New Podesta Email Exposes Dem Playbook For Rigging Polls Through “Oversamples”

Earlier this morning we wrote about the obvious sampling bias in the latest ABC / Washington Post poll that showed a 12-point national advantage for Hillary.  Like many of the recent polls from Reuters, ABC and The Washington Post, this latest poll included a 9-point sampling bias toward registered democrats.

“METHODOLOGY – This ABC News poll was conducted by landline and cellular telephone Oct. 20-22, 2016, in English and Spanish, among a random national sample of 874 likely voters. Results have a margin of sampling error of 3.5 points, including the design effect. Partisan divisions are 36-27-31 percent, Democrats – Republicans – Independents.”

Of course, while democrats may enjoy a slight registration advantage of a couple of points, it is no where near the 9 points reflected in this latest poll.

Meanwhile, we also pointed out that with huge variances in preference across demographics one can easily “rig” a poll by over-indexing to one group vs. another.  As a quick example, the ABC / WaPo poll found that Hillary enjoys a 79-point advantage over Trump with black voters.  Therefore, even a small “oversample” of black voters of 5% could swing the overall poll by 3 full points.  Moreover, the pollsters don’t provide data on the demographic mix of their polls which makes it impossible to “fact check” the bias…convenient.

ABC Poll


Now, for all of you out there who still aren’t convinced that the polls are rigged, we present to you the following recommendations on “oversamples for polling” in order to “maximize what we get out of our media polling.”

I also want to get your Atlas folks to recommend oversamples for our polling before we start in February. By market, regions, etc. I want to get this all compiled into one set of recommendations so we can maximize what we get out of our media polling.

The email even includes a handy, 37-page guide with the following poll-rigging recommendations.  In Arizona, over sampling of Hispanics and Native Americans is highly recommended:

Research, microtargeting & polling projects
–  Over-sample Hispanics
–  Use Spanish language interviewing. (Monolingual Spanish-speaking voters are among the lowest turnout Democratic targets)
–  Over-sample the Native American population

For Florida, the report recommends “consistently monitoring” samples to makes sure they’re “not too old” and “has enough African American and Hispanic voters.”  Meanwhile, “independent” voters in Tampa and Orlando are apparently more dem friendly so the report suggests filling up independent quotas in those cities first.

–  Consistently monitor the sample to ensure it is not too old, and that it has enough African American and Hispanic voters to reflect the state.
–  On Independents: Tampa and Orlando are better persuasion targets than north or south Florida(check your polls before concluding this). If there are budget questions or oversamples, make sure that Tampa and Orlando are included first.

Meanwhile, it’s suggested that national polls over sample “key districts / regions” and “ethnic” groups “as needed.”

–  General election benchmark, 800 sample, with potential over samples in key districts/regions
–  Benchmark polling in targeted races, with ethnic over samples as needed
–  Targeting tracking polls in key races, with ethnic over samples as needed



And that’s how you manufacture a 12-point lead for your chosen candidate and effectively chill the vote of your opposition.


Here is the full report of “Polling & Media Recommendations” from “The Atlas Project.”

Clinton Campaign Admits Hillary Used Same Tax Avoidance “Scheme” As Trump

Well this is a little awkward. With the leaked 1995 Trump tax returns ‘scandal’ focused on the billionaire’s yuuge “net operating loss” and how it might have ‘legally’ enabled him to pay no taxes for years, we now discover none other than Hillary Rodham Clinton utilized a $700,000 “loss” to avoid paying some taxes in 2015.

The Clinton Campaign was quick to jump on the leaked Trump tax filing with Robby Mook tweeting…

And Hillary following up, adding Trump “apparently got to avoid paying taxes for nearly two decades—while tens of millions of working families paid theirs.”

However, a look back at Hillary Clinton‘s tax returns from 2015 (here), proudly displayed by the campaign proving she has nothing to hide – shows something awkward on page 17…


While not on the scale of Trump’s business “operating loss”, Hillary Clinton – like many ‘wealthy’ individuals is taking advantage of a legal scheme to use historical losses to avoid paying current taxes.

