Or at least something like that...
"We actually misnamed the War on Christmas. It ought to be the Struggle Against Ideological Extremists Who Do Not Believe in Yuletide Greetings Who Happen to Use Secularism as a Weapon To Try To Remove The Christmas Spirit From The Free World."
Tuesday, December 25, 2007
In the mean time, have a Merry Christmas.
Friday, December 21, 2007
Others have complained about his recent Foreign Affairs piece, which they say shows that he just isn't all that serious. Come on! Is Huck all that different that the rest of the GOP field when it comes to foreign policy? The only difference I can find between Huck and the rest of the lot is an inane argument about whether Bush Admin foreign policy was just plain ol' good, or was it freakin' great.
Push back against Huck has nothing to do with his foreign policy agenda or any policy agenda for that matter, save one.
Huck raised taxes while Gov of Arkansas. And not by a little; he raised them a lot! This is the one unforgivable sin in the GOP.
You can diddle little boys, play footsie in public bathrooms, and bang hooker after hooker and the GOP establishment could give two shits. But you even think about raising taxes, the GOP establishment will take out both your knee caps and beat the crap out of your mother with a tire iron, just for good measure.
Problem is, Huck has impeccable Christian credentials. He's the real deal.
Compare him to the cross-dressing pro-gay, pro abortion "Catholic" from NYC.
Or the Northeast flip-flopping cult-member.
Or the 71 year-old former Episcopalian "Falwell is an agent of intolerance" now "I'm a Baptist, really!" with a giant goiter on his face.
Or the professional FrankenBerry-esqe lobbyist that thinks of nothing of lobbying for pro-abortion groups, as long as they pay.
Let's face it, Huck is gaining traction because the rest of the field is a bunch of fakes and frauds as far as the Evangelical base is concerned.
But the GOP establishment is very powerful, and they will stop at nothing to protect every last cent they have.It's All About The $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$!
Thursday, December 20, 2007
Since then, there has been enormous fall out. A lot of attention has been paid, because it turns out ACA was a small fish in the big pond of bond insurers. And the rotting corpse of ACA is starting to make all the other fish in the pond very sick. A Google news search pulls up TONS of articles, so feel free to look there for much more expert opinion than anything I can pull out of my amateur ass.
I'll do some looking, but you can't go wrong visiting Calculated Risk. They've been covering the most important developments, and the comment sections are usually worth reading. I'm a wanna-be finance guy; Calculated Risk is the real deal.
I showed in a previous post that the rate of change is very unequal across groups. Things have been very, very good for the Top 1% in this country; for everyone else, less so. This new figure illustrates that point in a new way.
I calculated the total amount of after-tax income accrued by each category per year. The US economy has grown immensely since 1979, even when adjusted for inflation. Every single group earned more income in 2005 than in 1979, and in general people on average earn more than they did the year before. I have eight categories:
- Lowest Quintile - 1-20 percentile; earn on average $15,300 = 20% of the population
- Second Quintile - 21-40 percentile; earn on average $33,700 = 20% of the population
- Middle Quintile - 41-60 percentile; earn on average $50,200 = 20% of the population
- Fourth Quintile - 61-80 percentile; earn on average $70,300 = 20% of the population
- Top 20% - 10% - 81-90 percentile; earn on average $96,127 = 10% of the population
- Top 10% - 5% - 91-95 percentile; earn on average $125,426 = 5% of the population
- Top 5% - 1% - 96-99 percentile; earn on average $200,533 = 4% of the population
- Top 1% - 100 percentile; earn on average $1,071,500 = 1% of the population
This figure shows the total after-tax income earned by each category since 1979:
I've bolded the line for the Top 1% because that category shows the most interesting pattern. In 1979, the Top 1% earned just a little bit more than the bottom 20%. Remember, the Top 1% is only 1% of the population, whereas the lowest quintile is 20%. In reality, the top 1% earned more than 20 times the average income of the lowest quintile in 1979. But here I am treating all the categories the same, ignoring the fact that the various categories actually represent differing numbers of people.
Anyway, in 1979 the Top 1% earned only 282 billion dollars, and only ranked seventh out of the eight categories. Since then, their total income growth has skyrocketed. They are now in second place, earning over 1.2 trillion dollars. The Top 1% now earns more than the bottom 40% combined (1.1 trillion).
Something else to note. The middle quintile, which could be considered at least a proxy for the middle class and representing 20% of the population, earned 2.2 times more than the Top 1% in 1979. In 2005, the middle quintile earned less as a group than the Top 1%.
