What are the statistical gaps in the US?

[william the wie]

I am not looking for solutions in this thread that discussion will come later if ever. On another board I have had discussions on the lack of hard data on derivatives, on this board about a lack of data on who relies on food stamps/WIC as the sole support of their family.

I am trying to figure out how bad the compounding of error problem is. As the 2008 meltdown and many other financial crises have amply demonstrated the number of known unknowns, to use a Rumfieldism, is escalating rapidly. A known unknown is a nice defensible number that is or becomes dead wrong. It becomes dead wrong in one of two ways changes in the population make data collection a joke or in some cases an incentive to game the data model is created.

The compounding of errors and known unknowns create what are called Black Swans: discontinuities that cause the markets to explode up or down, usually down. I speculate on black swan events so I am trying to get a handle on how big this problem is becoming.

 

[loosecannon]

the compounding of error regarding derivatives trade data or nanny state life support?

 

[william the wie]

the compounding of error regarding derivatives trade data or nanny state life support?

They are both in operation so take one or both and run with it. On this thread I am trying to find gaps I didn't know about.

 

[loosecannon]

Is any information about derivatives disseminated?

The BIS does occasionally float some figures, maybe the IMF too.

Google BIS data, seems fairly advanced.

a lot there.

The IMF seems to agree with you:

Centralized Derivatives Clearing Would Aid Financial System

By John Kiff
IMF Monetary and Capital Markets Department

April 13, 2010

* Over-the-counter derivatives trading has surged, creating systemic risks
* Replacing two-party trading with central counterparties would reduce risk
* Close coordination of cross-border regulatory frameworks is essential

Derivatives traded over the counter––that is, between two parties bilaterally rather than on an organized exchange––have proliferated in recent years and present a systemic risk to the financial system should the failure of one party or the other to live up to its payment obligations trigger a cascading wave of such failures.

The IMF says that risk, called counterparty risk, could be substantially minimized if bilateral contracts were cleared through a central counterparty (CCP) mechanism, which essentially acts as a counterparty to all counterparties. Most members of the CCP would be banks and dealers, but some CCPs could allow other financial market participants to become clearing members.

Outstanding over-the-counter (OTC) derivatives contracts have grown rapidly over the last decade, from a total notional, or face, value of less than $100 trillion in 1998 to more than $600 trillion in late 2009—although that figure overstates the risks associated with this market—the IMF said in a study that is part of its semiannual Global Financial Stability Report. According to the IMF, total contracts (see Chart 1) include many redundant, overlapping deals because counterparties in bilateral situations usually write an offsetting contract, rather than closing out the original one.

apparently 2009 volumes were above 2007 volumes that caused the credit crisis:

 

[william the wie]

A central clearinghouse for derivatives in say Chicago with a 0.1% tax would just about balance the budget.

 

[loosecannon]

I am all for it. Aside from currency swaps and commodity futures for folks who actually take delivery I can't even imagine why derivatives are legal.

2/3 of the volumes are in interest rate contracts that do nothing but service currency speculation. But currency speculation is purely predatory! And can have profound negative consequences on actual nation states!

 

[william the wie]

I am all for it. Aside from currency swaps and commodity futures for folks who actually take delivery I can't even imagine why derivatives are legal.

2/3 of the volumes are in interest rate contracts that do nothing but service currency speculation. But currency speculation is purely predatory! And can have profound negative consequences on actual nation states!

You know the old comment about fools and money. I say just take a cut to decrease taxes in the US and let the idiots kill themselves.

 

[psikeyhackr]

The number of cars in the US reached 200,000,000 in 1995.

Cars are machines that wear out. As machines wear out they DEPRECIATE. The laws of physics do not care about capitalism and whether a machine is a capital good or a consumer good. They both wear out. Our genius economists add the purchase of capital and consumer goods to GDP but they hardly ever talk about NDP. They only subtract the depreciation of capital good from GDP to compute NDP.

NDP = GDP - Depreciation

But this is not just about the United States. It seems that every nation on Earth has adopted this behavior. Most of the world thinks Americans are intelligent. Or at least used to.

So the depreciation of all of the consumer automobiles and televisions and refrigerators and stereos and computers and etc., etc., etc. is ignored. So consumers replacing junk that only lasts one third as long as it should increases GDP and the junk is not subtracted from anywhere.

