort of sickening discovery that MF Global’s clients made the morning after discovering that roughly $1 billion of their funds had been plundered by unscrupulous banksters.

In fact, however, the Citigroup Surprise Index is not some “thermometer” providing us with data on the current level of Wall Street thievery. Rather, it is something much more absurd: a measurement of how often the U.S.’s blatantly fraudulent economic statistics “beat expectations”.

One could easily write several chapters mocking this utter nonsense, but hopefully I can expose this “Idiot Index” for the vacuous drivel that it is in much less time. The fundamental criticism of this silliness is that it obviously has no meaning whatsoever, or more specifically it could be interpreted to mean anything.

The propagandists claim that when the Citigroup Surprise Index shows that the official statistics “beat expectations” on a regular basis that this is good news. There is absolutely no logical validity in such a conclusion.

There are several things implied when the experts consistently miss on their “expectations”. First of all, being increasingly wrong on their expectations simply implies incompetence. Following the unmasking of most of these “experts” as the charlatans that they are during the Crash of ‘08, the most obvious meaning of the Citigroup Surprise Index is that the so-called experts are going through another period of extended ineptitude.

However, note that the Citigroup Surprise Index isn’t simply measuring these experts being “wrong”, but rather specifically recording how they have consistently under-shot the numbers with their projections. This strongly suggests a negative bias among these experts. Of course these explanations presume sincerity/honesty among these participants. There is a more sinister explanation of the Citigroup Surprise Index which is also the most plausible.

First of all, we need to acknowledge the obvious game which Wall Street has made out of “beating expectations”. After decades of relentless brainwashing they now have their media parrots perfectly trained. For these talking-heads, announcing whether a particular number “beat expectations” has now become more important than the number itself.

How did our markets (and the sock-puppets who report on them) ever reach such a state of logical perversity? Quite simple. The Wall Street banksters have managed to convince both the media and market-sheep that expectations are always “priced-in” prior to an actual number being announced. This presumption is based upon a long list of assumptions – none of which are true – but the banksters never explain that part to the market sheep or media drones. They simply tell their flock that everything is always “perfectly priced” prior to any new announcement, and so if that new announcement “beats expectations” then the sheep are supposed to bid up the price.

Note that with Wall Street’s Pied Pipers directly and indirectly controlling somewhere in excess of 80% of all U.S. trading (via their automated trading algorithms) that causing something to go up in price after it “beats expectations” doesn’t even qualify as a cheap parlor trick. However such a clumsy ruse was still more than clever enough to turn market sheep into Pavlov’s Dogs.

Ivan Pavlov banged a dinner-gong and his dogs began to salivate. Wall Street shouts “beat expectations” and the sheep rush in to buy, buy, buy. What makes this game so utterly absurd is that companies now “beat expectations” with such frequency that it’s effectiveness is beginning to wear off on the sheep. In other words, the expectation is that companies will now beat expectations (which is in itself logically perverse).

There are only two ways to view this scenario. We can view it as a cynical game of deliberate deception, or years and years of ever more frequent “happy coincidences”. Empirical data from the past few years strongly suggests the former explanation.

In 2007 and 2008 we had the market experts being more wrong than any “experts” in history. Specifically, their prognostications proved to be wildly optimistic. And yet immediately after and even during all of this “wrongness” we still regularly saw the companies they were reporting on “beat expectations”. It is logically impossible for these experts to have simultaneously been absurdly myopic optimists and shrewd pessimists. If we had any remaining doubts as to whether this was deliberate or accidental deception, those doubts have been eliminated with the dishonest manner in which economic data has been presented during the mythical “U.S. economic recovery”.

Understand the inherent and absolute contradiction of permanent 0% interest rates. Prior to the death of the U.S. economy, no nation in history other than Japan had ever engaged in such reckless monetary policy over an extended period of time. It is wildly stimulative, and the exact economic equivalent of a defibrillator. It is a palliative intended for only the most dire of emergencies and never intended to be used for more than brief intervals.

If a defibrillator was used on a person continuously, over a period of years, we would not be talking about a patient “in recovery”, we would be dealing with a corpse. Equally, when we see an economy being permanently defibrillated with 0% interest rates we are not witnessing an “economic recovery” but rather gazing at an economic corpse. Similarly, the analysis of market experts with respect to the strength of the U.S. economy and their predictions (upon which the “beat expectations” game is played) are absolutely contradictory.

Out of one side of their mouths, we have these experts gushing about the “underlying strength” of the U.S. economy – the talk of optimists. Out of the other side of their mouths, the same experts have been underestimating economic statistics with greater frequency than at almost any time in their less-than-illustrious careers – the actions of pessimists.

To portray this scenario as unequivocally positive/bullish for the economy (as Bloomberg and the rest of the propaganda machine are doing) becomes even more dishonest and absurd when we focus on specific sectors for the U.S. economy.

The U.S. housing sector is in the midst of a Depression far worse than the Great Depression. The carnage in this sector is already many times more severe than in the 1930’s, and the housing market is in even worse shape today than it was in 2008. We know this to be the case because the sector has plummeted through those lows, and prices are still falling today.

Yet here we have market experts regularly predicting/expecting (month after month) that this sector will do even worse than it has been doing, while simultaneously solemnly assuring the sheep that the U.S. “economic recovery” continues to steam ahead. There is a psychiatric term for such contradictory duality: schizophrenia.

It is when we look at the U.S. retail sector, however, where such duplicity appears to be more unambiguously indicative of deliberate dishonesty. The most glaring indication of dishonesty is the refusal on the part of both media talking-heads and market analysts to discount retail sales figures by the prevailing rate of inflation.