Ironically, though it looks like the Top 1% is on it's way to take over the Fourth Quintile for the top spot given the category's exponential growth, I don't expect that to be the case, at least for 2007. The credit crisis will lead to massive losses on Wall St (it already has), and given that huge portion of the Top 1% are in finance (they're not all Google billionaires) I expect that we will see a significant crash in their income for 2007 and probably 2008. The current fiscal crisis is bigger than anything we have seen for a long, long time, and the fallout for the Top 1% will be significant.
Of course, that doesn't mean peaches and cream for the rest of us either. A recession hurts everyone, and 2008 will be no different.
Wednesday, December 19, 2007
His new book has been reviewed by David E Levin, available at the NCSE website. The whole thing is worth reading, but I found this part especially interesting:
What is perhaps most remarkable about The Edge of Evolution is how much Behe now concedes to the evidence that supports Darwinian evolution. He not only accepts that life has existed on earth for billions of years, but that it has evolved over time. He now agrees with the Darwinian notion that all life on the planet "descended with modification from one stage to another." He even acknowledges that natural selection is the obvious mechanism by which adaptive gene variants spread through a population. It is difficult to imagine his core audience being receptive to this revised position. But at this point, Behe is stuck between the need to establish a semblance of scientific credibility and the desire to forward his distinctly unscientific creationist ideas.Levin argues that the only thing Behe has left for God to do is act as a mutagen. Life can evolve all on it's own, but needs a little tinkering here and there.
Some things are not addressed in Levin's review, but they may be addressed in Behe's book. I haven't read it yet, but I would like to know if Behe suggests the first life form was "frontloaded" with all of the needed mutations for all of the life forms that were to follow. Or does Behe suggest that God intervenes whenever a mutation is needed? If that's the case, how does God accomplish these mutations? Are His interventions limited to just toying with DNA, or does he tinker in other ways?
Some notes about what I did, first. I used the data that the CBO released last week. I used after-tax income; this is important because it is a more conservative assessment of income. If I used pre-tax income, the differences I show below would be even more exaggerated. In addition, given that some groups don't pay any federal income taxes, I felt it was probably better to use after-tax income so that we're comparing apples to apples. The data came from page 1C in their spreadsheet
Second, the CBO gives data in quintiles. They break down only the top quintile into smaller groups. Unfortunately, their breakdown is inclusive. Thus, their Top 5% includes the Top 1% and the rest of the Top 5%. I had to calculate the Top 5%-1% group by subtracting out the Top 1% from the Top 5% group, and so on.
Now to the data. This figure shows after-tax income per household since 1979. These are in 2005 dollars, which adjusts for inflation. Except for the numbers I calculated for the top percentiles, the raw data comes right off the CBO spreadsheet. (Sorry, no log scale. You want log scale? Make your own fig!)
In 1979, the lowest quintile made $14,400 in 2005 dollars; the top 1% made $326,400, or 22.7 times more than the average person in the lowest quintile. As the figure above shows, this gap has widened. In 2005, the lowest quintile made $15,300; the top 1% made $1,071,500, or 70 times more than the lowest quintile.
I also wanted to know how income has changed over time since 1979. The fig below shows percent change in income since 1979 adjusted for inflation. As you can see, every group is making more money now than they did in 1979. Yet some groups are doing a little bit better than others.
The after-tax income per household in 2005 for lowest quintile is 6.25% higher than it was in 1979, adjusted for inflation. The after-tax income per household in 2005 for the Top 1% is 228.3% higher than it was in 1979, adjusted for inflation.
There are some interesting facts to point out. It's clear that the income for the Top 1% is especially sensitive to good times and bad times on Wall St. The sharpest drop-offs in their income comes during the 1987 crash and the 2000-2001 tech bubble implosion. Yet despite all of that volatility, they are making 228% more than they were in 1979 when adjusted for inflation. Not too shabby.
The lowest quintile also shows a very interesting pattern. the 80's were especially hard on the poor. Their income decreased for the first five years and was flat for the rest of the decade. The 90's saw an interesting turn around for after-tax income for this group. They saw substantial growth in their income through the entire decade, growing to 13.2% greater than their 1979 income in 1999. Their gains were so impressive that they almost reached the same growth achieved by the second and middle quintiles.
