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  • A Note on the Slowness of Recovery  [View article]
    No! No! No! Krugman is NOT calling for a housing bubble! Read the whole article carefully! Krugman is arguing against what Greenspan and Bush were doing at the time and saying that the only way their policies will work is IF Greenspan creates a housing bubble!

    > Saying that "Keynesian macro, in contrast, actually makes testable predictions that have been demonstrated in the real world." is a little like saying that communism isn't a failed experiment, Stalin was just too much of a sissy to bring it off correctly.

    Argument by weak analogy is a standard logical fallacy.
    Mar 25, 2011. 11:31 AM | Likes Like |Link to Comment
  • A Note on the Slowness of Recovery  [View article]
    Neither Krugman nor DeLong were ever perplexed about the results of the stimulus. Both Krugman and Delong predicted in advance of this depression that it would be a bad one, both complained that the stimulus was not large enough and would only server to arrest the decline and not bring us out, and both have been right on the money with those predictions.

    If you had bothered to read that article of Krugman's you would see that he is complaining about UChicago econ types who build theories that have zero basis in reality and have proven demonstrably false in the real world. Keynesian macro, in contrast, actually makes testable predictions that have been demonstrated in the real world.

    What is your track record like?
    Mar 24, 2011. 03:17 PM | Likes Like |Link to Comment
  • A Note on the Slowness of Recovery  [View article]
    Um. Northern Europe, that place that is most Eurosocialist of them all, has a lower unemployment rate than the U.S. But we should never let measurable fact stand in the way of our ideology, should we Mr. Petroski?
    Mar 24, 2011. 03:06 PM | Likes Like |Link to Comment
  • How to Funnel Money to Bankers and Brokers, Housing Edition  [View article]
    Why would I want to sell it? Its my home! I bought it because I liked the house and the neighborhood, I expect to live in the place until I die, I paid less than the house was worth to me, and for gravy, the Gov't actually paid me to buy the house.

    Why should I care how much anyone else values it?
    Mar 11, 2011. 02:45 PM | 4 Likes Like |Link to Comment
  • How to Funnel Money to Bankers and Brokers, Housing Edition  [View article]
    > Look at today's youth. Is there anything about that group, as a whole, that says to you "Responsible...

    That's what one generation always says about their progeny. We Boomers have mostly proven our parents were right when they said it about us.
    Mar 10, 2011. 05:26 PM | 1 Like Like |Link to Comment
  • How to Funnel Money to Bankers and Brokers, Housing Edition  [View article]
    > That’s 1.15% of the value of your mortgage every year for 30 years...

    Er, no. You pay it for a minimum of 5 years and can then have the insurance payment ended if you have achieved 22% equity.

    We bought in Fall of 2009 using this program and collected the full 8K 1st time home buyers credit which basically covered the 3.5% down and most of the fees. That was the best time to take advantage of Gov't housing programs.
    Mar 10, 2011. 05:23 PM | 2 Likes Like |Link to Comment
  • Ben Bernanke: The U.S. Leninist?  [View article]
    Lets add to this by noting that there has been a large increase in the average incomes of people living in the emerging markets. Higher incomes mean more demand for meat (in turn creating a larger demand for grains) and energy. This is a simpler explanation for commodity price growth than trying to explain it via contorted explanations emanating from QE2. Occam's Razor says that given two theories that explain the same phenomena, pick the simpler explanation.

    I'll bet on 300 million Indian middle class consumers buying cars and China building 100 cities of greater than 1 million people as the likeliest cause of high commodity prices.
    Feb 25, 2011. 03:50 PM | Likes Like |Link to Comment
  • Judging Treasury's Housing Report  [View article]
    > All I can say is that while I am happy to have no mortgage, I still pay to subsidize those that do.

    Thanks! Those of us with subsidized mortgages really do appreciate your help!
    Feb 14, 2011. 01:12 PM | Likes Like |Link to Comment
  • Judging Treasury's Housing Report  [View article]
    Heard a lecture from a city planner a few years ago who claimed that it was much better to scatter individual section-8 houses out across a city than to build them all together. When scattered, the renter tends to be forced by neighborhood peer-pressure to get their act together in terms of cleanliness, maintenance, etc.
    Feb 14, 2011. 01:07 PM | 4 Likes Like |Link to Comment
  • Judging Treasury's Housing Report  [View article]
    > There is almost no way the housing bubble of 2008 would have occurred at the same magnitude if it weren't for Fannie and Freddie. The only reason the banks could write the loans that they wrote was because they knew that they could pass them off to Fannie and Freddie.

    Reality Check: Ireland had none of the housing guarantees that the U.S. has and yet had a massive housing bubble that has exploded in their face. Same thing in Spain. The reality is that banks are perfectly willing to blow up economies w/ or w/out state intervention in the market for the underlying asset that is involved in the bubble.
    Feb 14, 2011. 12:58 PM | 5 Likes Like |Link to Comment
  • Be Wary of Most Micro-Cap ETFs' Negative Alpha  [View article]
    > Over the past five years, its monthly alpha was a statistically insignificant negative 0.16%.

    Morningstar needs to publish the significance levels of all of the MPT stats they publish for mutual funds, ETFs, etc. Since they just publish the values w/out the tests, it is impossible to know if any given alpha, etc is meaningful. In the example of the PowerShares Zacks Micro Cap alpha in this article, how do we know that the negative alpha given, even though it appears big and bad, is statistically different from 0?
    Feb 10, 2011. 02:39 PM | Likes Like |Link to Comment
  • Bond Market to Fed: Your QE2 Logic Was Wrong  [View article]
    You are an undergrad? Wait until grad school. In many American universities, Keynes is completely ignored. IIRC, he was mentioned but once in the 1st year PhD macro courses when I was in grad school. Read Krugman's NYT Mag article ...
    Feb 8, 2011. 04:03 PM | Likes Like |Link to Comment
  • Three Takes on JP Morgan and Madoff  [View article]
    Fox News and the WaPo are subsidiaries of the DNC? Gosh, you can learn something new everyday here on SA.
    Feb 8, 2011. 03:30 PM | Likes Like |Link to Comment
  • If You're Going to Do Economics, Don't Do Macro  [View article]
    9.4% official unemployment and 20% non-labor force participation means that there are an awful lot of people who can't afford a house or a car or a nice dinner and a movie. People want those houses but they have no jobs to pay for them.

    Minsky's ideas, are, I believe, probably the best at explaining what happened:
    Feb 3, 2011. 10:31 AM | Likes Like |Link to Comment
  • If You're Going to Do Economics, Don't Do Macro  [View article]
    > What we had was a misallocation -- too much housing -- and so now must move labor and capital to other areas, which creates temporary unemployment.

    What you have missed is that when housing construction went down, finance went down, too and THEY TOOK EVERYTHING ELSE DOWN WITH THEM! There is a large body of real hard evidence that pretty much every sector has lost serious numbers of jobs and that the unemployment problem is caused by lack of demand and is not structural. If Austerians actually based their theory on real evidence instead of magical thinking it would be worth paying attention to that theory and its policy implications. But they don't and never really have and that is why it is not taught in grad schools.
    Feb 2, 2011. 05:20 PM | 2 Likes Like |Link to Comment