Friday, January 30, 2009

Graph: U.S. housing prices, 1890-2008

This graph shows U.S. housing prices for the first quarter of each year. 2009's first quarter numbers should be released four months from now.

Source: My Housing Graphs Website.

Wednesday, January 28, 2009

Graphs: The U.S. money supply

M2, the broadest measure of the money supply currently tracked by the Federal Reserve:

M1, a narrower measure of the money supply:

M0, the monetary base (currency plus central bank reserves), the portion of the money supply directly controlled by the Federal Reserve:

The Fed helicopters are a-flyin'!

Sunday, January 25, 2009

Video: The Nanny State in 2008

Don't worry. It's for your own good:

Aren't you glad you live in a free country?

Wednesday, January 21, 2009

Obama has retaken the oath of office

Both Barack Obama and John Roberts screwed up the oath of office on Tuesday. After Obama caught the Chief Justice's mistake and Roberts corrected himself, Obama did not exactly repeat Roberts' correction. The end result was that Obama said the oath of office incorrectly.

I was hoping that they would redo it, to eliminate the prospect of historians debating whether Barack Obama was really the first black president. It turns out that they have:
President Obama retook his oath of office Wednesday after Chief Justice John Roberts flubbed while delivering it at Tuesday's inauguration.

The second oath — also administered by Roberts — took place at 7:35 p.m. Wednesday in the White House's Map Room. ...

The do-over was aimed at dispelling any confusion that might arise from Tuesday's take — in which "faithfully" was said out of sequence — and erase any question that Obama is legally the president. ...

The Constitution sets out the language that should be used in the oath: "I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States."
Now historians and legal scholars can debate which day Barack Obama became president.

I feel sorry for Roberts. Everyone makes mistakes, but historians will remember this mistake for as long as America exists.

Extended copyrights are harmful for consumers

Although this video is about Europe, the principle is the same in the U.S. Having older works pass into the public domain is beneficial for society.

Source: Electronic Frontier Foundation

Saturday, January 17, 2009

Paulson says more capital injections needed

Treasury Secretary Hank Paulson says more bank capital injections are needed:
The second half of the financial industry bailout fund should be used mostly for direct capital injections into troubled banks and financial firms, Treasury Secretary Henry Paulson said Friday.

"At least in my judgment, a good portion of the TARP resources has to be used for capital programs," Paulson told reporters in his final press conference as Treasury Secretary.

Congress is working quickly on releasing the second half of the $700 billion war chest. The Senate voted on Thursday to release the funds.

Paulson said he understood the public's impatience that the massive spending has not solved the financial crisis.

But he said the plan has been essential for financial market stability.

Paulson defended his record in combating the financial market failure and resulting credit crunch.

"I think history will look and say that maybe around the edges we might have done things differently, but the big decisions we've made have been the right ones and I think will stand the test of time," he said.

Although he was as frustrated as anyone that banks are not lending more, lending is naturally lower in a recession, he said. The key is that lending is higher than it would be without the Bush administration's efforts, he said.

President-elect Obama will face the same frustration with his economic stimulus plan, Paulson said.
I agree with Hank Paulson. I originally opposed bank bailouts, but Milton Friedman changed my mind.

Keep in mind that capital injections are not a handout to the financial industry. The banks do have to pay the government (i.e. the taxpayer) dividends in exchange for the capital. The banks need to continue paying dividends to the government taxpayer until the banks repay the principal. If the government borrows at a rate of 3% and the banks pay a dividend to the government of 5-8%, then the government taxpayer is netting 2-5% on the capital injections.

Friday, January 16, 2009

Circuit City is being liquidated immediately

Circuit City is being liquidated immediately. If it is still open this weekend, you may want to look for a going out of business sale. Anyone with Circuit City gift cards should use them immediately. Any product returns should be done immediately.

Update: I went to Circuit City on Saturday. The discounts are lame. You can get better discounts from

Update #2: CNN Money has a warning about liquidation sales. Here's an interesting quote from the article: "It's almost a scam and there's nothing illegal about it."

Thursday, January 15, 2009

Stanford economists predict recovery in second half of 2009

Stanford University economists Nicholas Bloom and Max Floetotto explain why they believe the economic recovery will begin during the summer:
The heightened uncertainty after the credit crunch led firms to postpone investment and hiring decisions. Mistakes can be costly, so if conditions are unpredictable the best course of action is often to wait. Of course, if every firm in the economy waits, economic activity slows down.

But now that uncertainty is falling back growth should start to rebound. Firms will start to invest and hire again to make up for lost time. ... After falling by 3% between October 2008 and June 2009, we forecast GDP will rapidly rebound from July 2009 onwards. ...

