Today Post::New Residential Construction Report: July 2009

Subtitle: Green Shoots Continue … Look Slightly Droopy

Today's New Residential Construction Report effectively adds a fifth consecutive feather in the cap of the "Green Shoot" camp and further will likely continue to promote a sense that our massive housing decline is finding a bottom.

It's important to consider that at 490K single family units (SAAR), the level of national housing starts still remains substantially below that seen in October 2008.

Single family housing permits, the most leading of indicators, again suggests sluggish future construction activity dropping 20.35% nationally as compared to July 2008 and an astonishing 73.40% since the peak in January 2005.

Moreover, every region showed significant double digit declines to permits with the Northeast declining 25.59%, the Midwest declining 18.9%, the South declining 18.9%, and the West declining 22.5% on a year-over-year basis.

Keep in mind that these declines are coming on the back of the last three years of record declines.

To illustrate the extent to which permits and starts have declined, I have created the following charts (click for larger versions) that show the percentage changes of the current values on a year-over-year basis as well as compared to the peak year of 2004.

Here are the seasonally adjusted statistics outlined in today's report:

Housing Permits

Nationally

• Single family housing permits down 20.3% as compared to July 2008.

Regionally

• For the Northeast, single family housing down 25.9% as compared to July 2008.
• For the Midwest, single family housing permits down 18.9% as compared to July 2008.
• For the South, single family housing permits down 18.9% compared to July 2008.
• For the West, single family housing permits down 22.5% as compared to July 2008.

Housing Starts

Nationally

• Single family housing starts down 22.5% as compared to July 2008.

Regionally

• For the Northeast, single family housing starts down 16.2% as compared to July 2008.
• For the Midwest, single family housing starts down 22.2% as compared to July 2008.
• For the South, single family housing starts down 23.4% as compared to July 2008.
• For the West, single family housing starts down 23.6% as compared to July 2008.

Housing Completions

Nationally

• Single family housing completions down 40.6% as compared to July 2008.

Regionally

• For the Northeast, single family housing completions down 32.6% as compared to July 2008.
• For the Midwest, single family housing completions down 38.5% as compared to July 2008.
• For the South, single family housing completions down 41.7% as compared to July 2008.
• For the West, single family housing completions down 42.9% as compared to July 2008.

Today Post::Two Great Bounces!

The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 is up over 35% in a little over 100 trading days… down from an over 40% gain set just a few days ago but still…a very aggressive run with an obvious note of mania to it… and wholly comparable to the price movement seen in the 1930s-era DOW rally.

At this point for the 30s-era DOW, the bull-run was over… no more time to trade out of your positions… the bear trend resumed in earnest with a first leg of decline chopping the prior gains nearly in half.

The 30s-era DOW had three large legs up followed by a bit of profit taking that appears to have morphed into a reemergence of the bear trend… Could we be at a similar point?

Only time will tell… But for now, let's continue to keep a watchful eye…

Today Post::Jason Statham Buys at the Beach

BUYER: Jason Statham
SELLER: Matt Palmieri
LOCATION: Malibu Colony, Malibu, CA
PRICE: $10,950,000
SIZE: 3,355 square feet, 5 bedrooms, 5 bathrooms (as per listing)
DESCRIPTION: Tucked away behind Malibuy Colony’s legendary guarded gates in this impeccably maintained wood & glass architectural. High ceilings, walls of glass & extensive use of beautiful old growth Douglas Fir throughout. Main house has 3 beds, 4 baths, living room w/ over sized fireplace, oceanfront sitting area, dining area, family room, gourmet kitchen, large family room opens to a courtyard w/ spa tub. Separate 2 bdrm gst apartme! nt w/ bath, 2 car garage.

YOUR MAMAS NOTES: Back in late June of 2009 Your Mama discussed a 2 bedroom crash pad condo at the Broadway Hollywood building on N. Vine Street in Los Angeles owned by British born springboard diver turned Guy Ritchie’s go-to ack-tor man Jason Statham (Lock, Stock and Two Smoking Barrels, Snatch, and Revolver) which was–and still is–listed for sale with an asking price of $1,395,000 which is nearly $150,000 less than he paid for the place in June of 2008. Remember that puppies? Well, as it turns out that condo catastrophe is not the only blip on the celebrity real estate radar Mister Statham has lately made, not by a long shot.