As Bloomberg notes, this federal tax break is among the wealthy’s most used avoidance schemes…

Those 1.1 million folks in the 1 percent, as measured by the TPC, have annual income that averages a little less than $700,000. The top one-tenth of that group, some 110,000 households, average about $3.6 million, according to Howard Gleckman, a senior fellow at the TPC.2


The middle of the pack, some 33 million people, have pretax income ranging from $45,000 to $80,000. The lowest one-fifth of taxpayers, a universe of about 47 million Americans, have income up to about $24,000.


Among the biggest of these givebacks, courtesy of the Internal Revenue Service (well, really Congress), are capital gains and dividends—these are the biggest way the wealthiest benefit.

In the words of Hillary Clinton‘s campaign manager, “this bombshell report reveals [Hillary Clinton‘s] past business failures… and may show just how long [Hillary Clinton] may have avoided paying taxes.”

*  *  *

Finally, as we noted previously, the NYT itself is also perfectly happy to take advantage of the US tax to minimize the amount of money it pays to the government: in 2014 the company got a tax refund of $3.6 million despite having a $29.9 million pretax profit, an effective negative tax rate for 2014, which it explained was favorably affected by approximately $21.1 million for the reversal of reserves for uncertain tax positions due to the lapse of applicable statutes of limitations.

A History Of Manufactured Regime Change And Civil Unrest: Is America Next?

 Truthstream Media outlines the history of elitist run regime change and cultural overthrow in the past century.As Alt-Market’s Brandon Smith notes, Truthstream thankfully acknowledges what some in the Liberty Movement refuse to see; namely that the strategy of engineered collapse of nations perpetrated by the CIA and globalist NGOs is now being perpetrated against the U.S. Yes, that’s right, America is just as expendable to the elites as any other nation in their quest to create “order out of chaos”, or a New World Order…

These revolutions are portrayed in the western media as popular democratic revolutions, in which the people of these respective nations demand democratic accountability and governance from their despotic leaders and archaic political systems. However, the reality is far from what this utopian imagery suggests. Western NGOs and media heavily finance and organize opposition groups and protest movements, and in the midst of an election, create a public perception of vote fraud in order to mobilize the mass protest movements to demand ‘their’ candidate be put into power. It just so happens that “their” candidate is always the Western US-favoured candidate, whose campaign is often heavily financed by Washington; and who proposes US-friendly policies and neoliberal economic conditions. In the end, it is the people who lose out, as their genuine hope for change and accountability is denied by the influence the US wields over their political leaders.


-Via Global Research, “Color-Coded Revolutions and the Origins of World War III”

Via TruthStream…

Hidden Agenda Perpetrated By Congress & The Fed Exposed In One Simple Chart

I like to say policy objectives are invisible ink and policy results are the coloured glasses that expose them. You see, policy makers always tell us how they design and implement policies targeted at middle class America.  However, time after time after time, the only segment of society that fails to realize any benefit from any policy is middle class America.  Yet for some mind boggling reason we continue to allow these policy makers to carry on with this skullduggery.  The following chart really tells you everything you need to know about economic policy objectives for the past three decades.

The above chart depicts Wall Street real profits (black line), non-financial corporate real profits (red line) and real median weekly wages and salaries (blue line) all indexed back to 1982 (this is an important period where antitrust policies broke down under the Reagan admin).

What we find is that while median wages and salaries have increased by a paltry 9% over the past 35 years, corporate income is up 250% and Wall Street income is up almost 800%.   And so over the decades this story line about policies targeting the middle class is absolutely, in every way, a total and complete fabrication.  This chart doesn’t happen by accident nor could it be the result of honest mistakes.

The above results expose the hidden agenda perpetrated by Congress and the Fed.

The American middle class is a patsy in a system designed to do exactly what it has done.  

International trade agreements and excessive money printing do help Wall Street and Corporate America but do not help the middle class.  This is made absolutely clear in the above chart.  And if you are one of those typically shallow regurgitators of the theories you’ve been told, well tell it to the facts above.

