Friday, August 31, 2012

Dollar hits three-month low vs basket of currencies

Here is the Reuters report FOREX-Dollar drops as Bernanke reinforces easing hopes.

I mentioned yesterday:

Bernanke's speech is tomorrow. A lot of people who are addicted to free money are expecting him to engage in Third World election politics, and pour more money into financial institutions.

We have another rather difficult couple of months ahead. By signalling willingness to ease, Bernanke deflects blame for President Obama's election defeat.

In that, he acts not like an independent governor of the central bank of the most important country in the world, but like a simple appointed bureaucrat in the Third World.

For background, see "Is there hope for change?"

NB: John Cochrane explains the pitfalls of having the FED act as a central planner in detail. See also his blog post on the issue.

Can President Obama look you in the eye?

Looking at a bunch of Democrat sites, I was struck by the types of photos of the President they chose to use. Should I report them to AttackWatch!

The White House

Democrats.org

BarackObama.com

BarackObama.com "Action Bar"

Clint seems to have touched a nerve

Dinner with Barack

You can sign up for the drawing without making a donation here.

Thursday, August 30, 2012

Barack Obama on the Federal Debt

As you read this, just don't ask how much the Federal Debt went up during his administration.

Mr. OBAMA. Mr. President, I rise today to talk about America's debt problem.

The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.

Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is ``trillion'' with a ``T.'' That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President's budget will increase the debt by almost another $3.5 trillion.

Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we'll spend on Medicaid and the State Children's Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.

Every dollar we pay in interest is a dollar that is not going to investment in America's priorities. Instead, interest payments are a significant tax on all Americans--a debt tax that Washington doesn't want to talk about. If Washington were serious about honest tax relief in this country, we would see an effort to reduce our national debt by returning to responsible fiscal policies.

But we are not doing that. Despite repeated efforts by Senators CONRAD and FEINGOLD, the Senate continues to reject a return to the commonsense Pay-go rules that used to apply. Previously, Pay-go rules applied both to increases in mandatory spending and to tax cuts. The Senate had to abide by the commonsense budgeting principle of balancing expenses and revenues. Unfortunately, the principle was abandoned, and now the demands of budget discipline apply only to spending.

As a result, tax breaks have not been paid for by reductions in Federal spending, and thus the only way to pay for them has been to increase our deficit to historically high levels and borrow more and more money. Now we have to pay for those tax breaks plus the cost of borrowing for them. Instead of reducing the deficit, as some people claimed, the fiscal policies of this administration and its allies in Congress will add more than $600 million in debt for each of the next 5 years. That is why I will once again cosponsor the Pay-go amendment and continue to hope that my colleagues will return to a smart rule that has worked in the past and can work again.

Our debt also matters internationally. My friend, the ranking member of the Senate Budget Committee, likes to remind us that it took 42 Presidents 224 years to run up only $1 trillion of foreign-held debt. This administration did more than that in just 5 years. Now, there is nothing wrong with borrowing from foreign countries. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours.

Increasing America's debt weakens us domestically and internationally. Leadership means that ``the buck stops here.'' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

I therefore intend to oppose the effort to increase America's debt limit.

[Page: S2238] GPO's PDF

Initial unemployment claims for week ending August 25

The press release is out. So are the misleading headlines:

Here is what the press release says:

In the week ending August 25, the advance figure for seasonally adjusted initial claims was 374,000, unchanged from the previous week's revised figure of 374,000.

We have been through this before: You simply cannot compare unrevised numbers to revised numbers!

Looking at the advance versus revised numbers since Memorial Day separately, it is clear that after wacky dip-spike-dip in July, initial unemployment claims have been increasing slowly for the past month.

So, in reality, the advance number went up by 2,000. The Bloomberg story mentions:

The median forecast of 50 economists surveyed by Bloomberg News called for 370,000.

The next announcement is next Thursday, right after the Democratic convention. That's when the advance number for week ending on September 1st will be announced.

If, and that's a big if, there are any shenanigans going on regarding these announcements, the number for the week ending August 25th might be revised higher to, say, 377,000 or so, and the advance number for the week ending September 1st might come in at about 375,000, and people can put headlines pointing out how the unemployment situation is getting better.

As before, my gut level expectation is for these claims numbers to keep on inching up, and get stuck around the 400,000 level soon.

Bernanke's speech is tomorrow. A lot of people who are addicted to free money are expecting him to engage in Third World election politics, and pour more money into financial institutions.

I am hoping, hope against hope, that he will not. Ironically, the FED may help the situation more by not engaging in another round of "stimulus": If Bernanke and pals stop acting like chickens with their heads cut off, it may signal better times ahead than the message of we're worried … again!

As I have no confidence that Bernanke has a shred of the calm courage of Scully, I fully expect them to deliver a solid punch in the gut to the U.S. economy as opposed to a shot in the arm.

Wednesday, August 29, 2012

Is the popular support for President Obama overwhelming?

For practical purposes, let's adopt a rather undemanding definition of overwhelming popular support for the President. Let's assume 52% of the electorate will vote to re-elect him.

Now, let's consider the implications of this for opinion poll results. This post will contain some arithmetic that ought to be accessible to anyone who has spent a few hours in an Intro Stats class.

Denote by p the proportion of those who will vote to re-elect Obama. We have assumed p = 0.52.

An opinion poll gives us an estimate of this number. Well call this the sample proportion. It is simply the number of respondents who say they'll vote for the president divided by the total number of respondents.

The expected value of the sample proportion is equal to the true population proportion. However, given that these are random samples, the sample proportion will vary across samples. For sample sizes greater than 30 or so respondents, the sample proportion is distributed approximately normally with expected value p and standard deviation (p×(1-p)/n)(1/2).

That is, given our assumption that the true proportion of support for President Obama among voters is 52%, the distribution of sample proportions will be approximately N(0.52, sqrt(0.52×0.48/n)) where n is the sample size. For a relatively small sample size of 624 respondents, the standard deviation of the sampling distribution of the sample proportion will be 0.02 (i.e. two percentage points).

