Tuesday, October 30, 2007
"Look, I'll say it again for the cheap seats...I DON'T KNOW WHERE JOE HALLENBECK IS!!! That's my statement! Write it down and shove it up your ass!"
And many times, I feel the same way. When you have something that is so true, so basic, so simple, not even an issue of debate; the sky is blue, the water's wet, women have secrets, I don't know where Joe Hallenbeck is. Yet the forces that be want a different answer even if it isn't true. So I'll say it again for the cheap seats;
People, largely, vastly, do not care if you are a woman or otherwise minority running for office. They care about your stance and your abilities and what you stand for. This is why Pelosi, Feinstein and Boxer are not succeeding;
And why Bobby Jindal won.
Additionally it shows that Republicans, capitalists, libertarians and other right minded, fascist goose stepping types are truly the ones that are not racist, because we judge people based on merit, not the color of their skin or their gender.
Regardless, I'd just like to see the same chart for Harry Reid.
I thought that maybe the definition of a "house" according to the Census Bureau would mean only single family homes and not include town homes or condos, but after looking up the definition on the report it does.
This runs contrary to the bevy of other statistics out there that measure the supply of housing, namely "month's supply." But it reminded me of what my realtor pointed out to me one time, that "month's supply" is the current inventory of houses for sale divided by the previous month's sales, resulting in how many months it will take to sell out the current inventory. And while everybody focuses on how much housing inventory is sitting on the market, not a lot of people look at the denominator of the formula which has been precipitously dropping.
In other words, "supply" as we traditionally have measured it has gone up, not so much because there is a lot of new housing being built (though that is certainly the case) but because sales have dropped so much, decreasing the denominator of the formula, thereby increasing the "supply" of housing. Meanwhile relative to the population, the current housing stock of the country is not terribly out of line.
This leads me to believe that my realtor is right on another point. That when housing sales recover, even modestly, this will have a dramatic effect on the month's supply of housing and the housing market, when it does, will swing back to a balanced market rather quickly.
That is of course assuming we avoid a recession. Heh.
Unfortunately, he will not run.
(This post made just to depress Mahan and others about what could have been possible had the nation just studied up on a little bit of economics)
Sunday, October 28, 2007
and further cement that nepotism and cronyism are in general bad for societies.
I know everybody is excited because of the presupposition that if Christina can win, then so too can Hillary, but when we're all done with the warm fuzzies feelings and ready to look at people critically, especially when they're in important positions of power such as presidents and their decisions affect millions of normal every day folk, then maybe we can take off the rose colored glasses, absolve ourselves of sexism, overlook the fact they're females (and NOT Margaret Thatchers by any stretch of the imagination) and the "gee shucks howdy wouldn't it be swell if we had a female president" and instead treat them in a truly non-sexist, non-discriminatory fashion and ask "Gee, shucks howdy, will they really lead and help out our country or are they just riding on the coat tails of their husbands?" then I think both countries might just benefit.
Sadly I do not credit either population (Argentinians or Americans) with the intellectual fortitude and independent thinking to put ahead the idealistic desire to have the first female president ahead of their;
1. Ability to lead a country
2. Their policies and their ramifications for that country
3. The inevitable outcome, progress or lack thereof due to their election
Even if it would be on the whole, a generally positive and frankly interesting thing to have a first female president.
Thus, I predict, more so in Argentina's case than America's, Christina will prove to be more of a celebrity than an effective statesman, falling far short of a true genuine leader like Margaret Thatcher. And should Hillary get elected president, I predict the same.
For it isn't about sex or gender. That is key to understand. The key to the success of a nation and its progress is the policies that are implemented, regardless of the gender, sex, religion or race of the person implementing them. That is why I'm betting Christina will fail and Hillary would should she get elected. And why I lament the loss of Condi Rice or Walter E Williams to consider running for president. Christina will continue the policies of expansionary and reckless fiscal policy of Nestor, promise everything to everyone, and hope to high heaven commodity prices remain high so Argentina's economy can afford her vote-bribing promises, only to have it inevitably collapse like it did in 1999.
Regardless, cripes, could you imagine the fun and just outright pride that would be rejuvinated in America should Walter E Williams become "President Williams?" I might actually tune into presidential speeches then! I'll take a Walter E/Condi ticket over Hillary/Edwards any day.
Sadly it will not happen.
Friday, October 26, 2007
Thursday, October 25, 2007
And I say "about 25%."
The reason I say that is because, unlike pretty much every other estimate I've seen that speculates on the future drop in housing prices, is that I actually have some research that would back it up. And that research is based in the simple concept of house price to rents or house price to incomes. Meaning, that housing prices tend to stay withing a certain multiple of the rents that could be plausibly be gotten from renting out that house or the incomes of people that buy the house.
