Category Archives: Dubious statistics

Philip Pilkington: Economics as Machine – The Nature and Folly of the Forecasters

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.

– John Maynard Keynes

Obama and Boehner’s Grand Bargain: Gullible Democrats are Falling for the Ol’ “Good Cop, Bad Cop” Routine

By Michael Hoexter, a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency.

What is happening now in American politics surrounding the political theater called “the fiscal cliff”, must be understood with the utmost clarity because, in part, the organizers of what James K. Galbraith aptly calls a “scam” are counting on confusion and rash action to complete their scheme. If we can understand what is going on with greater clarity, we may be able to highlight to more people the import of the events occurring and hopefully short-circuit the efforts of politicians to damage the social safety net and the economy more generally.

The BLS Jobs Report Covering November 2012: Hollow Gains

By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente.

I suspect that the Bureau of Labor Statistics report covering November 2012 will be heralded as a solid report, but as usual there are a lot of negatives behind the headline numbers. Seasonally adjusted, 146,000 jobs were added to the economy and the unemployment rate dropped two-tenths of a percent to 7.7%. For those of you who are conspiratorially minded, after upward revisions in the months preceding the election, last month’s jobs number was cut by 33,000 and September’s 16,000.

The CBO’s Latest Con Job: Disappearing Data to Deter Analysis of its Deficit Scaremongering

The CBO is resorting to such extreme measures to impede independent analysis of its scaremongering about the fiscal deficits that it’s hard not to conclude that it has something to hide.

Questioning Health Care Cost/Budget Fearmongering: Consumer Revolt Against Prescription Drug Costs Already Underway

As we discussed last weekend, two Federal Reserve Board economists shot gaping holes the CBO’s health care cost increase assumptions in CBO’s long term fiscal forecasts. As technical as this sounds, these long-term cost increase assumptions are the big driver of the much ballyhooed deficit explosion. And as the Fed economists’ paper discussed in considerable detail, the CBO’s assumptions on the rate of increase look indefensibly aggressive, which in turn means the hysteria about entitlements eating the economy deserves far more scrutiny than it is getting.

Some evidence on the pressures against health care cost trees growing to the sky comes in a new post by Wolf Richter.

Quelle Surprise! Spain Shows Bank Stress Tests Living Up to Their Bad Name, Dud Loans Rise 0.6% in One Month

Bank stress tests have become a contemporary exercise in “the emperor has no clothes”. Everyone by now (or at least everyone who pays attention) knows that the stress tests are an exercise in confidence building, with emphasis on the “con”.

Mirabile Dictu! The Media Notices the Sucking Sound of Growth (What Little There Was) Leaving the Economy and Underplays IMF Malpractice

Starting late last week, there’s been a marked shift in the mix of headlines in the major media outlets. While it may simply be post fall equinox moodiness or a confluence of downer reports leading to a rare moment of sobriety, suddenly the big venues are concerned about the economic outlook.

Professional Firm Economics, or Those $1000+ an Hour Lawyers

I’m remiss in not seeing and commenting till now on a Felix Salmon post (hat tip Adam Levitin) earlier this month on law firm billing rates. Felix misses the real driver of law and other professional firm economics in his piece. In referring to top law firm partners who earn as much as $5,000 an hour, he says:

Quelle Surprise! Former JP Morgan Chairman Offers Dubious Defenses of Big Banks

Ordinarily, it might not seem worth the bother to debunk yet another piece of bank propaganda. However Thursday’s op ed by former JP Morgan Chase chairman William Harrison, “Don’t Break Up the Big Banks,” recites a classic set of time-worn canards. As regulatory compliance expert Michael Crimmins said via e-mail, “It’s sounding desperate that they’re dragging Harrison out of retirement to spout this drivel.”Thus shredding this piece makes for one-stop shopping on this topic.

Dubious Study Defends SEC Revolving Door

Nothing like being reminded on a regular basis that you live in the best of all possible worlds.

The New York Times tells us a new study is being presented today at the American Accounting Association which defends the revolving door.

Satyajit Das: The LIBOR Fix – Part 1

By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk (2011)

The scandal surrounding the manipulation of LIBOR sets raises a number of issues. In the first part of the two part piece, the known facts are outlined. In the second part, the broader implications of the episode are discussed.

Michael Olenick: The Real Estate Market’s Continuing Data Vacuum

By Michael Olenick, creator of NASTIACO, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick or read his blog, Seeing Through Data

As it turns out, information is not perfect, volatility does not define risk, markets are not efficient, the individual is adaptable.
– Dr. Michael Burry, UCLA Economics Commencement Speech, June 20, 2012

Will China Face a Lost Decade?

Although various commentators (including our Marshall Auerback) have raised warning flags about the long-term viability of China’s growth model, the middle kingdom’s performance during the crisis seemed to prove skeptics wrong. Never mind that creditors like China tend to suffer most in the aftermath of major financial crises, or that no country has ever sustained such a high combination of exports plus investment (over 50% of GDP) for very long. And the ongoing reports of all those vacant cities seemed to be irrelevant.

The critics have been looking less off base of late.

Insider Report on Big Pharma’s Corrupt Marketing and Phony Science

Francois T pointed to a post at the blog Health Care Renewal that summarizes an important insider report at the British Medical Journal on how much so-called medical research is of dubious validity, and performed to give talking points for marketing rather than to improve the lives of patients.

The reports on the corruption is big Pharma “research” are so rife that this account hardly qualifies as news. For fun, I dug up the notes from a 2004 study in which I interviewed some experts on drug company marketing. The reason? Even then, it was seen as the most effective, and a big financial services client was keen to see what techniques they could adopt from it. Even then, it was clear “research” was seen as key to effective selling. Per one interviewee, on sales reps:

Adam Davidson Strikes Again, Tells Us to Ignore Downer Data and Trust the Confidence Fairy

While Adam Davidson’s current New York Times column, “How to Make Jobs Disappear” refrains from blatant advocacy of the interests of the 1%, his “Let Dr. Pangloss explain it” approach to economic news is still flattering to the established order. To the extent that anyone in the officialdom pays attention to his work, he’s holding up a rosy-colored mirror to their stewardship. And for the rest of us, his relentless “see, everything really is fine, now take your Soma” denies the reality of the hardships and stresses most ordinary Americans face.

It’s hitting the point where I’m getting such sharp, annoyed commentary about Davidson’s columns by e-mail that I have to work to read his columns with a fresh eye. From one correspondent: