He is saying:

'When the crime rates go up, police say "we are encouraging more victims to come forward', and when crime rates go down, police say "this is due to the work of the police" '

Right, in other words, no matter what, they tell a story that is favorable to themselves.

It's like asking a real estate agent about the right time to buy. If prices are rising, it is a great time to buy and make a profit. If prices are falling, it is a great time to buy at a discount and make a profit.

With real estate agents it's even worse -- not only do they have to convince buyers that it's always a good time to buy, they have to convince sellers that it's always a good time to sell!

I think the quote is basically saying that the police claim an increase in crime rates is largely because more victims are coming forward instead of holding back, but when crime rates go down the police say it's because they are reducing crime. It seems to imply that when crime rates go down you could also question whether that's just because fewer victims are coming forward (or whether police are misrepresenting crimes to make the numbers look better).

The main lesson I took from watching The Wire is not to trust any statistics that come from police departments. When performance is evaluated on crime statistics and case closure rates, there are an awful lot of tricks one can pull to make one's performance look better no matter what the underlying trends are.

The second lesson I took from The Wire is that while robbing drug dealers for a living can be lucrative, the risk/reward calculus is slightly problematic.

That's why many studies only track the murder rate (it's hard to fudge). Just making people wait an extra hour before they can report a crime has a miraculous effect on the reported crime rate.