Historically, houses have "traded" at a multiple of 17 times the rent they could have been rented out for. However, with the new and creative financing methods, allowing people who should have never been loaned money in the first place to (as I like to say) "rent their house from the bank" this artificially and temporarily increased demand for housing, driving the average house price to rents to 30. This would imply a nearly 45% devaluation in the future, but not all that increase was due to fleeting ARM and interest only loans. Some of it was due to long term interest rates dropping and therefore the price increase would be a bit more sticky on the way down, once the sub prime mess is cleansed from the system.
Similarly is house price to incomes. Incomes being the median income of the average US Joe. Normally houses traded at around 3.25 times a person's median income, jumping to nearly 4.75. This implies a nearly 33% drop in housing prices must occur in order to come back in line with historical averages. And seeing housing has already dropped 5%, I'm thinking another 25% would do the trick.
I'm just wondering if those banks, in all of their wisdom and genius, can handle a 25% drop in value of their collateral...actually, I don't wonder.
Wednesday, October 24, 2007
I found it interesting that some countries are so poorly managed that those people who have emigrated from those countries are able to supply nearly or over a third of the countries' GDP through remittances.
That being said, remittances are supremely superior to foreign aid. The money is sent directly to the people, directly sent to the market, needn't go through a bureaucracy such as the UN and thus actually might get something done.
Tuesday, October 23, 2007
The debate is whether you suffer lousy future economic growth, declining corporate taxes, recession, increasing taxes under pressure from social security and pay a P/E of 16 for the current average American firm, or do you pay a P/E of 60 for a firm in a country with 12% RGDP growth, no debt, increasing labor productivity, AND a lower corporate tax rate in "communist" China.
Monday, October 22, 2007
Sunday, October 21, 2007
To which I responded, "Hey, I contribute to charity. I contribute to GDP."
Since then I have referred to "going to work" as "I'm contributing to GDP" for I think it sounds better and it impresses chicks.
Girl - "What are you doing Wednesday night?"
Me - "I'M WORKING."
Girl - "Oh, that's too bad."
Girl - "What are you doing Wednesday night?"
Me - "Oh, I'd love to join you, but I'm contributing to GDP that night."
Girl - "Awwww! Wow, you're so kind and sweet and caring! Let's make out!"
Totally happens like that all the time.
In any case, I thought the phrase might make for a good shirt and was kicking around the idea of having the following just on a white t-shirt;
Of course I would charge enough to cover my expenses and include a profit, but I guarantee all of you that 100% of the proceeds would go to the US National Income Accounts and help me contribute to GDP. There's a shop nearby I think I can get them made for $7-8 a shot, with shipping, I don't know, around $15 a piece I'd surmise. Anybody interested?
Major Swanson is currently stationed in Iraq and since he is a member of the blogging world I thought it'd be nice to have a whole sh!tload of complete strangers send in pictures that appreciate his service so we could make him and his outfit a nice gift.
E-mail them to me at email@example.com, REMEMBER TO COPY AND PASTE, it is CAPTcapitalism, not CAPTAINcapitalism.
Saturday, October 20, 2007
Are you a hard-working business owner looking to expand overseas?
Looking to tap that lucrative Euro market and it's potential 500 million customers?
Do you need labor that is not only loyal, but highly trained and skilled?
Yes, France, where the future hard-working leaders and workers of France pummel journalists for their camera.
Where future workers know how vital it is for an economy to distribute goods, services, products and labor efficiently
Where your future employees will hurl crap at you
Where the youth are trained to be mature, respectable representatives of your company
Don't go to other countries where their labor is so predictable and cheap.
Go to where all spoiled brat American girls who have not a freaking clue as to how the real world works and people with not the slightest ounce of economic sense want to go!
Friday, October 19, 2007
the Revolting Cocks.
But First Avenue is also just hands down the best dance club in the Twin Cities, I might even say the US. And I remember in my college days watching on the big screen there while dancing to the Beastie Boys they had thrown up some old 1940's dance film of this tap dancing duo. Don't know why, usually they just threw up some kind of music video, but this time they threw up this dancing duo.
HANDS DOWN THE BEST DANCING I HAD EVER SEEN!
I asked around. Nobody knew who I was talking about. I soon forgot about my crusade to find it.
Until it occurred to me to check You Tube for it on my way back from dancing.
Here it is. You will NOT be let down;
The Nicolas Brothers in "Stormy Weather"
I just like to see the kings of Hip Hop pull off anything with 1/10th the level of this skill.