According to the IMDB, the manly, muscled and in-demand action film actor rather wisely understands he’s unlikely to win an Oscar for making movies like Crank or The Bank Job. However, somehow Your Mama does not imagine that Mister Statham is feeling under appreciated by the film world given that he’s still pulling in piles of paper so prodigious that it would make many Academy Award winning actors weep with envy. In fact, Mister Statham is making so much damn money that he recently forked over $10,950,000 for an ocean front house behind the guarded gates of the super-exclusive Malibu Colony where his new neighbors include people like Tom Hanks and wifey Rita Wilson, Jim Carey and his autism activist ladee-mate Jenny McCarthy, Sting and his Tantric sex partner Trudie ! Styler and balloon breasted Pammy Anderson who sometimes rents out her house out to rich and famous people like Billy Bob Thornton’s ex-wife Pietra.

Property records reveal Mister Statham bought his new house from an Academy Award nominated documentary filmmaker named Matt Palmieri who happens to be one of soon to be dee-vorced Sean Penn’s oldest friends and who also happens to be the son of a wildly successful big biznessman named Victor. We’re not saying ol‘ Victor funded Mister Palmieri’s 1998 purchase of the home, we’re just saying it’s nice to have a father who sweats hundred dollar bills, you know?

Anyhoo, listing information provided to Your Mama by Babbling Babette shows Mister Statham’s new wood and glass contemporary crib includes 3 bedrooms and 4 bathrooms in the main house and another 2 bedrooms and 1 pooper in the guest house atop the 2-car garage.

The main house includes a living room with white walls, a gently sloping ceiling, a wall of floor to ceiling fenestration with old-growth Douglas Fir framing that draws the eyeballs out toward the glittering Pacific Ocean, wall to wall sand colored carpeting and an over-sized fireplace for taking the edge of the nippy nights and foggy Malee-boo mornings. A built in banquet provides another seating area off the living room and opens to the brick patio overlooking the sand. The dining area sits between the living room and kitchen which has flat fronted, honey colored cabinetry, glossy black granite counter tops and the full compliment of Viking brand, stainless steel appliances one expects in an eleven million dollar beach house.

The master bedroom in the main house stretches the full width of the house, has more wall to wall sand colored carpeting (yuck!) and opens to a slim terrace through a wall of windows with more, heavy old-growth Douglas Fir frames. More old-growth Douglas Fir was used to construct the built in cabinetry in the dee-voon dressing room and we’ll assume even more old-growth Douglas Fir was used in the master bathroom as well as in every other room in the house.

The garage and guest house are separated from the main house by a quiet, out of the wind courtyard where Mister Statham can privately soak his weary, nekkid muscles in a spa tub with gurlfriend Alex Zosman or whatever other buxom ladee friend he might be entertaining these days.

In addition to the up for sale condo in Hollywood and the new beach house in The Bu, records show that Mister Statham also owns a 2,281 square foot crib with 3 bedrooms and 3 poopers on Rising Glen Road that he picked up in June of 2005 for $2,400,000.

Today Post::The problem with professors becoming presidents

A lot of what our job is about is understanding the point of view of others, even when we disagree with them. A lot of our job is explaining to students a wide variety of viewpoints, and allowing them to choose from among them.

I don’t think FDR worried so much about the point of view of others–Doris Kearns Goodwin said he “gloried in his enemies.”

FDR also largely got what he wanted.

Today Post::Two Great Bounces!

The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 is up over 37% in a little over 100 trading days… down from an over 40% gain set just a few days ago but still…a very aggressive run with an obvious note of mania to it… and wholly comparable to the price movement seen in the 1930s-era DOW rally.

At this point for the 30s-era DOW, the bull-run was over… no more time to trade out of your positions… the bear trend resumed in earnest with a first leg of decline chopping the prior gains nearly in half.

The 30s-era DOW had three large legs up followed by a bit of profit taking that appears to have morphed into a reemergence of the bear trend… Could we be at a similar point?

