If your mother does not understand what you are saying then neither do you.
Sunday, October 4, 2009
O' Eeyore ... no wonder you are so depressed
Posted on 11/19/08:
OER: Optics Es Ridiculum
From the Bureau of Labor Statistics:
These data points are for the U.S. city average CPI for All Urban Consumers (CPI-U) as of December 2006:
Shelter is 32.776% of CPI-U
Here is the breakdown:
Rent of primary residence 5.930% Lodging away from home 2.648% Housing at school, excluding board (2) .154% Other lodging away from home including hotels and motels (3) 2.493% Owners' equivalent rent of primary residence 23.830% Tenants' and household insurance .369%
The calculation for the owners' equivalent rent of primary residence is based on the following fantasy:
Rental equivalence. This approach measures the change in the price of the shelter services provided by owner-occupied housing. Rental equivalence measures the change in the implicit rent, which is the amount a homeowner would pay to rent, or would earn from renting, his or her home in a competitive market.
Translation: CPI did not capture housing inflation on the way up, and CPI has not captured housing deflation on the way down. The former reduced government payments based on CPI the latter reduces deflationary expectations, the hemlock of the elites.
Mish posts today on how whacked this 'my Friend Harvey' stat is:
Since the Case Shiller housing market peak in June 2006, OER is up +7.7%, while the Case-Shiller index is down -30.9% - an amazing 3860 basis point divergence!
Pay no attention to the stats behind the curtain folks! You're not as depressed as you think you are. Doubt it?... we got your stats right here. Those darn lyin' eyes of yours are at it again.