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The National Association of Realtors comes out with a bearish forecast on home prices. Of course, given that home prices have been falling since July 2006, it seems a little like an analyst downgrading a stock after it has already fallen 40 percent. Given NAR's inability to call the inflection point in housing, it could be that this forecast--the first by NAR that projects existing home prices will actually fall in 2007--is a contrary indicator. Or it could be that the reality of the marketplace is finally catching up to the realtors--and that more downgrades could be in the offing.
Posted by dan at 08:53 AM
Kurt Vonnegut has died. Here's my favorite snippet of Vonnegut's prose. It's not from a novel. It's from a speech he gave at an event for the Cornell Daily Sun, the newspaper where he toiled as an undergraduate--and the newspaper where many far-less-distinguished writers, including your humble scribe, learned a great deal about the word trade, and about themselves.
I was happiest when I was all alone — and it was very late at night, and I was walking up the hill after having helped to put The Sun to bed.All the other university people, teachers and students alike, were asleep. They had been playing games all day long with what was known about real life. They had been repeating famous arguments and experiments, and asking one another the sorts of hard questions real life would be asking by and by.
We on The Sun were already in the midst of real life. By God, if we weren’t! We had just designed and written and caused to be manufactured yet another morning newspaper for a highly intelligent American community of respectable size — yes, and not during the Harding administration, either, but during 1940, ’41 and ’42, with the Great Depression ending, and with World War Two well begun.
I am an atheist, as some of you have gleaned from my writings. But I have to tell you that, as I trudged up the hill so late at night and all alone, I knew that God Almighty approved of me.
Posted by dan at 08:45 AM
My latest in Slate, on why the Democrats shouldn't be in any rush to permanently fix the Alternative Minimum Tax.
Posted by dan at 10:31 AM
Per the Associated Press, the International Monetary Fund states that the woes in the U.S. subprime market will not destabilize world markets. Question: when, in its distinguished history, has the IMF ever accurately forecasted an event that would destabilize the world's markets?
Oh, and about that meme, repeated from the Federal Reserve to Wall Street to CNBC, that the subprime woes are not indicative of any larger credit issues? Not so much. Apparently, the Alt-a sector -- the notch between subprime and prime -- is having some difficulties. Now check out this chart showing subprime casualty Novastar and alt-a casualty American Home Mortgage. I'm no technical analyst, but it sure likes like the subprime company's stock is leading the alt-a company's stock down.
Posted by dan at 10:25 AM
Jeffrey Sachs crunches the numbers and concludes the global rich can do more than the biggest countries in the world to combat poverty. from the Financial Times:
"There are 950 billionaires whose wealth is estimated at $3.5 trillion [$3,500bn]. An annual 5 per cent ‘foundation’ payout would be $175bn per year – that would do it. Then we don’t need the G8 but 950 people on the Forbes list,” said Mr Sachs. “Maybe private philanthropists will champion solutions to individual problems rather than the G8,” he said.
Posted by dan at 08:26 AM
Justin Lahart writes in today's Wall Street Journal about the growing stock shortage.
Shares of U.S. companies are getting retired like never before. According to the Federal Reserve, a record of a net $548 billion of stock was taken off the market last year, up from the old record -- set the year before -- of $295 billion.That's enough money to buy Citigroup a couple of times over and still have enough money left over to pick up Caterpillar. . . .
Companies in the Standard & Poor's 500 purchased $432 billion of their shares last year, according to S&P's senior index analyst Howard Silverblatt, more than enough to sop up the shares they issued. Exxon Mobil is the standard bearer here. It spent $29.6 billion -- just a bit shy of where the market now values oil-services giant Halliburton -- taking its number of shares outstanding to 5.97 billion from 6.32 billion.
Buyouts, where public companies get taken private, are also draining shares off the U.S. stock market. Private-equity buyout firms were behind five of the 10 largest takeover deals last year, as the likes of hospital giant HCA were privatized.
Posted by dan at 08:20 AM
David Carr wonders why so many mainstream media types and politicians continue to appear on Don Imus's show, given his propensity to make racist comments. The pathetic answer that Newsweek's Evan Thomas gives is that this is no time to make a statement. Why? Doing so now would simply beg the question as to why people like Thomas kept coming on after all his previous racist statements.
“He should not have said what he said, obviously,” said Mr. Thomas of Newsweek. “I am going on the show, though. I think if I didn’t, it would be posturing. I have been going on the show for quite some time and he occasionally goes over the line.”
Posted by dan at 08:15 AM
Edmund Andrews has a good article in today's New York Times on Democrats efforts to permanently fix the Alternative Minimum Tax, a tax which falls most heavily on residents of Democratic-leaning states. One of the challenges is that the AMT is a sort of hidden tax that sneaks up on people. In recent years, Congress has extended a series of temporary fixes that prevent millions of new people from being hit by it each year. The problem is that most people who have benefit from these fixes--or who will benefit from a bigger fix--don't realize they're benefitting from the fix.
Politically, the smarter thing to do would seem to be letting the tax laws that President Bush and the Republicans have put in place run the course. In 2007, as Pear notes, the AMT "if left unchecked isexpected ot affect 23 million households during the 2007 tax year -- up from 3.4 million last year." So wait until next year, when outraged middle-income people are being told they owe higher taxes than they expected, explain how this state of affairs came about, and then offer a solution.
It's something of a gamble. Taxpayers might blame Democrats who control Congress for not sparing them the tax increase. But they might also blame the parties who let this system fester for so long without doing anything about it.
Pear concludes his article thusly:
After his re-election in 2004, Mr. Bush vowed to overhaul the income tax and abolish the alternative minimum tax as part of the process. But even though he received recommendations from a handpicked advisory panel, Mr. Bush ignored the proposals and never came out with a plan of his own.
Posted by dan at 08:07 AM
My latest in Slate, on the proliferation of bank branches.
My latest in the New York Times Week in Review, on the lack of concern for union-busting among Starbucks customers.
My latest in New York, on why hedge funds congregate where they do.
Posted by dan at 08:01 AM