Monthly Archives: April 2007

Housing Slide Not Over Yet

Economics

Remember in March and early April, when everyone was cheering the strong sales of existing homes during the month of February? Perhaps we were finally turning the corner, right?

The National Association of Realtors’ index for pending sales of existing homes rose in February at a seasonally adjusted annual rate of 0.7 percent. The index is well below where it was a year ago but stronger than investors expected, reassuring them that the housing sector, while weak, is not being pummeled by the struggling subprime mortgage sector.

Some folks thought the market had done a 180. But it now appears to be little more than a stutter-step. The market juked the perma-bulls right out of their cleats on this one!

Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems in the subprime mortgage market, a real estate trade group reported Tuesday.

The National Association of Realtors reported that sales of existing homes fell by 8.4 percent in March, compared to February. It was the biggest one-month decline since a 12.6 percent drop in January 1989, another period of recession conditions in housing. The drop left sales in March at a seasonally adjusted annual rate of 6.12 million units, the slowest pace since June 2003.

The steep sales decline was accompanied by an eighth straight fall in median home prices, the longest such period of falling prices on record. The median price fell to $217,000, a drop of 0.3 percent from the price a year ago.

The fall in sales in March was bigger than had been expected and it dashed hopes that housing was beginning to mount a recovery after last year’s big slump. That slowdown occurred after five years in which sales of both existing and new homes had set records.

Everyone said, as they always do in a major asset bubble market, that “this one is different”. And it some senses, they’re right, real estate is different. But different doesn’t preclude a crash. If you hold $500K in a technology stock, and you need to liquidate as it’s dropping like a rock, you might sell for $300K in a day just to get rid of it, because you know it will be worthless tomorrow. If you own a $500K home, though, you can’t get rid of it in a day, you’re in debt to pay for it, and unlike the technology stock, it will never be completely worthless. But that doesn’t mean that the market can’t reprice it at $300K and screw you.

Oh, and despite what they said last month, it now appears that they see the error of their ways:

Lereah said that the troubles in mortgage lending were also playing a significant part in depressing sales. Lenders have tightened standards with the rising delinquencies in mortgages especially in the subprime market, where borrowers with weak credit histories obtained their loans.

This has been brewing for a long time, and it doesn’t take a rocket surgeon to have seen it coming. You flood the market with liquidity, loosen interest rates and lending standards, and you create an asset bubble. It had to burst or deflate. With housing, it’s tough to burst, because there is inherent value, but it’s starting to deflate quite rapidly now.

Hat Tip: Doug

Brad Warbiany
https://thelibertypapers.org/

The FCC Wants To Declare War On Television Violence

Constitution, Free Speech, Government Regulation, Individual Rights, Media

This morning’s Washington Post is reporting that the Federal Communications Commission is days away from proposing an unprecedented expansion of government regulation of entertainment broadcasting:

Federal regulators, concerned about the effect of television violence on children, will recommend that Congress enact legislation to give the government unprecedented powers to curb violence in entertainment programming, according to government and TV industry sources.

The Federal Communications Commission has concluded that regulating TV violence is in the public interest, particularly during times when children are likely to be viewers — typically between 6 a.m. and 10 p.m., FCC sources say.

The agency’s recommendations — which will be released in a report to Congress within the next week, agency officials say — could set up a legal battle between Washington and the television industry.

For decades, the FCC has penalized over-the-air broadcasters for airing sexually suggestive, or “indecent,” speech and images, but it has never had the authority to fine TV stations and networks for violent programming.

The report — commissioned by members of Congress in 2004 and based on hundreds of comments from parents, industry officials, academic experts and others — concludes that Congress has the authority to regulate “excessive violence” and to extend its reach for the first time into basic-cable TV channels that consumers pay to receive.

As the article goes on to point out there are several problems with what the FCC is proposing that should concern anyone who believes in freedom of speech and property rights.