Yet, since 2000, fortunes for the bottom quintile have waned. They shed nearly all of their gains by 2003, when their inflation-adjusted income was only 4.17% higher than it was in 1979. The Top 1% also took a hit in 2003, sinking to only 128% higher than their 1979 income. Luckily they have made it all back and then some in just two years.
I'll do some more thinking about all of this. For the time being, all of this brings to mind a saying:
A rising tide lifts all yachts...
Tuesday, December 18, 2007
Anyway, the fig our good friends at TPM put together kinda sucks, so I made one that shows the trend better. Here it is:
If the lines have an upward slope, the politician is rising in the polls. If they have a downward slope, the politician is sinking like a stone. As this shows, Huckabee is the rising star. And Giuliani, well let's just hope that those breast double as flotation devices...
One of those is that though the piece of the pie for the bottom 90% of the population in the US has grown smaller, the pie as a whole has grown larger. I am wadding through the CBO data to find out more on how to best represent this issue. I'll post more on it later.
The other thing that the CBO data released last week does not address is income mobility. The Center for American Progress released a study last year on income inequality and mobility in the US.
By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.And:
And the middle class has more income volatility:
Since 1990-91, there has been an increase in the share of households who experienced significant downward short-term mobility. The share that saw their incomes decline by $20,000 or more (in real terms) rose from 13.0 percent in 1990-91 to 14.8 percent in 1997-98 to 16.6 percent in 2003-04.
The middle class is experiencing more insecurity of income, while the top decile is experiencing less. From 1997-98 to 2003-04, the increase in downward short-term mobility was driven by the experiences of middle-class households (those earning between $34,510 and $89,300 in 2004 dollars). Households in the top quintile saw no increase in downward short-term mobility, and households in the top decile ($122,880 and up) saw a reduction in the frequency of large negative income shocks.There is a lot more at the CfAP website, including race as a significant factor on upward mobility. Worth reading.
I've heard a similar story like this before. Something about big, lumbering dinosaurs and quick, nimble mammals...
"Dozens of striking film and TV writers are negotiating with venture capitalists to set up companies that would bypass the Hollywood studio system and reach consumers with video entertainment on the Web.
At least seven groups, composed of members of the striking Writers Guild of America, are planning to form Internet-based businesses that, if successful, could create an alternative economic model to the one at the heart of the walkout, now in its seventh week.
Three of the groups are working on ventures that would function much like United Artists, the production company created 80 years ago by Charlie Chaplin and other top stars who wanted to break free from the studios.
"It's in development and rapidly incubating . . ."
Friday, December 14, 2007
Obviously no free market society operates that way. Instead, there is variability in talent and capability, and some people are able to perform some very important jobs better than others. Those talented people are hired at a premium, and thus they make more than others. That gives us an income distribution, with some people making more money than others. In our example, some people are going to get more than a dollar and some will get less. That's reality.
So how has the income distribution changed in our society since 1979? I've been going through the latest data from the CBO and have come up with a couple of figs to describe this.
First a little about "binning". A data set is best illustrated when you put them into categories, or bins. The CBO has made five bins, called quintiles. Thus, the bottom 20% is the lowest quintile, the people who accrue on average between 20% and 40% the total share of income per year are in the second quintile, and so on. The problem with binning is that you lose resolution. The CBO only chose 5 bins, and therefore it is impossible to say what is happening within a given bin (except for the highest quintile; more on that later).
Below is a figure that illustrates how income would be distributed to the various quintiles if our economy were $100 large and the US had a population of 100 households. The value at any given point is the average amount of $100 dollars each person receives per bin.
Thus, in 1979 each of the twenty people in the lowest quintile received $0.26, and each of the twenty people in the highest quintile received $2.21. As you can see, though, that the amount of the pie each group gets per year has changed over time. The top 20% has expanded it slice of the pie, while the bottom 80% has gotten a smaller and smaller piece of the pie. For example, in 2005 the twenty people in the lowest quintile received only $0.19 each, and each of the twenty people in the highest quintile received $2.73. In other words, the top twenty people get $54 of the $100 and leave $46 for the rest of the 80 people. The change over time can be illustrated as a % change distribution of the $100.
This figure shows that the piece of the pie given to the wealthiest people in the US has grown by 23% over the last 26 years. The piece of the pie given to the bottom 80% has decreased since then, as much as 28% for the bottom 20 people. The percentages don't add up because this is how each piece of the pie has changed over time. The bottom has a small piece to begin with; thus, a small decrease for them is actually quite big, relatively speaking.