And people pay a lot of money to got to college to be taught economics based on defective grade school algebra. We have only been doing this nonsense for 60 years. Is that why the economy is so screwed up?

PBS Discussions :: View topic - The Algebra of Economics

psik

 

[loosecannon]

The number of cars in the US reached 200,000,000 in 1995.

Cars are machines that wear out. As machines wear out they DEPRECIATE. The laws of physics do not care about capitalism and whether a machine is a capital good or a consumer good. They both wear out. Our genius economists add the purchase of capital and consumer goods to GDP but they hardly ever talk about NDP. They only subtract the depreciation of capital good from GDP to compute NDP.

NDP = GDP - Depreciation

But this is not just about the United States. It seems that every nation on Earth has adopted this behavior. Most of the world thinks Americans are intelligent. Or at least used to.

So the depreciation of all of the consumer automobiles and televisions and refrigerators and stereos and computers and etc., etc., etc. is ignored. So consumers replacing junk that only lasts one third as long as it should increases GDP and the junk is not subtracted from anywhere.

And people pay a lot of money to got to college to be taught economics based on defective grade school algebra. We have only been doing this nonsense for 60 years. Is that why the economy is so screwed up?

PBS Discussions :: View topic - The Algebra of Economics

psik

GDP is a hoax from the get go, but it is what it is. Nothing more.

It doesn't account for capital improvements that you do to your own home, even if you built your own home from scratch. But it does account for production of nuclear weapons, then doesn't account for the destruction realized by detonating one.

GDP counts hiring a maid, a nanny, a baby sitter but doesn't count the labor of a stay at home Mom who does all three plus 35 other functions that can be counted as GDP if money changes hands.

GDP doesn't register the loss of lifetime productivity when a PHD dies a tragic death at 26yo, but it does register the cost of cleaning up the scene of the accident and his emergency room care.

It just is what it is, a simple measure of commerce, nothing more.

Is that wrong? No. Is it misleading? Only if you make the wrong assumptions.

 

[rdean]

26% of all trade job losses are high tech/high tech manufacturing jobs!

2.4 million jobs lost due to China from 2001-2008 | The Economic Populist

 

[rdean]

Public Praises Science; Scientists Fault Public, Media: Section 4: Scientists, Politics and Religion - Pew Research Center for the People & the Press

 

[rdean]

Pregnancy by state:

I have lots more. But I'll wait. Too much information makes right wing heads explode.

 

[william the wie]

The number of cars in the US reached 200,000,000 in 1995.

Cars are machines that wear out. As machines wear out they DEPRECIATE. The laws of physics do not care about capitalism and whether a machine is a capital good or a consumer good. They both wear out. Our genius economists add the purchase of capital and consumer goods to GDP but they hardly ever talk about NDP. They only subtract the depreciation of capital good from GDP to compute NDP.

NDP = GDP - Depreciation

But this is not just about the United States. It seems that every nation on Earth has adopted this behavior. Most of the world thinks Americans are intelligent. Or at least used to.

So the depreciation of all of the consumer automobiles and televisions and refrigerators and stereos and computers and etc., etc., etc. is ignored. So consumers replacing junk that only lasts one third as long as it should increases GDP and the junk is not subtracted from anywhere.

And people pay a lot of money to got to college to be taught economics based on defective grade school algebra. We have only been doing this nonsense for 60 years. Is that why the economy is so screwed up?

PBS Discussions :: View topic - The Algebra of Economics

psik

Great post. One other thing needs to be addressed: inflation. Economic depreciation of capital and durable goods should add up to replacement cost but because of inflation it does not. If the average piece of capital or durable good last three years then depreciation should be deflated by inflation by average age (1.5 years) to capture the cumulative inflationary understatement of depreciation in previous years. The way I was taught economics this is not done.

 

[william the wie]

26% of all trade job losses are high tech/high tech manufacturing jobs!

2.4 million jobs lost due to China from 2001-2008 | The Economic Populist

The propaganda of using gross income to rate the value of educational achievement is the main culprit here. The NPV of education in terms of after tax, after student loan payments free cash flow has been increasingly negative since at least the 80s and that does not count state and federal post-secondary educational subsidies. I suspect the transition was much earlier but I didn't start college until 1980. Since I was sopping up my deferred pay for serving during but not in Nam I decided to find out what my education was worth and looked up the numbers in the counselor's office. I was shocked to find out that college was a net negative in terms of discounted dollars with the exception of those like myself who were being paid to go. (What got me to checking was the claim that IQ has a higher impact on lifetime income than education I have not yet verified the other side of that claim but I find it highly likely to be true.)

