bricki

The Homebuyer Credit as Economic Success Story

That is a pretty nonsensical scenario given that lenders are requiring 20% down these days. That would mean that $8,000 > 20% of the price of the house, or that the house price was less than $40,000.

Really I think that the only scenario that makes sense is that it brings some home sales forward in time because it effectively allows buyers to accumulate lower amounts of savings before they can purchase a home.

I really don't think that helps anyone much. What is really needed is a way to bring job creation forward in time.

On Nov 06 11:40 AM a fat panda wrote:

> "3. The household buys a house when they weren’t even planning on
> buying a house, or they buy a bigger house than they were planning
> on buying. The tax credit actually gets them to increase their quantity
> of housing demanded, more fundamentally affecting their homebuying
> behavior."
>
> Here is a 4th possibility. The household leverages the tax credit
> and buys more house than they can afford. Once the tax credit is
> removed, and the house assumes its market valuation, the mortgage
> is underwater and the people who bought it are in bankrupcty and
> foreclosure.
>
> And this is the case that you say economists call a success. I would
> love to know on what planet they live.

10.2%

Minimum wage jobs are not full employment for anyone over the age of 18.

On Nov 06 03:32 PM Roger Knights wrote:

> There'd be less unemployment if DC hadn't raised the minimum wage.

A Lipper report shows that while mutual-fund expenses haven't changed much in the crisis, fees are a different story (.pdf) - going up, to keep income from plunging along with the assets. Felix Salmon sees the lesson: Stop trying to beat the market and switch to index funds or ETFs; mutual funds are changing from a mass-market product to a niche for elderly investors.

I wish my 401K would give me access to ETF's.

Gold Is Not in a Bull Market

The real problem with this sort of analysis is that it completely neglects some very powerful forces.

1. Inflation. While the dollar price of gold may have gone up, the primary driving force for that is inflation. The purchasing power of hasn't gone up with the price.

2. Comparison of stock market indexes over a period of time severely understate the value of investments because they do not include dividend payouts.

3. We are currently recovering from a black swan event in the stock market. A prudent investor would have sold a lot of his position well before we dropped to current levels.

On Nov 02 12:35 PM realitybiter wrote:

> I challenge everybody to do their own homework, including Nadler.
>
>
> I shouldn't let Nadler get under my skin, but alas, he does. Here
> is a homework problem: What if you had spent the last 20 years,
> accumulating two different asset classes, year in year out, averaging
> equal amounts every year. One was gold, one was growth stock, like
> those in the nasdaq. Okay, we'll use the nasdaq index as our metric
> for growth stock. (Think of how many times your friends would have
> rolled their eyes when you told them they were silly for buying Lucent,
> CMGI, of JDSU..."gold freak!") Result? Your average price for the
> nasdaq was 1,850. Your average price for your gold purchase was
> $440. Lets see...nasdaq is 2055 today AFTER the mother of all rallies
> the last 9 months...meaning you would have made more money in an
> interest bearing checking account!! Your gold, you do the math.
> (well over twice your average purchase prices).
>
> I own it and the miners, and of course I am biased. But I am trying
> to communicate facts here, not opinion. Will it go higher? Maybe.
>
>
> Does it make sense that the trend will continue? I would say, like
> all bull markets, this one will not end until it reaches the mania
> level and folks currently bashing gold, decide that selling their
> $15 Cisco stock for $4000 an ounce gold is a smart decision. Probably
> several years from now. Likely, they will be making the wrong decision
> at that moment, and it is gold's Spring of 2000...(when folks were
> selling $300 gold for $80 cisco stock).

America, The Nanny State

One thing that I think is really wrong with your approach is the idea the Medicare and the rest of the health care system problems are severable and can be dealt with independently. They cannot. The inefficiencies that make Medicare untenable are the same ones that make the rest of the system so costly.

Market: Spooked Today, But Panic Attack Is Likely Temporary

Healthy pullback is all. The REAL time to worry is when markets go up without periodic retrenchments.