To win the popular vote, you need 50% support, which, in this case, is one standard deviation below the expected value of the sample proportion. That means, the probability of getting a poll result (with 624 respondents) where President Obama does not get at least 50% of the support is about 15.9%. Since [p]robability is a normalized denumerably additive measure defined over a sigma algebra of subsets of an abstract space, that means 84.1% of all sample proportions (for sample size = 624) will show at least 50% support for the President if the the true population proportion of support for him is 52%.

If we look at polls with n = 1,000 respondents, the standard deviation of the sample proportion (assuming true population proportion of support for the president at 52%) will be 1.6 percentage points. Which means, 50% is now 1.25 standard deviations below the true proportion. That is, the left tail probability, the probability that a simple random sample of U.S. voters will indicate less than 50% support for the president, is about 11%. Meaning, you'd expect 89% of polls with n = 1,000 respondents to indicate 50% or greater support for the president if the true population support is 52%.

These values vary based only on sample size and the number you assume for the true population proportion of voters who are going to vote for the president.

Given that a decent national poll should have no fewer than 600, and preferably, at least 1,000 respondents, a quick statement that if at least 52% of the electorate support the president, I would expect 85% of national polls to show at least 50% support for him is fine.

Now, clearly, one is not elected President of the U.S. on the basis of the popular vote. The President does not need an overwhelming majority of voters to win big. So, he does not have to care if the public overwhelmingly supports him. He only really has to care about keeping California and New York on his side, and making sure those clingers in Pennsylvania and Ohio don't stray.

Tuesday, August 28, 2012

Dennis Miller on Jay Leno (August 27, 2012)

Part I: Dennis Miller on the Tonight Show

Part II: Dennis Miller on the Tonight Show

Not much movement in the real estate market

In an interesting twist, we have the following headline from Bloomberg news:

Home Prices in 20 U.S. Cities Mark First Gain Since 2010

So, was I dreaming when they wrote Home Prices Continue to Rise in May 2012 According to the S&P/Case-Shiller Home Price Indices?

As I mentioned before, the Case-Shiller indices are online. So, there should be no mystery to this.

But, apparently, there is, so here is the 20-city composite, seasonally adjusted:

No, your eyes are not fooling you.

The June 2012 value of the index is almost up to the February 2011 level. Amazing! Stop the presses.

What is clear to anyone looking is that the index has been stuck under 150 since December 2008, regardless of TARP, the Stimulus, and a whole host of measures enacted to keep people in properties they have not paid for.

Of course, when the index moves up by a point or two, we hear the news of the great housing market recovery that's just about to start.

Methinks such news of the re-birth of a vibrant housing sector are premature.

If you look beyond the oscillatory pattern in non-seasonally adjusted data, you'll see that actual transactions have been flat since President Obama took office. And, that's what matters here in terms of signaling the comeback.

Now, ask yourself how you'll feel about the following when the housing market finally does get going again:

Mr. Jones obtains a $500,000, no money down, interest only mortgage to buy a nice house and fill it with state of the art appliances. Pretty soon, the bubble bursts. Mr. Jones keeps making most of his interest only payments, while politicians renegotiate his mortgage on his behalf, cut down the principal to current market value of the property at $350,000, re-arrange the payment schedule etc. Housing market picks up. Mr Jones sells the property for $450,000, pockets the extra $100,000, after all these years of basically having paid a monthly rent while calling himself a homeowner.

Is that "fair"?

NB: I know, the stories are referring to the quarterly national index values (COMPOSITE-US-SA). The shape is similar with that index as well:

Saturday, August 25, 2012

Obama's America 2016

We had a chance to see Dinesh D'Souza's Obama's America 2016 yesterday.

He has done a great job capturing the destructive Third World thought process the President nurtures and embraces. I felt especially sympathetic to George Obama with whom, as best I can understand, I share a disdain for salon socialists who are eager to send countless nameless people to destitute lives in the name of advancing their revolution.

For the record, I paid to see both Bowling for Columbine and Fahrenheit 9/11 because I feel it is important to know before criticizing. So, I love the film's tagline: Love him. Hate him. Now, you know him. You owe it to us, and the people of the world who will most suffer from the replacement of the U.S. with a much worse alternative, to know him before you vote.

Thursday, August 23, 2012

Thoughts on Turkey, Israel and the Middle East

In December 2011, JewishPress.com sent me a bunch of questions regarding the relationship between Turkey and Israel. Apparently, they decided not to publish my responses (which is fine), but I think the content is especially pertinent given that Turkey is now practically involved in a war (also, see this one) in Southeastern Turkey with Syrian-backed guerrillas and Iran's Revolutionary Guard.

So, when you read my answers below, keep in mind that they were written around December 15, 2011 (I don't remember the exact date). I fixed minor spelling & grammar errors.

Disclaimer: Every statement I make below, other than specific historical events, is my subjective evaluation. I have no inside connections to anyone in the government of Turkey, the AKP, or the opposition parties to know what they are actually thinking—just in case you were wondering.

  1. Can you give us an overview of the transition in Turkey from the birth of the nation as a Republic to the current situation? How would you characterize the current situation in Turkey?

    It is impossible to understand Turkey without reference to the Ottoman Empire which was actually the second empire set up in Anatolia by nomadic Turkic tribes that migrated westward from Central Asia between the 6th and 11th centuries.

    The Ottoman Empire lasted from 1299 AD to 1923 AD. After a couple of centuries of decline, the decision to enter World War I on the side of the Germans accelerated its demise. In 1920, the Treaty of Sèvres officially partitioned areas under Ottoman control among Britain, France, Italy, Armenia, Greece, also designating an area for a possible future Kurdistan.

    By 1919, regional resistance movements had already been sprouting. These movements were later organized by Atatürk and his friends and Turkish War of Independence was fought. In 1922, an armistice was signed with the allied powers. On July 23, the Lausanne Treaty officially ended the Ottoman Empire, and established Turkey as her successor. On October 29, 1923, the Republic of Turkey was established.

    From the start, the Republic of Turkey was run by a single person from the center. Reforms and changes were enacted from the top down, and not in response to any strong demands by the people. There were various attempts at forming political parties to oppose Atatürk's Republican People's Party. These ended in a bunch of executions. After Atatürk's passing in 1938, control was transferred to his second in command who tried to keep the country out of the second world war by pleasing all sides. He succeeded in that.

