Everything we thought we knew about the economy is wrong

Well the UK is taking steps to become a true banana republic, bought and paid for by corporates and using accounting fraud to mask the issues of the economy. Don’t worry, Big Dave and hokey cokey Gidion have a plan to include ‘illegal’ activity, R&D spending and a wholehost of other nonsense. Not only does this lead to a monumental misallocation of resources and lulls people into a false sense of security but it gives the corrupt media a siren song to sing about.

Just remember, they’ll tell you it’s raining while they’re stood overhead pissing on you. Courtesy of Allister Heath @ City AM:

FACTS are sacred, unlike mere subjective opinions – or so most sensible people believe. In reality, as every good French philosopher would tell you, what we trust to be objective data-based truths all too often turn out to be social constructs. We are about to see a beautiful demonstration of this with the British economy, where the official statisticians will shortly entirely and drastically rewrite decades of history.

Everything we thought we knew – all the “facts” – are about to change. This is massive news for anybody who cares about the UK economy, politics and public policy; the last time a similar rewriting took place was when the UK’s economic statistics were harmonised with those of the rest of the EU many years ago.

One change will see research and development spending classified as capital expenditure; at a stroke, this will raise the level of the UK’s economic output by a cool £25bn. That’s just the beginning: overall, the statistical deckchair shuffling will boost the size of the UK economy by between 2.5 and five per cent, a shockingly large amount (and a vast range that makes it hard for outside forecasters to be able to predict exactly what the Office for National Statistics (ONS) will come up with).

Nothing real will have changed – but we will all officially be substantially richer. Hurrah – who said economic growth was hard to come by? The changes will start to come into effect this year but there is an “ongoing programme of work until 2017”; the ONS will publish various pieces of research this month and in May. Continue reading

Lies, Lies and US Statistics

If you were to believe what the US government and the BLS are saying about the economic recovery, everything appears to be rosy and on the up. You maybe tempted to spend your hard earned dollars instead of saving them for a rainy day…but what if the government is lying? What if they manipulated the statistics, not only to save face but to keep the economy on life support? It would be shameful and malevolent but remember, there are lies, lies and then there are statistics. Charts are courtesy of The Hedge.

In all of the charts below, the green line represents the S&P500

Crude Oil is diverging.

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Continue reading

UK GDP: It’s not a Recession but a Depression

I have wrote, blogged and re-blogged about market manipulation, I believe with conviction that all markets are manipulated and statistics on inflation, GDP and employment are not representative or true. If they were, inflation would be 6% plus, unemployment would be double and GDP numbers would prove we are in a depression.

Cui bono? Our illustrious leaders of course, if George Gidion Osborne, David ‘Never worked a full day in my life’ Cameron and William ‘War Criminal’ Hague had to stand in front of the British public with representative statistics, heads would roll…literally. Not forgetting that the wealth transfer, happening through quantitative easing, would end and the banks would fail due to being completely insolvent. Courtesy of Money Week:

I wrote here a few weeks ago about the oddly opaque manner in which the government figures out what inflation-adjusted GDP growth in the UK is. It doesn’t use the RPI or the CPI as a representative of inflation – as you might think they would – instead, it uses its own deflator. I have no idea how that is calculated, and I strongly suspect that almost no one else does either. The key point to note is that until 2010 the RPI and the deflator were much of a muchness. But in the last few years, they have suddenly (and to my mind inexplicably) parted ways. James Ferguson at MacroStrategy Partners has kindly picked this point up for me and produced this chart:

Real GDP vs NGDP adjusted for RPI

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If you assume that the Office for National Statistics’ occult calculations for the deflator are entirely reasonable and correct, the UK has avoided a double dip recession (hooray!). If, on the other hand, you note that the deflator and the RPI have rarely diverged in the past, and so think that using the RPI to deflate nominal GDP continues to make perfect sense, it turns out that the real economy has been contracting since 2008 (boo!).

That’s not a double dip. It is a depression.