Friday, December 11, 2009

Statistical Revisions

Noted by ZeroHedge:

Comparing the constituents of household net worth, yields one glaring disparity. While in Q2 Household Real Estate was valued at $18.3 trillion dollars, in today's data it was revised by a stunning $2.1 trillion lower. To put that into perspective, the entire increase in HNW from Q2 to Q3 was $2.7 trillion, of which $2.3 trillion was from "Equity Shares At Market Value."

In other words, had the government not fudged the data initially (or had it not subsequently revised it by a whopping 11.4%), today's Z.1 would have shown a much less ebullient picture, with just a $600 billion increase in HNW instead of $2.7 trillion: an 80% haircut!

Our data demonstrates that over the past 5 quarters this has been a habitual game of over-inflating household real estate by the government, only to trim it subsequently, as the stock market picks up courtesy of an imaginary (and soon to be revised massively downward) "improvement" in the consumer's net worth status. A big (and potentially fraudulent) Catch 22 perpetrated by the government: consumers believe they are richer (when they are not), they buy into the ponzi, the government then removes the "net worth" crutches, but the ponzi has ratcheted up a notch in value; next period: rinse, repeat.

That is a warning flag to the emptors who buy the Realtors' line....

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