German Bond Auction Failure Today

This is a discussion on German Bond Auction Failure Today within the General Trading Chat forums, part of the Reception category; Originally Posted by Martinghoul No, this is a myth that has been thoroughly discredited by quite a bit of research... ...

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Old Mar 27, 2012, 2:51pm   #41
 
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Re: German Bond Auction Failure Today

Quote:
Originally Posted by Martinghoul View Post
No, this is a myth that has been thoroughly discredited by quite a bit of research... Moreover, comparing ShadowStats CPI with the PPI figures that the General Mills release refers to is incorrect.

Finally, John Williams, the economist behind ShadowStats, has been invited numerous times to make his exact methodology public and to debate it with other economists. He has refused every single one of these invitations and has refused to submit his "research" for peer review of any sort. Moreover, one has to be aware of the fact that ShadowStats is a business venture, which depends on publicity for revenue. All of the above suggests to me that ShadowStats is just not very credible, where actual economic data is concerned.

Finally, on the subject of UK stamps, what does that have to do with the subject of US inflation, which is what I thought we were discussing?
This isn't specifically about US inflation, it is about inflation in general and how the free market isn't fooled (excluding you) by Government statistics.

The fact that ShadowStats is a business venture is precisely the reason it is more credible than Governments statistics. Which of the two have a greater motivation to produce manipulated inflation figures, the Government or a private enterprise? Jees Martinghoul, your logic astounds me sometimes.

Post a link to the 'research' to back up what you say. John Williams is often quoted as an alternate source, if it was as discredited as you believe they would be out of business.

Alternate Inflation Charts
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
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Old Mar 27, 2012, 3:05pm   #42
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Re: German Bond Auction Failure Today

These arguments between NT and MG are one the best features of this site. Always very interesting and entertaining to read.
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Old Mar 27, 2012, 5:07pm   #43
 
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Re: German Bond Auction Failure Today

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Originally Posted by new_trader View Post
This isn't specifically about US inflation, it is about inflation in general and how the free market isn't fooled (excluding you) by Government statistics.
Well, how is it, objectively, that your particular version of the "free mkt" (ShadowStats) is more valid and accurate than mine (MIT BPP)? Why should I believe John Williams's numbers more than I believe both the MIT and the BLS ones?
Quote:
The fact that ShadowStats is a business venture is precisely the reason it is more credible than Governments statistics. Which of the two have a greater motivation to produce manipulated inflation figures, the Government or a private enterprise? Jees Martinghoul, your logic astounds me sometimes.
Huh? I am astounded that you can miss something that obvious, so let me spell it out for you. John Williams sells a subscription to his service. If all his data did was provide something that's in line with the BLS figures, he would be out of business. Like, for example, HeroZedge, he has an incentive to publish stuff that is outrageous and reinforces the biases his audience has. So yes, while I completely agree that there's reason to believe that the government's figure might be biased, using and believing only ShadowStats as your alternative source of info is rather silly. What I normally do is compile a list of sources (say, official BLS, BPP, AIER EPI, etc) that, among others, includes ShadowStats. That is a much sounder strategy.
Quote:
Post a link to the 'research' to back up what you say. John Williams is often quoted as an alternate source, if it was as discredited as you believe they would be out of business.
There's quite a lot of it. You can look at some stuff like this that discusses the various issues arnd ShadowStats:
WHY IS THERE DEFLATION IN HYPERINFLATION FORECASTS? | PRAGMATIC CAPITALISM
Or this:
Why Shadow Government Statistics is very, very, very wrong. ę The Traders Crucible
Or this:
Econbrowser: Shadowstats debunked

I can go on, if you like.
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Old Mar 28, 2012, 8:52am   #44
 
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Re: German Bond Auction Failure Today

First let me state the facts as they are:

FACT: The Alternate inflation chart is available for FREE on the shadow stats website.

FACT: The methodology used to calculate the alternate inflation is disclosed on the website: The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.

Despite the facts that the data is free and the methodology is fully disclosed so that anyone can check it for themselves, you subscribe to the conspiracy theory that the methodology is proprietary and sensationalised to drum up business for a statistical website... Not an index linked investment fund or anything.

So, let me think this through. The government publishes inflation data for free but some economic entrepreneur thought to himself, ďHey, I can do better than that!Ē and came up with his own methodology to calculate CPI. However, he thought to himself that if he understates inflation he wonít get any business. So he came up with a methodology that ensures the alternate inflation figure is higher than the BLS figures (because for some reason higher = more business) but itís cleverly and secretly calculated to be only a few percent higher than the BLS figures as this maximises his revenue. You expect me to believe this nonsense??...Címon Martinghoul!

General Mills confirms the Shadow stats Alternate inflation data, there is no getting around that fact.
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Old Mar 28, 2012, 8:58am   #45
 
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Re: German Bond Auction Failure Today

A case study from Shadow stats:

One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. Suddenly, their model stopped working, and they asked me if I could fix it. I realized the GNP numbers were faulty, corrected them for my client (official reporting was similarly revised a couple of years later) and the model worked again, at least for a while, until GNP methodological changes eventually made the underlying data worthless.

So, does anyone here believe that this is just a fabricated story to drum up business?