First of all, just how do you define “excessive violence” ? Are we talking about Jack Bauer’s torture scenes on 24 ? What about the very life-like dead bodies we see on a regular basis on Law & Order and CSI ? For that matter, what about the autopsy scenes on shows like CSI ? Yes, these shows are excessive, but in each one of them, the violence isn’t gratuitous, it’s a part of the plot and often — as in the case of torture scenes on 24 that seldom yield useful information — make a point completely opposite from what you might initially think.

And even if you can come up with a constitutionally acceptable definition of violence, how do you objectively determine what’s excessive ? You can’t, of course, because the question of what is and isn’t excessive is entirely subjective. What I think is excessive will be different from what you think is excessive. In a way, it’s even worse than trying to define what is and isn’t obscene, which has led to an entire generation of Supreme Court litigation. » Read more

Doug Mataconis
http://www.belowthebeltway.com

Book Review: The Multiplex Man, James P. Hogan

Book Reviews

I teased this one in my bookaholic post, so I figured I might as well get around to reviewing it. The book is The Multiplex Man, by James P. Hogan. I’m not even sure where I first heard about this one (a libertarian blog somewhere, probably), but I picked it up used from Amazon for a very nice price, so there wasn’t a lot of risk in trying it.

The book describes a time in the not-so-distant future. The Western powers (US and Europe), driven by the environmentalists, have begun to clamp down on capitalism as a waste of resources, while the remnants of the old Soviet Union have embraced unbridled capitalism and are rapidly expanding (even into space). The governments of the West have built up enormous propaganda about the dangers of those capitalist nations to control their own citizens, and the people fear that capitalism in the East will collapse, leading to an attack by the East on the West. Thus, they rule their people through fear of an unlikely enemy.

In this world you find Richard Jarrow, a government history teacher who’s bought the lie— hook, line, and sinker. But one day something strange happens. He goes to the doctor, is put to sleep for some routine tests, and then suddenly wakes up 6 months later, 1000 miles away from his home, in a strange hotel room. And in a different body. Furthermore, he tries to head back to his home, only to find out that Richard Jarrow died a mere month after his last memory. Confused and disoriented, particularly by the fact that he has gained incredible fighting ability, he goes on a search to find out exactly what’s going on. He soon determines exactly whose body he’s inhabiting, and starts to see that there are forces of the Eastern capitalist countries who want to use him to further their own ends. Not to mention that the former fiancee’ of the body he’s inhabiting wants the original inhabitant’s personality back. As he starts down the eventual road to the climax of the story, you see how various personalities inside him all start to meld together and fall apart, and you watch as his own psyche starts shorting out.

To go any farther would give too much of the plot away, so I’m not going to do that. The book itself reminded me of a suspense-thriller much like Robert Ludlum’s Jason Bourne series. You have a man who isn’t quite sure who he is or why he’s capable of doing what he can do, unsure who to trust and how to survive his situation. It’s a bit more sci-fi than the Bourne series, though, and again to get into the details would give away too much of the plot. Last, for the libertarians in the bunch, it’s certainly got a dystopian vision that is distrustful of state control, sees the government as the enemy, and views unbridled free-market anarchist capitalism as the driving force of prosperity.

As a suspense-thriller novel, it is a bit formulaic at times. You have the protagonist, trying to figure out exactly what is going on in a world that seems to threaten him from every direction. You have the supportive female, who distrusts him at first but grows to push him to his destiny. You’ve got shadowy government figures all around, and you’re never sure which of them is working to help the protagonist and which is not. However, to call it formulaic doesn’t make it a bad book. Hogan throws in twists and turns in places that I hadn’t seen coming, and in general it’s an engaging read.

I’d say that if you’re looking for a new author to check out, and you’re into the suspense-thriller genre, it’s certainly worth a look. If you like the Bourne series from Ludlum, and you’re a libertarian, I think you’ll like this quite a bit. This is a decent novel with libertarian themes, but not to the extent that it beats you over the head with it. As I’ve said with a few other books, this one won’t win any awards, but it’s definitely a nice book to while a few hours away.

Brad Warbiany
https://thelibertypapers.org/

D.C. Area Government Workers Steal $ 17 Million Per Year

Government Waste

This morning’s Washington Post is reporting that government workers in the Washington, D.C. area have defrauded the American taxpayer out of $ 17 million dollars per year:

It’s a perk of federal employment: a free monthly subsidy that pays for commutes on public transportation. But scores of workers have been taking the government for a ride, selling their benefits on the Internet and pocketing millions in cash each year.