The Reckoning

by Jeffrey P. Snider

As I have written many, many times, the “unexpected” events of January and February were a dramatic wake-up call for central banks. Last August’s global liquidation they could at least try to ignore because it could possibly fit within the paradigm of “transitory”, a one-off aberration that was some mysterious Chinese viral contagion and thus of not any great, lingering importance. The recurrence in the first part of 2016, though, destroyed those assertions and a lot of people noticed; and you can bet the Fed noticed that a lot of people noticed.

What is happening this year is astounding. After saying year after year after year that the recovery is coming, and even doing so to the point of condescension, the admissions of wrongfulness are starting to roll in, if only softly at first. How ludicrous does “transitory” look now? Though that word remains attached to official policy statements, official policymakers themselves have begun to act otherwise.

There was the brief flirtation with NIRP even in the United States, though fortunately disabused by clear Japanese example of the utter harm such monetary “stimulus” actually offers. Of late, economists having floating the idea for raising the inflation target, but they have yet to offer an explanation as to why that might be needed (even before they try to argue why it might work in a way the current one doesn’t). To get to the future of new policy regimes that are hopefully (to them) more successful, central bankers have to deal with the policies of the past that so clearly weren’t.

Even Jon Hilsenrath of the Wall Street Journal has been captured by the mood, certainly affected by the discussions to be taking place among central bankers gathered at Jackson Hole. The Kansas City Fed symposium might be better titled this year as “How do we get ourselves out of this mess we created?”

In the 1990s, a period known in economics as the “Great Moderation,” it seemed the Fed could do no wrong. Policy makers and voters saw it as a machine, with buttons officials could push to heat or cool the economy as needed. Now, after more than a decade of economic disappointment, the central bank confronts hardened public skepticism and growing self-doubt about its own understanding of how the U.S. economy works.
For anyone seeking to explain one of the most unpredictable political seasons in modern history, with the rise of Donald Trumpand Bernie Sanders, a prime suspect is public dismay in institutions guiding the economy and government. The Fed in particular is a case study in how the conventional wisdom of the late 1990s on a wide range of economic issues, including trade, technology and central banking, has since slowly unraveled.

This is a theme that I have consistently presented as evidence for monetary evolution as both an explanation for Fed failure and what I believe will increasingly be appreciated as a depression. As I wrote just a few weeks ago:

Twice a year every year, the Chairman of the Federal Reserve drives up to Capitol Hill and formally reports to Congress. Given our current circumstances, these ceremonial affairs are lent a great deal of mainstream scrutiny as the public tries to parse the smallest scraps of unanticipated deviations from the carefully laid script. In many ways, this is a rerun of the late 1990’s dot-com bubble, but in reverse. When Alan Greenspan would testify, even his briefcase would be subjected not to so much scrutiny but reverence for what the Fed would not have to do, as the St. Louis Fed embarrassingly confirms. When Janet Yellen testifies, the world waits with baited breath for her to endorse instead the smallest little something that the Fed might have got right.

During the dot-com era, it wasn’t so much what Greenspan got right but what little the Fed had to actually do. The explosion of monetary evolution took care of the “moderation” of that time for him. It was all blasted apart on August 9, 2007, and hasn’t been fixed since (Humpty Dumpty references with regard to monetary policy are actually appropriate here, especially the horses) no matter how many trillions of worthless, inert bank reserves were created. Indeed, that is the crux of the matter; the true global currency standard was destroyed in further capacity for growth, economic as well as financial, and the agency charged with the care and nurture of the dollar responded with arrogant irrelevance.

Before the eurodollar break, the Fed was a bunch of geniuses, the best and the brightest the nation could possibly offer and a shining example to the rest of the world. They were the pinnacle of technocratic competence, admired for their power that everyone just assumed because, again, how little they actually did. After the break, they are an incompetent, increasingly petulant mess where the media looks to Janet Yellen in the desperate hope that there is the tiniest little scrap of good news all despite massive effort redeployed time and again.

