Numbers for Fun and Profit

The U.S. jobs report comes out today and the numbers are going to suck, but those numbers are a bunch of horseshit anyway. All the gubment’s numbers are made-up crap. This is lovingly referred to as “creative accounting.”

I’m certain creative accounting played a very large part in the saga of the Great Compression, which is my new preferred descriptive moniker for the economic trouble du jour. Do you like it? I just made it up. People have been throwing around the word ‘crisis’ way too easily, people who don’t even know what the word crisis really means. The word crisis does not apply when you can't find your car keys, or your checking account is overdrawn, or you run out of gas on the freeway; it means your ass is falling off. FALLING OFF. In terms of the American economy, this has not yet occurred for most of us. Most of our posteriors still cling to our anteriors. JUST WAIT.


Let’s think about creative accounting for a moment.

Gubment jobless figures do not count people who have just given up and stopped looking, or exhausted their unemployment benefits, or just fallen off the jobless roles because they've been looking for work beyond the amount of time it should take an out-of-work person to find a job (in the gubment's learned opinion, of course). This means that there are many, many more people out of work than the gubment admits. The reason the gubment lies to us about the real unemployment number is two-fold: first, it makes us look more prosperous to the rest of the world, and second, it makes us feel better about ourselves and our leadership. Problem is… the numbers are stinking rotten dirty lies we allow ourselves to be told because the fake numbers help us feel better than the real numbers would. God bless the miracle of creative accounting!

Another example… banks lie to other banks about the numbers on their balance sheets. Banks take their real asset numbers, beat them half to death with a number two lead pipe, then perform reconstructive surgery until the newly transformed numbers appear pretty enough to lie about how well the bank is doing. Bank A knows other Banks B, C and D are lying because Bank A is lying too; it’s all very Zen. The end result is that trust boils off into space resulting in the cessation of interbank lending, and poof… credit contracts, credit evaporates, loan channels freeze up, and people and businesses get cut off from access to the cash they ‘need’ to function. God bless the miracle of creative accounting!

Another example… rating agencies are the self-appointed watchdogs who sell us their opinion on companies overall health so we know which businesses are solid and which are not, which companies to invest in with vigor and which companies to flee from in terror. Rating agencies rated financial firms with the feeling that the good times would never end (or even slow appreciably, for that matter), extending best ratings to companies that were actually illiquid or even insolvent. They did so in the face of death-defying logic and multiple historical examples that should have warned everyone that the bender could not last forever. Reason flew out Wall Street windows left and right, replaced by twisted and perverted yet gorgeous numbers that told us all in no uncertain terms to pour every cent we had into housing and other bullet-proof swap-protected investments. When the ugly truth leaked out, AAA-rated investment vehicles turned to junk overnight. Trillions and trillions and trillions of dollars in wealth boiled off into the atmosphere like it was never even there. God bless the miracle of creative accounting!

Creative accounting flourishes because we allow it and we expect it; hell, we encourage it. American consumers actually prefer being misled when lies make us feel better about ourselves. We are such a narcissistic bunch that it’s no wonder every human civilization that ever lived imploded into sand and sea, leaving behind nothing more than shards of pottery and glass. If the economy is really based on consumer sentiment (our mood, for God's sake), then brothers and sisters it is time to grab the dogs and the guns, load up the truck with carefully chosen items, and head to the hills. Our precious, pouting economy -- bless its heart -- is getting ready to throw one hell of a wicked tantrum.

We made up sweet stories of unprecedented prosperity, of unending gains on investments, of unceasing new riches gained in climbing property values that would rocket us all to riches, of a stock market that would see us through to our golden years when we could finally relax and retire at a standard of living that would have turned the Pharaohs of ancient Egypt olive-green with envy. We fantasized of the benevolent rich, who would graciously allow the money they spent on quilted toilet paper, pedicures, massages, meditation supplies, and single-malt to trickle down to the grateful masses who would leap with joy whenever the rich were living extra well, because it meant that all that money would roll down their asses and rain all over us so those less fortunate could enjoy an extra skewer of gopher with their Sunday supper.

Our grand economy now teeters on straw and quicksand, thanks in large part to the wonders of creative accounting. It's folly; it's nothing but fairy tales we keep repeating until we don't know the difference between truth and fiction. We should have rooted out the garbage long ago but the warm, moist bed of lies felt so good. We've still not stopped. We must stop lying now, and it will be painful. We must stop, or soon we’ll be nothing more than shards of pottery and glass.

And plastic. Lots and lots and lots… of plastic.