The CBO also provides data for income distribution for within the highest percentile. The break the data down by Top 10%, Top 5%, and Top 1%. I showed you above that, on average, each of the top 20 get $2.73. But what if you break the top 20 into categories themselves? How does the $100 breakdown after that? Glad you asked...
Remember, this fig represents how much each person in each group receives out of $100. Unlike above, when we were just looking at quintiles, not all the groups are the same size. The Top 1% has only 1 person, the Top 5% -1% has 4 people, and so on till we get to the quintiles where there are 20 people per group.
As you can see, the distribution of the $54 to the top 20 people is actually highly skewed as well. In fact, it is so skewed I had to magnify the y-axis in order to make room for all the other data points for the bottom 95%. This is because the share of the $100 the top 1%, which in our example is one household, is so much greater than everyone else. That one person received $8.73 of the $100 dollars in 1979; in 2005 that one person got $18.39. How has the percentages changed over time? Each of the 4 people in the Top 5% -1% group received $2.71 in 1979 and $3.18 in 2005, on average.
The only group that hasn't changed much is the people ranked from 5 to 10 since 1979. The bottom 90 people have gotten a smaller piece of the pie over time. The #1 person has more than doubled his take. The only people to significantly increase their share of the $100 over time is the top 5 people.
So how did we get to this situation? More on that later...
I made some figures from the data that they have available. This first figure lists the share of total income accrued by groups of income earners. The data is broken up into quintiles; that is, the bottom 20% is the lowest quintile, the people who accrue on average between 20% and 40% the total share of income per year are in the second quintile, and so on. Of course, the quintile to keep an eye on is the highest quintile, which represent the wealthiest 20% of our country.
These trends are even better illustrated in this figure:
This illustrates the change in share of income normalized to 1979. If a quintile increased its share since 1979, then the value for the year would be positive. If a quintile decreased its share, then it would be negative. Zero would mean there is no change in the total share of income.
The bottom 80% all show the same trend: an equal loss in share of income. For the top 20%, there is an increase. Clearly tax cuts directed to the top earners is having its desired effect. The amazing thing is that the share for each of the bottom quintiles has decreased by about the same amount. So it's not like it's just the poorest of the poor are getting squeezed. Instead, anyone who is not rich is getting screwed equally, including the middle class.
Mathew Yglesias has some information on this here, and Kevin Drum expresses his jealousy for not getting a cool looking figure up fast enough here.
The CBO also has data breaking down the top quintile into finer categories. I'll be looking at those data a little more closely later today.
Anyway, the $hitpile has hit the fan, and ACA has been notified by NYSE that it will be delisted:
John C. Ogg at 24 hr Wall St has more:
NEW YORK, Dec 13 (Reuters) - The New York Stock Exchange has notified ACA Capital Holdings Inc. (ACA.N: Quote, Profile, Research) that it is not in compliance with the NYSE's continued listing standards, the company said on Thursday.ACA Capital is considered "below criteria" because its total market capitalization has been below $75 million over a consecutive 30 trading-day period and its stockholders' equity is less than $75 million, the company said.
He also mentions this bit of info that I didn't know before this morning:
ACA Capital Holdings, Inc. (NYSE: ACA) has been notified by the NYSE that it had fallen outside of the NYSE’s continued listing standards and is now "below criteria" and will have a ".BC"status on teh NYSE tape. This is due to its total market capitalization being less than $75 million over a consecutive 30 trading-day period and its stockholders’ equity is less than $75 million. ACA Capital had 45 days from receipt of the notice to respond with a business plan that demonstrates its ability to achievewith the continued listing standards. But that is all for naught.
ACA Capital said in its press release that it does not believe that it can take steps which will permit it to satisfy the financial continued listing criteria of thewithin the 18 month cure period. ACA Capital DOES NOT intend to submit a plan to the NYSE. ACA Capital has been informed by the NYSE that it will commence suspension and delisting procedures as a result of the failure to submit a plan.
Bear Stearns (NYSE:BSC) owned a huge slug of this company. Shares closed down $0.02 at $0.68 today, and the 52-weekI didn't know that BSC had a big stake in ACA. Like they need any more trouble given the meltdown that they had in August. Shares of ACA are currently down 55%. Ouch. range is $0.22 to $16.55.
Will update with more info if anything else happens.
