On 2002-08-03 19:15, Marc Lamb wrote:

"Marc: Why....when a bit of bad news pops up that rightfully should be addressed by Bush Republicans.... do you do that..."

Well, what do you think Bush should do... that he hasn't done yet? Should he raise taxes, and pay folks more unemployment money? Should he raise taxes, because it is the federal government that really creates jobs and not the private sector? Should he raise taxes tp punish those business folks that are failing to employ people who want to work? Should he raise taxes because the Democrats want him to? Should he raise taxes because to will make everybody feel better? Should he raise taxes because there is too many rich folks out there? Should he raise taxes because business aren't investing in the people? Should he raise taxes because that is the way to encourage businesses to grow and employ more people? Should he raise taxes because it sounds good? Should he raise taxes? I mean, should he raise taxes because, like my paper said today, it's the patriotic thing to do and will make people think they are really doing something about America? Should he raise taxes on everybody, even the poor to make them feel more patriotic? Should he raise taxes? Should he raise taxes?

No, he shouldn't raise taxes - but maybe he should try a tax cut heavily targeted to lower-income workers, like making FICA payments deductible for income-tax purposes. And maybe even do what Paul Krugman suggests: Cancelling - or at least postponing - the remaining provisions of the 2001 tax cut, which will only benefit people least likely to bolster consumption anyway (and substituting the former tax cut for the latter would probably be roughly "revenue neutral"). And "class warfare" has nothing to do it - what we need to now is what Ginger Rogers sang at the beginning of Gold Diggers Of 1933: "Let's lend it (money), spend it, send it rolling around."

The "jobless recovery" phase we're now in is a very dangerous one - history shows (as in the winter of 1980-81) that if anything bad happens during such a time, a double-dip recession will almost surely be the result; and if another one of those occurs right now, it means that the Democrats get control of both houses of Congress in November - and then the biggest "veto-fest" in 70 years will be on.

[ This Message was edited by: Buster Brown on 2002-08-04 01:27 ]

On 2002-08-04 00:14, AlexMnWi wrote:

Hey, don't bash the CCC guys; a good number of 'em were born around the same location in history as I was... :smile:

You were conceived in the 1930's and (ahem) thawed out in the 1980's :-0 ??? Are really a Silent in a Millennial body??? Do advise.

Subject: Kudlow

The weekend before that Kudlow piece appeared on the NR website, Kudlow was on McLaughlin saying that this was the biggest buying opportunity and if he had any money (if he had any money!) he would buy. A few days later he was talking about bank runs! It makes you wonder. Who was he talking about? JP Morgan? Who?

The word is that the Street is asking Captain Credit for another rate cut. If Al cuts again this would be the twelfth cut. The other eleven didn't do any good. What makes them think twelve is the magic number? The Japanese yeild curve is more or less flat with absolutely no effect. I foresee this for our future.

Bob Prechter says to get into cash and stay there. He also says be careful where you put your cash. All this talk about bank runs is frightening. When was the last time we had a bank run? Sounds like Argentina or Paraguay. Bob recommends using a rating service like Weiss or Veribanc. I just got the Weiss ratings, none of my banks was even listed. Have to do some moving around this week.

On the other hand is there such a thing as a safe bank? As soon as you deposit money in a bank they lend it to some knothead to buy an SUV. And remember everything is computerized now (Wow! It's COMPUTERIZED!). Bank runs could come at the speed of light. You might not have time to even get in line at the teller's window before all the money is gone!

On 2002-08-04 05:59, Virgil K. Saari wrote:

On 2002-08-04 00:14, AlexMnWi wrote:

Hey, don't bash the CCC guys; a good number of 'em were born around the same location in history as I was... :smile:

You were conceived in the 1930's and (ahem) thawed out in the 1980's :-0 ??? Are really a Silent in a Millennial body??? Do advise.

