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THE REAL MISERY INDEX IS OVER 15% AND STILL CLIMBING
Saudi Arabian King Abdullah explains how he screws America to our oblivious and amused President, George Walker Bush.
The Real Misery Index combines the government's unemployment and inflation rates to give a quick picture of the economy but since it's based on a jury rigged Consumer Price Index ( CPI ) and artificial unemployment figures ~ it's already at 15% and rising rapidly while the Bush Administration continues to hide it : Allen L Roland
The Dow Jones fell almost 400 points on Friday for three reasons ~ Oil prices ran up nearly $11 a barrel and settled Friday at a record $138.54 ~ The national unemployment rate increased by half a percentage point in May to 5.5 %, the largest monthly jump since 1986 ~ employers cut payrolls for the fifth straight month and the Real Misery Index is already over 15% and still climbling.
With the prospect of $150.00 a barrel oil by July 4th and five dollar a gallon gasoline a growing reality ~ the American economy is stuttering to a halt while Bush still babbles incoherently about his " so-called " stimulus package ~ which is the equivalent of taking a half aspirin for a major heart attack.
Bush is determined to avoid the failure of his economic policies and Iraq war fiasco at any expense ~ and the Democrats are more than willing to give him a free ride because they are complicit in the rapid unraveling of our economic ship of state.
The Bush Titanic has hit the iceberg of reality and it's time to man the lifeboats before the ship goes under ~ except it's too late ~ it's already half sunk and rapidly taking on more water.
Think the Bush Economy Is Bad? Wait Till the States Cut Back: Struggling as we are with the housing bust, the credit crunch, shrinking consumption, rising unemployment and faltering business investment, we can be forgiven for thinking that all the big shoes have dropped. There is another one up there, however, and it is about to come down and that's a dramatic cut in State spending: http://tinyurl.com/44jxjm
Nilus Mattive / Money and Markets writes of how both the jury rigged Inflation CPI reports and Unemployment figures ~ where if someone is unemployed but has not looked for work in the last month, they are excluded ~ is just another example of illusion and perceived reality with the Bush Administration.
Allen L Roland http://blogs.salon.com/0002255/2008/06/07.html
The Real Misery Index
by Nilus Mattive / Money and Markets
http://www.moneyandmarkets.com/Issues.aspx?Why-Government-Inflation-Rates-Are-Useless-to-
Excerpt:
So on one hand, we've got anecdotal evidence pointing to plenty of misery even in posh places like Santa Barbara. On the other, official measures make everything look hunky dory.
What gives?
I think the real reason that the current misery index looks so tame is because of the way the government measures inflation.
See, the misery index is based on the Consumer Price Index (CPI). And as I recently told my Dividend Superstars subscribers, that thing is fishier than a river full of salmon!
Here are four reasons why the CPI is a totally bunk measure of inflation ...
#1. Hedonic regression — That's the government's fancy way of saying that technological improvements in a given product mean you're getting more for your money.
Let me give you an example of how this supposedly works:
Say you bought a basic car in 1980. It probably wouldn't have had airbags or a CD player. Today's basic cars come with both.
So rather than just admit that the average price of a basic car has risen by the exact percentage, the people who calculate CPI might readjust the number to reflect the fact that CDs and airbags represent substantial improvements for today's car buyers.
In other words, they might lower the real rate of price increases to reflect this fact.
Never mind that you might not want a CD player. The fact that manufacturers put them in the dash and force you to buy them means you're coming out ahead!
Hedonic regression is used for clothes, computers, and more. And it lends some credence to the old saw that while figures don't lie, liars can certainly figure.
#2. Product substitution — This is like the evil twin of hedonic pricing. Under this scenario, if corn gets too expensive, the government just figures you'll switch to carrots. So they stop tracking corn and start tracking carrots.
But that's a rather huge assumption. And I'm still waiting to hear what the substitute for gasoline is!
#3. Most taxes are excluded — CPI calculations don't factor in federal, state, or local taxes, even though they are probably sucking away half of your income.
Nor does it matter that property taxes have increased substantially for many homeowners over the last few years. Nope, that's not inflation for regular, old urban consumers!
#4. Bizarro real estate figures — You'd think the housing bubble would have pushed the CPI through the stratosphere ... after all, it makes up a quarter of the CPI-U.
But Washington doesn't measure housing prices like normal people. Instead, it uses a measure called owner's equivalent rent (OER). This is what homeowners think they could rent their houses for. And as you probably know it's been a lot cheaper to rent than own throughout the housing bubble. It still is, especially in the nation's hottest real estate areas. Take it from someone who's currently being subsidized by his landlord!
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| Washington's figures belie what's happening on the ground. |
So the CPI has totally missed much of the run-up in housing prices. And now, if a weak housing market forces more people to rent, the CPI may actually show increased inflation!
I should also note that there are plenty of reasons to find fault with the employment side of the misery index, too.
For example, if someone is unemployed but has not looked for work in the last month, they are excluded. Peculiar, isn't it?
Allen L Roland http://blogs.salon.com/0002255/2008/06/07.html
Freelance Alternative Press Online columnist and psychotherapist Allen L Roland is available for comments, interviews, speaking engagements and private consultations ( allen@allenroland.com )
Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his weblog and website allenroland.com He also guest hosts a monthly national radio show TRUTHTALK on www.conscioustalk.net
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