May 31, 2008 § Leave a comment
on LA real estate. Gives me the opportunity to point out that the standard view is to blame the poorer for trying to invest and gain. The reality is that people who had to buy houses, or wanted to, had to pay more than they would have if there had not been a bubble.
The lenders made more moony because the loans were bigger. The brokers made larger fees because the fees were based on a percentage of the sale, and the lender holds the note, which value remains constant, while the borrow holds the house, which is worth less. The difference can be seen as money lost to the borrower. This is deeply unfair.
The following from the excellent Calculated Risk
This graph show the real Case-Shiller prices for homes in Los Angeles.
The low price range is less than $417,721 (current dollars). Prices in this range have fallen 34.9% from the peak in real terms.
The mid-range is $417,721 to $627,381. Prices have fallen 30.7% in real terms.
The high price range is above $627,381. Prices have fallen 22.8% in real terms.
In the recent bubble, the areas that saw the most appreciation are seeing the fastest price declines.
This seems to fit with some new research from David Stiff, Chief Economist, Fiserv Lending Solutions: Housing Bubbles Collapse Inward
May 30, 2008 § Leave a comment
Good pictures for GardenWorld, NY at two extremes
Stephen Toulmin wrote Cosmopolis in which he showed that the 16th C was a century of crisis, the thirty years war, climate, unemployment – and the result was the enlightenment project of a minimal dialog about clear things. He says that the previous generation of Shakespeare, Erasmus, was a period of much deeper exploration of the humanity, but that was put aside to maintain civility. But the crisis is over and we can return to the larger questions of the pre-enlightenment.
Democracy was afoot, but the Renaissance was the most authoritarian, and our current regimes of repression have their origins there.
Understanding this period is crucial to understanding the modern and post-modern dilemma.
and, no mention of oil but.. cheney’s grand design.
American and Iraqi negotiators are far apart on a number of issues, said Mr. Adeeb and another senior lawmaker close to Mr. Maliki, Haider al-Abadi, in interviews on Friday.
The Americans want to continue to have “a free hand” to arrest Iraqis and carry out military operations, and they want authority for more than 50 long-term military bases, Mr. Adeeb said. He said that he doubted that a security pact along the lines sought by the Americans would pass in the Iraqi Parliament.
Mr. Abadi, another senior member of Dawa, said Americans were insisting on keeping control of Iraqi airspace and retaining legal immunity for American troops, contractors and private security guards.
The United States official familiar with the negotiations accused Iran of orchestrating a disinformation campaign to undermine the negotiations, saying, “This is Iran’s playbook.”
The official, who like others interviewed for this article requested anonymity because of the fluid nature of the negotiations, said the debate over what kinds of operations American troops could carry out without Iraqi permission “will be subject to constant revisions and review.” Troops right now are cooperating extensively with Iraqi security forces, and the “new mandate should reflect that fact,” the official said.
American service members in deployments similar to Iraq are subject only to American military law, the official said, adding that American officials wanted to retain control of Iraqi airspace because the Iraqi government did not have the ability to manage that area yet. “It’s a question of technical proficiency and capacity,” the official said.
The American ambassador to Iraq, Ryan C. Crocker, told Congress last month that “the agreement will not establish permanent bases in Iraq, and we anticipate that it will expressly forswear them.” He also said the agreement would not specify troop levels, or “tie the hands of the next administration.”
and NYT editorial
As new reports make clear, the efficiency of industrial animal production is an illusion, made possible by prisonlike confinement systems.
Pasted from <http://www.nytimes.com/pages/opinion/index.html>
May 29, 2008 § Leave a comment
Most serious, the nations will not manage collectively energy and climate, but each seek advantage, rationalized by “there are too many people for a world wide single solution.”
It is amazing to see the emergence of Obama as a major personality.Let’s hpe that the heroic and clear projected onto him is accurate perception.
The McClelland book is the continuation of O’Neill’s book, which seems to be almost forgotten, but got the same themes. The idea that everyone agreeed that Iraq had WMD’s is just false. Me and most of those whom I know were opposed to the war and wanted to follow the German approach and let Blix continue, with more support.
Will a Democratic Congress act to change the carefully crafted opaque oil futures markets in an election year and risk bursting the bubble? On May 12, the House Energy and Commerce Committee stated it will look at this issue in June.
Pasted from <http://atimes.com/atimes/Global_Economy/JE24Dj03.html>
The Fall of Conservatism
Have the Republicans run out of ideas?