Only time will tell… But for now, let's continue to keep a watchful eye…

Today Post::Whence came unstable housing finance?

Over the weekend, Thomas Sugrue, a highly regarded history professor at Penn, wrote a piece in the Wall Street Journal that implied that we over-subsidize homeownership, and that government programs have produced instability in the housing market. I am not sure either is true.

With respect to homeownership, for those at the margin of owning, net subsidies may flow more to rental than owner housing. Section 8 vouchers support renting, not owning, and the mortgage interest deduction provides no benefit to those who don’t itemize–i.e., low income households. It is well established that Fannie and Freddie do no better, and perhaps worse, than the private when it comes to providing first time homebuyer with mortgages. The government does encourage overconsumption of housing for high income households, but that is a different matter.

As for stability, well, as Professor Sugrue correctly points out, it was the housing market of the 1920s, which was financed in the absence of any public sector support, that helped produce the Great Depression. And the preponderance of unstable mortgages originated in this decade were originated by purely private players.

Today Post::Two Great Bounces!

The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 is up over 38% in a little over 100 trading days… down from an over 40% gain set just a few days ago but still…a very aggressive run with an obvious note of mania to it… and wholly comparable to the price movement seen in the 1930s-era DOW rally.

At this point for the 30s-era DOW, the bull-run was over… no more time to trade out of your positions… the bear trend resumed in earnest with a first leg of decline chopping the prior gains nearly in half.

The 30s-era DOW had three large legs up followed by a bit of profit taking that appears to have morphed into a reemergence of the bear trend… Could we be at a similar point?

Only time will tell… But for now, let's continue to keep a watchful eye…

Today Post::Another Housewife Biting the Real Estate Dust?

Oh dear.

According to the ever-intrepid folks at gossip juggernaut TMZ, another of the supposed to be rich housewives from Orange County is embroiled in another real estate fracas. This time it is the sweet but entirely too tan “jewelry” designer Lynne Curtin who was, just today, served with a three day notice to perform or face eviction by her Laguna Beach, CA landlord.

That’s right chickens, her landlord. Apparently Miz Curtin and her building contractor huzband Frank rent their house in laid back but exorbitantly priced Laguna Beach and, according to the eviction notice, the couple owe their landlord $12,363 in unpaid security deposit, late fees and unreimbursed moving expenses. The homeowner also claims that the utilities to the house have been turned off because the Curtains have failed to pay them and, because real estate drama often arrives in threes, a real estate agent is huffing and puffing that she never received the $2,500 commission owed to her for arranging the lease for the Curtins.

Your Mama does not actually know where the Curtin’s new crib is but we do know thanks to Lucy Spillerguts that until sometime in June of 2009 Mister and Missus Curtin occupied one half of a duplex condo property on Camino Capistrano in Dana Point, CA.

Now listen children, Your Mama is certain that Mister and Missus Curtin or their spokesperson will shortly put out some sort of statement that this is all some sort of mistake and the check got lost in the mail and that it’s already all cleared up or some such thing. And we sincerely hope that’s the case because we never like to see anyone turned out of their (rented) house.

However, we do have a beef with booze swilling tee-vee show host/Senior Vice President of Production and Programming Andy Cohen and his casting minions at The Bravo who can’t seem to find actual rich people to star in their Real Housewives of… franchise which is supposed to be about actual (nouveau riche) rich people and their disturbingly profligate ways and not cash-strapped couples who spend in the most frivolous, indiscriminate and vulgar manner even though they’re not paying their mortgage. That is, not paying their mortgage iffin they even have a damn mortgage.

First was former mortgage broker and wannabe housewife Slade Smiley from the Orange County version whose home slid into foreclosure back in early 2008.

A few months ago, hot and spicy housewife NeNe Leakes in Atlanta was rumored and reported to have been evicted from her rental house last year. She sorta denied it.

More recently Lisa Wu Hartwell and her former footballing huzband Ed were tossed from their pond fronting multi-million dollar mansion in the St. Marlo Country Club community in Duluth, GA after defaulting on their mortgage. Their reps claim the couple tried to restructure their mortgage but since the house had lost a ton of value the bank said, nay. They have, according to their peeps, settled in a new house on 10 acres that they own.