Reporting nominal sales figures which have not been deflated for inflation is just as meaningless as reporting GDP calculations which have not been deflated for inflation. The reason these nominal numbers are utterly meaningless is that we have no way of determining how much of the change is an actual change in GDP/retail sales, and how much of the statistic is merely measuring inflation. Yet while the latter statistic is always (supposedly) deflated, the former statistic is rarely adjusted for inflation.

The intent here is obvious: a deliberate effort to hide the fact that the U.S. retail sector is mired in its own Depression. Adjust the sales numbers by the (real) rate of inflation and we find that U.S. retail sales have been in a steady decline throughout this supposed “recovery” – as retailers in the U.S. are selling less and less goods each year. It’s only the soaring prices for those goods which have resulted in the small (nominal) gain in sales dollars.

Compounding the misery of U.S. retailers, their margins are being squeezed from both ends. Median incomes in the U.S. have been plummeting much faster during the supposed “recovery” than they did during the “recession”, while millions fewer Americans are employed than prior to the onset of this Greater Depression. This means the purchasing power of the U.S. consumer has taken a nose-dive. At the same time, soaring commodity prices have caused the input costs for most retailers to explode – forcing them to pay much higher wholesale prices.

The results of this worsening retail sector Depression are plain to see. U.S. mall vacancies continue to hover at all-time highs, and retailers continue to descend into bankruptcy with alarming frequency. It is utterly ludicrous for these pseudo-experts to continue to maintain the fiction that the U.S. consumer-economy is in the third year of a supposed economic recovery when the entire retail sector is mired in an obvious Depression.

Yet while these statistical charlatans continue to “predict” the worst numbers in history for the U.S. housing sector, and continue to “predict” that retail sales statistics will be even worse than they are (while the sector grinds steadily lower), the propaganda-machine tries to deceive us into believing that we should regard these “surprises” as being an unequivocally bullish indicator for the U.S. economy.

The long-term intent here is obvious. With another totally fraudulent U.S. jobs-report being released by the BLS on Friday, even the propagandists themselves know that the fiction they peddle becomes less plausible by the day. Thus the effort is being made to distract our attention even farther from “hard data” – and toward utterly contrived fragments of spin like the Citigroup Surprise Index.

Expectations are not an economic fundamental. Rather they are a derivative of actual economic fundamentals, much like price. It is by no means a coincidence that the business propaganda-machine spends the vast majority of its time reporting on price and expectations – and only a relatively tiny sliver of its time/energy actually presenting the economic fundamentals.

In part this is an act of convenience/expediency, as it takes little education or intellect to “report” on prices or expectations, and a much greater level of sophistication to intelligently discuss genuine fundamentals. At the same time we cannot overlook the fact that this is obviously a part of a much large pattern of deception/obfuscation.

If Americans want to engage in reliable “economic analysis”, they should drive around their neighbourhoods and observe all the foreclosed and/or abandoned homes that pockmark once-prosperous Suburbia; or they can take a trip to their local mall and observe all the “wide open spaces” that used to be clogged with shoppers. They will get little help from the experts.

Comments (5)Add Comment
Jeff Nielson
written by Jeff Nielson, January 07, 2012
Paxjds, as my own little "shopping anecdote", I had been looking at a pair of shoes back in September but had decided that at $200 they were just a little too pricey.

I didn't forget about the shoes however, since I was still interested in them. I went back to the store two days before Christmas - intending to do a little "reconnaissance" in preparation for the Boxing Day price-slashing.

Well I ended up buying the shoes right then-and-there - as they were ALREADY marked down by over $70 from the original price (nearly 30%). I actually went back to the same mall on Boxing Day (very unusual for me) because I was also wanting a new pair of hiking/winter boots.

The crowds the day AFTER Christmas were at least four times as large as the crowds two days before Christmas - when even 5 years ago that would NEVER have been the case.

The message here is very clear: our populations in North America have been impoverished to such a degree that the ONLY time all year long when we can still "consume" like we used to is at the time of MAXIMUM DISCOUNTS.

"Economic recovery"? Yeah, right... smilies/wink.gif
written by paxjds, January 07, 2012
While checking all the "open spaces" with few shoppers, I also noticed one large mall totally shut down, and a large strip mall down to 3 small stores taking up just 10% of the mall. Reading government propaganda, they would have you believe the country is in a robust recovery. What a joke.
Lately, Obama's team is bragging in the media that unemployment has dipped to under 8.5%. publish the real unemployment at 23%, right in line with the great depression of the 30's. If the economy was doing so well, then why is the government deficits over 1.2 trillion dollars for the current year and projected for next several years. New home sales are down over 2/3 from 2006.
Obama, democrats, and republicans can call this a recovery if they want, but I call it a depression. I assume readers across the globe are also seeing the same 'Depression', and not a wonderfull recovery as spouted by their politicians and newspapers!
written by samix, January 07, 2012
I was watching two arrogant members of Eurasia research group talk about the world as if it's their own estate, I am angry and irritated.
Jeff Nielson
written by Jeff Nielson, January 06, 2012
Thanks Apberusdisvet!

I have to guard against going off on TOO many "tangents" when I start a topic of this nature (lol), so I actually struggled more than usual with this one trying to remain "on topic".

Certainly there is no shortage of EXAMPLES to use when it comes to exposing this insidious propaganda machine... smilies/wink.gif
written by apberusdisvet, January 06, 2012
Jeff: fantastic analysis that indicates that Goebbels and Bernays must be laughing from their graves at the stupidity of the masses. I'm surprised that you didn't mention CPI which is perhaps the phoniest statistic of all.

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