ABOOK August 2016 Fear Economy

But we should be vigilant about what is really going on here. I very much doubt there is a true mea culpa gathering to be offered from economists who up until recently vehemently abused any notion that they could be wrong. A preview of my RealClearMarkets column tomorrow:

There is at the very least a growing realization even among economists that their policies aren’t working; it only took nine years. It is the byproduct of the threat to survival; after having remained consistently optimistic to the point of shouting down anyone who challenged the recovery narrative, increasing popular unrest is creating political unrest that will, if unchecked, threaten even the longstanding cherished place of orthodox economists who have remained on such pedestals since the 1930’s. Thus, there can be no depression because if we all admit what is increasingly obvious that would leave no doubt as to just who has been at fault.

Economists are almost certainly repositioning themselves for when (not if, I believe wholeheartedly) that occurs. Once the depression sinks in, there is no room left for orthodox economists who blamed only the gold standard for the possibility.

ABOOK August 2016 Payrolls Final Sales LF Part

So we should be very clear also in response; they should be denied any seat at the table of reform. While starting to at least admit the possibility might seem to be something, it is far too little and much, much too late. Economists and central bankers have disqualified themselves for participation in the project. It’s not like the monetary system’s change and evolution was something that just happened overnight; it was right there for them to see all along, not the least of which was everything that has happened since August 2007. They have even talked about in at least vague and general terms for decades, only to dismiss it every time as of no great importance.

Once the people’s mindset changes, what they will find in especially Federal Reserve conduct could border on criminal neglect. There was Greenspan’s warning in June 2003 that perhaps the banking world had indeed changed in a meaningful way, and that monetary capabilities might need to be more carefully examined before they had to be used as in the Japanese experience. Three years before that, Alan Greenspan admitted right in the FOMC transcripts that the Fed had no idea what modern money even was:

The problem is that we cannot extract from our statistical database what is true money conceptually, either in the transactions mode or the store-of-value mode. One of the reasons, obviously, is that the proliferation of products has been so extraordinary that the true underlying mix of money in our money and near money data is continuously changing. As a consequence, while of necessity it must be the case at the end of the day that inflation has to be a monetary phenomenon, a decision to base policy on measures of money presupposes that we can locate money. And that has become an increasingly dubious proposition.

Did the Fed expend every resource to rectify this knowledge gap? No; emphatically no. Quite the opposite as they openly proved in discontinuing M3 in March 2006, writing in the official press release that the “costs of collecting the underlying data and publishing M3 outweigh the benefits.” Any institution that made such judgment only a little over a year before the repo and eurodollar markets blew up should be prohibited from all discussions going forward.

There is a world waiting to be rebuilt and a growing realization from even the most recalcitrant orthodoxists, those stubborn elite who denied all this for decades, that such a job is going to get done. We are moving past “if” and finally toward “when.” They are not interested in litigating past liability, only ensuring that they have a voice in that outcome. That should never happen; they had their chance, squandered it, and proved themselves unfit for the huge task ahead that was left to us by nothing more than Lord Acton’s axiom about power corrupting. A republican democracy needs no such people in positions of influence. They couldn’t be trusted to do what was right, and now we are left still to tally the costs of such blatant immorality.

The only positive that will come out of this changing tone and softening stance is that it will finally crystallize all the various threads that have been aligned against true reform, including and especially the idea that monetary policy as it is would still be an option. As I write for tomorrow:

He [Former Fed Governor Warsh] is of the growing chorus of even former insiders and members of past authority who are calling for letting go of the ideological rigidity set in place during the New Deal. Warsh takes no prisoners, charging, correctly, that a “numeric change” for the inflation target is “subterfuge”, a case that I and many others have been making for years. Pretending everything is fine delays the recovery, not aids in it.

It has been my fervent, pleading hope for years now that the phrase “they really don’t know what they are doing” will become associated with central banks and central bankers in the mainstream consciousness of the public as well as the professional verdict from politicians on down. For the Wall Street Journal and none other than Jon Hilsenrath to write that article (and it is not the only one of late) is a clear sign that we are moving ever closer to that day.  Even so, we need to be mindful that, pace Churchill, it would mark only the end of the beginning. There is a vast and hopeful world yet to be created and a great many people who have proved themselves utterly unqualified to help create it.