Yes reality bites but it is also a requirement for efficient capital allocation and healthy capitalism.

Transport Sector Confirms Economic Weakness

Investing 101. Economies don't respond to Wall Street runups. Not ever. Wall Street is a statistical predictor of future cash flow, discounted for risk.

Economies might respond to monetary and fiscal stimulus. Or they might not. The big puzzle here is how much of the GDP growth number we are getting is the result of these stims. There is a lot of skepticism that these GDP numbers are mostly the result of stimulation. Not so sure myself what the real story is. I'm not willing to give the Keynesians that much credit. In my opinion it's more a bounce due to things dropping below minimum economic activity levels.

In any case there are so many underlying issues going forward that I don't believe 3.5% real growth is going to be repeated on a consistent basis.

As far as retail, discretionary retail is dead for a good long while. People are learning that saving some and living within your means is a good thing. 2011-2020 is the decade of Wal-Mart and getting personal spending under control. And paying down debt. Time to get back to real values - like judging people for the quality of their character rather than whether their Bimmer is a 1,3,5 or 7 series.

On Oct 28 02:25 PM Mark in San Diego wrote:

> My KSP (K-Sea Transportation) tanked today - donw 33% on lower earnings
> and dividend cut. Why? They are the "last mile" operator of barges
> that you see in NYC, Seattle, SF, etc. Taking oil, gas, etc. from
> tankers to power companies, refineries, etc. They see very little
> increase in business, and some deterioration. . .the economy is,
> in my opinion, going to have a second downturn as the Main Street
> economy is not really responding to the Wall Street runup. All those
> retail stores that were "hanging in" waiting for the recovery are
> now going belly-up, and many small restaurants here in San Diego
> have started to call it quits. I would say another full year to
> the bottom.

Homebuyer Tax Credit: Update

I don't think the home buyer credit is doing anything but drying up the inventory of entry level homes. I haven't seen any indication that it has helped prices (the big actor there is interest rates keeping resets from going through the roof).

So is drying up that inventory doing any good? Maybe it's helping the banks a bit - owning all these homes can't be good for a bank.

Is it a good program? Can't see why just helping the banks directly vs. indirectly makes any difference. Except maybe this is something politicians like because they can say to voters they gave them free money (yes many voters would believe that).

Do I like the program? Well for me personally it's a help because it's helping grease the wheels a bit because my family is selling an entry level home because of a life event.

Otherwise it makes little sense.

Green Investors: Stop Hating Coal; Carbon Capture and Storage Here to Stay

One of the arguments against nuclear power is that costs for long term storage of the waste products are not properly included in the cost of the power.

Well it looks like we may be heading to the same situation with the coal industry, only the long term storage of carbon is a much higher volume problem.

How long is the long-run? According to this table, the 30-year timeframe is the narrowest in which stocks currently beat long-term goverment and corporate bonds. Of course, contrarians will say that recent weakness is precisely why stocks are poised to outperform going forward.

How did this same analysis look 10 years ago?

Stocks are inherently more volatile than bonds. If you do single point in time comparisons like this you will get answers that vary tremendously because of this volatility.

With the likelihood of inflation in the near future it is probable that we are in one of the worst periods in history to be concentrating investments into bonds.

How Apple's Market Share Will Propel Stock to $500, Part 1

A lot of people are buying into Windows 7 hype right now. That was also the case in the early days of Vista.

Personally I think this is will be a very short lived phenomena. I own both Vista and Windows 7 machines, and as a software developer I understand both of them quite well.

Vista rightly got a bad reputation when it was released with clumsy security features and some performance issues. Pretty much all of these issues have been corrected and if you configure it right it is a pretty decent, stable OS.

Windows 7 from a user perspective is really no better than Vista SP3, with the right configuration options selected. And Windows 7 still has to go through the teething pains that any new MS OS does - it will really not be something you would give to a user population until at least the first service pack comes out a year from now.