All AlexMnWi means is that as a "second wave Millie", he is generationally comparable to his fellow Civics -- GIs who were born around 1910 -- who participated in the CCC projects.

Duh!

Sheesh. Don't go away mad, Buz!

In short, the answer is no. Aside from the farm markets, which were racked due to trade barriers ans other things, the Dow was blazing "up, up, up" for about four years prior to the crash (it did so, again from 1933 to 1936, too).

But there were clear signs (always is) of a wild bubble in stock prices. Any right-thinking man was out before the crash.

But folks aren't comparing 2002 to 1928. That bubble has already burst. It's 1930 to them. Here's what I wrote eariler in this thread about that:

Dateline: Oct. 28, 1929, The Wall Street Journal's main headline announced that the Industrials were off 38.33. The next day, they fell another 30.57 points. (Those two plunges, of 12.82% and 11.73% respectively, remain the second-highest and third-highest of all time in percentage terms, behind the record 22.61% crash on Black Monday, Oct. 19, 1987.) In six days, the industrial average lost more than 96 points, nearly 30% of its value.

Such is history, huh. But did you know... the Dow came racing back in 1930 to nearly match that October high of 360.64? Yup, by April of 1930 the Dow stood at 293.18, or down just 18.7% from it's previous high.

But that's just when things got messy... some say more greed, some say the winds of the anti-trade Smoot-Hawley, some say Hoover's rumor of raising taxes darkened the skies, but darken they did. The slide was down, down, down from that month on. All the way down 85.3% before the bottom was reached in the summer of 1932. Eighty five point three percent! In two short years, Hoover had manged to travel back in time, back to the year 1908 to be exact. Just after the great "Panic of 1907", the Dow stood at 42.92 in February of that year. Back to the days, Hoover went, to when Mr. Morgan agreed to rescue the economy & Theodore Roosevelt was President. On the 26th of June, 1932, just before another "Roosevelt" was about to change America forever, the Dow stood slightly higher, than it had twenty four years earlier, at 42.93.

Such is history, huh? Zip forward to the post-9/11 world of 2002... Ok, the Dow takes a major hit when the market reopens in late September. But by Wednesday, March 27, 2002, the Dow Jones industrial average closed up 73.55 at 10,426.91, therby regaining more than all the loses incurred the previous year.

Then it happened. A rumor here, a rumor there. A bad move by Congress here, an unconvincing word from the President there. The oracles sound off, The economy is fundamentally sound, they say. Down go the common stock, down, down, down...

Now try to imagine the same scenario playing out... down 85.3% goes the vaunted Dow. Down 8894.15 points in the next two years!

It's summer, 2004. The Dow stands this day at 1532.76, and Mr Bush finds he has gone back in time, back, back, back... Back before his father was President, back even before the Crash of 1987... for Mr. Bush finds himself back in January of 1986, yep just before the Challenger explodes in full view of millions, the Dow stands at 1537.61.

Great scenario for all you liberals, huh? No pain, no gain, they say. :smile:

On 2002-08-04 05:59, Virgil K. Saari wrote:

On 2002-08-04 00:14, AlexMnWi wrote:

Hey, don't bash the CCC guys; a good number of 'em were born around the same location in history as I was... :smile:

You were conceived in the 1930's and (ahem) thawed out in the 1980's :-0 ??? Are really a Silent in a Millennial body??? Do advise.

What, you don't really think that a lot of 7 year olds were CCC workers... you do know that the CCC was around in the late '30s, right?

On 2002-08-06 20:27, Marc Lamb wrote:

behind the record 22.61% crash on Black Monday, Oct. 19, 1987.)

Shouldn't it be "Red Monday" considering that a bunch of investors went into the red, so to speak. Unless its named for the bear or two who thought it was a good idea to short in the middle of a bull market. Oh, wait, it was a good idea. But normally that would seem pretty dumb...

More "Depression" news...

