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Randy H
2007 Jul 16, 12:08am
NIA are the principles and measures by which GDP is computed. Refer to Mankiw et. al. for definitions.
But more to the point, I let this debate stand as yet another example of how the rational perspective that housing is in a price bubble so often becomes a competition of "who can be more doom and gloom".
I entered into this because it was uttered above that "it's simple microeconomics 101". OK, now we're arguing about what constitutes aggregate GDP within the framework of national income accounts, which is neither simple nor is it microeconoimcs.
Just because there's about 20% more equity owned by home-owners than the scarier bear blogs claim doesn't mean that house prices won't correct. Similarly, just because rents are starting to rise healthily in some markets doesn't mean that house prices won't correct.
Over a year ago I was having the same kind of argument about house-price stickiness. I seem to recall a particular blog bully named "Allah" who authoritatively proclaimed that there could not ever be any house price stickiness, and anyone who thought otherwise must be a 'sheeple'. When I disagreed he called me a Realtor. Hey Allah, is it not-sticky yet?
To point: Foreclosure does not equal Bankruptcy. You realize that nearly all states have laws that protect non-house assets from foreclosure action, right? A wave of foreclosures would suck. It will hurt lots of consumers. It will destroy creditworthiness. It may even cause a recession.
Just not the end of the US consumer economy. Despite what Peter Schiff may say. He's entertaining though. Kind of the Ed Yourdon of finance.
Over a year ago I was having the same kind of argument about house-price stickiness. I seem to recall a particular blog bully named “Allah†who authoritatively proclaimed that there could not ever be any house price stickiness, and anyone who thought otherwise must be a ’sheeple’. When I disagreed he called me a Realtor. Hey Allah, is it not-sticky yet?
No Randy; I am not a blog bully; it's just that you are not above me.
....and yes, I believe in your own mind I proclaimed that "there could not ever be any house price stickiness and anyone who thought otherwise must be a sheeple."
However, in reality as anyone knows how to read can see if they search out what I wrote that I said at first there will be stickiness (just like there is in a normal housing market cycle downturn) and then there will be no stickiness (like I expect to be in an unprecedented abnormal housing market downturn such as this one) and from what I am observing in many places, it appears to be exactly what I said it would be.
...but thank you for being man enough to make a post on a forum that I regularly visit so I am able to defend myself.
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We all know that a picture is worth a thousand words, and I believe this is also true of charts and graphs. A well designed chart has a way of conveying dense economic and statistical information in a visually pleasing way that even your most innumerate FB can understand. A good chart can also pack in an extraordinary amount of data plotted along multiple variables in a very small space that can have an immediate gut-punch impact that no amount of dry exposition can duplicate.
And let's face it, how many ADD-afflicted Uh-merikans are going to listen to you rant on about the bubble-blowing Fed, Yen carry-trade, mortgaged-backed securities, or MLS cartel for the minimum 2-3 hours it would take you to explain them all? Good charts are your best ally in educating the clueless or confronting the REIC Kool-aid stormtroopers.
The following are some that I believe should be part of every Patrick.netter's Bubble-battling toolkit. I recommend downloading these, and possibly even keeping hard copies at hand, for whenever the need to counter REIC bullshit comes up (which is probably fairly often).
Of course, we all know about the famous Shiller housing price chart:
Or the Credit-Suisse ARM reset chart:
Other strong contenders include:
Businessweek's "Map of Misery":
Calculated Risk's home inventory chart (sorry, can link to but not display chart for some reason)
Calculated Risk's MEW chart:
ForeclosurePulse's U.S. foreclosures "heatmap":
CalculatedRisk's MEW as % of total U.S. GDP chart:
PrudentBear's home Equity as % of market value:
How about a whole boat-load of RE related charts from Credit-Suisse?
What are some of your favorites?
HARM
#housing