And so I fled.
But now, like in pretty much every other major city throughout the US, city council members are scrambling to secure votes in the next election by calling for some level of assistance in helping the unfortunate people in their city that are facing foreclosure. Some advocate "crisis lines" to help people figure out a way to avoid foreclosure. Others are advocating bail outs calling on state and federal tax payers to bail their citizens out.
But here's a crazy idea I had. How about you lower the freaking property taxes? In many cases the reason people are facing foreclosure is that their ARM has reset and now they must shell out an additional $50-$100 a month (I'm not kidding, I've heard and read stories where they can't afford an extra $50-$100 a month). Well if that's the case, and so many of these poor unfortunate home owners are at risk of losing their homes, why don't you lower the property taxes to help them out? That would probably do more to help them keep their home than a crisis line.
Beyond which, lowering property taxes will also help in another regard;
It will increase the value of homes in the city.
In increasing the property taxes, what cities have done is decreased the net rents that can be received from renting out the property. The supply and demand for apartments and rentals is more or less independent of property taxes. Thus market rents are set. So if property taxes are increased, then the landlord must eat the extra costs. He can go ahead and try to increase rents to offset the increase in property taxes, but with so many affordable housing developments, chances are he's just going to have to eat it.
With these lower profits, this decreases the market value of a house or rental property. One of the three major valuation techniques used by appraisers is income approach, looking at what cash flows the property will provide. If property taxes were to be lowered, this would increase the net cash flow provided to the owner, and thus the appraised value of the property.
Of course the likelihood of this happening is zero. Most major cities' city councils are far left leaning, even Minneapolis has a Green party member if I recall correctly. And, if you were foolish enough like me to contact your city council member in the hopes of getting your property taxes lowered, you are always told there's not enough money and the reason your property taxes went up was through some weird, tangled logic that inevitably blamed the evil Republicans at the state. This is because democrats, socialists and other lefter leaning sorts stay in power by raising taxes on a minority and transferring the wealth to the majority effectively bribing the masses. So they are not going to lower taxes, even if it is on the poorer folk, because it's not in their nature. if anything, they're going to raise taxes on the rich and then try to provide some government service or program to bail these people out.
Thus, it seems time again to bring out what the left hates the most, and that is facts and statistics.
According to the City of Minneapolis property taxes have gone up 60% since 2000. Inflation however, has only gone up 20%.
Right off the bat you can tell, mathematically, that there is enough room to cut property taxes and provide these people a little relief. Secondly, and albeit anecdotally, instances of the city blowing money on a $200 million library, who knows how much on "green roof tops," and I recall a "sculpture" which was nothing more than a cube I saw in the city park that after some investigation I found cost $50,000 (If anybody wants me to make a cube, I'll cut them a deal for $30,000. We'll call them "Captain's Cubes" and I'll sign them and you can put them in parks or in your yard or something). Regardless, as always there is plenty of fat to trim from the city budget and pass onto the people.
The question is whether the council members are going to help out those unfortunately facing foreclosure with real help or whether they're going just help themselves.
I'm just happy I'm in the burbs.
Thursday, October 18, 2007
3. Selma Hayek
So, please, people, send me your charts. I am totally for posting new charts you come up with. Even The Economist followed my lead because I'm such a trend setter;
So, you will visit David and his identical chart. For when different people come up with that same data or chart, then you know there's something to it.
For ultimately, that is all a company will ever pay until the point it is either sold or goes bankrupt. Therefore dividends are the only cash flow provided by the company over the course of its life and are therefore the real driver of its value.
So a while ago I had pulled some data to get the average dividend yield for the S&P 500 from Globalfindata.com, and I'm glad I did because they started charging for it when I went to look for an update this morning. Here's my old chart;
Noticed that back in the Great Depression, based on dividend yield stocks were a steal, at one point dividends providing a near 10% of the firm's stock price. But with the nearly 20 year bull market stocks increased at a rate faster than dividends, driving the dividend yield to its historic low of just 1.1%. So roughly, based on the amount of dividends the firm was paying, you'd have to wait almost 100 years to break even.
But that was at the peak of Dotcom Mania and I wondered if the dividend yield, like the S&P 500's P/E ratio had recovered to more normal levels. This required I find more up to date data and found a data series going back to 1927, but then had to supplement it with an old Excel chart I had found (the source of which I did not notate so I don't remember where it came from, but nonetheless I assume it's legit);
And what a whopping recovery. Instead of realizing dividend return of 1.1% you can now expect a full 1.8% return! Seems the market is still partying like it's 1999.
