Anyone notice the lack of stories in the press about deaths in Iraq? Or how the decision by Muqtada al-Sadr to have his army take a six month break has hardly been discussed at all?
These are the best signs that "the surge" is working. Those who want to pull out, and those who want to make the Bush war policy look bad, are running scared.
Thursday, August 30, 2007
Pessimism Runs Rampant
Who can't help but marvel at the obvious attempts by the liberal MSM to cast a negative pall on anything that could be even remotely linked to the Bush administration.
Yesterday in the Valley News there was a lead above-the-fold article with a Washington Post by-line (authors Christopher Lee and N.C. Aizenman). Headline: US Poverty Rate Down .3% in 2006. The second headline: But More Americans Lacked Health Insurance.
The article goes on to offset any positive aspect with a negative counter. For instance: "While median household income rose for the second consecutive year in 2006, the increase appeared to be driven by a jump in the number of people in each household taking on full-time jobs, rather than a rise in wages."
In fact this is the first time this decade the poverty rate has declined, and it was accompanied with an increase in median household income of .7%.
Yesterday in the Valley News there was a lead above-the-fold article with a Washington Post by-line (authors Christopher Lee and N.C. Aizenman). Headline: US Poverty Rate Down .3% in 2006. The second headline: But More Americans Lacked Health Insurance.
The article goes on to offset any positive aspect with a negative counter. For instance: "While median household income rose for the second consecutive year in 2006, the increase appeared to be driven by a jump in the number of people in each household taking on full-time jobs, rather than a rise in wages."
In fact this is the first time this decade the poverty rate has declined, and it was accompanied with an increase in median household income of .7%.
Saturday, August 18, 2007
Record Low Temps Again?
The record low temperature for Lebanon, NH on August 18 is 41 degrees, recorded in 1957, the year I was born.
The National Weather Service forecast for tonight is a low of....41 degrees.
I think I have to build a fire.
The National Weather Service forecast for tonight is a low of....41 degrees.
I think I have to build a fire.
Apple turns the corner
One of the top electronic game makers, EA, has shipped two new Mac games and will soon be shipping two other popular titles written for the Mac (well, maybe not really written for the Mac, but deciphered from the Windows version).
While still not quite matching the release dates of the Windows version of the games, EA's step into Mac-dom is welcome.
One of Apple's weaknesses has always been the lack of certain software, especially in the gaming arena.
With a few more hits like this, the only remaining reasons for not switching to a Mac would be.........ummmmmmhhhh...
Bill, can you help me here?
While still not quite matching the release dates of the Windows version of the games, EA's step into Mac-dom is welcome.
One of Apple's weaknesses has always been the lack of certain software, especially in the gaming arena.
With a few more hits like this, the only remaining reasons for not switching to a Mac would be.........ummmmmmhhhh...
Bill, can you help me here?
Hanover High Cheating Scandal
At the local high school, Hanover High, nine 17-year old students (all males) have been charged with misdemeanor counts of criminal trespass and/or criminal liability for the conduct of others, in connection with the theft of final exams in math and chemistry courses. It sounds as if the kids hatched – and implemented – a plot to steal exams before test day, so as to be better prepared. I believe they also gave other students the exams as a gift, which causes one to further question the kids’ common sense (unless they sold the exams, which raises the old economics question of whether you can profit more from information by using it yourself or selling it).
I am sorry for the kids, but it certainly was not a very bright thing to do. And I would have to say that in my ranking of crimes, this is one notch worse than, say, colluding with another student to share answers. These guys not only (allegedly) violated academic integrity by cheating, but they also allegedly criminally invaded school property and stole something. Not good.
But, the most interesting part of this is that, naturally, some of the kids are children of folks we know. I will resist any urge to engage in schadenfreude, for the usual “there but for the grace of God…” reason. However…one of the poor kids is the son of Jim Kenyon, a notorious columnist for the Valley News. This is the guy who never misses a chance to tear into Dartmouth and generally side with the forces of bleeding hearts and evil. His column is one I never miss, and much like Paul Krugman’s, it never ceases to raise my ire. The last one he wrote got me upset because he criticized our local food co-op for having a 60-year old woman arrested for shoplifting (she was later acquitted by the judge). The co-op should have shown mercy on a nice old lady, Kenyon said; my reading was that he has one kind of justice for people he knows and likes and another kind of justice for outsiders and “ne-er do wells”. Nothing like a little discrimination, eh?
Perhaps Mr. Kenyon knew when he wrote that column that his son was being investigated for his own form of shoplifting?
The Valley News had some quotes from Jim Kenyon regarding the incident and his son:
He said Hanover High School’s “high pressured academic culture” leads to widespread cheating.
“The entire community must be willing to take a hard look at how it might have unwittingly contributed to this problem and work together to find solutions.”
Kenyon said the school’s cheating problems “do not begin or end with the final exams now in question.”
Give me a break, please! So we are to sacrifice our academic ambitions because nine kids can’t resist the pressure to steal exams? And this is not mainly the problem of the kids and their families, but of the entire community? Yes, society is to blame, competition is evil, we are not responsible for our own actions, we all have to work together…blah blah blah.