    In 1950, Turkey's one party system was transformed by the electoral victory of the Democrat Party. During this decade, Turkey sought to be better integrated with Western Europe and the United States. It joined NATO and participated in the Korean War. In 1960, the democratically elected government of the Republic of Turkey was overthrown in a military coup. Three leaders of the Democrat Party were executed and many others were prosecuted for treason.

    This marked the beginning of a series of coup attempts, military interventions, and successful takeovers by the military of the civilian governments. Among others, there were March 12, 1971, September 12, 1980, and February 28, 1997.

    Turkey's current prime minister, Recep Tayyip Erdoğan spent time in prison, and was banned from politics for a number of years due to a poem he recited in a political rally. He is the leader of the Justice and Development Party (AKP) whose predecessor Welfare Party was disbanded for violating the principle of secularism in the constitution in 1998 following the military intervention in 1997.

    The current situation in Turkey is better than it has ever been.

    It is important not to confuse better with good, here. Citizens of the Republic of Turkey are freer, wealthier, and more equal in front of the law than they have ever been since 1923. The economy is more stable than at any point over the same period as well. There are encouraging signs everywhere.

    However, there are also discouraging signs. Corruption and nepotism are endemic in Turkey. One could try to feel better about the situation by pointing out that things have improved over the past decade, or that things really are no worse than they are in Italy or Greece. However, using an absolute yardstick, the population as a whole needs to become much more mature and tolerant of different opinions, and intolerant of corruption and flaunting of the law in the small and the large.

    While much economic growth has been due to the stable environment the AKP has been able to provide entrepreneurs, the state apparatus still casts a long shadow and the tax system is highly complicated and distortionary. The government's entry into the housing market, and domination of education and health care markets are concerns.

    On the whole, however, the situation is better than it used to be.

  2. Is Turkey an inspiration and/or an example for other countries in the region throwing off dictators and trying to establish functioning democracies? What involvement do you expect Turkey to have in supporting this process in other countries?

    When thinking about whether the experience of the people of Turkey can form an example for the peoples of mostly Muslim countries in the region, it is important to keep in mind that the standing of Turks in the region is a complicated issue, to say the least.

    Since the arrival of the first Turkic tribes in Anatolia more than a thousand years ago, they have not been dominated by other peoples of the region —at least not for any significant duration— whereas most everyone else fell under Turkish domination at one time or another. Turks tend not to recall the final separation that fondly.

    I have not interacted with many Arabs in my life, but most Arabs I have interacted with have voiced the opinion that the worst thing that happened to Islam was the Ottoman takeover of the Caliphate. The Republic of Turkey, the successor of the Ottoman Empire, abolished the Islamic Caliphate unilaterally.

    It is hard to imagine a world in which the Italian prime minister could shut down the Vatican and kick the Pope out of Rome. In fact, in a tongue-in-cheek way, you can blame the Turks for every Arab dictator of the 20th century: In a wide open field, they all seemed to want to be the next Caliph.

    All attempts at humor aside, there is also the fact that the Turks fought for their own independence after World War I whereas the Arab sovereigns sought to be dominated by Western powers.

    Furthermore, given that the reform movements in the decaying Ottoman Empire started more than 170 years ago, the Turkish experience may not be that encouraging. After all, the people of Turkey went through the destruction of an empire, saw major wars, death and destruction, attacks on minorities, economic depression, military coups, suppression of individual liberties, central planning, and social and economic upheavals on an almost routine basis since the first reform attempts in mid-19th century.

    As recently as in 1993, inhabitants of a Sivas got up and burned 37 people alive for allegedly insulting Islam. Precisely 33 years ago the inhabitants of Maraş got up and decided to slaughter each other over religious, ethnic and political differences.

    And, after all that, there is still no clear separation of religion from the state. After all that, all forms of media are still routinely censored. The list goes on.

    Clearly, among other majority Muslim countries, Turkey is the freest one with the greatest respect for human rights. Equally clearly, that is a very weak standard by which to judge a country.

    Despite detours, progress has been made in the right direction. The Turkish experience shows the rest of the world, and other majority Muslim countries that it is possible for Muslims of many stripes to live together, usually harmoniously with each other and people of other religions or no religion at all.

    The real question is whether the people who are rising up in places like Egypt and Syria really want that kind of a society. Or, do they want all other perspectives to be silenced?

    There is no direct evidence that Arabs are toppling dictatorships because they aspire to the Western values Turks have been striving to adopt. It seems to me that people in those countries have simply had enough. Among them, I am sure, there are people who would like to be even stronger dictators than the ones they have removed or are trying to remove from power.

    It is incumbent upon the rest of the world to be on guard and support the alternative.

  3. What are the dangers and/or advantages for Turkey if it plays a leading role for some nascent democracies?

    Neither Turkey nor the Turks can choose if they are going to play that role. First, there are no nascent democracies, yet. Second, it all depends on people in those yet to be formed nascent democracies whether they are going to look at the Turkish experience for guidance.

    In the Western world, the notion that well defined rights for individuals can exist independently of the whims of the sovereign has been recognized in some form since at least the 13th century. A corresponding philosophical foundation upon which freedom and democracy can stand does not yet exist in majority Muslim countries.

    Over the past decade, Turks have seen greater economic stability and wider freedoms. I doubt these happened because Turks wanted to set an example for anyone. The risk faced by every free democracy is clear: Such countries provide an environment where individuals who want to overturn the system can also freely organize and associate. Such an attempt cannot be ruled out in Turkey. The chances of a destructive and undemocratic change of government will be diminished if, and when, the opposition parties in Turkey can win an election on merits, and the party of Recep Tayyip Erdoğan dutifully surrenders power according to the rules.

  4. How did Israel and Turkey get to be so close to begin with? Was this all due to the secular influence of the early power holders in the Turkish Republic? Or were there other factors that caused the population to be open to this sort of close relationship with the Jewish state?


    June 16, 2008 London, U.K. • Photo © 2008 Cara A.

    I am not sure whether Turkey and Israel were ever really that close. Granted, Turkey was the first majority Muslim country to recognize Israel. And, most Turks look fondly upon the fact that the Sephardim were evacuated to safety by the Ottoman Sultan Bayezid II. Many Jews have flourished in business, academia, and the arts in Turkey.

