Friday, 27 June 2014

Accounting tricks

Believe it or not, one of the main things you learn studying accounting (as I spent a year doing it) is how to present the figures in different ways. This is based on the principle they know better than everyone else so can use their knowledge not just to make a fucking fortune (they really do, and most of the work's incredibly easy, unlike other professions) but to hide things and make things look better than they are, or worse depending what is required. Basically what they do is to arrange the identical accounts in different ways, either hiding losses and dragging future profits ahead to impress shareholders and potential customers, or hide profits and create apparent losses for tax purposes. They have been doing this since the first scribes and tax collectors one way or another, each generation passes the new versions of the same tools to the next, legally (as it is quite possible to avoid breaking the law doing it) presenting the identical accounts to different people and managing to show different results, which nearly all accept and believe implicitly, and would often need at least another accountant or team of accountants to figure them out as the methods could fox a team of Times crossword finalists. In fact the only difficult part of accounting, besides tax accounting, is how to carry out these presentations, learning the law to know which tricks are actually beyond the pale and then keeping up with the latest methods to offshore profits and pay your own company for loans to itself.

So basically it's a dirty business, one which could be perfectly pure and clean but owing to legal breadth has its largest field in saving the clients more money than they pay and reducing or increasing the bottom lines to do so. In accounts they can only work the profit/loss trick for a year or two as they are only suppressing the figures which are all public as that is the law, so can't keep it up for ever. The tax dodges are the exception simply as the government make them permanent by approving them, so once invented can simply run till the law changes. Therefore when the Bank of England shows growth, or low inflation, it is because the government wants them to, but if you get the raw figures (also available in the main) and know what to do, then you can see they are quite able to take some really poor performances and use the same tricks we learnt at college to make borrowing look like assets, while in fact they are huge liabilities, as every penny of profit shown from a loan is a loss as you must pay back more than you borrowed, but if not this year the law says you can include that loan as income. Go figure. So growth can be from increased capital (which technically it only is from) or borrowed capital, much like borrowing expensive furniture when selling a house to make it look better, or hiring a Ferrari for a first date, but despite creating a good impression for a short time they were never yours and you have had to lose money hiring them so actually worse off as they don't even belong to you after you give them back.

So once you know these are used to present pretty much all statistics, so much so when top civil servants are appointed the statistical department asks them what figures do they want (this is a fact not an anecdote), it really means whatever the government tell you is happening you have to check for yourself. It also means something far, far worse, the government are inherently dishonest. They spend millions a year employing top level accountants and statisticians to take whatever real figures exist and make them look as close to how they need them to to make the public believe whatever they need them to believe. Global warming is similar to business, you can't borrow future profits forward forever unless you are actually going to make a real profit eventually to back it up. So although they can divert people's attention with predictions outside their lifetimes as the people are mainly as thick as pigshit, they can't drag heat from the future, hide cold from the past and adjust existing temperatures up forever as the main temperature measurements are public knowledge and the longer they remain flat (or even fall, which is quite possible) the harder it will be to convince enough people they are really rising, and if you believe Barack Obama (billions do worldwide, shame on them) it is going up faster than ever then they don't even need to spend five years studying complex tricks to make bad figures go away, they will simply lie openly as enough people trust their authorities few actually bother to check. So in the end these tricks can only work as long as enough people fall for them.

So to summarise, we have inflation figures, unemployment, growth, profits, and temperature rises which governments have the ability to take the identical set of figures and present showing a wide range of different bottom lines, using legal and sometimes less than legal methods to offset genuine losses and bad news to delay them till the next election, or whichever other point they can maintain the illusion. But the real figures are always there which the experts can use to undo the illusions, subtracting borrowings from growth and immigrants from employed people and you see the starving bodies beneath them, the skinny, scrawny economy padded by fake muscle suits and scurvy rashes covered up by thick makeup. Don't look at the surface, and don't even expect the surface to represent anything any longer, as beneath it you will see what is really there. In some cases it could even be the same, but when interest rates are 0.5% and house prices are rising 20% a year don't imagine it means the economy could ever be healthy as those real figures are the sign of a rampant disease. If rates were around 5%, the median in a healthy economy, and house prices were fairly stable, then you're onto something. Look at price to earning ratios. How much is petrol, gas bills, car prices compared to average earnings? They can never be tweaked so they are the constants, the roots you need to really know how an economy's doing. How many of the people coming off the unemployment figures are sick, leaving the country, retiring or working part time rather than actually getting full time jobs? Again, the data is all there if you want to know, and can do your own sums to see the truth. One area where the data cannot all be found is the climate data, as much of it is protected by commercial law. That tells you more than enough on that front.

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