Smoke and Mirrors Inflation Statistics

Leading economist Simon Ward has accused The Bank of England of using “smoke and mirrors” to present official forecasts for inflation. With the annual rate of price rises currently double the official target at 4pc and showing signs it will keep rising, the Bank’s central projection that the rate should return to 2pc next year is looking like pure fantasy.

Mr. Ward, chief economist of global investment fund Henderson’s, thinks the Bank is diverting attention from a far more worrying presentation of how fast it thinks prices will rise in the future.

“Inflation-targeting has become meaningless,” he said. “The opacity of the forecasting process and scope for creative interpretation of the remit and presentational manipulation imply that there is no effective constraint on the Monetary Policy Committee’s [MPC] ‘discretion’.”

Arguing that the Bank’s most recent quarterly forecasts show its mean forecast – the mathematical average of projections – is for inflation of 2.48pc two years ahead, if interest rates do not rise he said that as the mean forecast takes account of the skew of risks, it is a useful indicator as to whether the MPC is on track.. He warned that the latest figure was “the largest positive deviation from the target since February 1998 and clearly signal the need for higher interest rates”.

Since the numbers lying behind the forecasts are only revealed a week after the report is published, Mr Ward said “the caravan had moved on by the time the numbers are published”.

Mr Ward also thinks the Bank is being disingenuous when it refers to the projected path of inflation if interest rates rise as markets expect.
That, he said, allows the doves on the MPC – the members who wants interest rates to stay low – “to take credit for market-implied tightening without ever delivering.”

For instance, when the last set of forecasts were put out in February, the mean forecast looked to be on target two years away, when market expectations were factored in. However, at the time, markets expected a rise to come in the second quarter of this year. Mr Ward said the consensus among economists is that would not now occur.

In addition to these “presentational tricks”, Mr Ward argued that MPC members can change the forecast to suit the policy they want, as the process is reliant on judgement. He thinks the Bank should put more emphasis on where inflation will be in the nearer term, such as 12 months ahead.

The Daily Stirrer’s economic expert John de Roe has been warning for over a year that inflation was running much higher than official figures showed.

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Conflicting Views On The Economic Recovery

Nobody seems to know what is going on in the global economy. Take these two articles on the state of the recovery:

UK Economy Records Fastest Growth In Nine Years (The Guardian)

The British economy grew at the fastest pace in nearly a decade in the second quarter, higher than initially estimated, thanks to a pick-up in the construction industry and strong consumer spending.

The Office for National Statistics’ second estimate for the second quarter showed GDP rose 1.2% between April and June, the fastest growth since …

On the other hand:

Stock Markets Face A Bloodbath (Daily Telegraph)
Investors should brace themselves for an equities “bloodbath” and a further fall in bond yields when the current excessive optimism propping up the market seeps away, Albert Edwards, a strategist at Société Générale, has warned.
Mr Edwards said there was too much hope among investors, with excessive valuations in the US, but predicted it would come to an end in the coming months as economic data increasingly pointed to a double-dip recession.

“Equity investors are in for a rude shock. The global economy is sliding back into recession and they are still not even aware that these events will trigger …

The optimism of the left which credits the Labour government with saving the economy thanks to their wise and far sighted fiscal management is a little overstated. Do not forget that Labour printed money equivalent to 10% of GDP and pumped it into the economy to secure growth of just 1.5%.

It is true the economy is growing now but people had to start spending again sometime. We should also remember that although the economy is grpwing is is running behond inflation so in real terms is still contracting.

On the other hand reports that the global economy is sliding back into recession are based on evidence that the US economy is heading for a double dip recession.

Though the American economy is big it is not the global driving force it once was so perhaps we should focus less on what is happening across the pond or maybe direst our attention to the Canadian and southern banks and leave the USA to reap the biter harvest of their unbridled consumerism and sense of entitlement.

The party is over, the good times are gone. We must learn to put aside wants and focus on needs.

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I Am Not A Number I Am A Human Being

The Guardian’s Jenni Russell, a Labour supporter in the past turns on the party and explains how their failure to win the popularity they expected after their claimed increases in public spending can be explained by the obsession with figures, targets, statistics and management babble. On top of that they made the great mistake of treating the public as stupid, thinking we would happily accept their statistics showing improvement in the NHS when people’s experience is of patients being neglected while clinical staff are prioritizing bureaucratic tasks, why so many children are emerging from the education illiterate and inummerate and even university graduates on entering employment need remedial training in basic literacy and numeracy while examination result statistics show year on year improvement..

