You don't see phase diagrams for housing everyday.
I forgot to point out this post by Calculated Risk earlier this week. He's using my housing inventory data to chart the trajectory of listings coming online this year. Inventory has come way down over the past couple of years and the big question is whether this winter will mark a bottom. If a lot of homes go on the market this spring, it probably indicates a bottom.
Where the missing demand comes from:
Household borrowing represents, in a very direct sense, a redistribution of purchasing power from savers to borrowers. So if we worry that oversaving by the rich may lead to an insufficiency of purchases [by poorer households], household borrowing is a natural place to look for a remedy. Sure enough, we find that beginning in the early 1980s, household borrowing began a secular rise that continued until the financial crisis.
Why that's a problem:
Suppose that the mechanism that reconciles inequality and adequate demand is household borrowing. Is that sustainable? After all, poorer households would have to borrow new purchasing power in every period in order to support demand for as long as inequality remains high.
How it messes with the role of banks in the economy:
We very explicitly ask banks to intermediate the deficit in demand, exhorting them to lend lend lend for macroeconomic reasons that are indifferent to microeconomic evaluations of solvency. We can have a banking system that performs the information work of credit analysis and lends appropriately, or we can have a banking system that overcomes deficiencies in demand. We cannot have both when great volumes of lending are continually required for structural reasons.
The elegance and insight density of this post is off the charts!
The Trillion dollar coin solution would work despite how silly it sounds. It's more likely that it'd be a bunch of million dollar coins though.
The problem with having the US Mint produce a single, one-trillion-dollar platinum coin so Timothy Geithner can deposit it at the Federal Reserve is that it seems plain ridiculous. Yes, much of the commentariat believes that the debt ceiling itself is ridiculous, but two colliding ridiculousses don't make a serious.
Whenever I talk with real estate agents, I ask why they think inventory is so low. A common answer is that people don't want to sell at the bottom. In a market with falling prices, sellers rush to list their homes, and inventory increases. But if sellers think prices have bottomed, then they believe they can be patient, and inventory declines. Another reason is that many homeowners are "underwater" on their mortgage and can't sell.
We'll definitely see US housing inventory hit a new low in January of 2013. I'd say we'll have reasonable confidence that it's a bottom if we see Y/Y inventory increases come May and June.
Most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. According to an analysis by The New York Times, the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980.
Households earning more than $200,000 benefited from the largest percentage declines in total taxation as a share of income. Middle-income households benefited, too. More than 85 percent of households with earnings above $25,000 paid less in total taxes than comparable households in 1980.
Lower-income households, however, saved little or nothing. Many pay no federal income taxes, but they do pay a range of other levies, like federal payroll taxes, state sales taxes and local property taxes. Only about half of taxpaying households with incomes below $25,000 paid less in 2010.
The accompanying graphic is fantastic as well.
The economics blogosphere was invented in early 2005 by a retired technology executive in Southern California named Bill McBride.
This is no hyperbole. Before Calculated Risk the web was, at best, an ocean of message board commentary on mainstream media reporting. At worst it was a bunch of crazies and their conspiracy theories. CR's dive into the numbers behind the narrative yielded the data driven analysis we almost take for granted today.
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A year-over-year comparison of FY 2012 to FY 2011 shows ridership grew 3.5 percent to a new record of 31,240,565 passengers and ticket revenue jumped 6.8 percent to a best ever $2.02 billion. In addition, Amtrak system-wide on-time performance increased to 83 percent, up from 78.1 percent and its highest level in 12 years.
Since FY 2000, Amtrak ridership is up 49 percent.
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The two mortgage giants [Fannie Mae and Freddie Mac] have been forcing banks to take back an increasing number of loans that the banks made during the boom years and sold to Fannie and Freddie. To protect themselves from such demands in the future, banks are ratcheting up credit and documentation standards for new mortgages.