Wednesday, October 17, 2007
That being said, I'm surprised the average work length in the US is as high as 4 years. I would have guessed 2.
Tuesday, October 16, 2007
Corporate earnings as a percent of GDP have never been higher in recorded history.
These high profits have driven the P/E ratio down from their stratospheric levels to more sane ones that are more or less in line with historic averages.
However, while the majority of people focus on stock prices as the primary measure by which to determine whether markets are over valued, they forget P/E ratios are a double edged sword forgetting that earnings can also sway dramatically, quickly eroding price support to stocks. This is the true risk to the stock markets.
For while the housing market has yet to "infect" the rest of the economy, it will do its damnedest to. First to fall will be the financial sector. This is evidenced by the spate of earnings and write off troubles various financial institutions are having. And we're not talking the schleppy, b-movie firms. We're talking top shelf firms; Bear Sterns, UBS, even Merrill Lynch posted it's first loss since 2000. Nor are we talking US firms. Foreign firms were fed a line of bull when they bought up 17% of our worthless MBS's and now they're suffering the consequences.
The question is whether it will spill into the non-financial sector and drive down overall earnings thereby triggering a stock market crash. And while I think that is a very real possibility, allow me to point out a silver lining that might just save us.
In a weird and perverted twist of economics, Americans' utter disdain for any measure of fiscal discipline may save them. For in spending more than they make, they've essentially tanked the US dollar against practically all other currencies.
However, corporate America has been wise, investing more than most other countries overseas, and therefore have diversified themselves into other markets, inoculating themselves against a downfall here. Plus, while on the domestic front things may collapse, profits made in foreign countries, denominated in foreign currencies may bolster profits here as they're remitted back home and converted into dollars. Additionally, a weak dollar may boost foreign demand for US assets and firms, such as China's sovereign wealth fund, putting upward pressure on stock prices.
Of course I doubt a favorable exchange rate and increased foreign demand for US stocks will solely prevent the stock market from at least some kind of correction, but it may soften the blow.
Monday, October 15, 2007
CFACT is hosting Ariel Cohen to talk about energy and Iraq. They had me come in and do a seminar a while ago, so you KNOW they have great speakers! ;)
In any case I promised them I'd let any of you aspiring, junior, deputy and otherwise interested economists know the time and location. Here's the info;
I wanted to let you know that CFACT is hosting Dr. Ariel Cohen of the
Heritage Foundation this Thursday, October 18 at 7PM in Room 55 of the
University of Minnesota Law School. You can find out more about
Cohen's bio here: http://www.heritage.org/about/staff/ArielCohen.cfm
The gist of his speech is on US energy security and specifically what
would happen if a conflict with erupted. I would like to invite
you to this event, and if you believe your readers would find this
topic interesting feel free to share this information - they are also
Sunday, October 14, 2007
Friday, October 12, 2007
A new woman after the Captain's heart! Yulia Tymoshenko!
Not only is she a looker, but she is an economist too! (What is it with all these former Soviet Bloc women and their impressive degrees?)
You can read more about her here.
All I want to know is why the Ukrainians get Yulia, while we're stuck with Hilary.
Thursday, October 11, 2007
The problem with that is that it was in the here and now. When the real threat was what was going to happen to default and delinquency rates. The Economist has an excellent article discussing the various percentages of different types of loans that are in default or delinquent. Plus, as always, they have a jim dandy chart to go with it.
Wednesday, October 10, 2007
There is Major Swanson of Swanblog who is in Iraq kicking ass and taking names...in a legal sense mind you.
There's the best radio show host, though he is not a full time one, Walter E Williams who missed his true calling and became an economist instead...though no doubt he is kicking ass and taking names there as well.
There was Gary who had the most kick ass belt buckle of all who showed up with his family and introduced himself and his family to me at the state fair.
And then there is good ol' Lawrence who was a frequent caller to my radio show in my radio show days who I miss sincerely.
And then I see this BS.
And it angers me because you have got to just wonder how stupid are people. How intellectually impotent one must be to put a freaking noose on the door of a black professor. Not to mention the noose incident in Jena, which I'm sure did not add fuel to the fire.
GROW THE F UP PEOPLE!
What? Is it 1920?
Hard core, evil, tripping-old-people-in-the-streets, kicking-puppies-in-the-yard conservative that I am, and try as I might to uphold my reputation as the evil, hate filled, kicker of kittens that I am, I deem it necessary to condemn such idiotic and ignorant behavior (though, such condemnation would seem to be implied).
Such childishness besmirches the honor and integrity of the men aforementioned above and those like them and shows you they will forever be superior people to the idiots that pulled such a stunt.
