KEVIN PHILLIPS: Numbers Racket - Why the economy is worse than we know

[Phred42]

If you don't know who Kevin Phillips is then you don't know why you should pay close attention to him. Google his bio.
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Numbers Racket - Why the economy is worse than we know
KEVIN PHILLIPS

Harper's Magazine v.316, n.1896 1may2008
http://www.mindfully.org/Reform/2008/Pollyanna-Creep-Economy1may08.htm

If Washington's harping on weapons of mass destruction was essential to buoy public support for the invasion of Iraq, the use of deceptive statistics has played its own vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it actually is.

The corruption has tainted the very measures that most shape public perception of the economy—the monthly Consumer Price Index (CPI), which serves as the chief bellwether of inflation; the quarterly Gross Domestic Product (GDP), which tracks the U.S. economy's overall growth; and the monthly unemployment figure, which for the general public is perhaps the most vivid indicator of economic health or infirmity. Not only do governments, businesses, and individuals use these yardsticks in their decision-making but minor revisions in the data can mean major changes in household circumstances—inflation measurements help determine interest rates, federal interest payments on the national debt, and cost-of-living increases for wages, pensions, and Social Security benefits. And, of course, our statistics have political consequences too. An administration is helped when it can mouth banalities about price levels being "anchored" as food and energy costs begin to soar.

The truth, though it would not exactly set Americans free, would at least open a window to wider economic and political understanding. Readers should ask themselves how much angrier the electorate might be if the media, over the past five years, had been citing 8 percent unemployment (instead of 5 percent), 5 percent inflation (instead of 2 percent), and average annual growth in the 1 percent range (instead of the 3–4 percent range). We might ponder as well who profits from a low-growth U.S. economy hidden under statistical camouflage. Might it be Washington politicos and affluent elites, anxious to mislead voters, coddle the financial markets, and tamp down expensive cost-of-living increases for wages and pensions?

Let me stipulate: the deception arose gradually, at no stage stemming from any concerted or cynical scheme. There was no grand conspiracy, just accumulating opportunisms. As we will see, the political blame for the slow, piecemeal distortion is bipartisan—both Democratic and Republican administrations had a hand in the abetting of political dishonesty, reckless debt, and a casino-like financial sector. To see how, we must revisit forty years of economic and statistical dissembling.

[WCGreen]

1. Just bought his new Book...

[burythehatchet]

2. "accumulating opportunisms"... that's a keeper

[justinaforjustice]

3. Excellent, If Frightening, Article. Read It All!

Thank you, Phred42, for posting this.

I have long suspected that the unemployment rates did not reflect reality. This article shows that virtually none of our key economic indicators reflects reality. They are all the product of political manipulation to hide unpleasant realities.

I wonder if even the truth-telling Obama will have the courage to require the U.S. Labor and Commerce Departments to publish the real statistics on unemployment, inflation and gross national product. If he does, we are all in for a hard jolt.

[robertpaulsen]

4. Interesting read in conjunction with this.

The Fire Bell In The Night And Our Real Terror
By Danny Schechter

While We Debate Reverend Wright, The Economy Goes To Hell

snip

A one time Republican strategist named Kevin Phillips was already ringing a fire bell about our mounting debt. He had documented the rise of the Financialization of our economy in which a credit and loan complex — using debt as its driver — was dominant, soon controlling over 20% of GDP. He warned of the consequences, of the hijacking of our future and our economy. Our system had become, he argued, a house of cards. Who listened?

In a new book, Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, he documents how those cards started tumbling in painful detail.

This reality should, in Jefferson’s words, wake us up and “fill us with terror.” (Odd that thought of “terror,” written centuries ago. How prophetic!) Perhaps we are fearing the wrong terrorists?

Yet even now, most of the media would rather debate Reverend Jeremiah’s Wright’s words or Miley Cyrus’s photos than examine the calamity facing us and our world. Where are the investigations of the greedy and unscrupulous? That’s who gave us the subcrime crisis, or in Phillips words, the “reckless finance,” that brought the market down, sending prices and joblessness up.

You can’t really track these mounting problems by watching TV or even reading many of our newspapers who failed to cover the crisis as it was building steam from 2002 to 2006, and when it might have been stopped.

It is usually only after the fact that we realize that the official response to these crises is also making things worse.

Example: A former top Federal Reserve official now says that the Fed’s bailout of Bear Stearns will come to be viewed as the “worst policy mistake in a generation.”

Reported the Wall Street Journal: “Vincent Reinhart, who used to be the Fed’s director of monetary affairs and the secretary of its policy making panel, said the event would be compared to ‘the great contraction’ of the 1930s and ‘the great inflation’ of the 1970s.”

Run that by me again — “the great contraction?” Duh? Does he mean the Great Depression? Then, we had a government that tried to end it. As of this week, only 2000 homeowners facing the threat of foreclosure have been helped by our government. As many as three million homeowners face homelessness!

more...

http://www.mediachannel.org/wordpress/2008/05/01/the-fire-bell-in-the-night-and-our-real-terror/?ref=patrick.net

[Phred42]

5. This is too important to Dissapear like this - How can this be bumped up a bit?

[Martin Eden]

6. Like this. N/T

[Phred42]

7. N/T ?

[CaliforniaPeggy]

8. N/T means no text.

Which means there is nothing in this part of the post...

So you don't have to click on the post to see everything...

EOM (end of message) means the same thing...

They both go in the subject line.

[Phred42]

9. TX!

I'm new to this

[zonmoy]

10. Not surprising.

they aren't about to admit that our oil and fossil fuel based civilization is dying as our supply of cheap fossil fuels runs out.

[Demeter]

11. K&R!

[grasswire]

12. kick

[zeos3]

13. kick

[bronxiteforever]

14. Kick