    There are some interesting contradictions in Turkish attitudes towards Israel and Jews: A lot of Turks, some I know, can spout all sorts of nonsense about Jews in general, but be completely docile when actually interacting with Jews. Such seemingly contradictory behavior is not confined to religious Muslims.

    There is, and has been at least since the 70s, a strong anti-Israel undercurrent across the political and social spectrum. One can sense an assumption that "Palestinians are innocent and pure. The evil Israelis are beneficiaries of the evil, imperialist USA. Through their control of media, and political and economic institutions, the Jews have banished Palestinian Arabs to an awful existence." And, you can hear, "Hey, don't you know, Israel was given to the Jews by the Europeans to alleviate their guilt for the Holocaust." All in all, pretty standard fare for what you might hear at an OWS protest, or universities and other institutions of "higher" learning in the United States. When it comes to Turkey, these sentiments also end up combining with certain elements of Islam.

    Over the 90s, to the credit of the Clinton administration, cooperation in the Middle East among Turkey, Israel, and the United States worked. However, that cooperation proved not to have been built on a strong foundation. First and foremost, the governments in Turkey during this period were hopelessly inept and corrupt. In the minds of the people, their distrust in the government was associated with the governments' close cooperation with the U.S. and Israel.

    Secondly, the Clinton administration simply dropped the ball in Bosnia and Chechnya, leading to great discontent in Turkey. It was during this time that a lot of young Islamist leaders in Turkey rose to prominence, and a bunch of Turks actually went to Bosnia or Chechnya to fight.

    It was the dismal economic situation and blatant corruption of the governments that ran Turkey in 90s that gave the AKP their first election victory. The rest of their victories since have been due to the fact that the economy improved incredibly during their time and other things did not get much worse.

    What is the biggest criticism from the so-called secular, center-left opposition of Erdoğan these days?

    You may be able to guess: "He is a tool of the USA and Israel." People have written books about how he is trying to hide the fact that he is, in reality, a Jew, hiding in plain sight. For example, there was one called "Children of Moses: Tayyip and Emine."

    These books sell well for Turkey. The supposedly secular center-left leader Kılıçdaroğlu says Erdoğan is the "advocate of Jews," and asks "will he return the accolades he received from the American Jewish Lobby?" These days, such banter passes for legitimate political discourse by the Turkish opposition.

    Most of the negative public stunts being pulled by Erdoğan are possibly attempts to buttress his support among the religious Muslims in Turkey because that's the flank where he is vulnerable. The rest of the political spectrum is weak not due to a conspiracy by him. They simply have not yet been able to replace what passed as leadership in the 90s with a new and effective crew.

    So, when the prime minister goes "One Minute!" at an international meeting, using the resulting coverage, he manages to drown out his critics in Turkey. This does not justify the outward animosity displayed by the Turkish government towards Israel, but may point out whence the payoff from being belligerent against Israel may come in a world where the leadership in the U.S. prefers to "lead from behind" and publicly demands Israel to "get to the damn table."

  5. What led to the, seeming, rapid deterioration in the relationship? Is the deterioration serious or on the level of optics? Is the nuts and bolts of trade and military collaboration continuing or is that breaking down as well? Is there an inherent reason to expect conflict between an Islamic country and the Jewish state?

    The AKP supported OIF. Most in the United States remember that the Turkish Parliament did not allow the 4th Infantry Division to invade Iraq through its border with Turkey, but forget the political price the government paid for trying to clumsily pass a resolution to allow that in the face of widespread opposition from all segments of the society. They also neglect the cooperation between Turkey and the U.S. on other aspects of the war effort.

    As I mentioned before, there has not been viable opposition to the AKP from the center-left and center-right of the political opposition. The AKP has been vulnerable only to attacks by harder line Islamists who hold the view (in agreement with the Turkish and American left) that the OIF was undertaken to keep oil resources out of the hands of Muslims to the benefit of the U.S. and Israel.

    My theory as to the seemingly sudden deterioration in Turkish-Israeli relations relates to the fact that the 2006 conflicts in Gaza and Lebanon really mobilized Islamists in Turkey. The government, already in a precarious situation, possibly facing another military intervention, had to ensure that it did not lose its strongest supporters.

    It is also no coincidence that the Bush administration was at the same time significantly weakened by domestic opposition to the Iraq war lead by the democrats, 9/11 conspiracy theorists and the popular media. Accounts of "massacres" by American troops or Americans urinating on the Koran etc served by American media to further their political agenda, inflamed Muslims everywhere. The AKP and Erdoğan simply could not afford to lose a major pillar of their support, and they had to at least project the image that they were opposing the U.S. and Israel.

    Despite all impressions to the contrary, most Turks seem to value the strategic relationship with Israel. Merchants in the tourist towns of Turkey's Mediterranean region want to go back to the good old days when stores used to advertise their wares in Hebrew. An overt conflict between Turkey and Israel seems extremely unlikely to me. Of course, one cannot easily say the same thing about Egypt, Syria, or Iran.

  6. What do you expect to see happen in the relationship between Turkey and Israel in the next 10 years if the various Arab Spring countries tend in the direction of democratically elected Sharia oriented governments? How will Turkey change in this new Middle East? What positive and negative pathways do you see laying ahead for the region and for Turkey and the relationship of both and all as a whole with Israel?

    Ten years is a long time. At this point, all I can see ahead is turmoil. While it is entertaining to engage in this kind of speculation, I must confess fotunetelling is not my strong suit.

    With that caveat out of the way, clearly, the greatest threat in the region are the Iranian mollahs. Given that the signals the Turkish government is sending through its stance against Asad in Syria and by being part of the missile shield, I consider a direct attack by Iran on Israel to be unlikely. However, Iranians showed in the 80s that they can also threaten the world oil supply. Indeed, there have been recent news stories citing Iranian threats to shut down the Hormuz straits. If and when Iran has a reliable supply of nuclear weapons, the mollahs would be able to wreak havoc around the world by threatening long term destruction of oil fields around the Gulf.

    The resulting economic crises would be very destructive for all democracies, nascent or otherwise.

    The changes in Turkey are mostly driven internally. Among Turks, I see a yearning for greater individual political and economic freedom, and hope, for everyone's sake, that the path does not lead to widespread social unrest and political violence.

