Archive for the 'Economics' Category



29
May
07

Vacation Blogging

Our outdoor fun has been cut short due to rain and cold, so I’ve been reading some. Here’s some recommended reading:

I’d say this young woman is on the fast-track to an early Ph.D. in climatology. Her analysis is incomplete, but her style and presentation of information are truly impressive (her analysis of the El Nino Southern Oscillation is compelling and is a much better indicator of warming trends). I wish more of my students were as thorough and engaging in discussion as she is. Maybe she can explain to Nancy that witnessing glacier calving isn’t the same as saying the world is warming. But remember– liberals don’t have to face facts (like #6 here), they get by on feelings.

Your government is hard at work hiding their total mismanagement of our taxes, according to USA today. Remember, flat tax, cut government programs, and, for God’s sake, TERM LIMITS!!! Do you really think anything is going to change if we keep the same crew in Congress?

Slate is blogging the Bible. It’s off to a great start, and it’s making the serious mistake of going it alone without someone to put everything into context. Meanwhile, the indefatigable Robert Spencer is going to tackle the Koran over at Hot Air in a weekly column. Robert’s been a Koranic scholar for a long time, and he’s browsed the most famous commentary on the subjects.

I plan on doing much lounging tomorrow before another day of travel, so I may get a few more posts in. If not, I’ll see you all next week.

03
May
07

I can’t understand why the economy is doing so well!

That’s effectively the take by Kevin Drum over at the “Washington Monthly”, the “progressive must-read” of James Carville.

Borrowing a line from the AGW crowd, he says:

Well, look: anytime any aggregate growth figure [homebuilding] is low you can always point to its weakest component and say that things look a lot better if you just exclude it. A couple of years from now it will be something different: “Sure, there’s a slowdown in the IT sector, but it’s temporary and the rest of the economy is growing at a nice clip.” This kind of analysis leaves me pretty cold.

For years now people have been warning that the “housing bubble” is going to burst, and there’s plenty of indicators that show it’s happening. The first sign of trouble with the housing market is the damage to people with adjustable rate mortgages.

Hey, ARMs were great when the interest rates were in the 1’s, but now we’re creeping back up to normal, and there was plenty of time to Re-Fi into a fixed-rate adjustable, even locking one in at a low interest rate (although not as low as the ARM). And what we end up with is stupid people who’ve borrowed too much and are now feeling the pressure of an adjusted ARM.

As a result of interest rate increases, mortgages are harder to afford. I wish I had some career stability in the past 5 years to take advantage of buying a house, but I wasn’t in one place long enough to make a house purchase feasible. So I could get an ARM now and get a house, or I could do the smart thing and wait, save, and get a 30-year fixed rate. Or a 15-year fixed rate (but that would require the wife to agree to a smaller home, and that’s just not going to happen).

But now that other people are understanding long-term loans are just not the solid deal they once were, borrowers are scarce, and new home construction as well as existing home purchases are beginning to sag, and soon they’ll collapse under their own weight.

We’ll see a direct hit on the economy as companies fold. It’s called a correction, and it happens all the time. Wishing for doom and gloom, as Kevin does, and expecting the economy to self-destruct is perfectly aligned with Harry Reid and the defeatist plan for Iraq. Progressives just aren’t happy unless the US is suffering.

And Kevin is befuddled as the economy moves forward. The growth is good, not spectacular, and it’s steady, so the economy is strong. Unemployment is low (4.4% compared to 6.3% in June 2003). Kevin has to look at any “bad thing” and say “look, the economy is tanking!” And one day he’ll be right.

But the housing market’s bubble is bursting, and it’s going to impact the economy, but don’t expect it to force a major recession. It’ll be a correction, and most of us aren’t going to notice. Well, I will. With a collapsing seller’s market in real estate, it’ll be an ideal time for anyone to buy an existing home.

As an aside, I’m also doing this to test memorandum. I used to get links there, but evidently I kicked someone’s dog, so I’m never linked there any more. So, unless I get some memeorandum love, I’m going to kick it and its sidebar to the curve.

06
Apr
07

Detroit in Crisis

It’s no secret that the housing market in Detroit has hit rock bottom. Anyone selling property there is in serious trouble because nobody wants to buy. The city’s economy is bad and the crime problem is worse, and the elected officials are woefully incompetent.

Want proof? Sure. There’s a plan by Michigan Democrats to buy an “MP3 player” for every child going to school in Michigan. Why, you ask? “To assist education.” How is a student in my classroom rocking out to Ludacris on an MP3 player instead of participating in lecture going to assist that?

Insanity? The Detroit Free Press seems to think so. Will it turn the state Republican? Unlikely, and not like that would really help matters. Michigan needs to put all elected officials out on their ear and start over.

06
Apr
07

4.4% of you are lazy jerks!

