Understanding Seasonal Adjustments
Following my rant about the putzes at the NAR, a few people asked me to better explain the Seasonality Adjustment issues.
Here goes nuthin:
I certainly understand that we have to do seasonal adjustments. One cannot report that Retail Sales fell 80% in January (for obvious reasons) but most of all, because to do so would be misleading. The sources of data report information to inform the public, media repeats what is said, and we pass along interpretations to make things clearer, to get at an objective truth.
The NAR does the opposite.
Let’s look at the specifics of the adjustments this year and see where they went awry.
Whenever we have an outlier year — like Sept 2009 — then we know that seasonally adjusted results will be utterly misleading. That is an issue when we seasonally adjust, as every statistician, economist and number cruncher is well aware. An honest broker of information recognizes that, and reports it the data in a way that is not misleading.
The NAR is no such honest broker (pun intended).
Most people are unfamiliar with what goes into the methodology of Seasonal adjustments, and how they are performed. When people misunderstand statistical methods, it allows folks like the NAR to make major misrepresentations, and get away with their misrepresentations. It is incumbent on the people who are “numerate” — who understand mathematics — to explain it.
There is a mathematical assumption in SA that the annual seasonal changes will occur around the same time each year. There is also a presumption that the month-to-month changes will be approximately equal, or at least of similar magnitude, from season to season. This forms the baseline for the seasonal adjustment.
Hence, when we are discussing EHS, the prior years’ monthly August-to-September drops are the basis for making the newest seasonality adjustment.
As Rex pointed out, the past decade of August to September EHS changes were:
1999: -19%
2000 -17.7%
2001 -26%
2002 -17.1%
2003 -12.5%
2004 -15.5%
2005 -15.2%
2006 -19.2
2007 -28.9%
2008 -10%
This range was 10% to 28.9%. That averages to 17.2% in the typical September. This is the key element in impacting any subsequent seasonal adjustment (different SA methodologies may use differing time periods).
This year, the fall was 5.3%. Hmmm, that was highly aberrational — I wonder why? We (and the NAR) know the reason: Due to ZIRP and the soon to be expiring 1st time home buyers $8,000 Tax credit, the drop was minor – much smaller than it usually is when we go from August to September in EHS.
The tax credit very likely extended the selling season by at least a month. It pulled some sales forward, and perhaps created other sales where there might not have been.
But the seasonal adjustment does not know that; The math PRESUMES THE AUGUST/SEPTEMBER DECLINE IS OF TYPICAL MAGNITUDE OF THE PRIOR 10 YEARS.
That creates a misleading — lets even say false — appearance when the seasonally adjustments are performed.
Again, someone trying NOT to mislead will inform the reader of that directly. But calling it a SURGE? Only if you are innumerate — or a liar. Any honest statistician who worked on these numbers KNOWS that the seasonal adjustment was going to create a big bump, a misleading number, based on the historical data.
And thats the whole point. The NAR knows that calling this a surge will mislead readers, but they report the data — DOWN 5.3% — as a “SURGE.” What else might their goal be BUT TO MISLEAD THE PUBLIC?
I refuse to facilitate that. And I will call anyone an unprofessional liar, a distorter of the data who claims this was surge. THIS MEANS YOU, NAR !
The folks who are unfamiliar with seasonal adjustments will get caught in the scam. This was not an ordinary seasonal adjustment — it was highly misrepresentative.
I know better. And now, you know better. Unfortunately, most folks do not.
October 23rd, 2009 at 6:46 pm
Thank you, thank you, thank you, Barry. I can tell you in my immediate area that a lot of real estate agents appear to be getting a tad desperate as homes languish longer on the market. The ones that haven’t sold by now won’t have a chance at selling until spring unless they are significantly marked down. The “surge” in home sales is over for the time being. And like auto sales, the next few months are going to be an absolute bloodbath. The NAR knows this, which is why they, and other real estate hacks are desperately pushing for the credit to not only be extended, but to be expanded to $15K and to cover EVERYONE. My agent even said this to me outright.
