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To: Haim R. Branisteanu who wrote (229216)	3/19/2003 9:19:14 AM
From: marginmike	Read Replies (1) \| Respond to of 436258

buy gold, a shotgun and canned goods-ng

To: Haim R. Branisteanu who wrote (229216)	3/20/2003 10:56:24 AM
From: Mike M2	Read Replies (1) \| Respond to of 436258

Haim, Much of the growth differential between the US and the rest of the world can be explained by the recent adaptation of statistical techniques unique to the United States. These changes corrupt the integrity of the data rendering comparisons with prior periods in the US less meaningful as well as comparisons with other nations. The BLS implemented most of the changes that the Boskin commission report recommended. The major finding of the report was that the CPI overstated product price inflation because it failed to account for quality improvements. To the extent that you reduce the " measured" rate of consumer price inflation you increase REAL GDP and productivity. Hedonic pricing of computers has been around since 1986 but did not have a substantial impact until 1995. to see the impact look at the Dept. of Commerce Survey of Current Business and compare compare current dollar spending on computers with chained dollars. To the best of my knowledge no other nation uses the hedonic deflator. The Bundesbank did a study and found that Germany's reported GDP and productivity growth would be higher by simply adopting the same statistical techniques of the US . The British and the Japanese had similar findings. The OECD also noted the impact of different statistical techniques. Starting in 1999 the US decided to no longer classify computer software as an expense but as an investment. In general, expenses do not enter the GDP account but capital spending does. Once again this practice is unique to the United States. I touched on the major issues of statistical changes but there are others as well. I happen to believe that these changes were done with the intent to overstate the strength of the economy but even if you reject that notion it is intellectually dishonest to not recognized the profound impact these changes have on the data. mike

To: Haim R. Branisteanu who wrote (229216)	3/20/2003 11:22:40 AM
From: Mike M2	Respond to of 436258

Haim, I agree that Japan does not look attractive - they are suffering from post bubble burst syndrome . When one looks at traditional measures of economic health - the savings rate ( I suppose the US has the lowest rate of savings in the industrial world) , the US current account deficit -a record 5% of GDP, the rate of Net investment - it is overlooked how the aforementioned statistical technique differences overstate the rate of real US investment . In addition, the change in the pattern of US investment with an emphasis on high tech equipment with a much shorter useful life than industrial machinery means much of the new investment is simply replacing depreciated assets. Upon closer examination I believe that the perception that things are better in the US than elsewhere is based upon, in part, misinformation and disregard what was once considered the metrics of a sound economy. I happen to believe that the US is in the early stages of the deflation of a bubble economy and that the US stock market and US dollar are experiencing a secular bear market. I also believe that gold and gold stocks will do very well. Mike