Read Jenni Russell’s article New Labour’s Mistake Is In Thinking We Are All Automatoms

LITTLE NICKY MACHIAVELLI now spends most of his time at Greenteeth Multi Media. Keep up with his page there at The Daily Stirrer

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Who Do We Trust To Run The DNA Database?

The Government’s latest big idea to put its abysmal record on crime and the causes of crime looks no less likely to fail abysmally than all their other initiatives, crackdowns and reorganisations.

The new wheeze is to create a DNA database with a record of everybody in the country’s DNA stored in it. Leaving out the track record of Government I.T. projects (because we will doubtless be returning to that in the future) The question is in view of the fact they have lost control of the streets can we trust the Police to manage something as complex as a DNA Database?

In the past all the government’s efforts to convince us their “war on crime” was succeeding were based on telling blatant lies and backing them up with fraudulent statistics. This has fooled nobody except silly Polly Toynbee, a journalist who is still so gusset-creamingly in love with Tony Blair she insists we have all been taken in by the hysterical reporting of crime favoured by The Daily Mail and other tabloids.

It seems the demands of highbrow socialist journos for “justice for all” define “all” as non white, non British, non straight, non males or asylum seeking, thieving, cheating, human trafficking pikey scum from Eastern Europe (my mate Adil’s description of the latest arrivals in town, not mine.) As for the rest of us, who cares that our gardens have been vandalised, our cars keyed and our sheds torched?
The reality, according to dear Pol is that crime, having fallen at an accelerating rate for a decade is now so low that people are breaking into your house to leave TVs, Video Recorders, jewellery and cash. Crime figures are now negative for all crimes except being nasty to blacks and Asians, women, gays, immigrants (especially asylum seekers) and psychopathic axe murderers.
Its the kind of thing that gets liberalism a bad name, and from such an unlikely source. Polly is a smart, elegant woman, not the type to go around in a dress made from Jilly Cooper’s old curtains and a pair of rope sandals.
Everybody knows there is such a dearth of good new novels these days because all the best fiction writers are employed making up government statistics.

I have written to Polly many times to explain the reason why crime figures fall year on year is because the statistics used are based on crimes reported to the police rather than crimes committed. I don’t know what happens where you live but round here the last thing crime victims want to do is get the police involved. It’s a waste of time and can put people at risk.
Let’s follow what happens. Two or three days after you are mugged, burgled, vandalised etc. the police turn up and while WPC Sillytits explains empathetically that there is little they can do unless they catch the culprit red handed, her colleague PC Dimmock knocks on the door of Mr. Ruthless Bastard, the local fence and drug dealer who has more convictions for ABH and GBH than a beach has grains of sand. P.C. Dimmock says, “ ‘ello ‘ello ello Ruthless Bastard, we’ve got you band to rights this time. Mr. Decent at Number 14 tells us you tried to sell him the stuff what was nicked from his house.
A few days later, following your release from hospital, a victim support officer calls at your house and tries to recruit you for a scheme that involves spying on neighbours and reporting anything suspicious to police so that PC Dimmock can go straight round to Ruthless Bastards house and tell him Mr. Decent saw him handing small bags of white powder to people wearing hoodies in exchange for £20 notes. PC Dimmock’s warning that “we’ll be keeping an eye on you” leaves Ruthless Bastard quaking in his shoes.
Does anybody think this is at all far fetched?
Not so long ago in Burnley there was a case of somebody giving information on a suspect who was arrested but “walked” due to procedural error. The informant later had his home vandalised and his car torched while members of his family were attacked.
So now you know why crime figures look so good, would you trust the Police to manage a DNA Database?

The Renewable Energy Con

Now its official, the governments progress on renewable energy sources is all a con. Those windmills may waft their trefoil arms prettily but the truth is the window of efficiency between too little wind to operate economically and too much wind to operate safely just means there are few days we are actually getting energy from wind. Solar power is a non starter in Britain, not because of lack of sun but because the vast areas of scrubland that can be covered in photovoltaic cells are all in other countries. We tend to build new houses on any bit of land big enough to accommodate a cow pat.

There are of course some viable renewable energy sources we could explore but these require massive investment and have a long payback period. No good at all to the fascistic profiteers our public utilities have been handed to.

So what do the government do. They fall back on statistical smoke and mirrors. Energy production from renewable sources has increased 20% in the last year is easily spun to sound as if we get 20% of our energy from renewables. But actually the 20% increase is 20% of 2%.

Most of our energy still comes from coal, oil, gas and nuclear stations. For all the promises of the past decade we have hardly moved forward at all.

Little ?Nicky Machiavelli reported all this going on several times in the past two years. If you want to know the news before it happens read Machiavelli Blog.