Tag: John Robb

John Robb apparently has just returned from an alternative plane of existence where Bush wasn’t inaugrated president until January of 2002,

When did the recession begin? March 2001. Of course, this isn’t going to stop the Bush team from rewriting history to blame it on Clinton.

Since Bush was inaugurated on January 20, 2001, I can’t wait for Robb to explain precisely what Bush did in the intervening week and a half to cause the recession.

Of course, 9/11 was nearly 2 years after Bush took office, but Clinton must certainly be culpable too.

Talk about rewriting history. 9/11 occurred less than 8 months after Bush’s inauguration.

Perhaps Robb is recounting the history of the Mirror Universe — you know, the one where Spock has a goatee and Osama Bin Laden is clean shaven.

Update: Well, it took Robb just a few hours to rewrite history and delete that embarassing post without explanation. Bush will probably try to blame that on the Clinton administration, too.

Source:

John Robb’s Weblog February 16, 2004.

Somebody had to say it and John Robb puts it succinctly — the stock market is not the American economy and the economy is rather healthy. Robb writes,

Hey, for what its worth: the US isn’t in a recession. Most economists think we are going to grow from 3-4%. Productivity is expected to grow 4%. Real wage growth is over 3%. Inflation is nearly zero. Fed rates are expected to remain unchanged for the rest of the year. In fact, even the markets are still up big from their early 90’s levels (the Dow is still 2x over its 1990 level and the NASDAQ is 3x). Housing prices are up 12% nationally.

There are still those that think we are headed for a financial depression ala Japan in the 90’s or the 1930’s US. If you are in that camp, please sell all your assets for cash and move to a cabin in the woods. I bet you can get a great deal on a survivalist cabin from all those Y2Kers that moved out there in 1999.

Robert Samuelson wrote an excellent op-ed last week pointing out that much of the blame for the stock market debacle rests with individual and institutional investors who barged in gung ho with extremely risky investments. Those investors were more than happy to benefit from windfall gains in their portfolio, but are suddnely shocked when some of those risky investments went south.

How absurdly high were stocks? Samuelson noted that historically stocks in the S&P 500 have a 14:1 Price/Earning ratio. But during the stock market bubble, stocks were trading at closer to an absurdly high 30:1.

The stock market is not collapsing, but rather returning to a more sane valuation level.

John Robb and Dave Winer take at face value Alan Greenspan’s assertion that his data are free of spin. Winer writes,

Very interesting note on John Robb’s weblog about Alan Greenspan’s number crunching that routes around the noise added by corrupt management. “We do have a set of profits data which, for all practical purposes, are free of spin,” says the Federal Reserve chief.

Not. In fact the quarterly estimates of National Income and Product Accounts — which Greenspan is referring to — are as often just as much smoke and mirrors as are corporate profits. The bottom line is that once you get past a certain point, finding a way to measure things like earnings or productivity that everyone agrees on becomes very difficult.

As Joseph Ritter, a researcher with the Federal Reserve Bank of St. Louis, noted in a report on the NIPA numbers,

Second, the data BEA uses to construct the NIPA are generally reliable, but they are far from perfect. They may be inaccurate, or they may not be precisely what are needed. Indeed, for quarterly estimates of some components, no source data are available, and BEA must substitute judgment and statistical methods. This is especially true of quarterly estimates published shortly after the end of the quarter, as data collection and processing often take more than one or two months. Furthermore, since the NIPA are the result of a complex process based on many inputs, it is impossible to construct formal measures of their statistical reliability, as is done for the unemployment rate, for example.

Just imagine a CEO stepping forward today to say that he is going to start estimating his company’s earnings based on a method that he knows is not accurate and, moreover, a method whose accuracy cannot be reliably tested. Oy.

Which is not to trivialize what NIPA attempts to do. That they can put together a “best guess” for measuring one of the largest economies in world history on a quarterly basis is amazing. But NIPA numbers are not the end all be all when it comes to routing around errors in other sectors.

Source:

Feeding the National Accounts. Joseph A. Ritter, Federal Reserve Bank of St. Louis, March/April 2000.