Many economists make the case for a stronger policy response. That might be right, but policy makers need to act fast. ... Dithering over different courses of policy will actually make things worse by adding uncertainty.

Tuesday, January 13, 2009

Bernanke says banks need more money

From MarketWatch:
There will be no "lasting" recovery without more government action and additional money to strengthen the financial system, Federal Reserve Chairman Ben Bernanke said Tuesday.

The timing and strength of economic recovery "are highly uncertain," Bernanke told an audience in London.

In what's likely to be a sobering message to Congress, Bernanke did not say the end was near. He said that the stimulus package championed by President-elect Barack Obama would likely help the economy but wouldn't be enough on its own.

"In my view ... fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system," Bernanke said.

The next step is to get toxic assets off bank balance sheets, he said. He outlined several ways to do this, including setting up "bad banks" to hold the troubled assets, mostly mortgage debt.

As yet, the financial crisis has no end in sight, given the weak economy, Bernanke said.

Saturday, January 10, 2009

Unemployment rate projections

The Obama administration's projections of future unemployment, with and without its economic stimulus plan:


Friday, January 9, 2009

Project Implicit is complete garbage

After reading a CNN article titled "You may be more racist than you think, study says," I followed a link in the article to Project Implicit on Harvard University's website, where you can supposedly take tests to discover your hidden biases regarding things like race, religion, age, weight, etc.

So far, I have taken three of Project Implicit's tests, and I am not impressed. First, I took the Black-White racial preference test, which said I have a strong automatic preference for White people. This apparently put me in Ku Klux Klan territory, as it was the most racist option possible.

Second, I took Project Implicit's Obama-McCain test, which actually tested two things: racial preference and politician preference. Regarding racial preference, it said I have no automatic preference for either Black people or White people, which was in complete disagreement with the racial preference test I had just taken a little while earlier. Regarding Obama vs. McCain, it said I have a slight preference for Obama. Although I did vote for Obama, I actually like both men but favored McCain most of the year. My switch from supporting McCain to supporting Obama was due to my dislike of Sarah Palin, not McCain, himself.

Finally, I took Project Implicit's "Presidents" test, which supposedly compares how one likes George W. Bush compared to other recent U.S. Presidents. For some background, I have despised George W. Bush as long as I have known about him. I contributed to McCain's 2000 campaign, in an attempt to prevent Bush from winning the Republican nomination. I voted for Gore in 2000 and Kerry in 2004. Even after the September 11 attacks, when Bush's approval rating soared to around 90%, I was in the other 10%. I think he is one of the worst presidents in U.S. history. So what did Project Implicit's test say? (You know where this is going, don't you?) It said I have a strong automatic preference for George W. Bush, which is complete garbage.

I don't know what research Project Implicit's tests are based on, but from my experience the tests are no more accurate than random chance. The New York Times has also noted that "there isn’t even that much consistency in the same person’s scores if the test is taken again." Yikes! This is science? Wikipedia lists some of the criticisms of their testing methodology here. In fact, if you search for the term "Implicit Association Test," which is the testing methodology Project Implicit uses, you keep coming back to the same very small group of researchers. This suggests that their methodology has not passed the peer review necessary to verify that it is reliable. I get the uneasy feeling that Project Implicit's tests are as bogus as polygraphs. You've gotta love social science research.

Wednesday, January 7, 2009

Meredith Whitney says banks will have to raise more capital

From CNBC:
U.S. banks will have to raise fresh capital in 2009, and a sharp increase in credit-rating downgrades on mortgage-related securities will lead to further stresses on the companies' capital, according to prominent banking analyst Meredith Whitney.

"From July 2007 to date, over $5 trillion worth of securities have been downgraded, but our concern here is that the pace of downgrades has only accelerated through 2008," the Oppenheimer analyst wrote in a research note dated Jan. 6.

Tuesday, January 6, 2009

Krugman criticizes Sanjay Gupta as Surgeon General pick

Nobel Laureate Paul Krugman dislikes Obama's pick of Sanjay Gupta as Surgeon General:
So apparently Obama plans to appoint CNN’s Sanjay Gupta as Surgeon General. I don’t have a problem with Gupta’s qualifications. But I do remember his mugging of Michael Moore over Sicko. You don’t have to like Moore or his film; but Gupta specifically claimed that Moore “fudged his facts”, when the truth was that on every one of the allegedly fudged facts, Moore was actually right and CNN was wrong.

What bothered me about the incident was that it was what Digby would call Village behavior: Moore is an outsider, he’s uncouth, so he gets smeared as unreliable even though he actually got it right. ... And appointing Gupta now, although it’s a small thing, is just another example of the lack of accountability that always seems to be the rule when you get things wrong in a socially acceptable way.
The conservative Weekly Standard provides a rebuttal.