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« The Financial Commentary 'Peter Principle' | Main | Candidates and Fuel Prices »

April 30, 2008

Comments

Bill aka NO DooDahs!

Jeff, I left a comment on another site regarding the birth/death indicator, and I thought it might be useful here:

Keep in mind that making no adjustment for births/deaths is, in fact, a BIRTH/DEATH MODEL - one in which births always exactly equal deaths.

Is that an accurate model, do you think?

Over long (loooooonnnnnnggggg) periods of time, do you think perhaps that business "births" might exceed business "deaths?" If that is the case ... then an accurate birth/death model should be adding jobs. Correct?

It follows that, if over the long haul, business "births" outweigh business "deaths," then the unadjusted data - which implicitly models births as EQUAL TO deaths - would be too low.

If, over the long (looooooonnnnngggg) term, the ratio of births to deaths results in an exponential increase in the number of businesses (say even as low as +0.5% annually), then any accurate adjustment for birth/death would add an INCREASING number of jobs over the years.

Just a thought.

Bill aka NO DooDahs!

I neither read nor care about Malpass.

Recessions are officially designated by the NBER. I don't "deny" anything of the sort, I'll just let them confirm it; they haven't as of yet and may not. I have a side bet that there won't be one which starts in 1Q08, but there's no money on it, and if they call one starting in 4Q07 or 2Q08, I still win.

I'm aware that the NBER definition is subjective. So? And your point is? If you or anyone else wants to "predict" a recession using your own "objective" definition, it would behoove you to DEFINE it before PREDICTING it.

Barry's one of many that do a disservice to retail investors with their "economic" writings. I include Mish and Roubini in that ilk, and could probably find a few others that fit the bill. I've never met any of them, but I hope (and actually suspect) that Barry's a better trader than he is an economist or economic prognosticator.

blackvegetable

"My beef is with *ssholes who want to predict recession for 3 years running, and then when they don't get it, redefine the terms to suit their prediction."

With which part of Malpass' admission are you struggling?

If BS's resident Pangloss can admit that we've been in a slowdown/recession since 2006, then why do you remain in such determined denial? Particularly if, as you insist, that as a trader, you don't care?

"otherwise, all the outside observer is left with is the "official" NBER definition."

The NBER "definition" is anything but....it is a judgment call with rather loosely bounded parameters...if you doubt it, get a look at their 1991 call...

I'm beginning to suspect that Barry bluffed you out of a big pot back in college.....

Bill aka NO DooDahs!

I don't really give a sh*t whether it's called one or not; I'm trading, and the economics either don't matter, or are priced into the fundamentals and technicals of the stocks in a timely enough manner for my needs.

My beef is with *ssholes who want to predict recession for 3 years running, and then when they don't get it, redefine the terms to suit their prediction. If dipsh*t had wanted to predict a "per capita" recession with his own personal price index deflator, he shoulda made that pretty damn clear in 2005 when he first predicted a recession - otherwise, all the outside observer is left with is the "official" NBER definition. If he MEANT something else, he should have SAID something else, BEFORE making the prediction.

Here's a scientific proposal for ya ~ define what you're trying to predict BEFORE you ff'in predict it, and then let it happen or not, and THEN measure the prediction.

blackvegetable

As an unrepentant Malpass basher I am obliged to point out the following...

"we’re nearing the end of a slowdown/recession phase that began in 2006 with higher real interest rates and weakness in housing and autos."

Malpass in August 2007...

""Housing and debt markets are not that big a part of the U.S. economy, or of job creation. It's more likely the economy is sturdy and will grow solidly in coming months, and perhaps years.""

I can appreciate that there will be credentialed economists and other sophists who will insist that the two comments above are NOT in conflict, but most of us are obliged to conclude that Malpass was completely wrong, not only with respect to his stated premise, but also the outcome....

In response to Bill:

"If YOU had been predicting a recession since at least the summer of 2005, wouldn't you be disappointed when, almost THREE YEARS LATER, the economic downturn came but WASN'T a recession?"

Even Malpass will now admit that a "slow down/recession phase" began in 2006 and if he believes it was a "recession phase" then, what are we to call what is going on now? Surely you are not going to limit the definition of recession to that banal "two quarters of negative growth" thingy, are you?


and I can only imagine the chuckle the late Jude Wannisky must be enjoying with all this emphasis on orthodox economic qualifications...

Bill aka NO DooDahs!

Put yourself in Barry's shoes.

If YOU had been predicting a recession since at least the summer of 2005, wouldn't you be disappointed when, almost THREE YEARS LATER, the economic downturn came but WASN'T a recession?

Under those circumstances, wouldn't you be tempted to twist whatever data you could in order to "call" it a recession and finally (after THREE YEARS of PREDICTING RECESSION) be "right?"

Plus, it fits the whole gonzo bear bullshit thing he's got going on. "Everybody else is wrong, the world is going to hell, but LISTEN TO ME! I have the secret knowledge that will guide you through these times!" That's the marketing script, and it works, check out his Alexa rankings ...

Barry Ritholtz

Thanks for the homework assignment, but I have enough on my plate these days.

How about this -- why don't you do some additional original research. Topic Suggestion: How accurate/inaccurate is the CPI measure of inflation. Identify where it accurately portrays inflation, and where there is "room for improvement." If there are other measures worth considering, by all means feel free to suggest them.

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