"Not surprisingly, those that felt the boom was based on fundamentals now believe the worst is over."
It always flummoxes me that these folks can't see a big flaw in their reasoning -- if the boom was truly based on fundamentals, WE'D STILL BE IN A BOOM. A bust never would have happened. Right? Wages are moving up, rates are low, economy is strong.
"Oh, Lazear also revised down the White House estimates for GDP growth for Q4 and 2007."
Guess he's looking for 2.6. Consensus of most economists was apparently cut a few days ago, from 2.9 to 2.5. Guess they didn't like the starts and permits.
I sure don't see how we can get 2.6. 3Q auto production was an aberration, residential construction will certainly be worse, commercial not likely to be much better, exports maybe a little better, consumer spending definately weaker in October. And it's not as if Boeing is cranking out 200 planes. Anything over 1 seems pretty optimistic to me.
The theatre is crowded, the smell of smoke is in the air, and the aisles are already full of anxious people making their way toward what they hope is an exit. Under these circumstances, wouldn't it be criminally irresponsible for someone with access to megaphone to shout: "FIRE!"
Please, let's have a little compassion for Chairman Lazear. He wasn't the one the one playing with matches; it was just his bad luck to be on duty when the blaze got out of control. His comments today should be understood not as forecast, but as an effort to minimize the collateral damage from a disaster that is already underway.
CR, what numbers from BLS are you rolling up to get to your total residential construction employment figure? The one major line item in their data is only about 1 mil jobs, but youve got around 3.2 mil.
The housing market, as you know, it has been hit, I think, harder than most of us had expected."
Edward Lazear, Q&A Nov 21, 2006, chairman of the White House's Council of Economic Advisers
I wonder who the "most of us had expected" could be. Certainly isn't any of my neighbors who have been trying to sell their stucco crap boxes for 600K all year and found no buyers. Maybe the White House's Council of Economic Advisers live in a neighborhood were all the homes sell fast and have plenty of bidders.
Interesting steps Lazear takes to avoid the word "recession". If it were not a big deal, you might think he could argue the case rather than just tell us it's bad form to bad mouth the economy. Things must be worse than he lets on.
Last thing: I would never let you on people. GDP in q4 is not going to be anywhere near 2.5. It's going to be zero growth and the 3rd week of Jan when we find this out. It won't feel that much different than right now. The marketing for or against the label "recession" is a tad overblown.
They have to put on the 'best face' and this is what Lazear has done.
If one would have listened to the 'consensus' view- some of histories biggest bubbles should not have happened. The greatest economic debacles should have not occurred- case in point October 1929. One or two voices warned us of a disaster coming- while the 'majority view' saw sunny days forever.
His reasoning is basically the same as the economists on Wall St.: so far the fall has been much worse than we thought it would be, therefor, the worst must be over.... Sounds a bit like Dr. Pangloss.
I guess things can't get truely bad, because we live in the best of all possible economies. I think the Florida condo market is taking the role of Lisbon.
Percentage wise I would argue that housing prices have a long way to go to return to fundamentals. (mean reversion) The large price declines (on actual houses, not medians) that we've seen so far represent the asymptotic tip of high prices and were based on relatively few sales to truely rarified "greatest fools." Now we should settle in for a few years of declines while the more garden variety idiots with suicide loans are shaken off of the baloon.
CR, thanks. That was my guess, but the only problem is that the residential specialty subcontractor data only goes back to about 2000. However, since that figure is a pretty consistent share of residential construction (on average about 2.35x) I guess you can estimate the historical number for the combined going back much further.
Any ideas about the historical relationship between these numbers?
It makes no sense for us to argue that Lazear, BB & too MANY more don't fully comprehend what drove the housing Bubble and what the most probable outcomes for this debacle are. They have THE info that would resolve the dispute, specifically the financing details for RECENT home sales in PK's "zones".
Want to know if we're headed for a soft landing? Tell me how the homes sold in CA in the last 30 days were financed?
There's a huge difference between "misunderstanding" and spewing rhetoric that's expected of you. The simple truth is there is NO upside & a whole lot of downside for these Public Relations Experts to be straightforward & honest in sharing what they KNOW with the public.