US rates 'could hit 1930s levels'

[A]t 1.75pc, US interest rates are already at a 40-year low and Peter Dixon, an economist at Commerzbank, said some traders were guilty of wishful thinking yesterday. "There could be another cut in US rates," he said, "but I am not expecting one until October. You must remember that this is August and markets are very thin."

Then, in the "fundamentaly sound" news, we have...

"Today's situation is because of the dollar and interest rates," said Ryan Shea of Bank One." The US recovery will be quicker than in the UK economy." The International Monetary Fund produced its latest forecast for the US economy yesterday and said it expected growth to accelerate from 2.5pc this year to 3.25pc next year.

Happy days are here, again! Won't be long now, libs. :smile:

[ This Message was edited by: Marc Lamb on 2002-08-07 16:55 ]

Both inflation & deflation are virtually nonexistent right now... makes it easy to save up for stuff without worrying about inflation, I guess.

On the front page of The New York Times today...

Ex-Executives Say Sham Deal Helped Enron
By DAVID BARBOZA

HOUSTON, Aug. 7 ? Desperate to meet a year-end profit target, the Enron Corporation struck a sham energy deal with Merrill Lynch that let Enron book a $60 million profit in the final days of December 1999, according to former Enron executives involved in the transaction.

Not on the front page of The New York Times today...

Clinton/Gore Cooked Books
August 8, 2002
BY ROBERT NOVAK SUN-TIMES COLUMNIST

The Commerce Department's painful report last week that the national economy is worse than anticipated obscured the document's startling revelation. Hidden in the morass of statistics, there is proof that the Clinton administration grossly overestimated the strength of the economy leading up to the 2000 election. Did the federal government join Enron and WorldCom in cooking the books?

Through all of President Bill Clinton's last two years in office, the announced level of before-tax profits was at least 10 percent too high--a discrepancy rising close to 30 percent during the last presidential campaign. Most startling, the Commerce Department in 2000 showed the economy on an upswing through most of the election year, while in fact it was declining.

The Commerce Department's Bureau of Economic Analysis estimates before-tax profits of domestic nonfinancial corporations quarterly. Revised figures last week showed profits were really lower by 10.7 percent, 12.2 percent, 15.2 percent and 18 percent for the four quarters of 1999. In 2000, this gap became a chasm. The revised quarterly profits for the election year are lower than the announced figures by 23.3 percent, 25.9 percent, 29.9 percent and 28.2 percent.

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Comment from the peanut gallery...

The liberal response to the first story, Those greedy, Bushlicker Republicans!

The liberal response to the second story, So what? Everybody does it.

[ This Message was edited by: Marc Lamb on 2002-08-08 11:03 ]

Marc:

Your point that Clinton and company put rose colored galsses on their estimation of the 2000 economy is pretty lame, considering the fact that the Republicans did this consistently under both Reagan and Bush I, with Bush II picking-up right where daddy left-off. Do a little research!

Of course, Robert Novak would report lint on Clinton's best suit; the "red meat" crowd always cares, for some reason. Only Cal Thomas is more disingenuous than Novak.

That said, it's still pretty sleazy. Now you admit as much about your hero Ronnie, and I'll be happy.

_________________
Intelligence is not knowledge and knowledge is not wisdom, but they all play well together :wink:

[ This Message was edited by: David '47 on 2002-08-08 11:41 ]

The first story is an example of fraud. The Enron company knows precisely what they are doing because they are doing it. So when they report otherwise it is fraud.

The second story is about revisions in BEA estimates of the economic performance of the nation. The BEA is reporting about the behavior (in aggregate) of others not their own. Thus they cannot be expected to know what happened, unlike the Enron folks who do know what they did. Thus, the fact that the BEA's initial estimates are almostly always wrong does not constitute fraud.

They are trying to make an estimate about what happened. They use models and the first release is really little more than an educated guess.

After tweaking the models based on later events and additonal data collection, the estimates are revised. Eventually the revisions cease and the numbers become part of economic history. But this process can take years, especially following periods of trend change (like recessions).

