Avoiding the obvious conclusion

Calculated Risk considers his indicators:

Historically the best leading indicator for the economy (and employment) has been housing. I’ve been writing about this for years. For a great summary paper, see Professor Leamer’s presentation from the 2007 Jackson Hole Symposium: Housing and the Business Cycle

For housing as a leading indicator, I use Residential Investment (quarterly from the BEA’s GDP report), and monthly data on Housing Starts and New Home sales from the Census Bureau, and builder confidence from the NAHB.

1. “Total starts had rebounded to 590 thousand in June, and have moved mostly sideways for eight months.”

2. “The record low was 8 set in January 2009. This is still very low – and this is what I’ve expected – a long period of builder depression. The HMI has been in the 15 to 19 range since May 2009.”

3. “New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 309 thousand. This is a record low and a sharp decrease from the 348 thousand rate in December.”

I don’t think the correct conclusion is to say that “any growth will be sluggish and choppy”, but rather “this supports the debt-deflation data showing economic contraction and very clearly shows that there is no recovery no matter what the GDP numbers say”.

Hey, it’s what they do

What is applied atheism about anyway, if not eliminating freedoms and killing communities? History teaches quite clearly that this is what atheists do best.

“Congratulations, you killed the forum.

Not just the forum, but the community as well. I’ll stay on until the new site and continue with my mod duties. But not with the format you propose. What you have proposed is going to kill the community, and many people will leave. Opening threads and speaking our mind freely is why we are here. Not being able to do that, not being able to talk about different things, not being able to debunk bad ideas, and more… those are some of the things that we are here for….

“The secretive way this has been handled and the exclusion of the hard working staff is an insult. We were promised input into the new site and to be able to test its functionality. We were led to believe that we were going to be included in the process and aid in the transition.

Now it’s presented as a done deal, and we’re condescendingly told to shut up about it and not cause trouble? To not dare contact Richard Dawkins about it?

It’s a familiar pattern. The upset forum moderators should be happy that it’s only a virtual community. And there are few things more amusing than Richard Dawkins’s belated discovery that his biggest fans are socially maladjusted pricks given to “splenetic hysteria”, “remarkable bile” and “ludicrously hyperbolic animosity”. Dickie dear, don’t you know that they’re just following your lead?

Married to the model

Lest you think I exaggerated how little the mainstream economists are aware of the increasingly tenuous link between their Neo-Keynesian economic model and the way the economy actually operates in RGD:

The Congressional Budget Office (CBO) has produced a new report estimating that the $862 billion stimulus has thus far saved or created 1.5 million jobs. Yet the CBO’s calculations are not based on actually observing the economy’s recent performance. Rather, they used an economic model that was programmed to assume that stimulus spending automatically creates jobs — thus guaranteeing their result.

Logicians call this the begging-the-question fallacy. Mathematicians call it assuming what you are trying to prove. The CBO model started by automatically assuming that government spending increases GDP by pre-set multipliers, such as:

* Every $1 of government spending that directly purchases goods and services ultimately raises the GDP by $1.75;

* Every $1 of government spending sent to state and local governments for infrastructure ultimately raises GDP by $1.75;

* Every $1 of government spending sent to state and local governments for non-infrastructure spending ultimately raises GDP by $1.25; and

* Every $1 of government spending sent to an individual as a transfer payment ultimately raises GDP by $1.45.

Then CBO plugged the stimulus provisions into the multipliers above, came up with a total increase in gross domestic product (GDP) of 2.6 percent, and then converted that added GDP into 1.5 million jobs.

The problem here is obvious. Once CBO decided to assume that every dollar of government spending increased GDP by the multipliers above, its conclusion that the stimulus saved jobs was pre-ordained. The economy could have lost 10 million jobs and the model still would have said that without the stimulus it would have lost 11.5 million jobs.

The present state of economics is very, very bad. The fact that mainstream economists not only can’t recognize that the economy is in a depression, probably a Great Depression, but think it’s in the midst of a genuine recovery is powerful evidence that their theories and models need to be completely junked.