First time unemployment claims for week ending August 18

Keeping in mind the theme of only comparing unrevised figures with unrevised figures, and revised figures with revised figures which I emphasized last week, let's take a look at today's figures:

In the week ending August 18, the advance figure for seasonally adjusted initial claims was 372,000, an increase of 4,000 from the previous week's revised figure of 368,000. The 4-week moving average was 368,000, an increase of 3,750 from the previous week's revised average of 364,250.

No, that's not how you do it! You compare this week's advance number with last week's advance number and you compare last week's revised number with previous week's revised number. It really isn't that hard.

So, the advance number for the week ending August 18 was 372,000. The advance number for the week ending August 11 was 366,000. That means, the advance number went up by 6,000.

Now, the revised numbers run a week behind. Nothing you can do about that. This week's announcement tells us the revised number for the week ending August 11. Last week's press release tells us the revised number for week ending August 4. The difference: 368,000 - 364,000 = 4,000.

I'd say we're headed right back to 390,000–400,000 territory following the weird dip-spike-dip in July, but then I have been known to be wrong.

But, more importantly, I do not understand why none of the qualified data people at the BLS actually say anything about the comparison of advance figures with revised ones.

Tuesday, August 21, 2012

Average US Temperature in GHCNv3

A discussion on WUWT prompted me to take another look at the GHCNv3 Quality Adjusted Data I had downloaded on earlier this month.

I plotted the average temperature for the entire U.S. from 1881 to July 2012. Earlier years have too much noise due to the small number of observations.

I did this because I hate 1) looking at charts produced by the GISS people at NASA where the vertical axis is compressed; and 2) I hate looking at so called temperature anomalies.

In the plot below, you'll notice a tick up in the temperature and a leap down in the observation count. That's because that data point corresponds to a partial year. The average would go down once more observations covering the rest of the year are added.

Note that some stations have multiple series associated with them. To avoid over-representing those stations, I first averaged those multiple series into a single one for each station.

Note the declining number of observations in the recent decades.

And here's a plot of the average July temperature for the entire U.S. This makes it easier to make year-to-year comparisons as some years may have more observations from the colder months and vice versa. It seems we've had a few warm Julys recently. But, I want to attract your attention to the middle part of the graph, with the most observations. Notice how the period with the most observations has the least variability? Food for thought.

Thursday, August 16, 2012

Which way are initial unemployment claims going?

Today's Unemployment Insurance Weekly Claims Report says:

In the week ending August 11, the advance figure for seasonally adjusted initial claims was 366,000, an increase of 2,000 from the previous week's revised figure of 364,000. The 4-week moving average was 363,750, a decrease of 5,500 from the previous week's revised average of 369,250.

Let's wade through those press releases and compare the revised numbers with original numbers:

First, the dip for week ending 7/7 and the subsequent spike for week ending 7/14 are puzzling.

The spike and dip also make the four week moving average relatively devoid of meaning until the window no longer includes the dip-spike-dip weeks. The trajectory since 7/21 seems upward for both the revised and original series.

This is seasonally adjusted data, and if the seasonal adjustment is any good, it should have controlled for any regular spikes and dips that happen during this period of the year. Therefore, these movements must represent something that is specific to those weeks.

Looking at the report for week ending 7/7, it is hard to see anything special, but the report for week ending 7/14 is revealing in that the top five states with an extraordinary increase in initial unemployment claims are New York, Michigan, Ohio, and Pennsylvania:

STATES WITH AN INCREASE OF MORE THAN 1,000

State Change State Supplied Comment
NY +22,336 Layoffs in the transportation, educational service, and healthcare and social assistance industries.
MI +7,602 Layoffs in the manufacturing industry.
OH +5,976 No comment.
PA +4,775 Layoffs in the professional, scientific, and technology service, fabricated metals, and construction.
WI +5,615 No comment.
KY +4,232 No comment.
FL +4,087 Layoffs in the construction, administrative support service, manufacturing, wholesale trade, and retail trade industries.
IN +3,576 Layoffs in manufacturing.
IA +3,197 No comment.
IL +2,586 Layoffs in the construction, manufacturing and administrative support service industries.
AL +2,133 Layoffs in all sectors, largest increases in administrative support service, machinery manufacturing, and transportation equipment manufacturing.
MO +2,080 Layoffs in the manufacturing, transportation and warehousing, and administrative support service industries.
AR +1,787 No comment.
NC +1,722 Layoffs in the business services, textile mill products, nonclassifiable establishments, food and kindred products, apparel, and fabricated metal products industries.
WA +1,678 Layoffs in the agriculture, forestry, fishing and hunting, utilities, manufacturing, retail trade, and educational service industries.
KS +1,672 No comment.
TN +1,645 Layoffs in the administrative and support service, professional, scientific, and technology services, educational service, and manufacturing industries.
AZ +1,631 No comment.
TX +1,324 Layoffs in the manufacturing, finance, and transportation industries.
NV +1,158 No comment.

To get some perspective, let's look at weekly initial unemployment claims between January 1, 2007 and August 4, 2012 using the revised, seasonally adjusted figures:

The peak was for week ending March 28, 2009, with 667,000 initial claims filed. Clearly, initial claims have fallen from that peak. Recently, the figures have been flirting with the 390,000 line, and my gut feeling is that we're going to be meandering around there for a while. Ironically, increased election activity may create some temporary work opportunities.

Everything new is old again

The New York Times has a story about Julian Assange.

The last paragraph states:

Mr. Correa had invited him to seek asylum in Ecuador during an interview for Mr. Assange's TV show on Russia Today, an English-language cable channel financed by the government of Vladimir V. Putin.

Call me ignorant, but I did not know Assange was funded by the Kremlin.

It turns out, New York Times reported that as well:

RT, …, is an English-language news network created by the Russian leader Vladimir V. Putin in 2005 to promote the Kremlin line abroad. (It also broadcasts in Spanish and Arabic.)

Of course, practically speaking, Mr. Assange is in bed with the Kremlin, but on Tuesday’s show he didn’t put out.

Oh, I guess we can rest easy now.

NB: By the way, did you notice how they always refer to Putin as Vladimir V. Putin, but some never to President Obama as Barack H. Obama?

Tuesday, August 14, 2012

Is the Third World War inevitable?

