Category Archives: housing

Links for 2010-06-23

Tim Duy thinks the fanfare about a new Chinese currency policy is overdone:

The PR overload suggests the Administration is desperately in need of a “win,” no matter how trivial….
While China appears willing to adjust the parity rate, changes are likely to be more window dressing than anything else. The industrial base shifted from the US to China over the past twenty years, a transition aided by the Clinton Administration’s commitment to a strong dollar, and it is not going to come rushing back for a few percentage points of currency value. The structural shift has happened, and it won’t reverse easily.

When Bill McBride says he expects house prices to decline, I pay attention:

When months-of-supply is below 6 months, house prices are typically rising– and above 6 months-of-supply, house prices are usually falling…. We are much closer to the price bottom now than in 2008, and I don’t expect that severe of a price decline. But I do expect house prices to fall in the 2nd half of 2010 and into 2011– probably another 5% to 10% for the major house price indexes (Case-Shiller and CoreLogic).

A federal judge overturned the moratorium on new deepwater offshore drilling:

“An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country,” [U.S. District Judge Martin] Feldman wrote….

The temporary injunction by [Judge] Feldman appears unlikely to bring a swift resumption of deepwater drilling: Oil companies say they’re reluctant to start new ventures as an uncertain appeals process unfolds.

Why Adam ate the apple

In my last post, I discussed how the run-up of U.S. mortgage debt during the last decade was funded. One important element was the sale of commercial paper that helped fund the purchase of some mortgage-related securities. Here I comment on why it was hard for some institutions to resist buying that commercial paper.

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Links for 2010-01-13

Stuart Staniford, who earlier had been persuaded that global oil production might have already peaked, now comments on the potential for increased production from Iraq to push the peak up to a decade down the road.

King Banaian on disturbing developments in Argentina and Venezuela.

Economists comment on the role of the Fed in the housing bubble. Two in particular worth emphasizing:

Marvin Goodfriend: Interest rate policy was appropriately stimulative in the 2002-3 period. But rates should have been raised less mechanically and more aggressively in 2004-5 on grounds of the usual macroeconomic conditions…. A somewhat tighter stance of interest rate policy then could have cut off the last year or so of the house price appreciation and prevented the worst part of the subsequent adjustment.

Mark Gertler: If we could go back in history and make one policy change, I’d go after sub-prime lending. Absent non-prime lending, the likely outcome of the housing correction of 2007 would have been a mild recession like 2000-2001, and not the debacle we experienced.