I am sorry for the kids, but it certainly was not a very bright thing to do. And I would have to say that in my ranking of crimes, this is one notch worse than, say, colluding with another student to share answers. These guys not only (allegedly) violated academic integrity by cheating, but they also allegedly criminally invaded school property and stole something. Not good.
But, the most interesting part of this is that, naturally, some of the kids are children of folks we know. I will resist any urge to engage in schadenfreude, for the usual “there but for the grace of God…” reason. However…one of the poor kids is the son of Jim Kenyon, a notorious columnist for the Valley News. This is the guy who never misses a chance to tear into Dartmouth and generally side with the forces of bleeding hearts and evil. His column is one I never miss, and much like Paul Krugman’s, it never ceases to raise my ire. The last one he wrote got me upset because he criticized our local food co-op for having a 60-year old woman arrested for shoplifting (she was later acquitted by the judge). The co-op should have shown mercy on a nice old lady, Kenyon said; my reading was that he has one kind of justice for people he knows and likes and another kind of justice for outsiders and “ne-er do wells”. Nothing like a little discrimination, eh?
Perhaps Mr. Kenyon knew when he wrote that column that his son was being investigated for his own form of shoplifting?
The Valley News had some quotes from Jim Kenyon regarding the incident and his son:
He said Hanover High School’s “high pressured academic culture” leads to widespread cheating.
“The entire community must be willing to take a hard look at how it might have unwittingly contributed to this problem and work together to find solutions.”
Kenyon said the school’s cheating problems “do not begin or end with the final exams now in question.”
Give me a break, please! So we are to sacrifice our academic ambitions because nine kids can’t resist the pressure to steal exams? And this is not mainly the problem of the kids and their families, but of the entire community? Yes, society is to blame, competition is evil, we are not responsible for our own actions, we all have to work together…blah blah blah.
Friday, August 17, 2007
The Fed to the Rescue
The Federal Reserve today singlehandedly created a 2% rally in the stock market and put to rest at least some fears of a credit crunch. I applaud Ben Bernanke and his colleagues’ move.
The critical distinction here is between bailing out investors who made bad decisions versus preventing a classic financial panic, of the “run on the bank” variety. I give my vote to the idea that there was indeed risk of a credit crunch, with a cascade of negative opinion creating feedback that was preventing capital from flowing to positive net present value projects.
The classic bank run occurs when depositors come en masse to a bank, demanding their deposits. These deposits are not, of course, in a vault at the bank but instead have been lent out to borrowers, with only some small percentage kept close at hand. If too many depositors demand their account balances, the bank must begin calling its loans, and therein lies the contagion effect.
In today’s market, the problem is not so much with traditional banks. But consider an investment bank like Bear Stearns. Bear Stearns discloses that one of its in-house investment funds held mortgage-backed securities that has declined in value so much that the fund is worthless – presumably the fund managers had leveraged their investments, so a relatively small decline in value could wipe out the net assets of the fund. Once disclosed, and given the overall worries about mortgage-backed securities, negative sentiment about Bear Stearns increases. In the normal course of business, an investment bank needs to borrow large sums of money to finance its activities. But given the concerns, and lack of knowledge of how bad the problems really are, who will want to throw money into a pot that might turn out to be rather empty? Afraid of being the claimant of lowest priority, nobody wants to lend money to such an institution under almost any conditions. This causes the investment bank to reduce its activity in a whole host of areas, and to sell assets it otherwise would hold, in order to raise funds. The vicious cycle begins, with lower prices in asset markets putting other institutions at risk…
I have been hearing from friends on Wall Street since at least June of the funny conditions in the credit markets. Credit was drying up, in the sense that lenders were just saying no, rather than just increasing prices by a reasonable amount to cover new risks.
It is funny how long it took for those fairly wide-spread debt market fears took to spread to the equity markets. One of those (many) instance where if only I had known for sure, I could have made some money. Ah, but how many times have I suspected some disaster only to see stock markets rise thereafter? Much better to buy and hold.
What the Fed did, in lowering the discount rate, was really quite genious. Very little additional credit will enter the economy as a result, and what does enter can be offset at an opportune time via open market operations.
But the Fed showed investors that they do understand that conditions are unusual and that there is a risk of a credit crunch. Credit crunches, panics, and runs should be prevented, and that is the job of the Fed. Bailing out mortgage bankers who loaned 100% of a home’s appraised value to buyers without verifying income is not the job of anyone.
By the way, I know folks in Hanover who had to pay for private mortgage insurance when they bought a house, and these are people with great jobs and in a great housing market. How is it that people in Florida and California are getting by with 100% loan to value mortgages, no income verification, and no PMI??
The critical distinction here is between bailing out investors who made bad decisions versus preventing a classic financial panic, of the “run on the bank” variety. I give my vote to the idea that there was indeed risk of a credit crunch, with a cascade of negative opinion creating feedback that was preventing capital from flowing to positive net present value projects.
The classic bank run occurs when depositors come en masse to a bank, demanding their deposits. These deposits are not, of course, in a vault at the bank but instead have been lent out to borrowers, with only some small percentage kept close at hand. If too many depositors demand their account balances, the bank must begin calling its loans, and therein lies the contagion effect.