In my ideal vision of the world, there would be unrestricted freedom of movement of goods, people and capital. People would be free to live and work anywhere they want, practice or not practice any religion they want, say anything they want, and pursue happiness in any way they want so long as they respect the lives and property of others.

We do not live in that world.

We live in a world where many countries are run by tyrants and other unsavory characters. We live in a world where most people face severe restrictions on what they can say, and what they can do. We live in a world where billions of people cannot even freely move in the country where they were born, let alone choose to move to places where they can best apply their skills.

In Cuba, farmers being allowed to set up vegetable stands and set their own prices is considered a threat to the regime. In countries such as China, Russia, and North Korea, people need internal passports to be able to travel from one city or region to another. In many places, people have to stay close to other people of the same ethnic, cultural, or religious backgrounds, or face immediate physical danger. I am sure you can come with other examples.

I am listing these to point out that in most places, people live under the thumb of a state apparatus designed to keep them as peons to be used by a ruler. Therefore, whether the subjects love their children, too is irrelevant to what the rulers will do.

Let's take a look at the Middle East and Africa. This region is important because of the existence of crucial resources, trade routes, and proximity to the crumbling Europe, which, once again, consists of countries that have neither the capability nor the willpower to protect themselves.

Along the Mediterranean shores of North Africa, we find Morocco, Algeria, Tunisia, Libya, and Egypt.

Morocco is run by a king, who is standing on top of a pressure cooker, and is trying to maintain his grip by allowing elections, and appointing a leftist Islamist, born of the Cold War cooperation between Islamists and the Soviets as the prime minister.

Algeria is practically at the mercy of Al-Qaeda. In Tunisia, the government is now in the hands of Islamists. In Libya, Muslim-brotherhood affiliated politicians are running the show. Ditto for Egypt.

Now, I should point out that I never thought that these dictatorships ought to have been supported. I am a firm believer in the idea that supporting dictators with the notion that they are "friendly to the U.S." is self-defeating. It tarnishes the ideals for which the U.S. stands, and ultimately, leads U.S. influence to go down in flames with the dictator.

These countries, along with many others, had been colonies of Western powers until after the Second World War. Prior to that, they had been under Ottoman influence of various degrees for centuries. At some point, internal conflict in trying to sort out the power structure was inevitable.

However, it is also natural to be worried about the form of the conflict and its spread. After all, why was it possible for East Germany to disintegrate in a much more orderly fashion than former Yugoslavia? Why are the countries born of former Yugoslavia still centers of conflict?

The collapse of East Germany came at a time when no one in the world doubted the supremacy of the United States and her willingness to fully stand behind German unification. If you believe for a moment that things would have worked out just as well with Carter at the helm, trying to convince the Soviets from a position of weakness, I have a few bridges I can sell you at a reasonable price.

By the time of the collapse of Yugoslavia, we had Clinton in office. Unwilling to commit to using force to enforce U.N. resolutions, following a policy of "let them kill each other", his administration projected weakness, his administration ceded the ground to the Russians. The void in Bosnia was filled with Jihadis from many countries. The Bosnian conflict along with the war in Chechnya was when the hard core Jihadist movements formed the backbones of their international infrastructure.

Sure, the Clinton administration did finally use force against the Serbs in the Kosovo conflict. But, by that time, the amount of force needed was much larger because the U.S. threats to use force were no longer believed. Unwilling to commit ground troops, he bombed Serbian cities, causing a whole bunch of civilian casualties. To this date, nothing has really been solved, and stability in the Balkans depends on a mixture of NATO and European forces, along with continued bribery in the form of foreign aid to prevent things from getting out of control. It would take very little for the Russians to push the region into turmoil again.

The sweeping regime changes in North Africa have been happening in an environment where everyone assumes that the U.S. has neither the strength nor the willpower to protect regional stability and intervene if needed.

In Iraq, the U.S. has ceded power to Iranian backed Talabani & al-Maliki co. In Iran, while various U.S. officials say things like "all options are on the table", no one takes seriously the threat of actual military action. In Afghanistan, the U.S. and NATO forces have increasingly withdrawn to bases, and do not project strength and determination. By relying on drone attacks that kill insurgents along with a number of women and children at a time, the U.S. has also given up the high ground, and any pretense of actually collecting intelligence on the ground.

In Syria, no one knows what to do. Contrary to various fictional stories of what a wonderful new dictator Assad was (do you remember Pelosi's visit in 2007 when Assad was actively taking out politicians in Lebanon and supporting al-Qaeda in Iraq?), supporting him is out of the question. But, because the U.S. has left a void in Iraq, that void is being filled with anyone who can put together a bunch of people with weapons. The Kurds in Northern Iraq are getting involved. The central government in Baghdad, whose interests are aligned with Iran's, is trying to prevent that. Assad is pushing PKK's Kurdish guerrillas to stage attacks in Turkey and cause general unrest, including kidnapping a Turkish member of the parliament.

So far, the only credible partner to the U.S. in the region is Turkey. Yes, I know all about the U.S.-Israeli partnership, but there is no way Israel can get directly and openly involved in the Syrian civil war without causing the whole thing to blow up. Only problem: There seems to be little Turkey can do other than protect her border, fight Assad's henchmen within her borders, hold some meetings and send some weapons. The fact that the U.S. signaled that they would not stand behind a strong Turkish reaction to the downing of a Turkish Air Force jet has emboldened the Russians, Assad, and the Iranians. While backing Assad, the Russians and Iranians are making plans to deal with the aftermath when he falls. They will be on the ground when that happens. Where is the U.S.? In Istanbul, having cocktails while taking in the view.

Which brings me back to East Germany: When the wall fell in 1989, there were Soviet troops in East Germany. In fact, according to Wikipedia, there were quite a few of them:

The Soviet troops occupied 777 barracks plants at 276 locations on the territory of the GDR. This also included 47 airfields and 116 exercise areas. At the beginning of 1991 there were still about 338,000 soldiers in 24 divisions, distributed among five land armies and an air army in what was by then the WGF.

I point this out because the existence of Soviet forces in East Germany did not stop the U.S. from standing firmly behind German unification back then. But today, the administration seems unable to do anything decisive for fear of angering the Russians. Meanwhile, the quagmire is extending, its tentacles reaching far and wide.

