A Must Read: The Righteous Mind by Jonathan Haidt

Posted on December 22, 2015 by ScottC

I just finished reading The Righteous Mind: Why Good People are Divided by Politics and Religion, by Jonathon Haidt, a social psychologist formerly at UVA and now at NYU. I highly recommend it. It touches on a boatload of topics that we have talked about here, including that perennial issue of the source and nature of morality. It is written by a self-proclaimed very liberal academic, but he does a pretty good job of setting that aside and except in a couple of places it happily does not approach things within the confines of liberal premises. In fact much of it is aimed at explaining why premises differ so much from person to person.

I’ve discovered (after already purchasing and reading it) that it is actually out there on the internet for free, here.

To entice you to read it, I’ll leave you with one of the concluding passages, which hopefully shows that my recommendation doesn’t derive simply out of confirmation bias.

If you take home one souvenir from this part of the tour, may I suggest that it be a suspicion of moral monists. Beware of anyone who insists that there is one true morality for all people, times, and places—particularly if that morality is founded upon a single moral foundation. Human societies are complex; their needs and challenges are variable. Our minds contain a toolbox of psychological systems, including the six moral foundations, which can be used to meet those challenges and construct effective moral communities. You don’t need to use all six, and there may be certain organizations or subcultures that can thrive with just one. But anyone who tells you that all societies, in all eras, should be using one particular moral matrix, resting on one particular configuration of moral foundations, is a fundamentalist of one sort or another.

The philosopher Isaiah Berlin wrestled throughout his career with the problem of the world’s moral diversity and what to make of it. He firmly rejected moral relativism:

I am not a relativist; I do not say “I like my coffee with milk and you like it without; I am in favor of kindness and you prefer concentration camps”—each of us with his own values, which cannot be overcome or integrated. This I believe to be false.

He endorsed pluralism instead, and justified it in this way:

I came to the conclusion that there is a plurality of ideals, as there is a plurality of cultures and of temperaments.… There is not an infinity of [values]: the number of human values, of values which I can pursue while maintaining my human semblance, my human character, is finite—let us say 74, or perhaps 122, or 27, but finite, whatever it may be. And the difference this makes is that if a man pursues one of these values, I, who do not, am able to understand why he pursues it or what it would be like, in his circumstances, for me to be induced to pursue it. Hence the possibility of human understanding.”

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Morning Report: TRID shows up in the housing data 12/22/15

Posted on December 22, 2015 by Brent Nyitray

Stocks are higher this morning on hopes of more stimulus for the Chinese economy. Bonds and MBS are down small.

Existing Home Sales fell to an annualized rate of 4.76 million from 5.32 million last month. This was the lowest level in 19 months. Guess what the reason was. The median home price rose to $220,300. which is up 6.3%. Housing inventory is 2.03 million homes, which represents a 5.1 month inventory at the current sales pace.

The third revision to Q3 GDP came in at 2%, a slight downward revision from the 2.1% second estimate. A lower inventory estimate drove the revision. Personal consumption was 3%, while the core PCE index (the Fed’s preferred measure of inflation) rose at an annualized rate of 1.3%. Consumption has been depressed for so long that eventually consumers are forced to replace worn out clothes and cars. The average age of a car in the US recently hit a record at 11.5 years, and this is behind the stronger auto sales (along with cheap and easy financing).

Housing contributed 15.3% of GDP in the third quarter, about where it was in the fourth quarter. This is well below the historical levels and is explained by the drop in homebuilding. Given that the excesses of the bubble were worked off years ago, inventories are tight, and the Millennial generation is even bigger than the Boomers we will see a pick-up at some point, which should last years. Remember, housing starts averaged 1.5 million a year from the 1960s to 2002 (pre-bubble years). Since 2002, we have averaged under 1.2 million. When you take into account population growth, the deficit grows even larger.

House prices rose 0.5% in October, according to the FHFA. On a year over year basis, they rose 6.1%. Looking at the chart, it seems like we are back at the heights of the index set in 2007 or so.The Mountain states led the charge, while the Northeast fell a little.

Cash sales as a percentage of home sales fell to 32.5% of all sales from 35.9% a year ago, according to CoreLogic. REO sales tend to be most likely to be cash sales. You can see on the map below the range of percentages based on the state. It looks to correlate most closely with the foreclosure pipelines.

More TRID horror stories. Borrowers are having to pay for longer lock periods, and lenders are scrambling to meet closing deadlines. Hopefully this will be a memory in a few months. Non-agency remains an even bigger problem as investors are taking a zero defects stance on TRID and not buying loans.

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