The era of American politics that has been dying before our eyes was born in 1966. That January, a twenty-seven-year-old editorial writer for the St. Louis Globe-Democrat named Patrick Buchanan went to work for Richard Nixon, who was just beginning the most improbable political comeback in American history. Having served as Vice-President in the Eisenhower Administration, Nixon had lost the Presidency by a whisker to John F. Kennedy, in 1960, and had been humiliated in a 1962 bid for the California governorship. But he saw that he could propel himself back to power on the strength of a new feeling among Americans who, appalled by the chaos of the cities, the moral heedlessness of the young, and the insults to national pride in Vietnam, were ready to blame it all on the liberalism of President Lyndon B. Johnson. Right-wing populism was bubbling up from below; it needed to be guided by a leader who understood its resentments because he felt them, too.
I have an analysis of this article in some detail at
And, on write downs.
The source said the White House views the proposed air strike as a limited action to punish Iran for its involvement in Iraq. The source, an ambassador during the administration of president H W Bush, did not provide details on the types of weapons to be used in the attack, nor on the precise stage of planning at this time. It is not known whether the White House has already consulted with allies about the air strike, or if it plans to do so.
Sense in the senate
Details provided by the administration raised alarm bells on Capitol Hill, the source said. After receiving secret briefings on the planned air strike, Senator Diane Feinstein, Democrat of California, and Senator Richard Lugar, Republican of Indiana, said they would write a New York Times op-ed piece “within days”, the source said last week, to express their opposition. Feinstein is a member of the Senate Intelligence Committee and Lugar is the ranking Republican on the Foreign Relations Committee.
Senate offices were closed for the US Memorial Day holiday, so Feinstein and Lugar were not available for comment.
Pasted from <http://atimes.com/atimes/Middle_East/JE28Ak01.html>
This is far from an exhaustive examination of the global shifts caused by rising oil and grain prices. Our point is this: High oil prices can increase as well as decrease stability. In Iraq — but not in Afghanistan — the war has already been regionally overshadowed by high oil prices. Oil-exporting countries are in a moneymaking mode, and even the Iranians are trying to figure out how to get into the action; it’s hard to see how they can without the participation of the Western oil majors — and this requires burying the hatchet with the United States. Groups such as al Qaeda and Hezbollah are decidedly secondary to these considerations.
We are very early in this process, and these are just our opening thoughts. But in our view, a wire has been tripped, and the world is refocusing on high commodity prices. As always in geopolitics, issues from the last generation linger, but they are no longer the focus. Last week there was talk of Strategic Arms Reduction Treaty (START) talks between the United States and Russia — a fossil from the Cold War. These things never go away. But history moves on. It seems to us that history is moving
This article can be forwarded or reposted but must be attributed to Stratfor.
linking to www.stratfor.com.
And, important, Capital and its Complements
J. Bradford DeLong
U.C. Berkeley and NBER
Dennis Meadows, one of the authors of “The Limits to Growth,” says the book was too optimistic in one respect. The authors assumed that if humans stopped harming the environment, it would recover slowly. Today, he says, some climate-change models suggest that once tipping points are passed, environmental catastrophe may be inevitable even “if you quit damaging the environment.”
Resource constraints in fast-growing India are hitting farmers and city-dwellers alike. One danger is that governments, rather than searching for global solutions to resource constraints, will concentrate on grabbing share. China has been funding development in Africa, a move some U.S. officials see as a way for it to gain access to timber, oil and other resources. India, once a staunch supporter of the democracy movement in military-run Myanmar, has inked trade agreements with the natural-resource rich country. The U.S., European Union, Russia and China are all vying for the favor of natural-gas-abundant countries in politically unstable Central Asia.
Historical patterns: what has been the relationship between capital and
growth in the past, and what economists have thought about that
The unexpected reversal: the fact that international capital mobility
over the past two decades (a) has expanded much more rapidly than
almost anybody had predicted, but (b) has expanded in the wrong
direction—the poor have not been borrowing from the rich to finance
their investment and industrialization, instead the rich have on net
been borrowing from the poor to finance their own consumption.
The critical reversal of fortune comes when the unblocking of the barriers to large net capital flows sees the flows proceed at an unexpectedly large intensity—but in a large and destructive way. The denouement—that has yet to be written; in fact, it will be our job over the next decades to write it.
Instead, the keys to growth and development appeared to be other things than a rise in capital intensity as measured by the capital-output ratios: skills, education, technology broadly understood, and improvements in organizational management.