Thursday, December 13, 2007
Suppose you run a business with $10 million in assets. Only assume most of those assets are manufacturing equipment, accounts receivable (i.e., money you are owed but have not yet been paid), and so forth... Not cash.And continues it here:
Now it's mid-month and time to pay your employees. The typical employee is not expecting to get paid with a lien on a lathe, or an IOU payable when your customers pay... The typical employee wants cash.
Now, you could sell some of your manufacturing equipment. But it's all in use; business is good!
So you head to the capital markets and say, look, I just need a 30-day loan so I can make payroll. I have all these great customers who will pay me later this month, plus worst-case I have all this equipment as collateral, so I am a very very safe risk. What interest rate will you give me?
Well, the market where you do that is called the Commercial Paper market, and it is -- er, was -- a $2 trillion market. The interest rate you can get is almost as low as a savings account or a Treasury bill would pay. That's what it means to say you are a very safe risk. And money market funds all over the world will be quite happy to loan you the money for 30 days to earn a little more interest than a T-bill.
And then every month you repeat the process, because you would rather have your capital tied up in productive equipment rather than in cash. You just borrow for the next 30 days in order to repay the loan from the previous 30 days. This is called "rolling the paper".
Now, in recent years there has been an explosion in other kinds of commercial paper. Banks created these off-balance sheet entities called "SIVs" which buy mortgages and issue CP. So instead of CP collateralized by accounts receivable and capital equipment, this CP is collateralized by mortgages. And money market funds lapped it up, too.Nemo has his/her own page here.
Except now the MM funds are a little worried about the quality of the collateral, for some reason, so they are taking money OUT of commercial paper and plowing it into Treasury bills. That is why the yield on the 13-week T-bill has collapsed; insane amounts of money has been taken out of CP and put into "perfectly safe" Treasuries. You know, just until "this whole thing blows over". Better safe than sorry. Etc.
By some sort of "contagion" mechanism that I do not really understand (animal spirits?), this is affecting the CP market for real businesses. This is where they get their working capital to do things like, oh, make payroll. If these CP numbers continue their current trend for much longer, real companies -- not banks or brokerages or mortgage lenders, but real companies in the real world -- will have to start liquidating real assets and/or firing real people.
And this is the real problem in the entire crisis. MEW affecting consumer spending remains pure speculation, and financial firms writing down billions makes for great CNBC coverage, but commercial paper is the mechanism by which this crisis threatens the real economy, right now, today. It is by far the most important thing to monitor, IMO.
Anyway, Mathew Yglesias points to the latest story in this saga. Click the link to see the video.
I'm always fascinated with the story behind where these types of videos come from. For instance, the Swift Boat Vets for Truth from the 2004 campaign illustrated just how dirty modern politics has turned. Yglesias speculates a little into the origins for this story, but it turns out the blog on the Arkansas Times has had no problem finding out who's behind this:
An Arkansas Republican, Keith Emis, takes responsibility. (And there wasn't a deep secret. He's encouraged the mother to tell reporters who did the piece and his phone number appears on the registration for the website set up to carry the video.)...Emis says he incurred only small expenses and had volunteer help, and I believe him. He also says he has not given support to any of the other Republican candidates.
Emis, 29, grew up in Fayetteville and works in his family's Data Forms business in Greenland. He said he incurred no expenses, save gas and video tapes, and used friends as volunteer help, including one with video production experience. His uncle Donn Emis, a Fayetteville DJ, did the voiceover.
Emis said the stories about the Missouri victims "made him sad." He called Mrs. Davidson and asked if he could visit. She talked to him Sunday and he returned Tuesday and Wednesday to do the video. He declines to talk about politics, such as other disagreements he might have, if any, with Mike Huckabee. Emis comes from a part of the state where Huckabee has left many disaffected Republicans, however, on account of issues ranging from taxes to immigration. Emis wants to stick to Dumond.
"I am not supporting anyone in the presidential race," he said."It really made me sad. She's just a simple, nice woman [and a retired Wal-Mart employee]. Her daughter was murdered and it didn't have to happen. And it did happen because Mike Huckabee worked to get Wayne Dumond out of prison."
Yet I doubt this is the whole story. Huckabee released Dumond because of incessant hooting and hollering from the GOP machine due to irrational Clinton hatred. Your average GOP flack isn't going to put together something like this on his own without some push from the anti-Huckabee camp. Club for Growth? Some other group affiliated with one of the other campaigns, yet conveniently no "official" ties?
They should dig deeper on this. There may be nothing, but my guess is that this goes a little deeper than some dope with a camera running around Arkansas to film "simple" "sad" old women.