For example, I record M3 values from the St. Louis Fed every month. Each time I do so I note that the values for previous months are different from what I typed in previous months. Periodically I update my data base and I find that I have to go back several years before the values stay constant from update to update. Such is the nature of economic data.

If the person who wrote that article had any familiarity with economic data (i.e. he has actually worked with the numbers before) he wouldn't write such an ignorant article.

But there is a world of ignorance in economic/financial writing (e.g. Dow 36,000), so I can't really be too hard on him.

_________________
Mike Alexander, author of Stock Cycles: Why stocks won't beat money markets over the next 20 years and
The Kondratiev Cycle: A generational interpretation http://csf.colorado.edu/authors/Alex...OCK_CYCLES.htm

[ This Message was edited by: Mike Alexander '59 on 2002-08-08 11:54 ]

[ This Message was edited by: David '47 on 2002-08-08 12:12 ]

I decided to take my own advice and do a little research. Since I'm not as savvy in the economics arena as Mike Alexander, I necessarily relied on comparing opposing versions of the same story. I got more than I bargained for.

Mike is right about one thing, there's a lot of ignorance out there. I'm going to go with ignorance, because I'd hate to believe that knowledgable people purposely misrepresent data just to make a point.

Here's a link to a Heritage Foundation paper that has holes big enough that even I can see them. I'm sure I can find others.

_________________
Intelligence is not knowledge and knowledge is not wisdom, but they all play well together :wink:

[ This Message was edited by: David '47 on 2002-08-08 12:11 ]

On 2002-08-08 11:39, David '47 wrote:
Marc:

Your point that Clinton and company put rose colored galsses on their estimation of the 2000 economy is pretty lame, considering the fact that the Republicans did this consistently under both Reagan and Bush I, with Bush II picking-up right where daddy left-off. Do a little research!

Speaking of which...here is a humorous take from one of Daddy's former "employees":

BEHIND THE SCENES IN THE BELTWAY

by Al Martin

Think Like a Bush: Lie Coordination Bureau Needed

(August 5) As of July 31, the markets have been down for four consecutive months - the first time that's happened in twenty years. The release of this week's economic statistics, particularly the Gross Domestic Product numbers, indicate that the economy was weaker last year and that economic growth in the first half of this year was also weaker than first believed. This points out a growing problem: the increasing unreliability of government economic statistics. These numbers would always be revised from the month before, but now we're seeing revisions of economic data released 18 months ago. The question then is -- why can't the government get it right in the compilation of statistics? Of course, the reason why is the because of the way the Reagan-Bush Regime rejiggered all the economic statistics.

You'd think it would be a simple matter of gathering statistical data. The problem is that until the Reagan-Bush Regime, government monthly statistics (eleven primary statistics, including everything from unemployment to housing to manufacturing to industrial capacity) would almost never be revised.

Then in 1983, as Reagan-Bush economic shenanigans began to weigh on the economy and federal deficits began to grow substantially, the Reagan-Bush people decided that all federal agencies involved in statistical compilation and the release of the monthly economic statistics would have to rejigger these statistics, under the guise of "bringing them up to date" and to "reflect a modern economy."

The way these statistics were compiled hadn't been changed in decades. It sounds nice, but what they did in effect is they added more and more complicated sub-categories to existing statistics.

Now you find that, for instance, the monthly labor reports have as many as twelve subsets of statistics in them, which makes it difficult to extrapolate information and put it in all these statistics, some of which were made purposely contradictory.

It has nothing to do with improving these statistics. It was done to politicize the economic statistics. In other words, no matter how bad the situation was, there would be one or more subsets of statistics they could point to and say this number here points to a bright future -- when the overall number might be disastrous.

Jimmy Rogers, the famous history professor and market trader, has consistently pointed this out over the years - the politicization of economic statistics.

Now polls of investors show that this is becoming a major concern because nobody can trust the monthly numbers, and these are the numbers that people base their investment decisions on.