Dear Congress: Have You Received Money From These Pharma Companies

We have been following the latest melodrama involving a “greedy” Mylan, and numerous “humanistic” US politicians, all the way up to the Democratic presidential candidate, exchange blows over the company’s dramatic price increases of its EpiPen anti-allergy medication, with a healthy dose of amusement for one simple reason: if Congress wants to crack down on someone, it should crack down on itself.

After all, the only reason Mylan has been able to pass the kinds of price increases that Congress is now blasting it for, is because of US laws and regulations; laws which incidentally, have been determined in Washington’s backroom bribe parlor, i.e. the corner offices of thousands of local lobby organizations dispensing with billions of dollars in “client” funds.

Clients such as the companies listed below.

Which brings us to this question: dear Congress, have you received millions in lobby dollars from the US pharmaceutical industry.

Or perhaps Congress denies that virtually every single pharmaceutical company operating in the US has spent millions on influence peddling pardon lobbying, in recent years? Perhaps, just like in the case of the Clinton foundation defense, that money was not used to buy favors and influence legislation, but was purely for humanitarian reasons?

So how much money has the US pharma industry spent? According to OpenSecrets, so far in 2016, the amount is $129 million, rising to $2.3 billion over the past decade.


Here is a small selection of the 369 lobbying “clients” OpenSecrets keeps track of: one can see Mylan toward the bottom.


And, as usual, we conclude with our favorite chart showing the relationship between the pharmaceutical industry  and Congress, according to which every dollar spent by big Pharma on lobbying generates a return of 77,500%!


And since virtually all representatives and senators suddenly appear so eager to accuse Mylan and its CEO of greed, we look forward to each and every member of Congress explaining to the American public, and their constituency, precisely where all their lobby dollars have come from, what laws were enacted as a result, and most importantly, what they spent the money on.

Beyond Human Capacity

Beyond Human Capacity

Distilling down and projecting out the economy’s limitless spectrum of interrelationships is near impossible to do with any regular accuracy.  The inputs are too vast.  The relationships are too erratic.


blue ball machine

The economy – complex and ever-changing interrelations.

Everything Changed In 1980 – Why The Fed Is Wrong

Over the weekend, Sam Fleming with the Financial Times interviewed Boston Fed President Eric Rosengren about why the Fed is likely to tighten monetary policy sooner rather than later.

The reason they should believe this time is different is that the economic conditions are changing over this period. If you go back to February there was a lot of financial market turbulence. The first quarter ended up being quite weak. Real GDP for the first quarter, at least from the preliminary report, was only half a per cent. You don’t need to tighten if the economy is weak and you are concerned about global market conditions potentially making it weaker.


If instead you are in an environment where you think labor markets are tightening, that GDP is improving and inflation is moving to 2 per cent that is an environment where more normalized interest rates would make sense.


Given that real GDP was only a half a per cent in the first quarter that is a relatively low threshold. If you look at how the data has actually been coming in I was a little surprised that there was not more of a market reaction to the very strong retail sales for April. If you look at the economic forecasters in the private sector most of them have raised their consumption forecasts for the second quarter to be in the range of 3 per cent to 3.5 per cent. When consumption is roughly two-thirds of GDP, a number that high for that major a component means that it is likely we will see growth around 2 per cent.

Here is the problem, the hope of higher personal consumption and stronger GDP has been the ever evolving“wish” of the Federal Reserve since the “financial crisis.” Of course, with each passinever-evolving “hopes”have turned to dust as consumers have struggled to make ends meet as wages have failed to grow, employment has been in primarily lower wage paying jobs,


The rise of the consumer society is a crucial point that continues to be missed in the ongoing arguments that try to explain the inability of the economy to achieve lift off.  Let me explain.