Tuesday, December 11, 2007
The market got a cut, but it wasn't big enough so they freaked. In fact, the market tanked immediately on the news. See it here:Now that's some cliff diving! The interesting thing is that the trend stayed down after the plunge. The Bulls on Wall St. didn't like the news, and I think the mood has turned sour. It will be very interesting to see what the international markets do overnight. I think we'll see a big sell off in Asia and a smaller one in Europe.
But it will be especially interesting to see how the central banks in the Mid East react to this cut. There is serious worry that some oil countries will unpeg from the dollar. I think they will hold for now; after all the cut could have been worse. Imagine what would happen if it was 50 bp, or god forbid 75 bp?
This will be interesting to watch over the next few days. If I see anything major or any good commentary, I'll be sure to post it.
As always, The comments herein reflect personal opinions about the markets. Under no circumstances does this information represent a recommendation to buy or sell securities.
CLAP HARDER PEOPLE!!! BUSINESS NEEDS YOU!!!
Monday, December 10, 2007
The division between paleolibertarians, centered around the Mises Institute, and cosmopolitan libertarians, centered around Cato, is also a case of "culture clash," according to Justin Raimondo, editorial director of Antiwar.com and prominent member of the Mises set. "There's the populist wing of the libertarian movement, and then there's the Washington crowd that's still trying to sell libertarianism, or their version of it, to elites. These people want to go along and get along. As long as they can abort their babies and sodomize each other and take as many drugs as they want to, they are happy. They don't care who is being killed in Iraq and how many Iraqis are dying. That's their hierarchy of values."Sounds like a lovely group of folks.
I've been struck by the ideological fervor for the Paul campaign on campus. The number of acolytes is small, but they are an enthusiastic bunch. It makes me think that the Paul campaign has probably tapped into disenfranchised LaRouchies. They sure seem to have an awful lot in common, especially the propensity to not advertise too widely the crazy crap each believes.
Friday, December 7, 2007
A team of scientists at Cold Spring Harbor Laboratory have developed a technique that allows them to image cells that are dividing the the brains of live humans. It has been known for some time that some parts of the brain actually add new neurons in adults, till the day we die. This has been shown by using a trick to label new DNA.
When a cell divides, the DNA strands split in two. The two strands split apart, and the cell splits in two. Meanwhile, the missing strand is replicated by an enzyme using free floating nucleotides (the ATGC's that everyone knows). The final product is two cells with exact copies of the DNA.
The trick is to give animals a compound that mimics one of the nucleotides (T usually). The compound gets taken up by any new cells that are making new DNA. This compound has something unique about that can be identified later. And by later, I mean once the animal or human has died and it's brain has been sliced into very thin sections and treated with all sorts of chemicals.
What the CSHL team did is use a trick of magnetic resonance imaging that up to this point had not been identified. It is possible to take images of the inside of alive, awake humans without any invasive procedures whatsoever. I won't explain How MRI works, mostly because I am no expert by far, but check out Wikipedia and How Stuff Works if you're curious. Basically, these broke down the various spectra of various cell types in the brain and identified a particular peak that is found only in cells that divide. The did this using cells isolated from mice brains, so they new what kind of cell they were looking at.
Next, they looked at the areas known to have dividing cells in the brains of rats and humans. Not dead sliced up brains, but whole brains still in the heads of their fully-alive owners. Sure enough, the band they saw in the mouse cells is also in these areas. Pretty cool.
They say this could be used clinically, but I see some very exciting possibilities for research. Many neuroscientists are interested in what controls the rate of neuron addition. This technique will allow scientists to test various treatments effects on cell proliferation in the same individuals over time. Very cool.
If you have access to Science, you can read their original paper here.
For those that aren't in the know, and I think I may even include myself, 620 is a VERY low score! Yet the industry has been making these crazy loans with no down payment to idiots with a credit score of 620 and calling it "prime"! That's like calling Taco Bell meat Grade A Black Angus New York Strip!
The 3/1, 5/1, 7/1 and 10/1 hybrid interest-only ARMS will reset in droves beginning now. These are loans that are fixed at a low introductory interest only rate for three, five, seven or 10 years — then turn into a fully indexed payment rate that adjusts annually thereafter. They first got really popular in 2003. Wells Fargo led the pack in these but many people have them. The resets first began with the 3/1 last year.