So, instead of wailing on & on for fairness & accountability, maybe we'd all do better to start each morning singing together a few refrains of Bob Dylan's, "Everybody's got to serve somebody"?
Lazear, in talking nice about the economy, is the model of a modern White House economic advisor. There is a story told about both Alfred Kahn and Herbert Stein, in which the protagonist uses the word "recession" and is roundly criticized. Knowing that he cannot do his job without discussing the possibility that output may fall as well as rise, the protagonist announces that he will henceforth use the word "banana" when "recession" is what he means to say, but cannot.
Since Kahn is less well known than Stein, and served in the White House first, I'd guess Kahn is the real source of this lexical switch, but you get the point. Lazear cannot say bad things about the economy in public. Very likely, he can't keep his job if he says bad things about the economy too often in private.
Honestly, do any economists realize that Housing (permits) is a LEADING indicator and employment is a LAGGING indicator? To forecast a strong economy because of currently strong employment makes no sense. I am no economist, but shouldn't these guys know that? Either they are ignorant or completely disingenuous. I'll guess I'll have to go with the latter.
Honestly, do any economists realize that Housing (permits) is a LEADING indicator and employment is a LAGGING indicator? To forecast a strong economy because of currently strong employment makes no sense. I am no economist, but shouldn't these guys know that? Either they are ignorant or completely disingenuous. I'll guess I'll have to go with the latter.
"It makes no sense for us to argue that Lazear, BB & too MANY more don't fully comprehend what drove the housing Bubble and what the most probable outcomes for this debacle are."
Did the captain of the Titanic comprehend what was happening to his ship as one bulkhead after another failed? Did he realize how few lifeboats there were, or how cold the water was?
So what were his options: to instruct the orchestra to play a nice Strauss waltz, or perhaps something a bit more contemporary? I personally favor Strauss, although I may be inclined towards some Mozart as the inevitable draws closer.
Wishing you all a stiff upper lip, and a Happy Thanksgiving!
Geoff, yes - the BLS only started breaking out Residential specialty trade contractors in 2001. It's been awhile since I tried to estimate the number - I'll have to dig through some of my old spreadsheets.
Following kharris (de-lurking from my usual stalking position people) [You gotta follow someone otherwise they lock you up for loitering.] here:
There is a story told about both Alfred Kahn and Herbert Stein, in which the protagonist uses the word "recession" and is roundly criticized. Knowing that he cannot do his job without discussing the possibility that output may fall as well as rise, the protagonist announces that he will henceforth use the word "banana" when "recession" is what he means to say, but cannot.
We saw a real shift in the office of Sec Treas with Snow (very ripe banana) replacing O'Neill (very green banana) IMNotcontaminatedbybananasO.
We expect Lazear to paint/sell/market the rosy picture; we expect the independent, almost bipartisan, keeper of stable prices... (and don't forget reasonable employment...like Poland), Fed to market less and take reasonable steps, not self-interested ones (see? 4.4% unemployment) [and 10% stock price increases with 0% wage increases] that might propel the stock market and those shareholders (M&A and LBO traders esp) at the expense of ordinary people (that B us!) whose main source of income is employment.
So how ripe are the bananas in the MSM? How compliant are they with the Lazear rosy picture and how critical are they about identifying the thorns in this bouquet?
Why I post here: real snoops brave enough to face a few thorns.
bailey: My take is they have enough data to know how things are generally looking, and that in some detail, but even when future developments are always based on fundamentals that are known with some specificity, at the end of the day events are carried forward by global group dynamics that defy measurement and even description.
It's like forecasting the weather -- with good enough monitoring and modeling you can predict the larger patterns, but confidence declines rapidly when narrowing down, both in time and space. E.g. it will quite likely rain, but when and where?
Which is not to say there is an excuse to announce sunshine when a storm front is coming up.
You bring great clarity to all the data. One can only hope the damage is contained. If the historical correlations hold true, (which I would venture to guess they will) I suppose it's prudent to conclude that the S&P 500 could very well be plumbing sub 1200 depths by mid 2007...?
"Not surprisingly, those that felt the boom was based on fundamentals now believe the worst is over."
It always flummoxes me that these folks can't see a big flaw in their reasoning -- if the boom was truly based on fundamentals, WE'D STILL BE IN A BOOM. A bust never would have happened. Right? Wages are moving up, rates are low, economy is strong.
