All Things in Moderation

I’m a big fan of the two shows This American Life did with Pro Publica regarding the Giant Pit of Money. Shoving interest rates down for so long meant that bond yields were nada. A historically unprecedented amount of money went looking for higher returns. Match that with poorly doc’d CDOs and you’ve got a setup for the biggest balloon since the tulips.

I was out purchasing in 2005 and deeply frustrated by competing in that market. I feel sorry for many, but I also got screwed in a different way. All that easy money meant that I had to pay a lot more for a house than in a reasonable market. We put down a bit over 10% and have a 15 year fixed mortgage. Even given a decline in values (we’re probably down about 10% in Alexandria, VA), we have solid equity in our home.

Personally, I’m in favor of terminating the mortgage interest deduction. I doubt that it’s done much for its purported aim, increasing home ownership. If you look at ownership rates internationally (I’m not on the SCOTUS, so I’m allowed to do this), you’ll some interesting results.

Australia – 69%
UK – 69%
US – 68%
Canada – 67%
NZ – 65%

Take a look at my not so random selection. Home ownership rates are comparable in the UK and English speaking former colonies. The desire for home ownership is a cultural matter, independent of a mortgage interest deduction.

But wait! One argues that it makes home ownership more affordable. No it doesn’t. Historically, the calculation has been based on income. If the government subsidizes mortgage payments, then housing prices will simply rise to compensate.

As an interim measure, I would suggest a housing tax credit of up to 20% with a limit of the median price of a home multiplied by the average interest rate . No second homes either. Sunset it by 1% per year until the damn thing disappears around 2030.

BB

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Gotta a migraine. This is gonna be short.

Dec. 3rd was the 19th Anniversary of the first cell phone text message.

The floor is yours.

— KW

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Christopher Hitchens is dead. Hitch was a very smart man, a great writer, and a bit of an enigma. He will be missed on all parts of the political spectrum, I suspect.

Back in 2005 I had my own brief “brush with greatness” with him. I was living in England, and had started my own blog, The American Expatriate, which was dedicated largely to critiquing the British media’s coverage of America. I had written a brief post about a debate on Iraq that Hitchens had with George Galloway (a truly loathsome MP who had had his own run-in with the US Congress over the oil-for-food program.) Anyway, unbeknownst to me, a radio personality in the UK named Charlie Wolf had become a bit of a fan of my blog, and when he saw my blog post he contacted me to appear on his radio show to comment on the debate, which I did. Unfortunately, my appearance was cut short when Wolf’s producer managed to get Hitchens himself on the phone in the middle of my comments.

So Hitchens managed to pre-empt my first and only radio appearance. At least he was kind enough not to remark about the bumbling, stuttering clown who preceded him on the show, for which I have forever been grateful.
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QB referenced a New Yorker piece on Hitchens in a more recent thread and while I’m not sure if I found what he was referencing, here are a couple of pieces on Hitchens from The New Yorker:

A 2006 piece on Hitchens’ support for the Iraq War.

A Postscript by Christopher Buckley that I really enjoyed.

And for those who, like myself, aren’t particularly familiar with Hitchens, here is a list (with descriptions) of some of his work.

–Ashot—

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Vital Statistics:

It is Triple Witching Day, and the folks on business TV are excited. I have never understood why – I don’t think options expiry days are any more volatile than non-option expiry days. As an aside, am I the only one irritated by the CNBC / Bloomberg TV insistence on calling it Quadruple Witching Day (to include the expiry of single stock futures)? Does anybody trade single stock futures? Quadruple Witching just sounds more dramatic than Triple Witching.

The consumer price index was released this morning, and it shows that inflation is still behaving. The low inflation numbers were primarily attributed to a drop in the price of energy, as gasoline bounces around close to support and natural gas cannot get out of its own way.

As we close in on the holidays, the markets are only going to become more boring. Zynga priced last night at the top of its range at $10 a share. It is set to begin trading around 11:00 am.

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When the government grows, the private sector shrinks. Or maybe it’s that the private sector shrinks, thus obligating the government to grow.

The 6 Things Movies Love to Get Wrong About the Workplace.