The 5/1 was the most popular by far, so those start to reset heavily in 2008. These were considered ‘prime’ but Wells and many others would do 95%-100% to $1 million at a 620 score with nearly as low of a rate as if you had a 750 score. No income or asset versions of this loan were available at a negligible bump in fee. This does not sound too ‘prime’ to me. These loans were mostly Jumbo in higher priced states such as
But this is the scariest part:
Kind of sums up the whole housing meltdown in just a couple of paragraphs. He says that only the lest sounds remotely possible, and I agree somewhat. We are going to see home prices fall A LOT. But I think the second option has a real chance as well. The Fed is keeping the printing presses very busy, and Helicopter Ben is warming up the rotary motors. Inflation of nominal prices of everything, including income, will lead to a smaller decrease in nominal prices of homes that would be seen otherwise.
One final thought. How can any of this get repaired unless home values stabilize? And how will that happen? In
Northern California, a household income of $90,000 per year could legitimately pay the minimum monthly payment on an Option ARM on a million home for the past several years. Most Option ARMs allowed zero to 5% down. Therefore, given the average income of the Bay Area, most families could buy that million dollar home. A home seller had a vast pool of available buyers.
Now, with all the exotic programs gone, a household income of $175,000 is needed to buy that same home, which is about 10% of the Bay Area households. And, inventories are up 500%. So, in a nutshell we have 90% fewer qualified buyers for five-times the number of homes. To get housing moving again in
Northern California, either all the exotic programs must come back, everyone must get a 100% raise or home prices have to fall 50%. None, except the last sound remotely possible.
2007 has been an amazing year to watch the financial markets. My guess is 2008 will make 2007 seem boring in comparison. Keep your seat belts fastened!
It easy to pile on the nonreligious. Though those that profess no religious affiliation are the fastest growing demographic in the US and constitutes the largest group (used loosely) if you break down religious affiliation by denomination, the Washington-based Pew Research Center found in a survey in August that 61% of Americans would have reservations voting for an atheist for president. Compare that to 45% for a Muslim president. With all of the (wrong-headed) demonization of Islam the last 6 years, atheists are still despised more.
The first casualty is the national community. Romney described a community yesterday. Observant Catholics, Baptists, Methodists, Jews and Muslims are inside that community. The nonobservant are not. There was not even a perfunctory sentence showing respect for the nonreligious. I’m assuming that Romney left that out in order to generate howls of outrage in the liberal press.
The second casualty of the faith war is theology itself. In rallying the armies of faith against their supposed enemies, Romney waved away any theological distinctions among them with the brush of his hand. In this calculus, the faithful become a tribe, marked by ethnic pride, a shared sense of victimization and all the other markers of identity politics.
In Romney’s account, faith ends up as wishy-washy as the most New Age-y secularism. In arguing that the faithful are brothers in a common struggle, Romney insisted that all religions share an equal devotion to all good things. Really? Then why not choose the one with the prettiest buildings?
I don't have YOY data that goes back too far, but Seattle Bubble does. He shows that the YOY change was the lowest that he has on record, going back 14 years.
So, no, not so typical.
Thursday, December 6, 2007
Sorry Seattle, but the bubble has done gone bust itself...
But when it comes to sales price, I am not convinced that there really is a seasonal pattern, or at least one that is that significant. This is especially true in Seattle, where prices have steadily increased without any seasonal pattern for the last few years. You can see that in the figure below. This is nominal price for single family homes (SFH) normalized to the price for SFH in January 2002. Thus, the value for January 2002 is 1.0 and it goes up from there. Red is King county, where Seattle is located. Black is Snohomish County, just north of Seattle. Blue is Pierce county, which is south of Seattle.
The latest data for the Puget Sound area on housing from NWMLS are out. Being real estate professionals, they obviously have put the sunniest spin on the latest numbers. They do this every month; it's their job. But it's getting harder lately, because the housing bust that has affected so many markets nation wide is starting to be seen in a big way in the Seattle area.
But here's their take:
A "typical holiday market," "the start of an optimum buy zone," "a good time to beat the spring rush," and a "wonderful time to be a home buyer" are among reactions by directors of Northwest Multiple Listing Service upon viewing the activity summary for November...Emphasis mine. Notice the emphasis on YOY changes. "Sure there are some declines here and there, but that is typical! After all SFH for King Co was unchanged. And this is a typical holiday market where things slow down and prices decrease.
The latest recap report issued by Northwest MLS shows little price fluctuation from a year ago, ample inventory, [and] the expected seasonal slowdown of sales activity...