Let’s not forget recent dee-vorcee She by Sheree Whitfield whose suburban Atlanta manse was foreclosed earlier this year because, she claims, she was clueless about the fact that her mean ol‘ ex-huzband Bob was not paying the mortgage. We’d bet our long bodied bitches Linda and Bevelry that there is more to this story than She by Sheree is saying.

Then there’s former Playboy Playmate turned real estate pusher Jeana Keough who somehow managed to restructure several mortgages she has on several pricey properties in Orange County and currently has her eight terlit spread in the gated community of Coto de Caza listed with an optimistic asking price of $4,900,000.

Next up is thinks-she’s-the-hottest-housewife Tamra Barney and her tequila selling huzband Simon who have their Ladera Ranch, CA tract house listed as a short sale at $1,149,000. They paid $1,320,500 for the 5 bedroom mock-Mediterranean in August of 2005. Of course, they’re spinning the situation like they don’t mind eating the loss so they can take advantage of a weak housing market and buy a foreclosed property or a buildable lot where they can erect a new and better faux-Tuscan tract house.

And then there is woman-with-a-past Danielle “Beverly Merrill” Staub in New Jersey who admitted during an early segment of that series that she’s about two minutes and a Range Rover payment from financial ruin because she and her ex-huzband can not come to terms on the details of their acrimonious dee-vorce.

And let’s not forget that hot-tempered, curly-haired baller Teresa Giudice in New Jersey who pays for everything with a wad of cash as big as a roll of terlit paper. Now, it can certainly be argued that if table tossing Teresa is humping around Franklin Lakes with a couple hundred grand in her designer handbag she’s rich. However, iffin anyone were to ask Your Mama, and of course no one did, we’re suspicious because, pleeze, let’s be honest, who does that–on national tee-vee for chrissakes–if they ain’t trying to prove something to somebody?

Next up? One of those bonkers behawtchas in New York? Have mercy.

Today Post::Alle Menschen Mussen Sterben

It is disgraceful that opponents of health care reform are exploiting people’s fear of the inevitable to undermine a really good idea: Medicare funding of end-of-life consultations.

We all will ultimately die, and I, for one, would like to do so as painlessly, and with as much dignity, as possible. Once I am irreversibly ill, I want neither ventilators nor feeding tubes to keep me alive, and I know enough to say so in an advance directive. Others should know they have the ability to say so too. For those who want the tubes, that is their business.

As for those who argue that government health care will incentivize euthanasia, well, the incentives are of course already there, because all seniors have government insurance.

In general, I detest ad homonym, and hope that I have pretty much kept it out of this blog. But Sarah Palin is just plain evil.

Today Post::Whoopi Hawks Her Loft on Wooster

SELLER: Whoopi Goldberg
LOCATION: Wooster Street, New York, NY
PRICE: $3,990,000
SIZE: 3,600 square feet, 2 bedrooms, 2.5 bathrooms
DESCRIPTION: …Exposed brick, extremely high ceilings, polished wood floors, massive mahogany windows and historical elements abound throughout the loft. Dramatic entertaining space with both opulence and integrity - offering a home entertainment system with 58″ flat screen plasma TV, ! Direct TV, Individual DVR and TiVo. Divine custom details throughout the loft - vintage ceiling fans, custom doors, light fixtures and wall mountings. ValCucine kitchen, separate guest quarters, three baths, bar area, and private master suite…

YOUR MAMAS NOTES: Well children, after working our way through the thick and florid listing information, Your Mama is ready to discuss the New York City loft that superstar Whoopi Goldberg recently hoisted on the market with an asking price of $3,990,000.

The calls it like she sees it comedienne and actress and all around media personality has appeared in more than 100 films and boob-toob programs. For her efforts she’s won an Oscar–for that ridiculous Ghost movie because the Academy screwed up and should have given it to her five years earlier when she was nominated but did not win for The Color Purple, a Tony, a couple of Golden Globes, a number of Daytime Emmys (plus a handful of non-daytime Emmy nominations), Image Awards, Kid’s Choice Awards, People’s Choice Awards, and a damn Grammy. Now she’s on The View with all them other opinionated ladees who every day weigh in on everything and everyone from Lindsay Lohan to whether men should wear engagement rings, from healthcare reform to the shenanigans of Sarah Palin.

