03/17/09 thoughts

I love a little good humor...not much I can really add to that, and I am guilty of it too.

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Urban Survival...

Why statistics are bullshit...

Fed's Capacity Utilization Report comes out later this morning.

Just to get Monday off on the right foot (of the left one if you prefer) here's a dandy economics thought experiment: Say you have 10 factories and 2 of them are not doing any business, so you survey all the plants and calculate that they are making goods at 80% of capacity.

Now, permanently close (as in tear down) those two factories so they no longer count. Next, export all the jobs from 3 more plants and close them too, so you only have five plants of the original 10 left.

Then let's further suppose demand is collapsing too, such that of the remaining plants are operating at only 90% of capacity.

What do the statistics show? Capacity utilization is up 10% from 80% to 90%.