I’m kidding! You’re just out of work.

So, the unemployment rate is at a 5-year-low. Bush has really screwed up the country, hasn’t he? I’m glad we elected a bunch of Democrats. We really need to fix this problem. Too many people are working! I’m so ashamed to be an American.

France: 8.7% (2006 est, according to the CIA).
Germany: 10.8%
Finland: 7%
Sweden: 5.6%
Greece: 9.2%
Spain: 8.1%

I can’t wait for Hillary to get elected and make us a socialist state just like these other ones!

13
Mar
07

New Century Goes Boom

This can’t be good. New Century, the 2nd biggest mortgage lender, says it’s running out of cash.

New Century may be insolvent because too many of its own customers — most of whom have poor credit histories or heavy debt burdens — aren’t repaying their loans. Bad U.S. subprime mortgages are at a seven-year high, forcing more than two dozen lenders to close or sell operations. Their woes may contribute to more than 1.5 million Americans losing their homes and 100,000 people losing their jobs, according to real estate executives, economists, analysts and a Federal Reserve governor.

New Century said in a federal filing it doesn’t have funds to repay lenders including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The creditors want New Century to repurchase all outstanding mortgage loans they financed.

For those out there with subprime mortgages, or those thinking about it, beware– this move will make it harder for you to get them. If these things are bankrupting the #2 lender in the real estate business, then there’s no reason to continue with them.

My advice: get on a budget, stop spending on credit, and eliminate the debt. Pretty much the same advice I’d give to the Federal Government.

09
Mar
07

Business News

The good:

Unemployment drops to 4.5%.

The trade deficit has shrunk.

Net worth of US households is rising.

Crude futures are falling.

The bad:

Inventories are up, which means demand has shrunk (which will probably increase the trade deficit next month). But it could be related to the cold weather as well. If the inventories don’t decline, we’ll see a reaction from the manufacturing sector in reduction of demand-based jobs.

So, the good is outweighing the bad. There’s nothing wrong with being cautiously optimistic here, even after last week’s 400 pt “correction” on Wall Street (remember, it was triggered by overseas stock adjustments).

Recall the warnings, though. Greenspan said there’s a possibility of recession. If the Democrats get their way and repeal Bush’s tax cuts, then there’s a likelihood of recession.

01
Feb
07

500mg of copper, nickel, zinc for your thoughts

A funny thing happened on the way to Inflation Heaven– the cost of the raw materials of the penny have outpaced the actual value of the penny, so the coin is more “valuable” as raw materials than it is as actual currency. Now, economically, this poses a problem– especially if clever speculators gather pennies, ship them overseas and melt them into their raw components for resale. We’ll have a penny shortage in the US, and all will fall into chaos. Or something like that.

Some people are suggesting that we make a penny worth 5 cents. That means a nickel would be worth a quarter, and a quarter is worth $1.25, and the dollar would be worth 5 dollars. OR you could just revalue the penny to be 5 cents and keep everything else the same. No longer would we have a 1 cent base to our money, but a 5 cent base, so all prices would have to be adjusted to be a multiple of 5.

I don’t like it. What’s the point of having a “cent” (which is 1/100th of a dollar) if you don’t plan to have a currency which matches that cent? In reality, why don’t we change the denomination to a “twentieth” instead of a “cent” to properly represent its worth? It’s Base 20 math.

I think the much easier answer would be to change all currency. Make the dollar worth 5 times its value and all other related currency. So, instead of earning 50,000 a year, someone would make only 10,000 a year. At the same time, something that used to cost a dollar would now cost 20 cents. And something that cost $.10 (Raman Noodles!) would now cost two pennies. It would be like the good ol‘ days, when candy only cost a nickel! Now you can turn the tables on Grandpa. (Oh yeah, well when I was a kid, a candy bar only cost a dime!)

Now, of course, this isn’t good news for the rest of the world. The Euro would now be worth about 25 cents. The Dollar would be what the Pound was. And why shouldn’t it? Our country kicks ass– so should our currency.

I’m not sure the allies would buy that, though. But given that we’re not basing our wealth on metallic holdings any more (fiat currency, folks!), we can basically decree how much our money should be. So why get out of the base-10 currency system? Keep the penny around, as well as other denominations– just change the inherent value.

This also has the added value of knocking the wind out of the millionaires. Those with a paltry million are now only two-hundred thousandaires, and they have to work back to the top of the money pile and dream of having their own reality television show.




About Me

My name is Doc. Welcome to my blog. If you're visiting from another blog, add me to your blogroll (and I'll happily reciprocate). I have a Ph.D. in Chemistry and live in Wisconsin. If you have any questions, feel free to email me. My email is docattheautopsy at gmail. (No linking to deflate the incredible spam monsters).

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