October 24th, 2009 at 6:49 am
Not About Reality
October 24th, 2009 at 7:55 am
I think the honest spin free reporting would have stated the year-over-year increase with a statement that “it is not clear how much of this increase was a result of the tax credit for new home buyers”. I also like the approach of averaging the last 3-5 data points when dealing with something that has a lot of swings in it. Maybe a 3 month average of Y-o-Y changes would have a better change of grasping at reality.
October 24th, 2009 at 8:08 am
Maybe I’m missing the point here, but why not just compare to the same month of the previous year, or just calculate everything on a moving year, 12 month basis, compared to the previous 12 months. Also, there was a $7500 tax credit from april 1st 2008 until the 8k started, so you have to take into consideration when you compare 07 to 08 and 09.
October 24th, 2009 at 8:10 am
“The production numbers are up, Comrades,” says the N.S.S.R.’s General Secretary of the Party, Yun.
Laguna Beach has seven hundred agents. There are currently about four hundred listings in the MLS (historically high) which is not even one listing per agent…
http://realestate.yahoo.com/California/Laguna_Beach
…normally there are a hundred or so – with a six month inventory – means those 700 agents get 200 sales a year (at six percent of average asking price of 1.3M-ish …no one pays full commission …you get the picture.) Furthermore the 80/20 rule means the star brokers get the lion’s share of that. In a city of about 10K units, with 20K comrades…
http://lagunabeach.areaconnect.com/statistics.htm
…there’s a huge inventory of un-productive realtors there in the “realtor’s paradise.” I see a re-allocation of resources ahead. Pot Farming anyone?
So, look for General Secretary of the Party Yun to begin incorporating “Co-operative Growing Statistics” in future five-year plans.
“The price of weed will always go up.”
October 24th, 2009 at 8:14 am
BR:
Great job discrediting this number. In the past, you have repeatedly said we should use a year over year number anyway, right? That already factors in seasonality. So I assume you would recommend reporting it y/y? I looked and have not seen that number.
Even more important for the economy going forward is the price of homes. Falling prices weaken the consumer and the banks and lookie here:
“The national median existing-home price fell to $174,900 in September, down 8.5 percent from the same time last year, according to the Realtors.”
I bet you’d sell a lot more homes at a median price of $100K…but you would drive many others underwater…and lead to more of this:
http://money.cnn.com/2009/10/23/news/economy/bank_failure/?postversion=2009102320
October 24th, 2009 at 8:30 am
Thanks for the post Steve, I would say the bank failure graph from 2005 needs some seasonal adjustment…
October 24th, 2009 at 8:33 am
Borrowers take mort servicers to court
It’s a ball of confusion in real estate,MERSey me!
http://online.wsj.com/article/SB125632363251004357.html?mod=WSJ_hps_LEFTWhatsNews
October 24th, 2009 at 8:43 am
http://www.nytimes.com/2009/10/24/business/economy/24older.html?_r=2&ref=business
65 and Up and Looking for Work
“Less well known, though, is that nearly half a million workers 65 and older want to work but cannot find a job — more than five times the level early this decade and this group’s highest unemployment level since the Great Depression.
The situation is made more dire because of numerous recent trends: many people over 65 have lost their jobs as seniority protections have weakened, and like most other Americans, a higher percentage of them took on debt than in previous generations.”
…as I’ve stated before, this is one of the cruelest aspects of extremely low interest rates. The elderly are being crushed. No seasonality here, they are being taken out behind the barn and shot. I suppose they could be like the rest of us and carefully play the markets……..Hell no, I hope not.
….They deserve better treatment than this….
October 24th, 2009 at 8:48 am
““I often get told that I’m overqualified,” said Barbara Brooks, 71, who retired in 2003 after 30 years as an administrative assistant at the University of California, Los Angeles. She said being told that is code language for “you’re too old.” But Ms. Brooks said she wanted to work — and needed to — citing her monthly mortgage of $1,500, which eats up half her monthly pension.”
…Although if you are 71 and still have a 1500 dollar mortgage, you fell into the same trap we younger folks did…The AARP should sit everyone of these people over 55 down who are members and tell them “Pay off your mortgage before you retire!”
October 24th, 2009 at 8:59 am
NAR is a liar, has always been a liar, and will always be a liar.
I am always astounded that what they say gets reported, as it is so transparently BS – it is not as truthful, accurate, or objective as the worst used car salesman in the history of used car salesmanship.
