Wednesday, May 21, 2008
The mention of the Mortgage Lender Implode-O-Meter in the introduction of Kevin Phillips' new book Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism was a good sign of what might lie ahead. Then there was the early reference to the work of John Williams at the Shadow Stats website and liberal use of his findings later on.
In the recent article at Harpers Barry Ritholtz was mentioned, his "inflation ex-inflation" meme picked up as a central element in Numbers Racket: Why the Economy is Worse Than We Know.
But it was something of a surprise to see the chart below show up on page 86 in this new book that is opening the eyes of many across the land (see How owners' equivalent rent duped the Fed at Seeking Alpha).
The chart looks much better in color, as shown below, which reminds me that I'm seriously delinquent in updating that series of charts that have the Case Shiller Home Price Index laid up against all kinds of other economic data with interesting results.
Here's the accompanying text from Bad Money on the issue of owners' equivalent rent and the Consumer Price Index. This follows the section on the mid-1990s changes for hedonic adjustments and geometric weighting that relies on the work of John Williams.
Mish (Michael Shedlock) of Mish's Global Economic Trend Analysis was also quoted later in Chapter 3 - Bullnomics - which is as far as I've gotten.
Yesterday brought this story in MarketWatch where Paul Farrell credits Kevin Phillips with pulling back the veil of the economic data, noting that "most economists are quiet, working for the conspiracy".
An interesting conclusion indeed - I always thought "unwitting accomplice" was a better characterization than "co-conspirator". There are about 500 comments on this story at MarketWatch with some interesting perspectives.
All it took was $4.00 gasoline for people to finally notice.