Where are the Europeans? They are just standing around, hoping that Russians give them enough natural gas to keep them warm during the winter months.

Let's look at a map and connect some dots:

The map does not include Pakistan and Yemen which I haven't touched. I have also ignored Boko Haram, Ansar Dine, and other groups in Africa.

But, just the map above should point out to you the dangers we (as people who do not want widespread war and destruction) face.

I am sure Ron Paul would say something like "Let'em kill each other. We're safe here. They won't hate us if we don't get involved."

Well, my friend, this is not about whether the People Committed to the Propagation of the Prophet's Teachings and Jihad like "us" or not.

This is about the time of great transformation we are going through and the explosive environment we find ourselves in due to an insistence on the part of Democrats to project an image of mealy-mouthed weakness.

When the U.S. is no longer considered invincible, then the vacuum is filled by the Russians and their clients. What happens next will affect all of us. Just like you couldn't retreat to a cave in the Sierra-Nevadas and watch the Second World War instead of Jersey Shore, we will not be able to isolate ourselves when the chain reaction begins somewhere.

Humanity's only chance is for the U.S. to once again claim and own her leadership in the world. That cannot be done without a strong U.S. economy, and a strong U.S. military. The first step in signaling that the U.S. would not stand idly by as the imperial ambitions of the Russians are spread via Islamist client states is to put in office leaders committed to getting the U.S. economy growing.

The U.S. must have the resources to do what is necessary, but also, others must believe that the U.S. has both the willpower and the resources to do it.

When the U.S. has the strength to back up her words, others take them seriously. That is the only hope we have before all these "little" conflicts turn into one big explosion of war, violence, destruction, and destitution.

Thursday, August 9, 2012

Dude, don't tell me it's raining!

I hope this will help set the stage and clarify what I am referring to in the title of this post.

First, some background: On August 6, 2012, NASA issued a press release with the title Research Links Extreme Summer Heat Events to Global Warming (I saw it thanks to Anthony Watts). Accompanying the article is an animation that purports to show how the density curve of the temperature distribution is shifting to the right and it is getting fatter tails (i.e. temperatures are higher, and extremely high temperatures are more likely) as time passes.

Here is the video:

Now, from earlier examination of the GHCNv2 data set, I know that the number of temperature stations in the GHCNv2 have been declining over time (incidentally, that is the data set the authors used). Their density curve shows frequency of various temperatures as a percentage of all temperatures in the data set, but, since the set of temperature stations in the data set is not constant, this is misleading. (To see why, think about the meaning of the statement "50% of the people in the sample had a million dollars" when the sample consists of you and Bill Gates versus when it consists of 1,000 randomly chosen adults in the U.S.)

Plus, while I think I understand the purpose of using anomalies rather than temperature levels (to remove assumed to be constant within station variability), I am always very uncomfortable with arbitrarily chosen sub-periods with respect to which those anomalies are calculated.

In short, I like to see the entire data set first, before putting it on the chopping block.

How can I do that in this case?

Well, at first I thought I would download the most up-to-date GHCNv2 data set, and check out the distribution of number of observations in the entire data set for every year and month. Well, for some reason, the GHCNv2 data sets are no longer there.

I do have the data set from 2010 somewhere on an external hard drive, but there was really no reason to go hunting for that, so decided to download and check out the GHCNv3 data set. So, I downloaded the quality control adjusted data set ghcnm.tavg.v3.1.0.20120809.qca.dat. I wrote a quick Perl script to extract the nonmissing observations and put the data in an SQLite database.

First, let's look at the distribution of Northern hemisphere temperatures. Keep in mind that the heights of the bars correspond to the number of observations in that bin for that particular time period (as opposed to percent of observations):

Northern Hemisphere Temperatures 1850 - 2012

Now, this whole back and forth between winter and summer months makes it somewhat harder to follow what's happening. So let's look at June, July, and August distributions through the years (again, Northern hemisphere only):

Northern Hemisphere June Temperatures 1850 - 2012

Northern Hemisphere July Temperatures 1850 - 2012

Northern Hemisphere August Temperatures 1850 - 2012

Conclusion

I am not able to see any substantial shift. What I do see are changes in the number of observations across time periods. Sure, there is some variability in the location of bars, but nothing to write home about.

Wednesday, August 8, 2012

How many federal government employees can you feed?

Every dollar paid to a government employee first needs to be collected from private sector worker. It is a given that government workers don't really pay tax. For example, if the average tax rate government workers pay is 25%, to collect a dollar of tax revenue from a government employee, the government first needs to raise $1/0.25 = $4 from a private sector worker, pay that to the government employee and then collect the dollar. Of course, the tax laid on the private worker increases the wedge between the productivity of the private sector worker and her cost to her private sector employer, creating a social welfare loss. In addition, every stage of the tax collection process has deadweight loss associated with it.

Therefore, it is best to achieve the smallest size government that can do the jobs we expect a government to do: Protect national security, provide law and order, and enforce property rights. The rest can be more efficiently taken care of in the private sector.

It seems some think we have a shortage of government sector workers. Since President Obama runs the Federal Government, let's look at the relative size of federal government employment versus private sector employment over the years.

The following graph shows the employment level in the private sector divided by the employment level in the federal government over the years. I obtained the data from the BLS. Both series are not seasonally adjusted values for January. Looking at other months also produced similar patterns except that every ten years you get spikes in Federal employment near May due to the Census.

The vertical axis is inverted so that periods over which federal government employment is becoming smaller relative to private sector employment correspond downward sloping portions of the line.

In the early 1980s, we have about 25 private sector workers supporting each federal government employee. Over the second term of Reagan and the subsequent Bush Sr. presidencies, we are up to about 29 private sector workers per federal employee (remember, larger number is better because the burden of federal employee is spread over a larger number of private sector workers). By the time Clinton leaves office, that number is up to 40 private sector workers per federal employee. This huge shrinkage of the federal workforce relative to the private workforce is due to two main factors: The tech boom and welfare reform.

During W's term, post September 11, we get the contractionary aftermath of the attacks, and the subsequent TSA expansion. Still, by January 2008, we have almost 42 private sector workers per federal government employee.