DeLong and Summers (1991) found that the post-World War II crosscountry dataset contained an extraordinarily strong correlation between growth and private investment in machinery and equipment. Public investment by state-owned monopolies did not do it. Investment in structures did not do it. The correlation was very strong in OECD-class and middleincome economies. And it appeared to remain even when you looked far down at the very bottom of the cross-country income distribution— Their populations are growing rapidly because countries with low levels of prosperity and low levels of literacy are countries where people find it advantageous for private insurance reasons to have relatively large numbers of children The reason for this striking association is clear. Modern transportation via container ship makes the cost of transporting durable commodities across oceans essentially zero.
It turned out that $20 billion to $30 billion of capital a year did flow from the United States to Mexico as American firms sought production platforms. But it also turned out that what looked to be $30 billion to $40 billion a year of capital flowed from Mexico to the United States. Relatively rich Mexicans took a look at the country’s monetary and political instability. They decided that in the event that something went really wrong from their perspective in Mexico and they had to flee across the Rio Grande in a rubber boat, it would be much better to get to Texas and have a large dollar-denominated asset account waiting for them in New York,
It is indeed the case that U.S. labor productivity is now 35 percent higher than it was back in 2000, with, as best as we can see, real wages remaining exactly the same. That represents a huge shift of income in the direction of capital.
But does this mean the low interest rate policies of the United States in the
early 2000s were a policy mistake? Three locomotives have driven the world economy over the past 15 years. The first was heavy investment, centered in the United States, owing to the information technology revolution. The second was investment in buildings,
once again centered in the United States, driven by the housing boom. The
third was manufacturing investment elsewhere in the world, predominantly in Asia—as the United States became the world economy’s importer of last reso
The first locomotive ran out of fuel seven years ago, and there is no clear
technology-driven alternative leading sector, like biotechnology, that can
inspire similar exuberance—rational or otherwise
In the current issue of the “New Yorker,” George Packer has a useful article
on the shambles that has befallen institutional conservatism. The subtitle
of the article asks, “Have the Republicans run out of ideas?” Much the same
kind of obituary is necessary for the DLC, which mirrored the Republican
idea machine. Packer does not raise this issue. The DLC is equally marooned
on ideas that are not so much anachronistic as failures (they were bad ten
years ago as well). The Republicans have begun a period of rethinking, but
most of their thinkers are allergic to revision. For them it is encore un
effort! Much the same for the DLC, whose people are more interested, like
Karl Rove, in winning elections than in the importance of governing (Mark
Penn is Rove’s DLC doppelganger). Will there be new ideas and policies to
befit the structural problems that bedevil the world population, or even
just the US population? Will Barack Obama revive a mild version of the New
Deal, a green capitalism, or will he too become entangled in yesterday’s bad
ideas? This is not on the table. What we have is the enduring racism of the
Clintons and their DLC legacy shaping the next Democratic presidency.
Should Wall Street banks continue to be forced to write down mortgage-related losses, many firms are so undercapitalized even the sound parts of their businesses are at risk…
“Lehman’s equity (in yellow), for example,” explains Mr. Amoss, “supports just a tiny sliver of its towering liabilities. Lehman’s ‘leverage ratio’ amounts to about 32 times equity. That means Lehman’s assets can fall only about 3% in value before their equity is wiped out.”
Yet shares of Lehman Brothers have shot up 30% from their 2008 lows.
Pasted from <http://www.agorafinancial.com/5min/>
J. Bradford DeLong (2008), “Capital and Its Complements: International Capital Mobility and Economic Growth in the Twenty-First Century” http://www.j-bradford-delong.net/2008_pdf/20080521_capital.pdf
May 27, 2008 § Leave a comment
Imagine that everyone is franchised on the internet and disenfranchised in the real world. That is, will full participation in cyberspace, no home, no job, no food, no health.
May 27, 2008 § Leave a comment
The theme here is powerful. And the article just hints.
Curriculum Designed to Unite Art and Science
Senator Barack Obama likes to joke that the battle for the Democratic presidential nomination has been going on so long, babies have been born, and they’re already walking and talking.
That’s nothing. The battle between the sciences and the humanities has been going on for so long, its early participants have stopped walking and talking, because they’re already dead.