According the the peeps at PropertyShark, Miz Goldberg, whose real name is the much less odd and memorable Caryn Johnson, purchased the (approximately) 3,600 square foot, full floor loft on SoHo’s Wooster Street in October of 2006 for $1,648,000. Other residents of the building, which houses the Patagonia store on the ground floor, include actor Billy Crudup who records show bought his top floor crib in 2004 just after he infamously dumped his long time ladee-friend Mary-Louise Parker when she was 7-months preggers with their son. But that’s another sordid celebrity story for another day.

According to listing information, the 2 bedroom and 2.5 pooper loft includes private elevator access, high ceilings (lofts usually do), polished wood floors (some of which are indeed quite lovely), gigantic mahogany framed windows that suck light deep into the loft, a fancy ValCucine kitchen with what appears to be magnificent mahogany cabinetry, and a home entertainment system that would make most couch potatoes weep with envy.

What listing information does not say is that someone unwisely installed a bunch of crown molding, the plumbing is exposed at the ceiling (as it is in many New York City lofts), there are at least four types of wood flooring, the layout is more than a bit awkward with too much space designated to the entrance hall, the laundry facilities are part of the wet bar in the family room and the floor plan indicates that there is not a single built-in closet in either of the two bedrooms. In fact, from the looks of things, there are only four cramped closets in the entire loft and three of them are in the damn poopers. No offense Miz Whoopi, but for four million smackers we want a large, custom-fitted walk-in closet and not a wall full of armoires.

The expansive apartment has been filled with an eclectic, flea market-y hodge-podge of furniture, countless tchotske collections and a truck load of decorative items that look to Your Mama like Miz Whoopi picked them out herself. We do love when a home bears the unmistakable stamp of the owner, which this one does, but we also think Miz Whoopi could have used the skills of a smart architect and a nice gay decorator to help her pull it all together a bit more succinctly. Her extensive collection of African and black American artworks, on the other hand, is flaw-less.

According to property records Miz Whoopi also owns a 7,039 square foot mansion on Amalfi Drive in posh Pacific Palisades that she bought way back in 1993 and she may or may not still own an 8,000 acre spread in Vermont, a waterfront house in swank and scenic Tuxedo Park, NY, a small house (or duplex) in Berkeley, CA, and some kind of property in Cornwall, CT.

Today Post::Two Great Bounces!

The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 is up just over 39% in a little over 100 trading days… a very aggressive run with an obvious note of mania to it… and wholly comparable to the price movement seen in the 1930s-era DOW rally.

At this point in the 30s-era DOW, the run was effectively over… the end near… no more time to trade out of your positions… a few percent off the top here and there and then, before you knew it, the bear trend resumed with a first leg of decline chopping your prior gains nearly in half.

The 30s-era DOW had three large legs up followed by a bit of profit taking that appears to have morphed into a reemergence of the bear trend… Could we be at a similar point?

Only time will tell… But for now, let's continue to keep a watchful eye…

Today Post::Biz Stone Selling Northern California Nest

SELLER: Isaac “Biz” Stone
LOCATION: Greenwood Terrace, Berkeley, CA
PRICE: $575,000
SIZE: 808 square feet, 2 bedrooms, 2 bathrooms
DESCRIPTION: Designed & constructed by well-known Northern California Architect William Wurster, this mid-century cottage is a terrific example of Wurster's signature modern style. Accentuating the use of natural light & open space, Wurster created a peaceful & stylistic home within a small footprint. Wurster, the namesake for UC Berkeley's Wurster Hall, built this cottage as his own personal studio in 1960. The cottage features 2 bedrooms and 2 baths and! is located just above Cordonices Park nestled in the Berkeley Hills.