HuffPo says Anti-Incumbent Fever Can Hurt Republicans. Implied, if not explicitly stated, is that it might also hurt the incumbents in the senate and the Whitehouse, as there are, in fact, a lot of incumbent Democrats, too.

Newt Gingrich says the Ryan-Wyden bill is awesome. Wonder who that will hurt more.

Do you like to clip coupons? I do. It’s like money you don’t pay taxes or withholding on. Good deal!

There’s a new Ghost Rider film on the way. I love it when underperforming films get a sequel. That shows moxie!

Climategate continues. Whistleblowers are criminals who must immediately be arrested, if their leaking the wrong kind of emails. Who thinks this is a good idea for dealing with climate skeptics? Whistleblowers were cool . . . back in the day.

Why We Need Serious Welfare Reform. I observed some of the same things over 20 years ago (without the iPhones). I agree in spirit, but it’s not going to happen. There will always be people, and lots of them, abusing the system and teaching that to the next generation. Those incentives will always be present in some form. The blogger is young. She talks like this might change, and it won’t, unless the entire country goes bankrupt. I’d prefer that not to happen, even if it means an ever-growing entitlement class.

Here’s another picture of a puppy:

lmsinca’s Christmas Cookies

I thought this one was pretty good…

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Vital Statistics:

A slew of economic data was released this morning: PPI, Empire Manufacturing, Jobless claims, Industrial Production, and Capacity Utilization. The PPI (Producer Price Index) shows that inflation is a non-issue. Empire Manufacturing showed manufacturing in NY State has rebounded from the summer lows. Industrial Production was surprisingly low, and capacity utilization was flat. Philly Fed indicated strength as well. The best news was in initial jobless claims, which dropped to 366k, a post-recession low. Initial jobless numbers can be fluky this time of year, and we had a headfake earlier this year, but that said, it is encouraging and confirms other numbers that show the labor market may be picking itself up off the mat.

The kabuki dance over the temporary payroll tax cut extension continues. There have been leaks that Democrats are planning to drop their insistence on a permanent surtax on millionaires to pay for the tax cut, which is a nonstarter for Republicans. I’m sure both parties will manage to scrounge up some fake spending cuts in the couch and pass something so they can go home for the holidays.

Perennial Krugman critic Amity Schlaes lays into Krugman for his latest column, which seems to imply that raising the retirement age in Greece means that Kristallnacht is just around the corner. Schlaes points out how austerity in the face of recessions worked well in the past, citing the early 20s recession and Australia. She should also mention the Asian Tigers which went along the austerity route and compare it to Japan, which followed the Krugman prescription to the letter.

Chart: Initial Jobless Claims:

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Ryan-Wyden.

I think that both JNCP and NoVAH have mentioned this was going to be offered.

Wyden-Bennett was the health care bill I favored and although I can mount a defense of ACA, it is huge, where Wyden-Bennett was relatively elegant, and it was partisan where W-B was not.

Paul Ryan thinks before he speaks, a trait he shares with Ron Wyden.  I have linked to Ezra’s take, but I really hope to get NoVAH’s.

Also, I want to know if this may become the law.

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Busy day. Things messing up, meetings coming up and the most inopportune moment, etc. So, in short, I got nothing.

Here’s a picture of a dog.

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To help a brother out, a link to the economic year in graphs

Time chooses the Protestor as its Person of the Year.

And the abstract to a paper in Science about empathy in lab rats.

“Whereas human pro-social behavior is often driven by empathic concern for another, it is unclear whether nonprimate mammals experience a similar motivational state. To test for empathically motivated pro-social behavior in rodents, we placed a free rat in an arena with a cagemate trapped in a restrainer. After several sessions, the free rat learned to intentionally and quickly open the restrainer and free the cagemate. Rats did not open empty or object-containing restrainers. They freed cagemates even when social contact was prevented. When liberating a cagemate was pitted against chocolate contained within a second restrainer, rats opened both restrainers and typically shared the chocolate. Thus, rats behave pro-socially in response to a conspecific’s distress, providing strong evidence for biological roots of empathically motivated helping behavior.”

Empathy and Pro-Social Behavior in Rats

— Mike

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I am really pretty sure some of you will find this funny.

—ashot

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