If the numbers are useless, then people, in essence, become paralyzed by inertia. The government likes to say that there's more economic information available to the American people than ever before.

While it's true that there's more volume of information available, if that information isn't considered to be reliable, then what good is it?

People are beginning to complain - how these numbers can be revised as much as eighteen months in arrears.

The only thing the current Bush Administration does is what his father did in 1991-92, when there were calls by brokerage firms to reform these statistics. The Bush I Administration simply dragged its feet, and the Bush II administration does the same thing. They'll form a blue ribbon commission to study the issue and nothing ever gets changed.

Unreliable government statistics point out the larger problem of Bushonian Government - - when you try to run government on the Big Lie Principle, you not only have to have offices in every government agency that generates the lies, you also have to have an oversight pan- government agency function (and this is what's most difficult) to coordinate the lies.

Considering the resources that the Bush Administration spends on lie generation and coordination as divided among all the different agencies and bureaus, it would be much cheaper to have one central bureau - a whole new government agency as large as the FBI. We could call it the LCB -- the Lie Coordination Bureau. That would be the sole function of this bureau and it would be cheaper for the Americans taxpayers to do it this way. And the lies would work better.

It should be remembered that during the Second World War in the civilian administration of the Third Reich, it was the Ministry of Propaganda that not only generated the lies for all the other civilian agencies of the Third Reich but also was in charge of coordinating those lies. Joseph Goebbels was in charge of it as the Reich minister. He did such a superb job in the generation and coordination of lies that it made the German civilian government, as many history texts will point out, one of the most efficient governments ever formed. Part of it came from what Goebbels said -- that a government, which operates on the principle of the Big Lie, can become very efficient. You only need very efficient people in charge of generating and coordinating the Big Lie.

And that is the problem that the Bushes have always had. They don't have good Lie Coordination Capability (LCC). You see that even in such things as these economic statistics.

The LCB or Lie Coordination Bureau should not however be confused with the Office of Information Awareness at DARPA, the Defense Advanced Research Project Agency.

According to their so-called mission statement, "The DARPA Information Awareness Office (IAO) will imagine, develop, apply, integrate, demonstrate and transition information technologies, components and prototype, closed-loop, information systems that will counter asymmetric threats by achieving total information awareness useful for preemption?"

Maybe the Bush Administration is already aware of the need for Lie Coordination. Watch out when Bushes talk about "transitioning" information. This is simply Bush Speak for stringing a bunch of small lies together to come up with one new Big Lie.

Ironically Vice Admiral John Poindexter, the former Iran-Contra figure, is in charge of the IAO. Poindexter was the head of the National Security Council (NSC) and Oliver North's superior, who essentially took the fall to cover George Bush Sr. And now he's been elevated to this new position where his chief function is to string together small lies to come up with a new Big Lie.

Remember -- only in Hollywood and Washington can people fail upward.

The so-called vision statement of the IAO reads, "The most serious asymmetric threat facing the United States is terrorism, a threat characterized by collections of people loosely organized in shadowy networks that are difficult to identify and define." They could be describing the Bush Cabal itself. Isn't this an apt description?

But the logo of the IAO will really get the New World Order crowd in an uproar. The logo has a globe of the world in the foreground with a pyramid in the background and the pyramid has an all seeing eye shining onto the earth. Their motto is "Scientia est potentia," or "Knowledge is Power." (DARPA's Information Awareness Office www.darpa.mil/iao/)

And speaking of lies, on July 30, George Bush signed the much-anticipated corporate anti-fraud bill and, of course, the market immediately sold off afterwards. It's full of loopholes, which even the Democrats don't want to lose. I've never seen Bush make a speech like this, and you could tell he was lying. He was sweating. Just as I've said before, when Jeb Bush lies, he starts sweating and he gets that little red line between his forehead and his hairline.