In that year the blush will come off the rose and people will realize that as usual that Microsoft is really a marketing company at this point in its life cycle. If Microsoft was really an innovative company there would be just one version of Windows 7, and it would be the 64 bit platform.

At best this is a non-event for Apple, and it could easily turn into a catalyst for Apple growth when people once again realize that Windows 7 is nothing special.

On Oct 23 10:39 AM D_Virginia wrote:

> > believe new OS launches from Microsoft may have even acted as

We know about the laws of supply and demand, but what if economics violates the laws of physics? Some academics are arguing that a model for consistent economic growth ignores diminishing energy supplies. As one professor puts it: "Neoclassical economics is inconsistent with the laws of thermodynamics."

The premise of this article is utter malarkey because the limits of what is possible under the laws of physics are not remotely approached by human technology.

For example, consider the Sun as a source of energy. It converts four millions tons per second of matter into energy. Of that vast amount of energy some 0.000000032 percent reaches the Earth.

Humankind over the course of one year uses about as much energy as the sun delivers to the Earth in one hour, or 0.01% of the available solar energy. If we were able to capture a measly 5% of this we would increase our energy supply by a factor of 500.

Now consider the idea proposed by Freeman Dyson that advanced societies will build a hollow sphere encircling their Suns in order to capture their energy potential. If humanity were to do this and collect this solar energy it would result in an increase in the available energy by a factor of 30 125 000 000 000, or about 30 trillion.

So give me a call when our economy has grown by a factor of 30 trillion and then I'll tell you about more advanced forms ways of generating energy that make a Dyson sphere look piddly.

We know about the laws of supply and demand, but what if economics violates the laws of physics? Some academics are arguing that a model for consistent economic growth ignores diminishing energy supplies. As one professor puts it: "Neoclassical economics is inconsistent with the laws of thermodynamics."

Actually they behave in a purely random fashion. It is only as a statistical whole that they behave in a predictable manner. The reason you don't see phenomena like all the air molecules suddenly collecting in one corner of a room is that there are so many of them that the odds of this happening are very very small.

On Oct 24 04:00 PM Wildebeest wrote:

> On Oct 24 02:45 PM bottoms-up wrote:

Not a Drop to Drink: Three ETFs for Future Global Water Shortages

I really don't thing the US spends more on water than health care. According to figures I've seen the US spends 1-2% of GDP on water processing and delivery, but 17% on health care. I mean it is not even close.

Education is closer, but still it is about 6% vs 1-2% for water.

As far as internet I was unable to find anything really reliable so I took telecommunications as a proxy - most all communications moves over the internet these days - and got a number of 3%. So one could claim water is comparable in size in the US to the telecom industry.

Yes water is a basic necessity and there are large populations where this is becoming a critical issue; as you say the size of the water problem correlates directly with population. But some of the claims you make about the size of the water industry aren't real. As far as growth goes, yes it has a long term growth picture. But if it is really linked to population it might not be that robust - after all world-wide population growth rates are declining.

American Booksellers Association asks the Department of Justice to investigate this week's price war between Amazon.com (AMZN), Wal-Mart (WMT) and Target (TGT), claiming it constitutes illegal predatory pricing that is damaging to the book industry and harmful to consumers.

Me too. Book publishers must hate us. I'm also on the warpath against e-books which I think is primarily a way for book publishers to choke off used book sales.

On Oct 22 08:30 PM Beach Bubba wrote:

> All I know is this, I shop the used book values on Amazon and then
> look to Ebay for the same item. It is 50-50, sometimes Ebay Has the
> bargain...the next day it is Amazon. The quality of each book I have
> bought (many) has been excellent to new in all cases, Ebay or Amazon.
> I will never ever buy a New Book again. And how do the Borders and
> other big book stores stay in business...with prices at least double
> the on line stores. Are people really that ignorant.
>
> The news story above makes absolutely no sense at all. When is a
> price war "preditory pricing" and how, in heavens name, is it harmful
> to the consumer. Get these idiots off the page. Or is this something
> from Orwell's 1984.