October 24th, 2009 at 9:11 am
Bruce,
the AARP is a key player in the FIRE Economy Smoke-screen..
All one needs to see is http://www.aarp.org/
think that AARP gives a hoot about anything other than its own aggrandizement?
The Empire Called AARP Under its nonprofit halo, the American Association of Retired Persons is a feared lobbyist and an even more awesome marketer.
By Eric Schurenberg and Lani Luciano
October 1, 1988
http://money.cnn.com/magazines/moneymag/moneymag_archive/1988/10/01/84702/index.htm
John Rother, policy director for the AARP, which supported the bill, … For its lobbying efforts, it landed a motherlode of future customers…
http://www.politicsofhealth.org/main/the_raid_on_medicare
more than EHS have been ‘Seasonally Adjusted’..
BR,
nice post.~
“But the seasonal adjustment does not know that; The math PRESUMES THE AUGUST/SEPTEMBER DECLINE IS OF TYPICAL MAGNITUDE OF THE PRIOR 10 YEARS.
That creates a misleading — lets even say false — appearance when the seasonally adjustments are performed.
Again, someone trying NOT to mislead will inform the reader of that directly. But calling it a SURGE? Only if you are innumerate — or a liar. Any honest statistician who worked on these numbers KNOWS that the seasonal adjustment was going to create a big bump, a misleading number, based on the historical data.
And thats the whole point. The NAR knows that calling this a surge will mislead readers, but they report the data — DOWN 5.3% — as a “SURGE.” What else might their goal be BUT TO MISLEAD THE PUBLIC?”
it should have been ‘Open Season’ on ‘Seasonal Adjusters’, many moon ago..
more should take a clue from your stance: “I refuse to facilitate that.”
October 24th, 2009 at 9:29 am
The NAR does not lie – they just sell information fixer-uppers.
October 24th, 2009 at 9:37 am
I think the biggest news of the week is the massive increase in credit card rates…I think I see where this is headed…I would guess huge walk-aways from credit card balances and a continued repudiation of debt…
…I think I smell another stimulus on the barbee….
October 24th, 2009 at 10:01 am
The problem here is not the seasonal adjustment itself, it is, as BR notes, the ignored tax credit.
A honest analysis would do the seasonal adjustment, but then do a regression to estimate the effect of the tax credit on sales. Report the non-tax-credit number and add a footnote showing estimated additional sales due to the tax credit.
October 24th, 2009 at 10:57 am
The biggest problem is that the media takes the NAR press releases as objective, unbiased information and doesn’t analyze it critically before presenting it to the public. Just more irresponsible, incompetent reporting; period.
They’re huge suckers for this crap because the work’s all done for them (they think) and it fills space and ostensibly informs the public with minimal work on their part. An embarrassment to all good journalists.
October 24th, 2009 at 10:58 am
house sales?
http://econompicdata.blogspot.com/2009/10/existing-home-sales-not-as-strong-as.html
home sales really ..bad?
http://www.businessinsider.com/wait-actually-existing-home-sales-really-sucked-2009-10
October 24th, 2009 at 10:58 am
I would assume that the homebuyer credit will be extended.
Painless prosperity, no?
October 24th, 2009 at 11:06 am
more on NAR
http://www.businessinsider.com/henry-blodget-that-idiot-at-the-national-association-of-realtors-is-getting-it-all-wrong-2009-10
October 24th, 2009 at 11:07 am
gorobei,
I think I hear you’re point, but is there a believable explaination as to why ’seasonal adjustments’ are even necessary v. Y-o-Y + moving averages?
if we look @ http://www.duke.edu/~rnau/411outbd.htm
maybe we could draw the conclusion that we should KIS, and, in the process, free up the ‘Economagicians’, and the Processing power they burn up, for something that scores a little higher on the Utility Scale–of their choosing, of course..
October 24th, 2009 at 11:16 am
It is incumbent on the people who are “numerate” — who understand mathematics — to explain it.
———-
Have you ever tried arguing with someone who believes 1+1=3?
When dealing with innumeracy, you can’t win if you go against their intuition. Only arguing with feelings will work.