YOUR MAMAS NOTES: Maybe we’re just too old, too much of a Luddite or just too dedicated a contrarian, but as far as Your Mama is concerned tweeting and twittering and all that one-to-many network nonsense is for the birds. The last thing we want to know is what every damn person we know is doing every minute of the day and nobody needs to know that we’re sitting here in our underpants having our second Kahlúa and coffee at seven in the damn morning. Okay?

This Twitter bizness was co-founded by a social media maven named Isaac “Biz” Stone who also had his hands in the creation of blogging communities like Xanga, Odeo and Blogger, the very software Your Mama uses for our little online endeavor. Anyhoo, some time ago we received a missive from a gal we’ll call Diamod Lil–not Diamond Lil the drag queen, but another Diamond Lil–who whispered in our big ear that Biz recently listed his shingled, William Wurster designed cottage in Berkeley, CA for sale with an asking price of $575,000. We’d like to claim we’re breaking some sort of real estate news here, but the truth of the matter is ol‘ Biz tweeted (or twittered or whatever) that he was selling his house a long time ago.

Regardless of our thoughts and opinions on the matter, this little thing called Twitter is quite popular with the teen and pre-teen populations not to mention celebrities like that alleged Christian/nekkid model/orgasm queen/publicity slut Heidi Montag and her equally mortifying huzband Spencer Pratt, Tila Tequila (whoever that is), and May/December duo Demi Moore and Ashton Kutcher who are under the not entirely false impression that a lot of people care about their every thought and action.

But we digress…property records reveal that Biz picked up his itty-bitty 808 square foot nest in January of 2006 for $550,000 and listing information shows the tiny 2-story cottage, located in the foothills just north of UC Berkeley on leafy Greenwood Terrace, includes just 2 bedrooms and 2 bathrooms.

The apartment-sized house was originally designed and built in 1960 by noted and influential architect William Wurster as his personal studio. In 1928 Mister Wurster built the Gregory Farmhouse in Scotts Valley, CA that many consider the prototype of a classic California Ranch house. The architect worked in a warm but no-nonsense style that bridged the gap between old-school, period revival extravaganzas and the more austere architecture movement–let by modern masters like Le Corbusier and Ludwig Mies van der Rohe–that was beginning to take hold among people rich enough to hire architects to custom design their domiciles.

At some point Mister Wurster’s studio was converted to an upside-down private residence with the primary living spaces on the second floor. The living and dining room includes a wood burning fireplace, one large, floor to ceiling window, a skylight, shiny bamboo floors and a bunch of furniture from Ikea which makes Your Mama think the house is staged because what new money new media mogul would have a $299 Klippan loveseat from Ikea? What little we can see of the kitchen indicates it has been updated if not entirely upgraded and includes open shelving and stainless steel appliances.

A large sliding pocket door separates the living room area from the office or second bedroom space which has another faboo floor to ceiling window and leads to the home’s primary pooper. The master bedroom, on the ground floor, has a gorgeous, organic Redwood ceiling, a nice amount of closet space and storage, and a small but nicely renovated bathroom. Also on the ground floor, in a basement like spaces, are a bunch of storage cabinets and laundry facilities.

Although this house is smaller than most apartments, Your Mama thinks this would make a stylish and well-located home for the child of a rich former hippie sending their child off to UC Berkeley to learn about free love, recycling, and how to organize a sit in to get McDonalds to start serving goat milk for the lactose intolerant.

We have no knowledge of his real estate plans or activities, but Your Mama presumes Biz is moving on (or has already moved on) to larger digs more suitable to a budding Silicon Valley honcho who probably makes money hand over fist even though Twitter is yet to turn a profit.

Today Post::Two Great Bounces!

The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 is up over 40% in a little over 100 trading days… a very aggressive run with an obvious note of mania to it… and wholly comparable to the price movement seen in the 1930s-era DOW rally.

At this point in the 30s-era DOW, the run was effectively over… the end near… no more time to trade out of your positions… a few percent off the top here and there and then, before you knew it, the bear trend resumed with a first leg of decline chopping your prior gains nearly in half.

The 30s-era DOW had three large legs up followed by a bit of profit taking that appears to have morphed into a reemergence of the bear trend… Could we be at a similar point?

