Government's 'numbers racket' is about to blow up in our faces

Submitted by Henry Poole on May 22, 2008 - 2:33pm.

At last, some mainstream coverage of our financial system that is worthy of attention. Marketwatch - Paul Farrell does a nice job of covering Kevin Phillip's new book "Bad Money: Reckless Finance, Failed Politics & the Crisis of American Capitalism."

According to Paul, Phillips reviews endless statistical cover-ups since the 1960s and concludes there was no "grand conspiracy, just accumulating opportunisms."

Be forewarned: No matter who's elected president, America will soon see a massive statistical curtain pulled back, exposing a con game of historic proportions. And when that happens, you and I will suffer another ear-splitting global meltdown, bigger than today's housing-credit crisis, dragging us deep into a recession and bear market for years.

How bad is it? "The real numbers ... would be a face full of cold water," says Phillips. "Based on the criteria in place a quarter century ago, today's U.S. unemployment rate is somewhere between 9% and 12%; the inflation rate is as high as 7% or even 10%; economics growth since the recession of 2001 has been mediocre, despite the surge in wealth and incomes of the superrich, and we are falling back into recession."

One obvious example of gaming the data is this: the inflation calculation leaves out food, energy prices. Listen to the recent NPR story on the topic.

Interestingly, Phillips is not one of us liberals. Kevin Phillips is a former Republican strategist for Nixon. Read Kevin's May 8th post on the Huffington Post.