October 24th, 2009 at 11:26 am
BR: “The NAR knows that calling this a surge will mislead readers, but they report the data — DOWN 5.3% — as a “SURGE.” What else might their goal be BUT TO MISLEAD THE PUBLIC?”
I do not want to defend NAR, but with an average down of 17.2%, a down of only 5.3% is way better than that average and is even outside the 10-year range (10 – 28.9%).
Rather than misleading the public, I believe NAR wants to ‘inform’ the members of Congress and their aids of the ’surge’ from -17.2 to -5.3%. In NAR’s press release they loudly credit the tax credit.
On their website the NAR has a heavy extend and expand campaign ($15,000 for ALL home-buyers: how about you buy mine and I buy yours, and we both cash in $15,000), targeted at members of Congess. Note: with median house price now $ 175k, this 15k is quite substantial.
However, on the one hand the NAR sketches a horrible scenario for a world w/o extend and expand the tax credit (complete standstill, large price reductions etc.), while on the other hand they write in their latest PR:
“Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average,” McMillan said” (McMillen is president of NAR)
Well, if this were true, than the tax credit is even completely overdone.
I do not like the NAR and Congress talking only about tax credit, without mentioning either who will pay for the loss in tax income to the treasury or what spending will be cut. Without spending cuts a tax credit for person A is a tax increase for person B. Also no mention of the perverse price distortion that it leads to (oh, pardon me, that is its purpose).
October 24th, 2009 at 11:27 am
…as I’ve stated before, this is one of the cruelest aspects of extremely low interest rates. The elderly are being crushed. No seasonality here, they are being taken out behind the barn and shot. I suppose they could be like the rest of us and carefully play the markets……..Hell no, I hope not.
….They deserve better treatment than this….
——————
The number one problem is not the pension system, it’s the demographic boomer bulge where too many of them are expecting a luxury retirement. Even if they had all saved a lot, the economy would have been much smaller and much less profitable. Thus, returns on their savings would have been much smaller. Saving works at the individual level but not at the national level when you have a bulge.
One thing we must remember is that over the last few decades, workers have had to pay for dependants, i.e. children. As the % of children decreases, there is less of a burden on workers and dollars can be transferred to the older population.
In the final analysis, the value of the money you have saved up for retirement will depend on the number of people who are there to serve you and how productive they are when it comes time to spend your retirement dollars. If no investment is done for the services the retirees are going to need, there won’t be many firms offering those services when time comes and these services will cost a lot. When the others see the huge profitability of the existing ones, they will all jump in, untrained, and lower the quality of these services. And this make life difficult for the quality ones by eating into their margins.
Boomers have been investing a lot of money in stuff they will not be needing vs. not as much in essentials. Not to mention that lot of this wealth is litteraly now in the dump.
When you look at where investments have been made vs. where more are needed, it’s vey easy to see a pattern.
All the fun stuff has been funded (hotels, spas, golf…) and all the serious stuff has not been touched. Our youth centric society is in denial and the wake up call will be sobering
October 24th, 2009 at 11:29 am
The NAR is a trade group. What do you expect?
Every entity reports (spins) data to their greatest advantage.
October 24th, 2009 at 11:35 am
Without spending cuts a tax credit for person A is a tax increase for person B.
—————
55+ do not want their houses to go down in price. This tax credit keeps valuations up.
We have never seen as much wealth concentration since the great depression. 55+ are holding onto it.
This tax credit is probably being used by the younger generation. Which means that if there is a wealth transfer, it is going from old to young.
Sheesh! So Boomers want their houses to stay up and not have to share any of their wealth with the younger generation? How about having you cake and eating it too.
I tell ya… Intergenerational clashes are coming soon.
October 24th, 2009 at 11:43 am
Without spending cuts a tax credit for person A is a tax increase for person B.
—————–
When government pays for the deficit by issuing new bonds, it is devaluing the currency for eveyone. Thus it becomes a tax for eveyone.
When government increases taxes, it is making the workers pay and the retirees benefit most.
Since wealth has never been concentrated in the 55+ since GD1, increasing taxes on the workers will be very difficult without generating intergenerational clashes or destroying your economy.