In any economy, there is a crucial link between production and consumption. In order for consumption to occur, production must come first.  Simply, an individual has to go to work and produce something, which can be consumed by others, in order to receive wages that allows for personal consumption.  In turn, economic activity can be directly traced by personal consumption expenditures as shown in the chart below.


This is not surprising in an economy that is nearly 70% (69.02% to be exact) driven by personal consumption expenditures.


What is important to notice is that while real PCE as a percentage of GDP has risen sharply since 1980, it has been a function of increasing debt levels and weaker economic growth rates as shown in the first chart above.  However, let’s look at this a bit differently.

From 1980 through 2000 total inflation adjusted household debt grew from $3.8 Trillion to $8.95 Trillion.  At the same time, PCE as a percentage of real GDP grew from 62% to 65.17%.  In other words, it took $5.054 Trillion in debt to generate 3.17% increase in the PCE/GDP ratio.

However, from 2000 through 2007, the PCE/GDP ratio expanded from 65.17% to 67.84%.  This 2.67% increase required an expansion of $6.46 Trillion in debt. Not surprisingly, when households are already laden with debt, there becomes a diminishing rate of return on debt growth.

Given the lack of income growth and rising costs of living, it is unlikely that Americans can continue to consume at ever higher levels. This is particularly the case given the inability for consumers to “save” as shown by repeated studies.

Yes, I know, the savings rate is going up, but I highly suspect the savings rate calculation is flawed.

“I know suggesting such a thing is ridiculous. However, the BEA calculates the saving rate as the difference between incomes and outlays as measured by their own assumptions for interest rates on debt, inflationary pressures on a presumed basket of goods and services and taxes. What it does not measure is what individuals are actually putting into a bank saving or investment account. In other words, the savings rate is an estimate of what is “likely” to be saved each month.”

However, as has repeatedly been the case, consumers have continued to fall short of expectations as the difference between disposable incomes and costs of living has been reflected by increases in consumer credit.


As shown above, consumer credit as a percentage of GDP has risen a low of 16.75% following the financial crisis to almost 20% currently. This increase in debt did not result in a surge in economic growth as much of that spending was not the consumption of “more” stuff, but rather the same amount required to sustain the current standard of living. The longer wage growth continues to stagnate, the dependency on credit to support the current standard of living will continue to rise.

The problem of surging debt, as it relates to economic prosperity is clearly shown below.


What was the difference between pre-1980 and post-1980?

From 1950-1980, the economy grew at an annualized rate of 7.70%. This was accomplished with a total credit market debt to GDP ratio of less 150%.

The CRITICAL factor to note is economic growth was trending higher during this span going from roughly 5% to a peak of nearly 15%. There were a couple of reasons for this. First, lower levels of debt allowed for personal savings to remain robust which fueled productive investment in the economy. Secondly, the economy was focused primarily on production and manufacturing which has a high multiplier effect on the economy.  This feat of growth also occurred in the face of steadily rising interest rates which peaked with economic expansion in 1980.

The obvious problem is the ongoing decline in economic growth over the past 35 years has kept the average American struggling to maintain their standard of living. As wage growth stagnates or declines, consumers are forced to turn to credit to fill the gap in maintaining their current standard of living. However, as more leverage is taken on, the more dollars are diverted from consumption to debt service thereby weighing on stronger rates of economic growth.

Unfortunately, for Mr. Rosengren, since the average American was never allowed to actually deleverage following the financial crisis, and still living well beyond their means, economic growth will remain mired at lower levels as savings continue to be diverted from productive investment into debt service.  The issue, of course, is not just a central theme to the U.S. but to the global economy as well.  After seven years of excessive monetary interventions, global debt levels have yet to be resolved.

If the Fed does proceed in hiking rates in the current environment, it will likely be a “policy error” which will be regretted in the not too distant future as debt service costs rise thereby further reducing consumers ability to“consume.”

