Tuesday, July 21, 2009

Will Grannis Be Green With Embarrassment?

Scott Grannis is a respected Economist with a blog at www.scottgrannis.blogspot.com. Scott is in the Larry Kudlow the world is Green Shoots camp.

Alstrynomics was created because it was clear Economists are ill prepared and incompetent to deal with the Zombulation impacting this economy. Now it appears a big problem also confronting Economics and Economists is an indifference to the facts.

A few years ago, I once attended a party where an Economist from the Federal Reserve told me to my face that he didn't like to cloud his analysis of theory with the facts. From that day on, I knew a new approach needed to be applied to deal with an economic contraction that our nation has not seen in over a century.

It appears that the indifference to facts is a pandemic infecting the entire field of Economics. On his blog a few days ago, Scott Grannis tried to defend his Green Shoots perspective by pointing out container volume decline was contracting at a slower rate at the ports of Long Beach and L.A.

Here is where things get a bit comical and intellectually embarrassing for Mr. Grannis and the entire Green Shoots field of Economics.

First of all, container volumes are still declining which is direct evidence that the economy is still contracting. This is supported by recent Q2 revenue declines from multiple transportation companies of anywhere between 20-30% including CSX, J.B. Hunt, and Werner. Further, we are seeing comparable REVENUE declines in important industrial companies as well, such as Caterpillar(over 40%), GE, Eaton, DuPont etc......

MOREOVER, most of the exports leaving the ports of L.A. and Long Beach are nothing more than containers filled with Trash. Of the top 26 exporters by container volume from the L.A. port, 12 of them are waste paper exporters with the number #1 being American Chung Nam Inc..

To measure the health of an economy by its trash exports seems a bit of a waste, sorry I couldn't resist. But to try to use it as support that the economy is turning around, such a conclusion is about as valuable at the nature of the subject being exported.

Further, even though brought to Scott's attention otherwise, he seems to believe that waste paper is only 10% of the container volume leaving the L.A. ports. Scott seems to be unaware that there is a clear distinction between waste paper and finished paper from manufacturers like Weyerhaeuser. Finished paper is actually about 10% of exports by container volume.

Altough exporting waste paper is definitely green, if Economists can't distinguish between finished paper and trash, how can we take their opinions very seriously?

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