Wednesday, April 13, 2011

Lies, Damned Lies, and Statistics

I posted the following article on Blogging for a New World Order.
On April 12, Britain said its inflation rate dropped from 4.4% in February to 4.0% in March. Reuters said that inflation report reduced the likelihood that the Bank of England would raise its interest rate in May. BNP Paribas agreed with that assessment and changed its opinion on when the Bank of England would raise rates. Previously, BNP Paribas had thought Britain would raise interest rates in May. Now, BNP Paribas believed Britain would raise its interest rate in August.

I think that’s there little to no chance that British inflation declined in March. Commodities prices have been skyrocketing. Inflation does not go down when that happens. More likely, Britain did what the West often accuses China of doing – it fudged the data to its liking because it did not want to raise interest rates.

Of course, the West is harping on China to raise its interest rates, despite the fact that its rate of inflation is not that much higher than the rate of inflation in Britain. However, the interest rate in China is 6.25% and the interest rate in Britain is .5%. To be fair, the interest rate in China is the one year loan rate while the British interest rate is the overnight rate. Nevertheless, Britain is maintaining a huge negative real interest rate while the Chinese interest rate is positive. Furthermore, wages and prices in China are much lower than in Britain, meaning that China can easily withstand a higher rate of inflation. On the other hand, Britain, being a developed country, has much higher wages and prices, meaning that it really can’t afford to have a high rate of inflation or else its economy won’t be competitive. And in fact, its economy is suffering a significant competitiveness problem. Britain has a current account deficit. On the other hand, China has a large current account surplus which means, once again, China can withstand a higher rate of inflation and not run into problems.

Basically, Britain is doing what it does best – it is being hypocritical. It does not want to raise interest rates because that would hurt its economy and it wants China to raise interest rates because that would hurt the Chinese economy. That’s just the kind of country Britain is.
Interestingly, it appears my government boosted the share prices of TiVo and Vonage in response to this article. On this day, Vonage shares rose 13 cents to $4.78 while TiVo shares rose 33 cents to $8.86.

My government has “told” me that they liked this article because the article almost exclusively attacks Britain, as opposed to America. This would become a trend. My articles which attacked foreign countries went over much better with my government than the articles I wrote which attacked my own country.

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