Only time will tell… But for now, let's continue to keep a watchful eye…

Today Post::I must pronounce more clearly

My kids are home from college for a little while. They both took their first econ classes last year.

One kid asks: can’t production possibility frontiers have small regions that are not convex?

Answer: sure, but the relevant points would be the convex hull of the PPF.

Kid: how can a hole be convex?

Today Post::Sham De Jour

Looks like the Feds "Cash for Clunkers" policy has stirred some pretty dramatic demand for new vehicles spurring on the second largest month-to-month production jump in vehicles in nearly 40 years.

While I recognize the novelty of the "Car Allowance Rebate System" policy, I'm more than a bit skeptical of its overall utility and simply appalled at the thought of thousands of Americans queuing up for their government auto allowance.

Oh how the mighty have fallen!

One day the force of impulsive and mindless debt fueled conspicuous consumption and class conceit are driving widespread demand for the biggest baddest Hummers and SUVs… the next… a modern day bread line of busted households and their two bit jalopies feverishly racing to lock in a chance at a 5% discount on a Toyota Corolla!

I can't speak to how this policy will affect environmental issues… I'm no expert… though I'm surprised that the requirement was only 22 MPG for the newly purchased vehicle… possibly U.S. automakers would have few eligible products if it were higher.

On a side note, as a former Prius owner (cracked mine up unfortunately) I can attest to the fact that the car is solid… fill it up… drive it and you get 45 miles per gallon… also it's worth mentioning that it withstood quite a pummeling from the likes of a Ford Econoline… yours truly walked away with just some minor flesh wounds… the car wasn't so lucky.

As for the effect on the economy… it's another fraud.

Moving 2010 and 2011 auto purchases into 2009 is clearly providing a short term economic pop but in the long term there is likely no extra demand being created so I would expect the trend of weakness in autos (as seen in the production data chart below) to resume once the policy expires (…or sooner).

Washington elites are likely all aglow over the "success" of the clunkers program and certainly those with auto and environmental interests are equally proud… but where does this type of thing end?

Cash for McNuggets, Cash for Marlboros, Cash for Johnny Walker…

What we have now in America is Keynesianism gone wild… a belief that through gimmicks, tricks and government handouts you can jumpstart and even remedy an economy that's writhing on the down slope of multiple decades of serious economic distortions… as if more distortions are all you need to repair all the prior distortions.

They claim it worked in 30s… I suppose now the issue will be settled once and for all.

Today Post::All that butter...

…and all those Martinis, and yet Julia and Paul Child lived happily into their nineties. If only I could be sure that theirs was a median outcome.

Today Post::How do they do it?

One of the things about my job that I really like is that I get to do public radio talk shows from time to time. I will never ceased to be amazed at how good the hosts of these programs are.

Kojo NNamdi at WAMU, Tom Clarke at WERN, Larry Mantel and Patt Morrison at KPCC and Kerri Miller at Minnesota Public Radio all ask good questions, and know how to run programs on controversial issues in a civil atmosphere. This is an exceedingly rare combination of talents; I wish they could find there way beyond the left side of the FM dial.

Today Post::Two Great Bounces!

The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 is up over 39% in a little more than 100 trading days… down slightly from an over 40% gain set just a few days ago but still… a very aggressive run with an obvious note of mania to it… and wholly comparable to the price movement seen in the 1930s-era DOW rally.

At this point in the 30s-era DOW, the run was effectively over… the end near… no more time to trade out of your positions… a few percent off the top here and there and then, before you knew it, the bear trend resumed with a first leg of decline chopping your prior gains nearly in half.

The 30s-era DOW had three large legs up followed by a bit of profit taking that appears to have morphed into a reemergence of the bear trend… Could we be at a similar point?

Only time will tell… But for now, let's continue to keep a watchful eye…

Today Post::John Hempton on Fannie and Freddie's losses

I think he gets it right:

It is in the non-traditional guarantee business that Fannie Mae and Freddie Mac have reported the huge losses which leave them in such a precarious position. Some of those losses (particularly the losses on the hedging book caused by the conservatorship) will reverse. Some (end credit losses on junky subprime mortgage securities) will not.