In today’s market, the problem is not so much with traditional banks. But consider an investment bank like Bear Stearns. Bear Stearns discloses that one of its in-house investment funds held mortgage-backed securities that has declined in value so much that the fund is worthless – presumably the fund managers had leveraged their investments, so a relatively small decline in value could wipe out the net assets of the fund. Once disclosed, and given the overall worries about mortgage-backed securities, negative sentiment about Bear Stearns increases. In the normal course of business, an investment bank needs to borrow large sums of money to finance its activities. But given the concerns, and lack of knowledge of how bad the problems really are, who will want to throw money into a pot that might turn out to be rather empty? Afraid of being the claimant of lowest priority, nobody wants to lend money to such an institution under almost any conditions. This causes the investment bank to reduce its activity in a whole host of areas, and to sell assets it otherwise would hold, in order to raise funds. The vicious cycle begins, with lower prices in asset markets putting other institutions at risk…
I have been hearing from friends on Wall Street since at least June of the funny conditions in the credit markets. Credit was drying up, in the sense that lenders were just saying no, rather than just increasing prices by a reasonable amount to cover new risks.
It is funny how long it took for those fairly wide-spread debt market fears took to spread to the equity markets. One of those (many) instance where if only I had known for sure, I could have made some money. Ah, but how many times have I suspected some disaster only to see stock markets rise thereafter? Much better to buy and hold.
What the Fed did, in lowering the discount rate, was really quite genious. Very little additional credit will enter the economy as a result, and what does enter can be offset at an opportune time via open market operations.
But the Fed showed investors that they do understand that conditions are unusual and that there is a risk of a credit crunch. Credit crunches, panics, and runs should be prevented, and that is the job of the Fed. Bailing out mortgage bankers who loaned 100% of a home’s appraised value to buyers without verifying income is not the job of anyone.
By the way, I know folks in Hanover who had to pay for private mortgage insurance when they bought a house, and these are people with great jobs and in a great housing market. How is it that people in Florida and California are getting by with 100% loan to value mortgages, no income verification, and no PMI??
Gloom and Doom
It’s really entertaining to read the New York Times, especially Paul Krugman’s gloom and doom editorials. I have a colleague who writes an investment advisory letter that exhibits a similar “longing for disaster” tone. Another example is all the climate change advocates who I detect thirsting for some Atlantic hurricanes this year (hurry up, Dean!).
The politics and world views behind so many pundits’ analysis is just so obvious, and so weakly denied. Krugman’s columns ooze not just gloom and doom, but I get a strong sense that he wants to see things melt down, just to prove that the Bush administration has been a total failure. My colleague’s letters to his clients are very similar. It’s not just that he thinks a real estate crash might come, but one gets a very strong sense that he will be happy and fulfilled if it does happen.
Here is an example. In today’s NYT, Krugman writes, “According to data released yesterday, both housing starts and applications for building permits have fallen to their lowest levels in a decade, showing that home construction is still in a free fall…The housing slump will probably be with us for years, not months…Meanwhile, it’s becoming clear that the mortgage problem is anything but contained.”
Free fall, years not months, anything but contained, lowest levels in decade…well, that last phrase is the one factual statement out of all of them. But given what housing has done in the last decade, to say that activity is lower than it has been for ten years really does not sound too bad. And even with housing prices haven fallen of late, has anyone checked the rate of return on owner-occupied housing over recent periods? Some slowing down or even declines is not exactly a crash.
How much you want to bet that Krugman criticizes the Fed for throwing cold water on his dreams? Don’t you share my hunch that many of these Democratic analysts are hoping that the housing crunch does indeed snowball into a recession, so that the Presidency will go to….Hillary? Obama? Edwards?
The politics and world views behind so many pundits’ analysis is just so obvious, and so weakly denied. Krugman’s columns ooze not just gloom and doom, but I get a strong sense that he wants to see things melt down, just to prove that the Bush administration has been a total failure. My colleague’s letters to his clients are very similar. It’s not just that he thinks a real estate crash might come, but one gets a very strong sense that he will be happy and fulfilled if it does happen.
Here is an example. In today’s NYT, Krugman writes, “According to data released yesterday, both housing starts and applications for building permits have fallen to their lowest levels in a decade, showing that home construction is still in a free fall…The housing slump will probably be with us for years, not months…Meanwhile, it’s becoming clear that the mortgage problem is anything but contained.”
Free fall, years not months, anything but contained, lowest levels in decade…well, that last phrase is the one factual statement out of all of them. But given what housing has done in the last decade, to say that activity is lower than it has been for ten years really does not sound too bad. And even with housing prices haven fallen of late, has anyone checked the rate of return on owner-occupied housing over recent periods? Some slowing down or even declines is not exactly a crash.
How much you want to bet that Krugman criticizes the Fed for throwing cold water on his dreams? Don’t you share my hunch that many of these Democratic analysts are hoping that the housing crunch does indeed snowball into a recession, so that the Presidency will go to….Hillary? Obama? Edwards?
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