Even More Recovery Was Erased


As if something out of bad dream, the economy continues to shrink. Actually, the economy has been shrunken this whole time, it is only the full recovery narrative that has shriveled as each drastic data revision blasts apart what little is left of the positivity. We are made to believe that government data providers go out into the economy and actually count what is going, leaving us forever confident that the numbers and the numbers. In reality, these are all stochastic processes that are nothing more than chained monthly modeled variations and thus are subject to all manner of interpretations.

Benchmark revisions act as a check on the accuracy and validity of the “high frequency” models of those variations. Every five years, the Census Bureau conducts a full-scale Economic Census with which to complete a comprehensive review. Because of its exhaustive size and scope, it takes years before the data can be incorporated into each of these economic accounts. The earliest touch of the 2012 Economic Census didn’t start until late 2014, but it really didn’t start to reveal the rampant over-estimation until last year.

That means that until these past few years, the stochastic estimations of monthly variance were based upon the 2007 Economic Census, with pre-crisis conditions as the most basic assumption of how the data “should” behave. I have referred to these before, the latest being Industrial Production especially of consumer goods. Last year, there were also massive revisions to everything from retail and wholesale sales to durable and capital goods. At the May 2015 benchmark revisionfor durable goods, I wrote:

Given the benchmark changes in retail sales, none of these changes are a surprise except perhaps the degree to which they were carried out in 2013. What that accomplishes is an after-the-fact agreement that the recovery got much worse after 2012, not better, and it further highlights the now-enormous dichotomy between spending and employment figures. Just as the rebound in 2013 disappeared, there is little to suggest that the 2014 version was anything other than a statistical mirage. Why would companies suddenly start hiring at a multi-decade high suddenly in 2014 when 2013 was really rather atrocious? [emphasis added]

So much of the economic surety during this “rising dollar” period has been based upon 2014, yet it was always shaky to begin with. There was never any income growth to suggest what the payroll reports were reporting. Even in accounts like durable goods, there was only marginal improvement in activity that could at best plausibly suggest an economic rebound was coming. Just as I suspected last year, however, the latest benchmark revision largely erased it; leaving 2014 just as barren as the rest of the 2012 slowdown.

ABOOK May 2016 Durable Goods New OrdersABOOK May 2016 Durable Goods Shipments ttm

The numbers are simply staggering, though not unexpected given the preview provided in the benchmark revisions of Industrial Production for consumer goods. As you can plainly see above, there is so little left of 2014’s “bump” that it doesn’t qualify for anything other than confirmation that the 2012 slowdown was indeed a permanent alteration in trajectory; a black hole of economic gravity from which there never was any possible escape. There is nothing of Yellen’s economy left in it.

In just the latest benchmark change from last year’s update, durable goods shipments have been shorn of another almost quarter trillion in activity dating back to the start of 2012 – with almost all of that disappearance contained within the past two years.

ABOOK May 2016 Durable Goods  Benchmarks Latest

Combined with last year’s downward revisions, the difference between the durable goods estimates that tried to buoy Yellen and what we find now is beyond description – amounting to a cumulative $346 billion just through March 2015. The downward revisions after that point total another $93 billion (April 2015 through March 2016), meaning that since 2012 there were almost half a trillion dollars less in durable goods shipments than originally estimated; again, with most of that reduction for the past two years.

ABOOK May 2016 Durable Goods  Benchmarks Both

The effect of these revisions on growth rates is to surrender all thoughts of acceleration out of the 2012/13 slump.

ABOOK May 2016 Durable Goods Shipments YY

What remains is a small, insignificant improvement in growth rates varied across the components of the durable goods reports; the revision to new orders was somewhat less striking, while revisions to capital goods were actually even more of a (negative) change.

ABOOK May 2016 Durable Goods New Orders YYABOOK May 2016 Durable Goods Cap Goods Shipments YYABOOK May 2016 Durable Goods Cap Goods New Orders YY

What appeared to be acceleration was only a statistical shadow very likely of trend-cycle over-estimation. The various stochastic processes took what was perhaps a slightly better environment in 2014 and turned it toward the long-sought recovery. That should never have occurred as trend-cycle should have been rethought long before the 2012 Census; there has been every reason to suspect this economy now is not like any prior cycle, or even perhaps a cycle at all. From that view, what little positive difference there may have been between 2012-13 and 2014 would have been seen for what it was, a continuation in theuneven nature of the unsurprisingly durable slowdown.