October 24th, 2009 at 12:27 pm
Mark E Hoffer,
I’m generally suspicious of “seasonal adjustments,” just like I’m suspicious of claims of alpha in equity returns.
However, given the choice between smoothing via MAs and seasonally adjusting, I’ll take seasonally adjusting IF there is a convincing case for why there is seasonal variation (e.g. heating oil consumption increases during cold months in the NorthEast, people buy more of some types of stuff before Christmas, people time home-moves around the school year.)
I’m not a fan of SAs in general: they hide underlying causes a lot of the time (e.g. seasonal adjustments for traffic fatalities hide a lot of real information.)
I’m also not a fan of MAs and windowed analysis for similar reasons: they give nice curves (that humans like) at the expense of statistic tractability.
October 24th, 2009 at 12:43 pm
damn,
“When government pays for the deficit by issuing new bonds, it is devaluing the currency for eveyone. Thus it becomes a tax for eveyone.”
That is not true in the sense that tax=burden. People with high spot or fixed-rate USD debt vs assets (e.g. recent homeowners and college graduates with student loans) generally gain under a currency devaluation.
A currency devaluation is one way to address rising inequality – it even has the benefit of hitting trust-fund babies harder than productive IBankers
October 24th, 2009 at 1:03 pm
isn’t retirement another scam, a post-war baby boom scam that we have sold ourselves? when in the history of the world do people get to retire at 65, unless they are ultra, ultra rich. (or a hedge fund manager. i still can’t get my arm around Raj at Galleon’s bail is $100 million, and his net worth is $1.3 billion!)
there isn’t enough wealth and savings to sustain a mass of people who don’t need to work anymore for decades. the reality is that 99.99% of us work until we drop. the 401k generation will never have enough savings or investments to retire. social security, when it started, was a safety net for a few years, not to sustain you until you are 90. any company that promised a pension to its retirees are in TARP.
October 24th, 2009 at 1:14 pm
hue,
retirement is an interesting research area. What does a society do with its old people if there is no retirement?
A couple of ideas:
1. Crank out oodles of kids: if you have 4 survive to adulthood, they can probably take care of you.
2. Assume they will die cos war/famine/healthcare deals with the issue.
3. Declare them to be witches, take their stuff, and kill them.
4. Make them elders – the store of knowledge and mores, and keep them fed. Sort of Google for villages.
5. ???
October 24th, 2009 at 1:21 pm
i don’t think you can find a significant pension fund without a huge unfunded liability. i think we have the medical technology to live longer, but not the wealth. you’re retirement will be death by war, disease and/or famine.
gorobei, i vote for witches declaration. baby boomers are witches. pass it on. lol
October 24th, 2009 at 2:40 pm
hue you can fund a pension. but it requires discipline in the business doing so. you can’t presume that a lot of employees will die early (or more than can show in the actuarial tables any way). if you, you end up with a pension in trouble. like many are. in fact if pensions aren’t feasible, then its impossible to save enough for retirement making 401ks (ok 20.5ks) not worth the effort either.
in the days before SS, retirement was non-existent. and when some one had a job they worked till death. which also tended to make it so that the next generation couldn’t get work when it was their turn (since it was already filled). course the bible has a solution too. the young are required to take care of the elderly. which at times gets corrupted too.
now the other thing to consider. take away the boomers as consumers. and that 70% of the economy shrinks an awful lot. seems the follow on generations (wrongly i think) aren’t making as much income as the boomers in the same part of their lives (with inflation adjustment of course).
and today’s debacle hasn’t been helped as boomers stopped buying (which they were going to do any way) as they try to retire. or were any way
October 24th, 2009 at 3:12 pm
but the problem is funding the pension properly, and invest in instruments that continue to build on the savings and not loot it and bad times. and still exist as a company for more than a generation to pay the pension with the rapid advancement of technology. do you think Microsoft (or Google) will be around or leaders in 20 years? and they don’t offer pensions. i think that pensions and retirement for the masses are pipe dreams. the power law of distribution prevents that from happening.
the only group that is enjoying retirement came along just before the baby boom, and on post war wealth. (like earlies SS recipients.) having said all this, i don’t have numbers to back it up. just theories about the lack of wealth. (perhaps there are actuaries and number crunchers that will prove me wrong.) it’s just like democracy and our consumer society. only Americans can live like Americans. we consume more resources than rest of the world, i think the numbers are that we are 10% of the population using up 25% of the resources. we need a third world. a rising India and China is not good for us. wealth is a zero sum game.