When George Bush Jr. lies, he sweats too, but he gets those blotchy red marks just under the high points of his cheekbones. That's how you can tell he's lying.

All of the Bushes have certain facial peculiarities, wherein one can tell they are lying. He said that from now on, those who commit securities frauds and shred documents are going to jail. After that he took out his handkerchief and wiped his forehead.

And then off camera they caught him. He walked away from the podium, and he wouldn't take any questions, which was surprising because there were supposed to be open questions. They had Paul O'Neill and John Ashcroft there, and Sarbanes and a couple of the Democrats who helped him. All these guys were supposed to say something after the president and they had their little microphones on. But when he walked past all them, I don't think he realized they had mics on. And the last thing he said in his speech was that those who commit securities fraud and shred documents to cover it up are going to go to jail. Then he wiped his brow, and when he walked past Sarbanes, he rolled his eyes, and when he turned his head, you could hear him say, "I can't believe I just said that."

He's rubbing the palms of his hands in his handkerchief. I think he was actually frightened by what he was saying.

(Continued at the link)

http://www.almartinraw.com/column66.html

"If the person who wrote that article had any familiarity with economic data (i.e. he has actually worked with the numbers before) he wouldn't write such an ignorant article."

Bob Novak is a highly respected columnist, who has been reporting on politics since Nixon. His piece cites the U.S. Commerce Department who routinely revise their figures.

A typical example is from June 27, 2002 that found "The Commerce Department said its final measure of U.S. gross domestic product (GDP) growth in the first quarter was 6.1 percent, compared with its prior estimate of 5.6 percent."

Novak asks, "If the government's books were not purposely cooked in the same way as corporate accounts, there still remains the question of how the government could be so wrong."

Lamb asks, Why did it take them soooo long to revise such huuge figures?

Of course, you all, like the mainstream media, couldn't care less. And just shrug it off like Mr. Horn, So what, everybody :razz: does it!

"Here's a link to a Heritage Foundation paper that has holes big enough that even I can see them. I'm sure I can find others."

Hey, thanks for the link with those great charts! Now, how come you don't point out the big "holes" for us?

One "hole" is those bogus growth numbers from 1999 and 2000. They're off by as much as 30%. :lol:

[ This Message was edited by: Marc Lamb on 2002-08-08 13:08 ]

On 2002-08-08 13:00, Marc Lamb wrote:
"Here's a link to a Heritage Foundation paper that has holes big enough that even I can see them. I'm sure I can find others."

Hey, thanks for the link with those great charts! Now, how come you don't point out the big "holes" for us?

<center>< Image deleted, see above ></center>

One "hole" is those bogus growth numbers from 1999 and 2000. They're off by as much as 30%. :lol:

If you need to ask, you ... never mind, I'll just give two examples:

Look at the charts carefully. Note: The only chart that uses real growth is the one you posted. All the others use then current dollars, which includes inflation.

Here's a typical bogus comment:
"Over the long run, federal budget deficits have resulted from overspending. Had the federal government simply held spending increases to the rate of inflation, it would have run budget surpluses in 28 of the 32 fiscal years since 1970. 3 Instead, it increased annual spending by 852 percent--120 percent above the rate of the inflation. Consequently, the federal government ran just four budget surpluses and 28 budget deficits. Clearly, budget surpluses require spending restraint, and Presidents and Congresses since 1970 have lacked the discipline necessary to keep the federal government's books out of the red." Note: they didn't mention the real growth of the economy, or of the population either. Just " ... 120% above the rate of inflation". Bogus.

Other interpretations are a little flaky, too, but I'm not going to post the whole thing and do a blow-by-blow critique. I'll leave that to each person's best judgement.

_________________
Intelligence is not knowledge and knowledge is not wisdom, but they all play well together :wink:

[ This Message was edited by: David '47 on 2002-08-08 13:34 ]

On 2002-08-08 12:42, Marc Lamb wrote:
"If the person who wrote that article had any familiarity with economic data (i.e. he has actually worked with the numbers before) he wouldn't write such an ignorant article."

