Posted: 11 Oct 2011 10:54 PM PDT

Unsurprising but interesting results from a Benford’s time-series analysis of U.S. public company financial accounting data. Things are, in short, getting worse.

So according to Benford’s law, accounting statements are getting less and less representative of whats really going on inside of companies. The major reform that was passed after Enron and other major accounting standards barely made a dent.

Next, I looked at Benfords law for three industries: finance, information technology, and manufacturing. The finance industry showed a huge surge in the deviation from Benfords from 1981-82, coincident with two major deregulatory acts that sparked the beginnings of that other big mortgage debacle, the Savings and Loan Crisis. The deviation from Benfords in the finance industry reached a peak in 1988 and then decreased starting in 1993 at the tail end of the S&L fraud wave, not matching its 1988 level until … 2008.

The time series for information technology is similarly tied to that industrys big debacle, the dotcom bubble. Neither manufacturing nor IT showed the huge increase and decline of the deviation from Benfords that finance experienced in the 1980s and early 1990s, further validating the measure since neither industry experienced major fraud scandals during that period. The deviation for IT streaked up between 1998-2002 exactly during the dotcom bubble, and manufacturing experienced a more muted increase during the same period.

via Studies in Everyday Life: Benfords Law and the Decreasing Reliability of Accounting Data for US Firms.

Smil: America’s Wa(i)sting Problem

Posted: 11 Oct 2011 05:11 PM PDT

Vaclav Smil:

Even after throwing away some 40 percent of its abundant food supply, the United States still has the industrialized world’s most overweight population. America similarly produces more energy per capita than any other major rich economy — so much so that if the United States were to consume that energy at a rate comparable to Germany or France, it would be a massive energy exporter. Instead, America imports more than 25 percent of its energy, paying more than $2 trillion for the privilege over the past decade — and still ends up with little to show for it. The United States now faces the choice of curbing its energy appetite with deliberation, commitment, and foresight, or waiting for the unraveling economy to put it on a painful crash diet.

via A Hummer in Every Driveway – By Vaclav Smil | Foreign Policy.