 

[rdean]

26% of all trade job losses are high tech/high tech manufacturing jobs!

2.4 million jobs lost due to China from 2001-2008 | The Economic Populist

The propaganda of using gross income to rate the value of educational achievement is the main culprit here. The NPV of education in terms of after tax, after student loan payments free cash flow has been increasingly negative since at least the 80s and that does not count state and federal post-secondary educational subsidies. I suspect the transition was much earlier but I didn't start college until 1980. Since I was sopping up my deferred pay for serving during but not in Nam I decided to find out what my education was worth and looked up the numbers in the counselor's office. I was shocked to find out that college was a net negative in terms of discounted dollars with the exception of those like myself who were being paid to go. (What got me to checking was the claim that IQ has a higher impact on lifetime income than education I have not yet verified the other side of that claim but I find it highly likely to be true.)

So you are saying education is unimportant? Without value? A waste of time?

 

[loosecannon]

26% of all trade job losses are high tech/high tech manufacturing jobs!

2.4 million jobs lost due to China from 2001-2008 | The Economic Populist

The propaganda of using gross income to rate the value of educational achievement is the main culprit here. The NPV of education in terms of after tax, after student loan payments free cash flow has been increasingly negative since at least the 80s and that does not count state and federal post-secondary educational subsidies. I suspect the transition was much earlier but I didn't start college until 1980. Since I was sopping up my deferred pay for serving during but not in Nam I decided to find out what my education was worth and looked up the numbers in the counselor's office. I was shocked to find out that college was a net negative in terms of discounted dollars with the exception of those like myself who were being paid to go. (What got me to checking was the claim that IQ has a higher impact on lifetime income than education I have not yet verified the other side of that claim but I find it highly likely to be true.)

So you are saying education is unimportant? Without value? A waste of time?

No. He said no such thing. Are you delusional?

Am I saying that you are delusional?

 

[rdean]

The propaganda of using gross income to rate the value of educational achievement is the main culprit here. The NPV of education in terms of after tax, after student loan payments free cash flow has been increasingly negative since at least the 80s and that does not count state and federal post-secondary educational subsidies. I suspect the transition was much earlier but I didn't start college until 1980. Since I was sopping up my deferred pay for serving during but not in Nam I decided to find out what my education was worth and looked up the numbers in the counselor's office. I was shocked to find out that college was a net negative in terms of discounted dollars with the exception of those like myself who were being paid to go. (What got me to checking was the claim that IQ has a higher impact on lifetime income than education I have not yet verified the other side of that claim but I find it highly likely to be true.)

So you are saying education is unimportant? Without value? A waste of time?

No. He said no such thing. Are you delusional?

Am I saying that you are delusional?

And you are a fool.

 

[loosecannon]

You should be so lucky.

 

[rdean]

You should be so lucky.

I was shocked to find out that college was a net negative in terms of discounted dollars

So the cost of education would have a negative impact, it looks like that's what he's saying. Can't you see that?

 

[william the wie]

26% of all trade job losses are high tech/high tech manufacturing jobs!

2.4 million jobs lost due to China from 2001-2008 | The Economic Populist

The propaganda of using gross income to rate the value of educational achievement is the main culprit here. The NPV of education in terms of after tax, after student loan payments free cash flow has been increasingly negative since at least the 80s and that does not count state and federal post-secondary educational subsidies. I suspect the transition was much earlier but I didn't start college until 1980. Since I was sopping up my deferred pay for serving during but not in Nam I decided to find out what my education was worth and looked up the numbers in the counselor's office. I was shocked to find out that college was a net negative in terms of discounted dollars with the exception of those like myself who were being paid to go. (What got me to checking was the claim that IQ has a higher impact on lifetime income than education I have not yet verified the other side of that claim but I find it highly likely to be true.)

So you are saying education is unimportant? Without value? A waste of time?

On average yes. And in all cases even when it produces positive NPV it is a subsidized activity paid disproportionately by those who never enjoy it.