Bob Novak is a highly respected columnist, who has been reporting on politics since Nixon. His piece cites the U.S. Commerce Department who routinely revise their figures.

A typical example is from June 27, 2002 that found "The Commerce Department said its final measure of U.S. gross domestic product (GDP) growth in the first quarter was 6.1 percent, compared with its prior estimate of 5.6 percent."

Novak asks, "If the government's books were not purposely cooked in the same way as corporate accounts, there still remains the question of how the government could be so wrong."

My response had two thrusts. It appears you didn't get the first one. Read this:

"Desperate to meet a year-end profit target, the Enron Corporation struck a sham energy deal with Merrill Lynch that let Enron book a $60 million profit in the final days of December 1999, according to former Enron executives involved in the transaction."

This is what Enron did: They made a fake deal. They knew it was fake. This is fraud, pure and simple.

Now let's consider Analytical Surveys (ANLT). This company reported strong profit growth (40% annually) for seven years, which was why I bought the stock in July 1997. After I bought it continued to show earnings growth of 40% for two more years. After I bought it, the stock nearly tripled in price up to April 1998 and then it corrected by about 50% (it had gotten way ahead of itself) and I bought a lot more at a lower P/E as the first shares I bought (i.e. I thought I got a bargain price).

The stock recovered partially into July 1998 and then began to fall, reaching a low in the Oct 1998 LTCM crash that was lower than my initial entry point. [This crash was far worse for the small cap world than what we have seen in this current crash.]

Anyways I didn't panic and Al bailed me out with his surprise eases. After the crash few of my small caps fully recovered, so I interpretted the "heaviness of ANLT" after Oct 1998 to "market stuff". This was the late 1998-early 2000 rally when all the hot money was running to net stocks and small caps were getting creamed.

During this time the CEO sold about $1 million in stock, but the two largest shareholders (Mr. Thorpe, the founder of ANLT and Mr. Miller the founder of another company that had merged with ANLT) did not sell shares. Both these men were on the board and reported their sales to the SEC as insiders. In fact, one of them (Thorpe)actually bought a little, probably to demonstrate his faith in the strength of his company to increasingly nervous shareholders.

The stock fell to alarmingly low levels by the end of 1999. Then when 4Q 99 earnings were released it was announced that there was an accounting issue. The stock tanked. Later it was announced that 1999 earnings would be restated and the stock became a >90% loss for me. I lost 20% of my net worth. (Yes, I was a damn fool for being so concentrated, I've learned my lesson).

Much later I have pieced together enough information to conclude that the company hadn't made a dime in the nine years they were reporting stellar eanrings growth. They have never restated the earnings from before 1999 and even the restated 1999 earning shows profits that were never made. I have annual reports from 1992-98 that present financial statements that are all fairy tales.

I lost hundreds of thousands, but Mr. Thorpe and Mr. Miller lost tens of millions. What happened? Were we victimized by crooked accounting?

Perhaps, the CEO of the company did sell stock during the decline. He did retire rather suddenly before the shit hit the fan. But I suspect it is more likely that he simply did not know what he was doing.

ANLT's accounting allowed them to sell services for less than it cost them to perform them. As a result they could undercut the competition and buy them out at attractive prices (gaining their existing profitable contracts).

That is, they bought real earnings by aquisition using the pressure their wonky accounting gave them. ANLT was the only public company in the industry and their high-flying stock gave them the resources to make the aquisitions on favorable terms. The regular aquisitions were accretive and reported earnings grew at a stellar rate as a result, resulting in an even higher share price and apparently a stronger financial position (they were able to convince banks to lend them funds for the aquisitions).

If you work through the numbers it turns out that they could keep these false profits going as long as they continued to grow, which they did until Y2K caused a temporary drop in new business and the post-1998 stock slump had put a kabosh on future aquisitions. With no new aquisitions and new business they were forced to work down their backlog which allowed the bad accounting to become evident.

