|||Hinky|||

Thursday, December 16, 2004

As usual, if you are looking for something hinky in the area of economics, Crudele in the business section of the nypost.com is the one to point it out.  Today is not exception.  "Hedonics" he explains, is a way that government statistics are cooked to make the Consumer Price Index appear that there is relative price stability where there is none.  You might yawn and say "so what," but the CPI is the benchmark; it's the number the whole world looks to when they reset the price of things each morning before the bond market wakes up and begins trading billions of dollars across boarders with lightning speed. When it moves, money movies--  ALL the money.  Crudele's reports about the way these numbers can be shaped, moulded and cooked like clay should make us all a bit more fatalistic about the American economy.  Policy gets support with statistical tinkering. The dollar flops.  Gold rallies.  Central banks sell in the EC, while Asia buys.  Oil spikes, and capital moves from one pocket to another at the speed of your new Dell, which Crudele would tell you is faster and better than ever (a "hedonic" reason to adjust the CPI).  It's like the man said: "Figures don't lie; but liars figure".

What's not hinky?  Well, the chickens are coming home to roost for all those Dot.com zillionares who sold out into the greatest bubble market in the history of mankind.  Time Warner (what is left of AOL), is under investigation for all the scam deals AOL did 5 years ago before buying Time Warner.  AOL destroyed 104 BILLION DOLLARS in MARKET CAPITAL.  And when they say market capital, you should read "people's pensions" and "health insurance policies" and "widow's retirement benefits" because that's what it means for the trusting saps who bought that Virginia company's profoundly hinky stories.  104 Billion... say it.  104 Billion is ten times more than the market for movies in the US. It's about 40% greater than the entire insurance market in the US. It's a lot more than the market size of a lot of entire industries in the US.  So the next time some MBA says this or that business, say Specialty Advertising (the Tshochsky biz ) is a "70 billion dollar industry", just think, AOL wiped out that much and must more with hinky buyouts of hinky software companies with hinky technology that still requires that everyone become a touch typist to get anything done using it.  That's one company serial rollups of smaller businesses who sold out at massive profits based on "new metrics" and "new paradymes" and fresh thinking that enabled fiduciaries to forget, overlook, by pass, and rationalize looking away from fundimentals such as price to cash flow (p/cf), or price to ACTUAL earnings (p/e) ratios before giving the green light to buy these hinky over valued, half baked, crack pot, pipe dream, securities.  I recall the days netscape, yahoo, and aol started trading, I was pitching stocks at a brokerage firm. The stock traded at thousands of times earnings. I remember thinking: "they got to the bankers".  It was a suprise then, but it gave rise to the question in my mind of "how will this end.. indightments and a vast government mop up of prices and new regulation or in a computer age that changes everything."  Well, I am still a monkey, typing away on my visual CB Radio, while the Elliot Spizter and young law grads are paper chasing securities fraud 5 years after the fact, as the federal reserve is pretending to look to the Labor department's cooked Consumer Price Index.

Ten years ago (maybe more) I read a statistic in the Harper's Magazine Index that stated the number of times the offical unemployment figures in the UK under Maggie "Meatball" Thacher had been stated based on a new offical definition of unemployment, which made it look lower was 18.  I was in Grand Central Station, walking and reading under the dirty cieling of unlit stars. I thought, "that is what makes America better" or maybe just not as ungreat as any of those hinky European governments. Now, the cieling is clean, but there are American troops posted with dogs and automatic weapons at all the doors, and Alan Greenspan is sorting through redefined benchmarks to make massive corruption (very wasteful corruption) look regular, like one of Thacher's toadies trying to tell the American people things are not as bad as they think when they can't afford both medicine and food in the same week. 

Hinky wonders if there has been any word on Chelsea Clinton's "Holiday" (not "Christmas") bonus at that big untouchable consulting firm that hired her right out of college?  Bill and Hill must be very proud, just like Paris' dad looking at the Hilton Hotel chain sales figures rocket up after his daughter's world wide DVD release.

Hinky 10:56 AM

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