Loan officers say their job used to be fairly straightforward: Determine that a borrower could reasonably repay the loan. Today, they say the goal is to shield themselves from a put-back. This means asking borrowers for reams of documentation: tax returns, bank statements, pay stubs, and appraisals in order to deliver loans that can't be questioned.
Banks are asking borrowers to explain every deposit into their bank accounts over a few hundred dollars in order to verify that their assets are their own, lest an audit later find that the buyer borrowed cash from a family member.
"Why do I care about that $100 deposit? Why am I triple checking your credit score?" says Barry Sturner, president of Townstone Financial, a Chicago lender. "Because I'm scared to death of the buyback."
The 2011 preliminary number of US births was 3,953,593, 1 percent less (or 45,793 fewer) births than in 2010; the general fertility rate (63.2 per 1,000 women age 15-44 years) declined to the lowest rate ever reported for the United States.
Unemployment is surging across the Northeast. In two states — New York and New Jersey — the statewide rates of unemployment are higher than they were at any point during the recession. In Maine, New Hampshire, Vermont, Connecticut and Pennsylvania, years' worth of progress against unemployment has been reversed in a matter of months.
We should get an update on the local view of income in the US next week when the Census ACS data is released.
In a surprising turnaround, the amount of carbon dioxide being released into the atmosphere in the U.S. has fallen dramatically to its lowest level in 20 years, and government officials say the biggest reason is that cheap and plentiful natural gas has led many power plant operators to switch from dirtier-burning coal.
The International Energy Agency said the U.S. has cut carbon dioxide emissions more than any other country over the last six years. Total U.S. carbon emissions from energy consumption peaked at about 6 billion metric tons in 2007. Projections for this year are around 5.2 billion, and the 1990 figure was about 5 billion.
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In spite of clichè s about Nascar dads and Walmart moms, the actual share of voters nationally who are up for grabs is probably between just 3 percent and 5 percent in this election, polling experts say. The Obama and Romney campaigns are expected to spend on the order of $2 billion, in part to try to sway this tiny share of the electorate.
If the number of undecided voters is
less greater than the margin between the candidates do you get an uglier campaign?
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College graduates earned less coming out of the recession, according to a May study by the John J. Heldrich Center for Workforce Development at Rutgers. Those graduating during 2009 to 2011 earned a median salary in their starting job $3,000 less than the $30,000 seen in 2007.
$27,000 is just slightly higher than the per capita income in the US in 2010.
An interview with Elon Musk includes this bit about why he got into the space business.
The thing that got me started with SpaceX was the feeling of dismay — I just did not want Apollo to be our high-water mark. We do not want a future where we tell our children that this was the best we ever did. Growing up, I kept expecting we're going to have a base on the moon, and we're going to have trips to Mars. Instead, we went backwards, and that's a great tragedy.
And speaking of Mars, JPL's Curiosity rover will be landing on the planet Sunday night!
Interfluidity on: Trade-offs between inequality, productivity, and employment
I think there is a tradeoff between inequality and full employment that becomes exacerbated as technological productivity improves. This is driven by the fact that the marginal benefit humans gain from current consumption declines much more rapidly than the benefit we get from retaining claims against an uncertain future.
Wealth is about insurance much more than it is about consumption. As consumers, our requirements are limited. But the curve balls the universe might throw at us are infinite.
There have been a slew of interesting idea posts lately from FT Alphaville's Izabella Kaminska on living in a post scarcity world (the whole series is here). See also this Skidelsky & Skidelsky piece for a complementary discussion. The rest blogosphere has has conveniently provided a lot of related fodder for discussion around these themes, the latest being Steve Randy Waldman's piece on the asymmetrical payoffs to inflation targeting. I can read this stuff all day.
The US Treasury is structuring the nations debt well in light of historically low interest rates by lengthening the overall portfolio maturity.
The government is taking the opportunity to refinance and lock in long-term rates just like the rest of the nation's borrowers.