Thursday, November 16, 2006

enron acounting to keep inflation low

more examples of enron style acounting......./ mehr beispiele für kreative erhebungsmethoden
hat tip to barry ritholtz! make sure you read the full story
plus for the hint.
PPI Hedonic Adjustments

“Prices for light motor trucks fell 9.7 percent following a 3.5-percent gain in the preceding month. From October 2005 to October 2006, the index for light motor trucks dropped 12.4 percent…In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October. (See Report on Quality Changes for 2007 Model Vehicles, USDL 06-1973.)” Quality changes produce hedonic adjustments to prices. Ergo the large drop in vehicle prices is fiction. It’s the work of BLS bureaucrats, the Winston Smiths from “1984”.

The ‘quality’ or hedonic adjustment to light vehicles is $392.10/vehicle. The BLS reduced the actual costs of these vehicles by $392.10 ERV. For autos the BLS adjusted the real price $139.96 lower. So as we have maintained for years, PPI and especially CPI are constructed so that they can’t show actual inflationary changes or pressure." (emphasis added)

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Blogger Dũng Bạch said...

Thanks for share. Accounting Tools for Business Decision Making

7:30 PM  

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