And while of course, because I'm a conservative, therefore I MUST be racist, I will ignore the association of racism that comes with conservatism foisted upon us by the left and express my disgust anyway.
Though, not to let readers such as Dtrum and Mr. Fuller down (who are beloved connoisseurs of cynicism), and to uphold my reputation as a cynical, angry man, I would be lying if I did not say that the hairs on the back of my neck are standing up to the point I would assert a 30% chance this may be a set up in the first place.
In either case, both prospects are disgusting and shame is plentiful enough to go around.
But what I particularly noticed was how housing prices predicated unemployment. Specifically when housing starts tank, unemployment usually peaks 6 months to a year later.
The reason would be that housing starts not only reflect 2-4 months of construction spending whilst the structure is being built, but 2-4 years consumer spending whilst the new owners furnish the building with furniture, drapes and X-Box 360.
There has been the occasional instance where housing starts tanked and unemployment did not increase. But that is the minority of the time.
Fun times ahead.
Tuesday, October 9, 2007
Monday, October 8, 2007
I also noticed the Scandinavians that consistently rank in the top of international educational scores spend relatively little.
Sunday, October 7, 2007
Regardless, I like this chart for it shows up the problem with transportation isn't the spending.
I still predict that after a long and thorough investigation they will conclude the bridge collapsed due to chance and that there will be no one to blame.
Friday, October 5, 2007
Thursday, October 4, 2007
Then read this.
I will lay the exact same criticism upon the Young Republicans and Young Democrats clubs.
All they're doing is taking ignorant, brainwashable idiots and turning them into drones.
When you're in high school you should be trying to figure out how to ask out Amy Sue for prom.
Not posing as some wanna be teenager intellectual.
Young socialists club. Cripes, where's the parents?
This chart doesn't even include ARM's. Just interest only and neg-am loans. What is particularly disgusting about this chart is that it's for original purchases. Not to take out equity in an already purchased home, BUT THEY USED NEG AM'S AND INTEREST ONLY LOANS TO BUY THE DAMN HOUSES!
The level of stupidity that not only the lenders, but the borrowers that caused this bubble is incomprehensible. How banks could make such stupid loans is beyond the jurisdiction of common sense and sanity. And to the point that over a QUARTER OF ALL ORIGINAL PURCHASE MORTGAGES WERE MADE TO HAVE NO EQUITY IN THE DEAL???
When this spills over into the larger economy and we all start to suffer because of these peoples' stupidity, I want not only the idiots that borrowed money they couldn't pay back, but I want the bankers and mortgage brokers that enabled this soon-to-be-recession taken to task too.
The regulators better be getting off their asses pretty soon.
Going from 60 cents to a full dollar in just 5 years. Canandians maybe should be looking to buy US assets with their newfound purchasing power.
Wednesday, October 3, 2007
And what do you know, the condo market in Minneapolis is going down the toilet.
What is great is I had several of these deals cross my desk several years ago. And like a good economist I not only looked at the individual projects, but also looked at the condo market and said, "you know, I think there's going to be too many condo's hitting the market and these won't sell."
The problem with that is it makes bankers sad. For bankers don't make their money on the successful sale of condos. They make their money on the commission of deals they fund. So bankers don't have an incentive to fund good projects, they have the incentive to fund ALL projects.
And thus much lecturing and stern language was used whilst the bankers explained to me that I didn't know how this market worked. And how I was just some young punk kid that didn't have experience in condo development. And why, Good Ole Jim was the developer for this deal and Jim was a good guy, and how dare a young whipper snapper like me question somebody with gray hair.
So, I'm going to pull up an old chart I posted probably a year ago.
Imagine, just imagine, if somebody had listened to me or the bevy of other junior, deputy, professional or otherwise economists out there that saw this coming a mile away. We could have been called "The Recession Preventers" which would make for a good kind of 1960's, Man from UNCLE spy series, but the heroes would be economists.
Tuesday, October 2, 2007
Naturally you would think home builders would dramatically scale back their operations until inventories had dropped and the market rebalanced. And that's your first mistake; You thought.
While builders have cut back production, they have only cut back to the historic average. Since this is a historic level of glut in the market, production will have to be cut to historic lows in order to rebalance the market. As I've suggested before, the best thing for home builders to do right now is take a vacation and not work the next year. Come back and then start building houses again. Alas, when I drive down the Streets of Minneapolis (a popular 1970's spin off that was relatively unheard of) I see new condos, town homes and twin home developments going up further condemning us to lower housing prices.
Apparently home builders just don't seem to get it.