In King County, the median price declined 2.9 percent for the "blended" property types (single family homes and condominiums); the price declined from $397,500 to $385,990. The price for single family homes only (excluding condos) was unchanged at $435,000...
"We're slowly beginning to rebound from the effects of the turbulent mortgage market," Scott said. [edit: must mean we've hit bottom if things are rebounding, right?]...
But is this typical? Part of the problem is that they're emphasizing changes in price YOY. This misses the fact that the median price for SFH peaked in July of this year.
This figure illustrates what I mean:
Median prices SFH in King Co are actually -10.57% lower than they where in July of this year! Ouch! But maybe it has something weird to do with the scale. Perhaps we really are having a plain old normal holiday slump where the median price decreases from summer to winter. So I decided to look back over the past few years and look at the percent difference between July and November within each year. If the value is positive, it means price increased from July to Nov. If it's negative, price decreased. So what do we see?Prices actually decreased about 1.5% in 2002 from July to Nov. We were coming out of a tech bubble bust that actually hit the area pretty hard. But in 2003, 2004, and 2005, prices actually increased. In fact, in 2005 prices increased a whopping 3.6% from July to Nov, just 5 months! In 2006, prices were unchanged (perhaps the beginning of the end?) This year things are VERY different. Prices have dropped -10.57% in just five months. I would say there's nothing "typical" about what we saw in Nov, turkey or no turkey.
Turns out the number Bush gave will only give hope of a more heavenly kind...
"I have a message for every homeowner worried about rising mortgage payments: The best you can do for your family is to call 1-800-995-HOPE," Bush said after a White House meeting with administration officials and lenders on a new plan to help.Unfortunately he was a couple digits off, it is actually 1-888-995-HOPE (4673).
Can't imagine why the number would be busy...
Calls to the wrong number Bush gave out were met with a busy signal. A search on the Internet showed it belongs to the Freedom Christian Academy which offers religious-based curriculum for home schooling and is located in Ponder, Texas northwest of Dallas.
Wednesday, December 5, 2007
I guess it's probably better than a whole crapload of foreclosures... Maybe that's the angle. Also maybe screws some of the less connected competition? Maybe the competition has a portfolio that falls outside the type described in the Bloomberg article; thus they get stuck with a bunch of foreclosed homes, while CFC and WM maintain cashflow.
Bond insurer ACA Capital Holdings Inc (ACA.N: Quote, Profile, Research) is likely to go bankrupt, Pershing Square Capital's William Ackman said on Wednesday.This was last Weds., which means that this is old news. It also explains why ACA has lost ~60% of its value in just three days. How soon it happens is hard to say. My guess is that it'll happen by the end of the week, maybe late on Friday like most bad news.
An update to yesterday's post about ACA. Today they had another nasty fall, shaving another 40% off of yesterday's close. Not too sue if this will be an atomic event or just a fizzle, but I don't expect ACA to last for too much longer. Hard too imagine any heroes sweeping in to save their asses now.
UPDATE: I sent Atrios an email about this, and he's front paged it here. And gave me a hat tip! Unfortunately, I have just started this whole bloggy thing and didn't give him a link to my blog, so there will be no traffic and no one will actually read this. But it's cool nonetheless.
Tuesday, December 4, 2007
For those non science-y types, here's a bone for you. Did you know that the size of testes in seasonally breeding male bird can vary by as much as several 100 fold? That's a huge difference, and it's amazing that we know so little about what controls those changes.
Anyway, he does some really great work. Worth checking out.
Anyway, now that I have the praise out of the way, I have two beefs with IRR. 1) It doesn't get updated enough. Only a post a day most days, and some days no post at all. 2) no comments.
I guess that if I was forced to pick between quality can quantity, I would go with quality every time. Can can't I get a little bit of both?
But seriously, keep up the good work Mike! You do a great service.
When this came out, there was all sorts of hub-bub about this in the media, which was tons of fun. Says a lot about picking a good title!
Check it out!
This is a really big deal because the firms that have been holding onto worthless commercial paper have been able to fall back on ACA to cover their asses. What happens when ACA goes away. Something tells me we are going to find out later this week...
Calculated Risk, a must read blog for anyone interested in financial markets, has an interesting run-down on the current state of US mortgage holders with negative equity (those that owe more than what the house is worth). This is obviously going to be a bigger and bigger issue as home prices decline further. This leads to more foreclosures because people have no reason to continue to pay for a home that depreciates in value.
Worth a look.