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Even people with only a casual interest in real estate know that there are seasonal trends in home sales. When one talks of sales in a certain month it makes sense to compare those sales to the period from one year ago during the same month. Comparing a month to the month immediately preceding it is rarely useful unless there has been a change of more than 5-10%, as anything less is statistical and/or seasonal noise.
Statistics can certainly be manipulated by bulls, bears and agnostics alike. My bias is clearly bearish. What irks me is that mainstream financial reporting has not been truthful for a long time in the United States. This article on home sales is one of many typical examples.
The headline reads that home sales are up 0.7% (break out the champagne!), but only compared with the previous month. This change on a month to month basis is meaningless, as it is within the parameters of statistical noise. This is the incorrect headline for the data presented in this article from a rational/neutral point of view. Much more important are the following, quoted directly from the article [info in brackets is not a quote from the article]:
* Sales were 4.3 percent lower than the same month last year.
* The median price [of homes dropped] to $195,200, off 11.7 percent from $221,000 a year earlier and 9.5 percent below July's level of $215,600. That was the largest monthly drop on records dating to 1963 [i.e. not statistical, month-to-month noise, but a meaningful price decline in only one month!].
* It's taking more than a year to sell the homes on the market.
A meaningful and realistic headline would have been that residential real estate is still doing poorly according to the new data. So why the spin? Why is the news no longer real but instead an Orwellian collection of garbage meant only to paint a rosy picture and ignore anything that would make a bad headline at all costs?
Perhaps this is why an increasing number of people (like myself) no longer trust or rely on mainstream media sources for the news. Dumbing down data points and spinning everything in a positive light to make a bullish headline regardless of reality is not news, it is propaganda and dishonest. It is doing people a disservice to tell them that real estate is bottoming or about to turn (newsflash: it's not) when this is not what the data indicates. Good money will end up chasing bad for anyone who relies on the media to tell the truth. Since I and my fellow taxpayers are now being put on the hook for these bad real estate investment decisions, I would prefer the media tell the truth on this issue.
Conspiracy theories aside, there is a vested interest of many media companies in not telling the truth, but rather saying what won't offend their advertisers. The "don't worry, be happy and consume more" crowd is helping to push many people (its customers) off the debt and stock market cliffs and into the economic abyss. Remember, though, that it takes two to tango. Watch, read and listen to such intentionally misleading data sources at your own peril.
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6 comments:
The fringe media have taken a self-prescribed duty of helping Obama. I don't mind news that helps this administration, as long as it's the truth and not hopped-up to seem like "all is well" and "it's getting better."
If you're not paying attention to the fundamentals, and lack discernment, it might be easy to believe. Informed Americans are not fooled.
Housing numbers must be the only time that the media focus on sales volume instead of the price. The headline always screams, "House sales up!" You have to really dig through the article to find out what happened to prices. It would be like saying, "stock sales were way up today!" No, it's just the opposite with stocks. Prices have been headed to Neptune, which is the headline. Nevermind that volume is weak.
Geoff,
I believe this kind of fraud is absolutely and positively not partisan. It absolutely happens when either of the parties are in power. It has to do with the vested interest of all parties in painting a positive picture on everything. The same bleeding heart republicans that are crying foul about the spending, voted and supported George Bush, by far the most irresponsible administration in the history of this country.
I do not support Obama's spending, but resent the republicans talk about "too much spending" simply because they are racist and are told by their pastors to do so, not because they have a clue about the economy.
The only hope remains the Libertarian Party.
sdanesh - absolutely, the rosy interpretation of economic data is bipartisan in the sense that whomever is in power does it.
I think you are more likely to see true independents cry "foul" regardless of which party has the presidency - and there have been a few of those voices out there. Ron Paul is a good example.
I think term limits would be a good thing - the founding fathers' intent was for regular folks to serve in public office for a bit and then return to what they did before. Although politicians moan about how term limits would rob Washington of experienced players, I think that is actually an argument in favor.
Guys,
In the past, when I went to Communist China to visit my relatives - I would turn on the T.V. and Bam! The propaganda and spin would come pouring out.
Then I come back home to the states and turn on the T.V. and Bam! The propaganda and spin would come pouring out! Except most folks don't realize that it is propaganda.
Those reading these blogs are economically savvy, so realize that a lot of the stuff the media and government says about the economy is spin and lies.
However, in the political arena, there are even more lies and spin as they can get away with it more there. i.e. What really happened during 9/11? Why are we in War in the Middle East? Why do we need Cap and Tax? Why do we need government to control health care and other industries? (Hint: The real reason isn't what the PTB - Powers That Be, tell us it is).
Anyway, looking as we have most likely just started wave 3 DOWN in the markets - Now would be a good time to investigate these things as Bob Prechter has said that during Waves 3 down, governments tend to start Wars.
But what most people don't realize is that this time, it will likely be a War against us - the American People - a war against our freedoms.
We need to step out of the box and matrix that the PTB has set up for us and figure out what they are up to. Many things will likely be happening this Fall: An economic collapse, possible war with Iran, A planned Flu Pandemic with the Vaccines being more dangerous than the Flu itself. (Research Dr. Horowitz and Steve Quayle's work - scary stuff). Millions of my own people have been killed by their government. Don't think it can't happen here.
As Orwell says: "In a time of Universal Deceit, telling the Truth is a Revolutionary Act."
Mae - two years ago, I would have read your post and dismissed most of your comments as extremist and alarmist. Now, after having educated myself on life in American under the early 20th-century progressives (Teddy Roosevelt and Woodrow Wilson), let's just say that I see what's happening now as a much more deliberate attempt to reshape society.
While not all plausible events may come to fruition, we mainly just need to keep our eyes and ears open; hoping for the best but preparing for the worst.
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