October 24th, 2009 at 3:13 pm
and still exist as a company for more than a generation to pay the pensioners. with the rapid advancement of technology, do you think Microsoft (or Google) will be around or leaders in 20 years? and they don’t offer pensions.
October 24th, 2009 at 3:18 pm
Damn says; “When government increases taxes, it is making the workers pay and the retirees benefit most.”
Why? If we now get a potpourri of tax credits, we need a potpourri of taxation too. Why should all tax increases fall onto workers?
* e.g. currently Social Security Contribution and Wage Benefit Base: 6.2% up to 100k. This is a regressive tax. Make it progressive as well and abolish the max.
* decrease the cut-off amount for estate tax, and make it progressive
* start VAT
* impose a ‘wealth tax’ (in certain EU countries one pays a percentage of his/her wealth each and every year, irrespective of whether one’s wealth is in a savings account, stock market, house(s))
* etc. etc.
It is a matter of creativity. Increased tax does not need to hit workers exclusively.
All I am saying is that this tax credit will aid the banks as the artificially inflated housing prices will allow them to take a smaller haircut for their MBS and outstanding mortgage loans, at least for now, because what will happen after June 2010 (currently envisioned end of extend and expand)? OK,…. it will have to be made more or less permanent.
Question remains: why should ‘person B’ pay for this?
Also, there appears to have been quite extensive fraud with the current $8k ‘first time’ buyer. How can the government legislate this in a ‘anti-fraud proof’ way? And check it?
October 24th, 2009 at 3:26 pm
hue,
“wealth is a zero sum game.”
Huh? There’s some fixed “wealth” that we all fight over? If I pay my maid to clean my house, it’s just a zero-sum game? If I buy a steak in restaurant, it’s zero-sum because I could have just as well killed a cow and cooked a chunk while the chef and busboys priced exotic foreign exchange derivatives?
Or do you mean something else?
October 24th, 2009 at 3:39 pm
carol7,
please, rethink “* start VAT”, it’s, honestly, the last thing we need.
gorobei,
w/this: “why ’seasonal adjustments’ are even necessary v. Y-o-Y + moving averages?”
sorry, if I wasn’t clear, lazy syntax..
don’t Y-o-Y comparisons account for most, if not all, “Seasonalities”?
~~
hue,
you raise a good question re: “”Retirement”. though, try, you know, just for grins, to see the endgame of a Currency lent into existence, at interest..
October 24th, 2009 at 3:43 pm
but the problem is funding the pension properly, and invest in instruments that continue to build on the savings and not loot it and bad times.
its not that hard to save over 40 years if you do it with discipline, but if any time you don’t you create a mess later.
why should any business be allowed to loot a pension ever?
its no different than not allowing individuals to loot their 401ks right?
and still exist as a company for more than a generation to pay the pension with the rapid advancement of technology.
companies come go true. but a lot of them last a lot longer than that. and some of those have pensions. that aren’t in trouble.
do you think Microsoft (or Google) will be around or leaders in 20 years? and they don’t offer pensions.
no pensions aren’t part of the retirement plan.
as i you noted that probably means retirement for those not in the top 2% is over,
they will work till they die or die once they are unable to.
i think that pensions and retirement for the masses are pipe dreams. the power law of distribution prevents that from happening.
and while we consumer more the world’s resources. we are also more of the worlds economy that what we consume. not that we shouldn’t attempt to consumer less or be more efficient with what we do consume.
October 24th, 2009 at 4:01 pm
Mark E Hoffer,
Y-o-Y (e.g. Sept 09 vs Sept 08, or 2009 vs 2008) numbers are clean and unbiased. The problem happens when you want to predict or estimate at a higher-frequency (e.g. monthly rather than yearly.) You have three basic choices:
1. Smooth the data with a MA. This looks pretty but is not math.
2. Just look at Sept 07, 08, 09, etc. You get a number, but sigma is so high that no one cares about it.
3. Seasonally adjust, explain your reasoning, and hope you did it right.
Sampling theory (and statistics in general) is a nasty thing. Here’s a typical puzzle:
Fund A returned an average of 10% PA with a standard deviation of 10%
Fund B returned an average of 11% PA with a standard deviation of 10%
How many years of results do you need to see in order to bet that fund B is generating superior results and is not just lucky?