By July 2010, that number was down to 35 private sector workers per federal employee. Following the Tea Party elections in 2010, the January 2011 figure is 37, January 2012 is 38, and July 2012 is 39.5.

So, change is happening in the right direction of making the footprint of the federal government on the private sector smaller. Of course, this is but one facade of that burden. Government expenditures and federal debt are other aspects, and those are scarier fronts.

To pretend therefore that "the private sector is doing fine" and there is a government jobs problem is folly.

Tuesday, August 7, 2012

The kynge was wonder wroth withall

But alway went good Robyn
By halke and eke by hyll,
And alway slewe the kyngës dere,
And welt them at his wyll.

In Robin Hood's time, the King of England distributed and re-distributed wealth willy-nilly. If he had might, what he did was right. Only others who had accumulated resources could challenge his might, leading to Magna Carta, the first recognition of limitations to King's power by the people ruled by him.

In the Robin Hood story, the Sheriff of Nottingham represents the King. He collects taxes, and dispenses "justice". Robin Hood steals from him and his pals what they took by government force from actual producers.

Apparently, some people think Mr. President was being smart when he proclaimed: "It's Romney Hood!"

I think Romney should wear this as a badge of honor, for many reasons:

First, they called him a gay-bashing bully for a prank he may or may not have carried in high school or kindergarten.

Then came the Wimpy Romney Newsweek cover.

Now, he's a hoodlum.

Excellent.

Way to build Romney's street cred. He is going to cut off the flow of funding to Obama's chosen circle of friends at GM, environmental front firms, and a bunch of other parasites that feed off our hard earned tax dollars, and give it back to the people.

Romney's gangsta!

And, in this scenario, in one corner is Romney Hood, and in the opposite corner is King Obama:

John created a new tax on income and movable goods in 1207 – effectively a version of a modern income tax – that produced £60,000; he created a new set of import and export duties payable directly to the crown. John found that these measures enabled to him to raise further resources through the confiscation of the lands of barons who could not pay or refused to pay.

Thursday, August 2, 2012

First time unemployment claims in July 2012

Back on July 24th, I had said:

In the week ending July 14, the advance figure for seasonally adjusted initial claims was 386,000, an increase of 34,000 from the previous week's revised figure of 352,000.

… I think the odds are better than 50-50 (based on nothing other than gut feeling), that the report for the week ending July 21 will show an upward revision for the July 14 figure, meaning the actual increase in initial unemployment claims for 7/15–7/21 will be higher than the 34,000.

According to the July 26 news release:

In the week ending July 21, the advance figure for seasonally adjusted initial claims was 353,000, a decrease of 35,000 from the previous week's revised figure of 388,000.

Yey! I was right. The real increase for the week ending July 14th was 36,000, not 34,000.

Now, let's look at the August 2 press release:

In the week ending July 28th the advance figure for seasonally adjusted initial claims was 365,000, an increase of 8,000 from the previous week's revised figure of 357,000.

The revised figure for the week ending July 21 was revised upward to 357 thousand, from 353 thousand. That means, the decrease reported, 35,000 was actually overstating the decrease in the initial claims, and therefore, the decrease should have been 31 thousand.

Of course, the revision also made this weeks increase look smaller. Had the previous week's figure not been revised, initial unemployment claims this week would have gone up by 12,000.

But, my problem is not with revisions (which are a necessary evil presumably because of delays and errors), and seasonal adjustments, without which we could not make week-to-week comparisons (seasonal adjustment is always hard, but I have no reason to think there is anything fishy going on).

Nah, the real problem is how these figures are reported. So-called journalists seem to pick and choose whatever number is less damaging to President Obama. Is the number less than previous week's revised number? Make sure everyone hears about it. Is the number higher than previous week's but less than some panel's expectations? Well, then, make sure that's in the headline or first paragraph.

But, the real problem is, one can get whiplash trying to follow this week by week stuff.

And, comparing with the same period last year is always a good way to gauge if more and more people are filing initial unemployment claims.

The data are available on the Labor Department's web site.

Here are the not-seasonally adjusted (but, presumably revised) numbers for the end of July:

07/31/2010  402,140
07/30/2011  341,103  
07/28/2012  310,492 (from press release)

Does this mean things are booming?

According to the Bureau of Labor Statistics, 143.2 million people were employed in June 2012 which is about 3 million higher than June 2011's figure of 140.1

Over the same period, the civilian, non-institutional population of the U.S. went from 239.5 million (total about 309 million) to 243.2 million (who knows what the total is).

That is, the proportion of those employed out of the civilian, non-institutional population went from 58.5% to 58.9% between June 2011 to June 2012.

Here's what's been going on with that:

Wednesday, August 1, 2012

Are home prices going up?

A quick look at various news sites as well as the press release say essentially the same thing:

Home Prices Continue to Rise in May 2012
According to the S&P/Case-Shiller Home Price Indices

New York, July 31, 2012 – Data through May 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that average home prices increased by 2.2% in May over April for both the 10- and 20-City Composites.

S&P Case-Shiller is available online.

Which makes the whole thing slightly funny, because the statements are so easy to verify.

With these kinds of data, you get two series: Seasonally adjusted and not seasonally adjusted. Seasonal adjustments are supposed to control the regular month by month ebb and flow of activity through the year.

When using data, it is important to always compare apples to apples. Which means, if you are going to compare May sales to April sales, you must seasonally adjusted values.

If you don't use the seasonally adjusted data, you can only compare May 2012 to May 2011 to May 2010, and compare April 2012 to April 2011 to April 2010 etc.

So, what was the change in the seasonally adjusted composite-20 index value between April 2012 to May 2012? Easy: (139.93 - 138.67) / 138.67 = 0.91%.

How did they come up with the 2.2% value? Well, they committed the cardinal sin of using the not-seasonally adjusted data to compare month-to-month changes.

Comparing the May 2012 value of 138.96 of the not-seasonally adjusted composite-20 index to its May 2011 value of paints a different picture: Home prices fell by 0.66% between May 2011 and May 2012.

And, the unadjusted value in May 2012 is the same as the unadjusted value in May 2009 (and they are down 31% compared to May 2007).

I find this rather odd: The people at S&P surely know the point of seasonal adjustments and they are capable of putting together some charts. Heck, even the enemy of algebra ought to be able to understand this.

So, I must ask, why?