That said – none of these loss categories is likely to expand in the future. If the GSEs wind up being a toxic mess for the government it won't be on the losses already incurred – it will be on future losses.

Today Post::UPDATE: Suzanne Somers

Way back in the Dark Ages, in January of 2008, Your Mama discussed a property called Les Baux de Palm Springs, the lavishly quirky Coachella Valley compound of Suzanne Somers and her huzband Alan Hamel. Back then the asking price for the 73 acre property with a total of 10 bedrooms, 11 terlits and one damn funicular was a sphincter tightening $35,000,000.

Since then, Miz Somers and Mister Hamel have not only allowed the property to be featured on a recent episode of comedienne Kathy Griffin’s reality program Life On The D List, they’ve sliced, diced, cleaved and clipped the asking price all the way down to $12,900,000. That’s right kids, $12,900,000. A few flicks of the well worn beads on our bejeweled abacus reveals that to be a stupefying 61% reduction.

Many have argued that the nonpareil property was not worth thirty-five million clams in the first place and some will bicker about whether it’s worth $12,900,000 now. Whatever it’s worth, to the children or whomever ends up buying the pseudo-Franco spread, it’s definitely worth another look because no matter what one thinks of the countless number of zebra rugs, the insanely large and undeniably dangerous pot rack that hovers above the breakfast table or the 3 million year old polished fossil stone sink in one of the powder poopers, it’s truly a tour de force of architectural siting and an extravagant and elegantly rustic example of an intensely personal if somewhat campy and dee-lishusly hyperbolic interior day-core.

Enjoy.

Today Post::Going The Way of The Cordwainer

After a brief stay in what can only be described as a micro-Versailles (…14 foot beamed ceilings, floor to ceiling carved panel, stone and marble fireplaces, gigantic draped and shuttered windows that open out to a bustling square filled with shops and restaurants) in a prosperous and lively section of Bordeaux, I'm now sitting in the lobby of a hotel across the street from a large old vineyard, another of my wife's family's properties, located in a small village just outside of Nantes.

This has me thinking that although most of the American Melting Pot's immigrants likely had good reason to come to the U.S., those that completely cut ties with the old country left behind some dam nice real estate.

I suppose an extended stay in France (or any country in Europe for that matter) provides an opportunity to reflect and to make valuable comparisons to the U.S. … It's not like this is some remote or exotic corner of the world… We're nearly all cut from the same cloth… There's even a large statue of Thomas Jefferson situated on a bank of the Seine… and of course, we have Lady Liberty looking out over New York harbor.

One principle that has clearly been over applied in the U.S. is "Economy of Scale".

It seems… from the vantage point of a tiny village economy nestled within the Loire-Atlantique (or from Paris for that matter)… that in the U.S. we have cheapened everything, squeezing not just the cost but the value out of nearly all that we consume.

Worse yet… this squeezing of value didn't just cheapen products and services but labor too.

We have killed the artisan, the tradesman, the handicraft, the small local entrepreneur… about the only local business that appears completely free from franchise forces or a big box pummeling are funeral homes and even for them repeat business is pitiful.

Think of our shoes… I wonder if Americans of the early 1900s could imagine a future in which there would not only be no cordwainers or cobblers but a world where cheap rubber slippers called "Crocks" would be all the rage… you wear them rain or shine and when they get funky… into the dumper.

We threw away our shoes and our cordwainers and cobblers too…

Cheapening a product or service is usually considered an inflationary process because consumers generally pay the same amount for an inferior product…. effectively paying more.

But I can't help thinking that our many decades long foray into mass production represents a massive deflationary force whereby the value of all things have steadily seeped into the ether along with the production skills and even the knowledge that better things ever existed.

Theoretically, the things we own are all independent stores of value, exchangeable for some amount of something else … like cash, gold or food … yet it appears that all the standardization and mass production and distribution are now giving way to a twisted version of "Moore's Law" where products are so continually cheapened as to be almost immediately rendered as worthless once taken from the store or the box.

Here in this little village (… or Paris for that matter), the people have less stuff… there's no doubt about that… but what does that say for their quality of life?

Is a higher standard of living (for everyone) simply having more stuff or more value?