October 24th, 2009 at 4:33 pm
gorobei, what you described is velocity of money. money is not wealth. that is problem with our fiat currency. the cow is wealth, and only a limited amount of people can benefit from its consumption. unless the gov’t is jesus with bread and fish.
by saying wealth is a zero sum game, i’m not strictly saying that. i’m saying that the entire planet can’t out consume it’s wealth and resources, can’t deficit spend like G20 gov’ts.
willid3, we’re back to socialism if we try to distribute the wealth. but we all know that socialism doesn’t work. and looks like capitalism doesn’t work either. not sure what does work. i think when Bruce brought up the older folks, i was thinking “Big Picture” regarding retirement. of course, companies in the past generation realized that pensions will break them, that’s why we have 401(k)s. i think even if we have Nasdaq 10,000 and Dow 30,000, it still will not be enough to sustain the masses in retirement.
MEH, regarding currency lent into existence. the Chinese are willing to do that, it’s call vendor financing. the Chinese are willing to lend to us and debase their on currency to keep their masses employed and export products. the US is willing to export our jobs to them by debasing the dollar. it’s a beautiful world.
October 24th, 2009 at 4:35 pm
retirement is an interesting research area. What does a society do with its old people if there is no retirement?
———–
Remember the word poorhouses?
October 24th, 2009 at 4:45 pm
Why should all tax increases fall onto workers?
——————-
Unless you want the US to become a real banana republic, you’re going to have to transfer wealth from the 55+ to the young. So somehow they have to tax this group and transfer it to the younger generation.
The reality is that 2/3 of the 55+ probably have most of their wealth in real estate which is tanking. And that wealth is probably still not even enough to carry them through their 10-30 years of retirement.
I have a lot of trouble seeing government increasing taxes on those on “fixed incomes” while their assets are tanking. Not good for reelections!
So they’re going to have to find some ingeueous stealth way of transfering money without the 55+ realizing it. That means printing money and tax credits for the young.
October 24th, 2009 at 4:57 pm
looks like many of the retirement comments have been deleted. my apologies Barry for sidetracking your NAR discussion.
October 24th, 2009 at 8:59 pm
[...] here: Understanding Seasonal Adjustments | The Big Picture Share and [...]
October 25th, 2009 at 6:16 am
gorobei,
thank you, this: “The problem happens when you want to predict or estimate at a higher-frequency”
is what I was getting at, the introduction of Statistics/Mathematics in the service of the impossible–here, the predicting/forecasting of human behavior.
as a, different, ex. “Retail-demand Forecasting”–Doesn’t. It is, merely, a better Information gatherer coupled with ‘Historical’-trends understanding..
Hardly the stuff of MTBF/MTTF, and other models of the physical world.
as in http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=MTBF+MTTF
this is, always, an interesting Q:
Fund A returned an average of 10% PA with a standard deviation of 10%
Fund B returned an average of 11% PA with a standard deviation of 10%
they should remind us, again, that Finance is a Quantative, not Qualitative, Act.
no knowledge, whatsoever, can be derived to lead one to an understanding of “How” the results were generated, esp., without the knowledge of the Portfolio constituents..
We should remember “Investing is a ‘People’ Game”
October 25th, 2009 at 4:33 pm
Only economist can love seasonal adjustments. The fact that retail sales drop in January as compared to December is a FACT! And you have to be an idiot not to know the reason why.
“Honey, I just got laid off, but it’s ok because seasonally adjusted it doesn’t count since somebody gets laid off duringthe same time most years.”
Just give me the real numbers and give me an explanation. Ah, the curse of being an accountant.
October 26th, 2009 at 9:20 am
Barry,
Thanks for posting this. It would be great if you wrote this in an op-ed piece somewhere in the MSM. The general public needs to know more about this.
October 26th, 2009 at 9:45 am
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