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Monday, November 26, 2007

The real cause of the current housing mess

Government support encouraged too many people to see housing as a risk free investment. Why is there a view that to own is much better than to rent?

EconLog, Shiller is bold?, Arnold Kling: Library of Economics and Liberty

The Bear Case: Lawrence Summers - Wake up to the dangers of a deepening crisis

Summers writes that things are much worse than three months ago. Roubini also chimes in . The question is whether the market has discounted this new information yet.

FT.com / Columnists / Lawrence Summers - Wake up to the dangers of a deepening crisis

Saturday, November 17, 2007

Enough said

blog.pmarca.com: Nixon White House tapes: the gift that keeps on giving

The Fed on: The Rise and Fall of Subprime Mortgages - Economic Letter, Nov. 2007 - FRB Dallas

A good history of the rise and fall of mortgages.

Also can add a comment on the size of the losses.

Some estimates of the size of the sub-prime damages appear to us to be double-counting the losses. They add loan defaults to CDO and MBS write-downs and financial institution write-offs. In our view, there’s only one economic loss among these the foreclosure minus the recovery. The rest are timing decisions in which some are realizing their losses in zero-sum financial calculations, while others will realize gains later.

  • On a broader scale, the realized mortgage losses (a foreclosure minus a recovery) are a subset of unrealized losses (over the last couple of years as real estate prices declined). Those followed largely-unrealized gains (the seven-year boom from 1998-2005). From the standpoint of the economic outlook, we think the still-large net real estate gains over the last decade, by adding to household net worth, act as a cushion against a recession.
From Malpass at Bear.


The Rise and Fall of Subprime Mortgages - Economic Letter, Nov. 2007 - FRB Dallas

Monday, November 05, 2007

Notes from Beijing

I was just about to send James Fallows a note about his air quality report. I arrived in Beijing on Nov 5. Nasty.

James Fallows (November 05, 2007) - Maybe Nov 3 is out too?

Thursday, November 01, 2007