Washington And Wall Street Depending On Deceptive Economic Statistics


On August 17, Bloomberg reported a
US government release that industrial production rose
twice as much as forecast, climbing 1 percent. Bloomberg
interpreted this to mean that
"increased
business investment is propelling the gains in
manufacturing, which accounts for 11 percent of the
world`s largest economy."
 

The stock market rose.

Let`s look at this through the lens
of statistician John Williams of
shadowstats.com.

Williams reports that
"the primary
driver of a 1.0% monthly gain in seasonally-adjusted
July industrial production"
was
"warped seasonal
factors"
caused by
"the irregular
patterns in U.S. auto production in the last two years."

Industrial production
"shrank by 1.0%
before seasonal adjustments."
 

If the government and Bloomberg had
announced that industrial production fell by 1.0% in
July, would the stock market have risen 104 points on
August 17?

Notice that Bloomberg reports that
manufacturing accounts for 11 percent of the US economy.
I remember when manufacturing accounted for 18% of the
US economy.  The decline of 39% is due to jobs
offshoring. 

Think about that. Wall Street and
shareholders and executives of transnational
corporations have made billions by moving 39% of US
manufacturing offshore to boost the GDP and employment
of foreign countries, such as China, while impoverishing
their former American work force. Congress and the
economics profession have

cheered this on as
"the New
Economy."

Bought-and-paid-for-economists told
us that "the new
economy"
would make us all rich, and so did the
financial press. We were well rid, they claimed, of the
"old"
industries and manufactures, the departure of which
destroyed the tax base of so many American cities and
states and the livelihood of millions of Americans.

The bought-and-paid-for-economists
got all the media forums for a decade. While they lied,
the US economy died.

Now, back to statistical deception. 
On August 17 the Census Bureau reported a small gain in
July 2010 residential construction housing starts. 

More hope orchestrated.  In
fact, the "gain",
as John Williams reports, was due to a large downward
revision in June`s reporting. The reported July
"gain" would
"have been a
contraction"
without the downward revision in June`s
"gain." 

So, the overestimate of June
housing not only made June look good, but also the
downward correction of the June number makes July look
good, because starts rose above the corrected June
number. The same manipulation is likely to happen again
next month.

If the government will lie to you
about Iraqi weapons of mass production, Iranian nukes,
and 9/11, why won`t they lie to you about the economy?

We now have an all-time high of
Americans on food stamps, 40.8 million people, about 14%
of the population. By next year the government estimates
that food stamp dependency will rise to 43 million
Americans. So last week Congress cut food stamp
benefits.  Let them eat cake.

Wherever one looks–food stamps,
home foreclosures, bankrupted states, mounting
joblessness, the message to long-suffering Americans
from "their
government"
is the same: go eat cake, while we fight
wars for Israel that enrich the military/security
complex and while we bail out banksters whose annual
incomes are in the tens of millions of dollars and up.

It is impossible to get any truth
out of the US government about anything. If private
companies used US government accounting, the executives
would be prosecuted, convicted, and incarcerated. 

"Our government"
is committed to fighting wars to enrich the
military/security complex and Israel`s territorial
expansion at the expense of

cuts in Social Security and Medicare.

All most members of Congress,
especially Republicans, want to do is to pay for the
pointless wars by cutting Social Security and Medicare.

When they worry about the deficit,
it is usually Social Security and Medicare–so-called
"entitlements"
that are in the crosshairs.

You don`t have to be smart to see
that Wall Street`s and the government`s response to the
amazing US budget deficit is not to stop the senseless
wars and bailouts of mega-millionaires, but to cut
"entitlements."

I will end this column on
unemployment. 
"Our government"
tells us that the unemployment rate is just under 10
percent, a figure that would have wrecked any post-Great
Depression administration. But, again,
"our government"
is lying. The reported unemployment rate is just below
10% because the US government no longer, since the
corrupt Clinton administration, counts Americans who
have been unemployed for longer than one year. Once the
unemployed hit one year and one day, they are dropped
from the unemployment roles and no longer counted as
unemployed. 

Compare this fact with the number
you read from the financial press. Right now, if
measured according to the methodology of 1980, the US
unemployment rate is about 22%.  Thus, the reported
rate of unemployment hides more than half of the
unemployed.

And Secretary Treasury Tim Geithner

welcomed us
in the August 2
New York Times
to "the
recovery."

Utterly amazing. 


Paul Craig Roberts

[email
him
]
was Assistant Secretary of the Treasury during
President Reagan`s first term.  He was Associate
Editor of the
Wall Street Journal.  He has
held numerous academic appointments, including the
William E. Simon Chair, Center for Strategic and
International Studies, Georgetown University, and Senior
Research Fellow, Hoover Institution, Stanford
University. He was awarded the Legion of Honor by French
President Francois Mitterrand. He is the author of




Supply-Side Revolution : An Insider`s Account of
Policymaking in Washington
;
 
Alienation
and the Soviet Economy

and



Meltdown: Inside the Soviet Economy
,
and is the co-author with Lawrence M. Stratton of




The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name
of Justice
. Click




here

for Peter Brimelow`s
Forbes Magazine
interview with Roberts about the recent epidemic of
prosecutorial misconduct.