In a way ANLT is like Enron in that they got in over their head. Unlike Enron they didn't try to cover things up after it became clear there was a problem. Most importantly, insiders who sat on the board went down with the ship--they didn't cash out billions ahead of time like the Enron insiders did.

Enron was criminal, ANLT was just clueless.

The point of this lengthy discursion is to point out that often even highly experienced businessmen honestly don't have a clue what is going on in their own companies. The BEA has to make use of what companies report, they obviously are not privy to the inside details. If the companies report bad info then the BEA is going to come up with bad results.

I believe that what happened at ANLT is similar to what happened in our economy in the late 1990's. Because of rapid growth, much of it funded by a high-priced stock and rapid-fire aquisitions, high-flying companies thought they were making sound investments and making boatloads of money and reported such. Later, the stock slump (which stopped the aquisition train) and the post-Y2K slowdown in tech spending forced them to see the true (lack of) profitability of their businesses. Then, like ANLT, they revised the great profits of 1999-2000 to (much) lower, more realistic numbers.

To claim that the BEA numbers are crooked is to claim that MOST American companies were run by crooks and that the government was in collusion with these crooks. Do you seriously believe this?

If this were to become widely believed it would be all over. Prechter would be right, the triple digit Dow and all that would come true. This is in the realm of Stonewallian conspiracy theories.

As to Mr. Novak there are three possibilities. (1) He is stupid (2) He is ignorant. (3) He has a political agenda.

I very much doubt [1], [2] is possible, but I suspect [3]. Somebody else implied that he is a right wing pundit. Is what you posted an opinion piece? I am not familiar with Novak. I do know that you post political opinion. So do I. But if you are citing an opinion piece as backing for your own opinion piece, that greatly diminishes your argument.

So what was your point?

The graph is very telling. They plot rates of growth to tell the story that tax revenues follow the GDP. Why not just plot the absolute revenue and GDP in constant dollars and the ratio between them--like this?

Check out the two graphs. Both are of the same raw data. Does the raw data that I presented tell the same story to you as the graph of first differences presented by the Heritage folks?

They do to me of course. But, how many of you thought to mentally integrate the data over time to back out the raw data and see the situation clearly? How many even know what the hell I am talking about?

By presenting the raw data in differential form, they can produce an implication in the mind of "non-wonk" viewers that the Reagan tax cuts did not really cut revenue.

What is the purpose of such a deliberately obscure graph? It seems to me that it is to advance a political agenda, which after all is what a political think tank like the Heritage Foundation is for. It is much the same with Novak's article.

"How many even know what the hell I am talking about?"

:lol: Pretty funny, Mike.

"By presenting the raw data in differential form, they can produce an implication in the mind of "non-wonk" viewers that the Reagan tax cuts did not really cut revenue."

I'm sorry, but I'm failing to see how you came up with your "Rev/GDP" line that seems to contradict the rising tax revenues with the rising GDP.

As to your other post... dang it all, you said a mouthful, which I think confirms mush of my point, but I'll respond tomorrow, k?

"mush"? A Freudian slip, if I ever saw one. :smile:

The Rev/GDP is revenue divided by GDP. A rising revenue and a rising GDP can produce a rising or decling ratio between them. I don't understand what you are getting at.

"By presenting the raw data in differential form, they can produce an implication in the mind of "non-wonk" viewers that the Reagan tax cuts did not really cut revenue."

Then quit talking wonkspeak, and state your case in soccermomspeak. Ie., pork & beans are a great buy this week... why? Econ 101, that's why. All things considered, of course. :smile:

I presented the raw data. My graph is clear cut. What needs to be explained?

I did not present the massaged data that requires "wonkthink" to properly understand, the Heritage folks did that. Why even bother with their hard-to-interpret graph when you can get the raw data and see for yourself? (I even did the work of plotting it out).