It’s been some 50 years since the physicist-turned-novelist C.P. Snow delivered his famous “Two Cultures” lecture at the University of Cambridge, in which he decried the “gulf of mutual incomprehension,” the “hostility and dislike” that divided the world’s “natural scientists,” its chemists, engineers, physicists and biologists, from its “literary intellectuals,” a group that, by Snow’s reckoning, included pretty much everyone who wasn’t a scientist. His critique set off a frenzy of hand-wringing that continues to this day, particularly in the United States, as educators, policymakers and other observers bemoan the Balkanization of knowledge, the scientific illiteracy of the general public and the chronic academic turf wars that are all too easily lampooned.
May 26, 2008 § Leave a comment
When the nation is fragmenting, those at the margins are threatened, and those responsible for service and order are overwhelmed.
i saw the movie Forgetting about Sarah. Reviews have been mixed but the structure is classic tragedy/comedy and the puppet scene near the end is delightful and creative. The characters are a real handful – stereotypes well done. the sex is slightly educational and necessary. It probably takes a fair amount of experience with drama to appreciate the classical structure. It is also entertaining in a relaxed sort of way.
Mencius.. the king asks the sage” teach me.”
The sage asks, “is there any difference between killing a man with a knife or a stick?”
“Is there any difference between killing a man with a knife or bad government?”
from mencius king lui of wang 4.
May 25, 2008 § Leave a comment
Marshall has a great summary.http://talkingpointsmemo.com/archives/196722.php
The Long View
If you haven’t already had read it, let me recommend George Packer’s piece in The New Yorker on the “fall” of conservatism. He weaves together a thousand threads of the story in a way any magazine writer knows is terribly difficult to pull off. For the article Packer had a long conversation with Pat Buchanan, who, for the younger folks among our readers, isn’t just a vinegary TV right-winger with a punchy turn of phrase. Buchanan is a very important figure in the last half century of American history — for the forces of darkness perhaps, but important no less for that.
Buchanan gave Packer a copy of a confidential memo he wrote for Richard Nixon in 1971. (“A little raw for today,” he warns Packer.) The memo is about what Buchanan and his Nixon aide colleague Kevin Phillips called “positive polarization,” ways to divide the country for political advantage. Some of you will remember the key line that Buchanan ends on because it’s quoted in Jonathan Schell’s magnificent 1976 book, Time of Illusion. The aim, wrote Buchanan, was to “cut the Democratic Party and country in half; my view is that we would have far the larger half.”
Those of us who look at politics from moment to moment tend to look at gaffes, campaign strategies, the foibles of this or that politician. But it’s always important to step back from the particulars to see the broad sweep of political and social change. It’s almost always dominated by long term trends — demographic, ideological, economic. But particular events can pivot history off in dramatic new directions.
Back in the early part of this decade two friends of mine, John Judis and Ruy Teixeira wrote The Emerging Democratic Majority. It’s a very good book — and not just in the sense of the happy prediction. Unluckily, though, for the authors it came out just a few months before the Democrats’ big thumping in the 2002 midterm elections. And because of that, the book, after a lot of initial fanfare, got sort of pushed to the back of the collective shelf.
But I’m starting to wonder whether we might not see the first decade of this century similarly to the way we now look back on the 1970s. Packer’s piece is a loosely structured review of Rick Perlstein’s new book Nixonland. (I just dipped into it for the first time a few nights ago and it was like eating some incredibly rich food. I can’t wait to get back to it.) Nixon’s resurgence began in those mid-sixties rumblings which we can now see from the perspective of history were the onset of the era of conservative ascendence that we’ve been living in now for the last four decades. But it wasn’t an unbroken trajectory. The Democrats had a huge year in the post-Watergate 1974 mid-term elections, with a big class of new self-consciously reformist House Dems. Then Jimmy Carter was elected president in 1976.
In retrospect this was only a Watergate-induced hiccup, an Indian Summer of mid-century liberalism and Democratic ascendency, in a decades long trend toward conservative dominance. And I’m beginning to wonder whether we might eventually see the 2002 and 2004 elections in a similar light.
I say this for a couple reasons, and hopefully not just out of wishful thinking. Clearly much of the Republican party’s current state of disrepair is due to the disastrous record of George W. Bush. But all of it? There’s a great deal of continuity between the demographic and regional voting trends we see today and those Judis and Teixeira noted through the 90s and the first years of this decade. 9/11 juiced President Bush’s standing and massively reinforced the advantages Republicans have historically had on national security issues — at least over the last forty years. And the Bush White House pressed that advantage mightily. But hidden underneath was the same ideological and electoral decay. Perhaps we will see the Republican party in this period as akin to the doped up athlete whose drugs enable him to achieve amazing feats in the short-run but also lead him to gravely exacerbate existing injuries because they inure him to the pain.