Instead, with trend-cycle pegged to the 2007 Census the chained monthly variations were looking for a more conforming recovery cycle, which apparently caused them to greatly overstate that small shift. As again with IP in consumer goods, we find durable goods (ex transportation) that once appeared to indicate a slow but consistent recovery turning more positive in 2014 instead being revised to an altogether unrecognizable form.

ABOOK May 2016 Durable Goods Shipments ttm LongerABOOK May 2016 Revised Consumer Goods IP Recent

That means that the recovery didn’t disappear, it was never there to begin with, rather it is the narrative that has or at least a great deal of data formerly supporting it (however loosely). Since this is mostly related to consumer spending and really lack of income (but not limited to it, since capital goods are included in these revisions) it casts even more suspicion on whatever stochastic regressions exist within the payroll figures that have so far somehow resisted any benchmark revisions at all. Instead, durable goods with this current benchmark adds further weight to the common sense proposition that there is something very wrong in an economy that “loses” 14 or 15 million people from the labor force.

The unemployment rate for a time seemed to suggest (to the mainstream, anyway) that the participation problem would only be a matter of degree for an actual cycle, but these more complete overhauls show that was always backward. A seriously shrunken labor force would never suggest the speed of any cycle, rather it can only indicate something much worse than cycle in the first place. Economists have tried to ignore the fact of the denominator in the unemployment rate, but more comprehensive data sources show yet again that the economy itself was never going to be able to do so.

If this is all correct, and there is only more data pointing in that direction with each successive updated benchmark, then it leaves us with a very uncomfortable question: now what? Unfortunately, as these statistics are finding out, there is no precedence for this kind of slowdown, stagnation, or elongation of weakness. It means all options should be considered. We could see a slowdown that just keeps on slowing and contracting for however many more years, or worse an actual recession that like the Great Recession only leaves the economy still more withered after it.

ABOOK May 2016 Revised Consumer Goods IPABOOK May 2016 IP Revisions IP Labor Potential

Tesla Compared To Enron, Ponzi Scheme In Scathing New Research Report

While Tesla’s cars may or may not be the greatest thing since sliced bread, regular readers are well aware that our recurring complaint about the company is not about the quality of its product or its growth prospects as much as its incredulous, ostensibly ridiculous, non-GAAP accounting practices…


… as well as its relentless cash burn, which just last week forced the company to sell even more stock.


We summarized all of this recently, and as diplomatically as we could recently in an article titled “Tesla Releases Steaming Pile Of Epic “Non-GAAP” Gobbledygook; Stops Reporting Free Cash Flow.”

Today, an independent third-party research boutique (in other words unlike Morgan Stanley or Goldman both of whom upgraded the stock to ridiculous valuations on laughable catalysts just hours before they underwrote a convertible and stock offering, respectively), Devonshire Research has issued a scathing report in which it compares Tesla’s financing model to a “common Ponzi, Pyramid and Matrix scheme“, and even goes as far as hinting Tesla could be the next Enron due to its opaque financial reporting.

Here is the executive summary, which explicitly lays out the similarities inherent in Tesla to the features “common in Ponzi, Pyramid and Matrix schemes”:

Just to make its point, the report then immediately attacks Tesla as the potential next Enron or WorldCom due to “aggressive accounting.”


Devonshire next points out something well known: without generous subsidies, Tesla would not exist, as a result a question is just how reliant is the company on ongoing state and Federal generosity.


The report then points out that as in any comparable Ponzi scheme, Tesla has to “introduce novel financial definitions”, such as the following:


Most damning may be the next slide which explains why “to sustain its financing model, Tesla would need to court successively larger “loss-tolerant investors” or seek subsidies.”


There is much more in the full report (link), whose warnings we are confident the market will ignore until it’s too late at which point the cries of “who could have possibly seen it” will emerge.