If it was, does anyone here think that Shadow stats would still be in business if large manufactures were being given false and misleading data?
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Old Mar 28, 2012, 10:17am   #46
 
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Re: German Bond Auction Failure Today

You have not actually responded to me, yet again. You have just repeated what you have said previously. What is the point of having a conversation like this?
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Old Mar 28, 2012, 10:50am   #47
 
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Re: German Bond Auction Failure Today

Quote:
Originally Posted by new_trader View Post
FACT: The Alternate inflation chart is available for FREE on the shadow stats website.
Click the image to open in full size.

Quote:
Originally Posted by new_trader View Post
So he came up with a methodology that ensures the alternate inflation figure is higher than the BLS figures (because for some reason higher = more business) but itís cleverly and secretly calculated to be only a few percent higher than the BLS figures as this maximises his revenue. You expect me to believe this nonsense??...Címon Martinghoul!
I think he meant different=revenure.
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Old Mar 28, 2012, 10:55am   #48
 
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Re: German Bond Auction Failure Today

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Originally Posted by Martinghoul View Post
You have not actually responded to me, yet again. You have just repeated what you have said previously. What is the point of having a conversation like this?
YOU, ok...YOU are trying to discredit Shadow stats. I gave you 2 facts that cannot be disputed:

1) The Alternate Inflation data is FREE.
2) The methodology used to calculate it is FULLY DISCLOSED.

The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.


The methodologies in place in 1980 is the one used by the BLS.

So how can you claim that

a) The figures are bogus and sensationalised to drum up business?
b) He doesn't reveal his methodology?
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Old Mar 28, 2012, 11:42am   #49
 
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Re: German Bond Auction Failure Today

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Originally Posted by new_trader View Post
YOU, ok...YOU are trying to discredit Shadow stats. I gave you 2 facts that cannot be disputed:

1) The Alternate Inflation data is FREE.
2) The methodology used to calculate it is FULLY DISCLOSED.

The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.


The methodologies in place in 1980 is the one used by the BLS.

So how can you claim that

a) The figures are bogus and sensationalised to drum up business?
b) He doesn't reveal his methodology?
1. I never once claimed that the ShadowStats figures are necessarily bogus and sensationalised. I claimed that they may be. So you have missed my point. All I am suggesting is that your assumption that ShadowStats data is free of bias is naive. As I have said before, I can understand and have a lot of sympathy with the argument that the official CPI data may be biased and should be taken with a grain of salt. However, one should approach the ShadowStats data with an equal amount of skepticism, at the very least. Once you dig into the details (as I have), you may experience a sudden rise in the level of skepticism (as I have).

2. I repeat my claim that he does not reveal his methodology, even though he claims otherwise. Let me give you an example. Williams estimates that the "formula effect" caused by the adoption of the geometric mean in lieu of the Laspeyres index is to lower the YoY CPI by arnd 3.0%. That is demonstrably false. In reality, the actual calculated (i.e. all inputs remain the same and only arithmetic changes) "formula effect" on YoY CPI is arnd 0.3%. John Williams has actually admitted that he DOES NOT go back and recalculate the CPI using the old formula. Instead, he just applies the "spread" to the official number (Econbrowser: Shadowstats responds). That is emphatically NOT what it says on the box. That is one of the reasons to claim that his "methodology" is actually not transparent.
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Last edited by Martinghoul; Mar 28, 2012 at 12:25pm. Reason: Grammar
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Old Mar 28, 2012, 2:13pm   #50
 
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Re: German Bond Auction Failure Today

Quote:
Originally Posted by Martinghoul View Post
1. I never once claimed that the ShadowStats figures are necessarily bogus and sensationalised. I claimed that they may be. So you have missed my point. All I am suggesting is that your assumption that ShadowStats data is free of bias is naive. As I have said before, I can understand and have a lot of sympathy with the argument that the official CPI data may be biased and should be taken with a grain of salt. However, one should approach the ShadowStats data with an equal amount of skepticism, at the very least. Once you dig into the details (as I have), you may experience a sudden rise in the level of skepticism (as I have).
I don't believe I said that shadow stats was free from bias. I assert that the Government has a greater motivation to manipulate inflation figures than a private business venture does.

Quote:
Originally Posted by Martinghoul View Post
2. I repeat my claim that he does not reveal his methodology, even though he claims otherwise. Let me give you an example. Williams estimates that the "formula effect" caused by the adoption of the geometric mean in lieu of the Laspeyres index is to lower the YoY CPI by arnd 3.0%. That is demonstrably false. In reality, the actual calculated (i.e. all inputs remain the same and only arithmetic changes) "formula effect" on YoY CPI is arnd 0.3%. John Williams has actually admitted that he DOES NOT go back and recalculate the CPI using the old formula. Instead, he just applies the "spread" to the official number (Econbrowser: Shadowstats responds). That is emphatically NOT what it says on the box. That is one of the reasons to claim that his "methodology" is actually not transparent.
This is what John Williams says:

I publish two estimates of alternate CPI growth, based on methodologies in place as of 1980 and as of 1990. The alternate estimates are based on adjusting the published CPI-U for cumulative annual differences in CPI as estimated by the BLS for the impact of its various methodological changes since the early 1980s (or 1990s). Some of the 1990s and later estimated changes have not been published by the BLS. I do not recalculate the CPI, only adjust for the reported, aggregate biases, generally using the BLS numbers. Since 1980, the aggregate change in annual CPI inflation reporting due to methodological shifts has been a reduction of roughly 700 basis points (7%). Again this is based primarily on published BLS estimates.
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