The program, which covers 300,000 federal employees nationwide, has been abused by workers across a variety of agencies, the Government Accountability Office will report to Congress today. Workers in the Washington region alone have defrauded the government of at least $17 million a year, with the actual figure probably several million dollars higher, according to the GAO.

Employees have taken the benefit vouchers, known locally as Metrocheks, and turned them into a kind of black-market currency, selling them — often at a discount off the face value — to buyers who can use them to ride Metro, regional buses or commuter railroads.

Workers have been accepting the transit subsidies but driving to work, or claiming a subsidy far greater than their commuting costs and selling the excess, GAO investigators found. For example, one employee at the Department of Transportation claimed the maximum benefit of $105 per month, but his commute cost $54.

Meanwhile, agencies have been handing out transit subsidies to employees who also receive free parking spaces, to employees who no longer work for the government and, in some cases, to people who apparently were never employed by the agencies.

To anyone who understands rent-seeking and public choice economics, none of this should be a surprise. The government hands out cash subsidies rather than actually confirming that workers are incurring the transportation expenses they claim — and apparently without even demanding receipts — and the workers, responding accordingly, inflate those expenses and take as much money as they can get.

Hearings will be held and reforms will be proposed, but the incentive to lie, cheat, and steal away the taxpayer’s money will remain.

Doug Mataconis
http://www.belowthebeltway.com

Fred Thompson On Federalism

Constitution, Election '08, Federalism

First, let me make it clear. Fred Thompson is not a libertarian, he’s a conservative. Nonetheless, he does have interesting things to say.

Today, he has a column up at NRO that addresses criticism about his votes on tort reform while in the Senate, but has this interesting quote about federalism:

As I understood it, states were supposed to be laboratories that would compete with each other, conducting civic experiments according to the wishes of their citizens. The model for federal welfare reform was the result of that process. States also allow for of diverse viewpoints that exist across the country. There is no reason that Tennesseans and New Yorkers should have to agree on everything (and they don’t).

Those who are in charge of applying the conservative litmus test should wonder why some of their brethren continue to try to federalize more things — especially at a time of embarrassing federal mismanagement and a growing federal bureaucracy. I am afraid that such a test is often based more upon who is favored between two self-serving litigants than upon legal and constitutional principles. Isn’t that what we make all the Supreme Court nominees promise not to do?

Adhering to the principles of federalism is not easy. As one who was on the short end of a couple of 99-1 votes, I can personally attest to it. Federalism sometimes restrains you from doing things you want to do. You have to leave the job to someone else — who may even choose not to do it at all. However, if conservatives abandon this valued principle that limits the federal government, or if we selectively use it as a tool with which to reward our friends and strike our enemies, then we will be doing a disservice to our country as well as the cause of conservatism.

There are many things about the Constitution that can be considered the work of genius, but perhaps the most important among them was the idea of Federalism. As originally intended, the Federal Government was supposed to have only limited jurisdiction over matters that truly impacted the nation as a whole. The vast majority of the rules that impacted every day life were supposed to have been made at the state and local levels, where people would have more control over their legislators.

As with most everything else that the Founders believed, that idea has faded into history. Today, the Federal Government inserts itself into virtually every aspect of our lives and the states have become more and more irrelevant. Over the past 30 years, the Federal Government has used the power of the purse to force the states to change policy on everything from the drinking age to seatbelt laws. And when the voters of California decide that people who are dying of cancer should have the right to utilize marijuana to alleviate their pain and suffering, the DEA steps in and shuts down the clinics……and the Supreme Court says it’s okay.

With the exception of Ron Paul, nearly every Presidential candidate is talking about what the Federal Government can do for you. Almost nobody is talking about the idea that maybe there are some things that it shouldn’t be doing at all.

If Fred Thompson becomes the exception to that rule, then he may be a welcome addition to the race.

Doug Mataconis
http://www.belowthebeltway.com
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