So which tax breaks do you think will have to go? [more]
I am sick and tired of reading the news about the "weak housing market", "horrible housing market", "ominous developments in the housing market", "housing market going from bad to worse" and the other such crap. Now, we've had enough of Orwellian talk already, and it's time to call things by their proper names. A "strong housing market" meas that you have to pay prices for housing that are beyond extortionate. Anyone who tries to impose the NAR "strong/weak" terminology, is essentially telling that fair is foul and foul is fair. It's very simple. There is no such thing as too cheap oil, too cheap sugar, too cheap toilet paper, too cheap coca-cola, too cheap subway rides, etc. The cheaper the better. Similarly with property values. The closer to zero, the better. I suggest an official moratorium on the use of Orwellian slogans. Instead, let us describe the situation in correct terms. This description should sound like this: the housing market was bad in 1998-2004, then it went from bad to horrible in 2005-2006, but then it became slighly less horrible in 2007. [more]
Just finished reading the Boskin Commission report from 1996, which is titled "Toward a more accurate measure of the cost of living". Let's quote some excerpts in this blog. [more]
How's that: "Before the adoption of the stimulus package, our economy was indeed standing on the brink of a precipice. However, after the package was adopted, it has made a great leap forward".
A few days ago, a relative of mine went out for a stroll, passed out, and was rushed into a hospital. The doctors did a CT scan and MRI, said everything was normal, and discharged him the next morning. The bill came for 33,000. Talk about an expensive one-night stand.
Just wasted a whole hour browsing through the list of agricultural companies. It was a total waste of time. All these companies are in processing and distribution business. None of them owns any farmland. In the very best case, they're 90% in processing and 10% in production.. If they produce anything at all, the land is leased. If they own land, it's non-agricultural. If they own an acre of farmland, they're in land management business, having bought land only to improve and resell it. [more]
I am not going to argue with Ron Paul or with our own abitarecatania that currency should be reliable and safe to hold. However, I am going to suggest that their worry about the greenback is overdone. Indeed, in case you haven't noticed, we already have such reliable currency. It is called the square foot, and I can even suggest a special symbol for it: ft^2. [more]
I spent today's evening in a rather unusual way: instead of reading 10K reports, HiddenGems message boards, Caps blogs or the rants of bloggers at housingpainc.com, I started reading the Boskin commission report and the Bureau of Labor Statistics (BLS)'s response to it. While I still have to finish reading them (yes, when you encounter terms like Laspeyres formula or superlative indexes, this slows down the reading process considerably), I can already make two observations: a) this is some of the most interesting stuff you may find on the internet, for all its technical mumbo jumbo, and b) I still don't understand the process by which the Bureau of Labor Statistics calculates its CPI index. Maybe I can improve my understanding if I read some more. The point that I want to share with you now, however, is that much of the discussion appears to be centered around the so-called "quality change bias". What is quality change bias? The idea is that if today's car selling for 20K runs better than the 10K car of yesteryear, then we should say (for CPI calculation purposes) that it sells at 10K. Simply stated, the essense of the debate boils down to this: the Boskin group (which is composed of politicians looking for ways to lower inflation on paper) is pressuring the BLS to report lower prices than the ones actually recorded by their data collectors, while BLS (which is not directly concerned with the Treasury's financial woes) is trying to be accomodative but still holds on to its last vestiges of honesty. As a result, Boskin & Co. wants BLS to generate an extra 10% price reduction by 2008 by creative quality accounting, while BLS replies that they're already doing just that, will try to do more, but cannot quite go all the way because then honest people will refuse to shake their hands. This exchange of opinion is truly fascinating, and I recommend reading both articles to get a better understanding of the CPI calculation process (you might even understand how the imminent bancruptcy of Social Security is getting postponed year after year after year without any tax hikes and without any visible reduction of benefits). But my point is that quality changes should never be tracked by statistical agencies at all. It is wrong both conceptually and statistically. [more]
Even the Fed is now beginning to realize that its deflationary scenario is not realistic. [more]
Bear case for bonds: after the Fed lowers rates to zero, there will be inflaton, which means that a 4% bond yield is a very poor investment. This will force private investors to demand higher risk premium, and lower the prices of bonds which are currently in circulation. There should be 25-30% downside for bond prices. [more]
One would harly believe that the government could overstate GDP by nearly 1 trillion dollars with nobody (except bloggers from www.nowandfutures.com) noticing it, but here it is, the official link proving that 980 bln of GDP exists only in the mind of bureacrats from the Bureau of Economic Analysis. A must-read for everybody who still trusts the official statistics. [more]
I have to admit it: I'm a big admirer of President Robert Mugabe. The first reason is that this man is a genius. An ordinary man can't achieve such incredible results, whether he has a low IQ of 20 or a high IQ of 200, so this African dictator must possess some supernatural power. The second reason is that we're all indebted to him: as long as Mugabe is in charge of Zimbabwe, our own Bushes and Bernankes will look harmless by comparison. [more]
alstry is reporing this good news for prospective buyers: D.R. Horton will be liquidating homes at 50% OFF in the next few weeks in CA. Well, I hate to spoil the party, but sales pitches can't be considered a substitute for a real discount. Let's follow the link: [more]
As I pointed out in December, the rumors of the dollars's demise have been greatly exaggerated. My argument was that the dollar will remain a viable currency, not because of Bernanke's dubious talents, but because other currencies are in even worse shape (except China's). And now, lo and behold, the mighty Euro is about to give up the ghost. [more]
Some folks like Nouriel Roubini claim that if the economy does slip into a recession, then there will be no inflation. I'm afraid that they are dramatically wrong. [more]