So ... you know .... whot happened?
Along similar lines, a WSJ poll that appeared yesterday found 2 out of 3 economists thought the worst of the housing bust was over.
My suggestion would be to poll just the economists that were predicting a housing bust to begin with.
You might find they come to a different conclusion.
"Oh, Lazear also revised down the White House estimates for GDP growth for Q4 and 2007."
Guess he's looking for 2.6. Consensus of most economists was apparently cut a few days ago, from 2.9 to 2.5. Guess they didn't like the starts and permits.
I sure don't see how we can get 2.6. 3Q auto production was an aberration, residential construction will certainly be worse, commercial not likely to be much better, exports maybe a little better, consumer spending definately weaker in October. And it's not as if Boeing is cranking out 200 planes. Anything over 1 seems pretty optimistic to me.
The theatre is crowded, the smell of smoke is in the air, and the aisles are already full of anxious people making their way toward what they hope is an exit. Under these circumstances, wouldn't it be criminally irresponsible for someone with access to megaphone to shout: "FIRE!"
Please, let's have a little compassion for Chairman Lazear. He wasn't the one the one playing with matches; it was just his bad luck to be on duty when the blaze got out of control. His comments today should be understood not as forecast, but as an effort to minimize the collateral damage from a disaster that is already underway.
CR, what numbers from BLS are you rolling up to get to your total residential construction employment figure? The one major line item in their data is only about 1 mil jobs, but youve got around 3.2 mil.
Geoff
The housing market, as you know, it has been hit, I think, harder than most of us had expected."
Edward Lazear, Q&A Nov 21, 2006, chairman of the White House's Council of Economic Advisers
I wonder who the "most of us had expected" could be. Certainly isn't any of my neighbors who have been trying to sell their stucco crap boxes for 600K all year and found no buyers. Maybe the White House's Council of Economic Advisers live in a neighborhood were all the homes sell fast and have plenty of bidders.
Geoff, I add two categories together:
1) Construction of building, Residential building, currently 985 thousand jobs SA.
2) Residential specialty trade contractors, currently 2,269.2 thousand jobs SA.
The current total in residential construction is 3254.2 thousand SA.
Best to all.
Interesting steps Lazear takes to avoid the word "recession". If it were not a big deal, you might think he could argue the case rather than just tell us it's bad form to bad mouth the economy. Things must be worse than he lets on.
Last thing: I would never let you on people. GDP in q4 is not going to be anywhere near 2.5. It's going to be zero growth and the 3rd week of Jan when we find this out. It won't feel that much different than right now. The marketing for or against the label "recession" is a tad overblown.
NARs presentations in New Orleans:
Presentations by NAR Staff and Industry Experts
They have to put on the 'best face' and this is what Lazear has done.
If one would have listened to the 'consensus' view- some of histories biggest bubbles should not have happened. The greatest economic debacles should have not occurred- case in point October 1929. One or two voices warned us of a disaster coming- while the 'majority view' saw sunny days forever.
His reasoning is basically the same as the economists on Wall St.: so far the fall has been much worse than we thought it would be, therefor, the worst must be over.... Sounds a bit like Dr. Pangloss.
I guess things can't get truely bad, because we live in the best of all possible economies. I think the Florida condo market is taking the role of Lisbon.
Percentage wise I would argue that housing prices have a long way to go to return to fundamentals. (mean reversion) The large price declines (on actual houses, not medians) that we've seen so far represent the asymptotic tip of high prices and were based on relatively few sales to truely rarified "greatest fools." Now we should settle in for a few years of declines while the more garden variety idiots with suicide loans are shaken off of the baloon.
CR, thanks. That was my guess, but the only problem is that the residential specialty subcontractor data only goes back to about 2000. However, since that figure is a pretty consistent share of residential construction (on average about 2.35x) I guess you can estimate the historical number for the combined going back much further.
Any ideas about the historical relationship between these numbers?
BTW, that was nicely done CR.
It makes no sense for us to argue that Lazear, BB & too MANY more don't fully comprehend what drove the housing Bubble and what the most probable outcomes for this debacle are. They have THE info that would resolve the dispute, specifically the financing details for RECENT home sales in PK's "zones".
Want to know if we're headed for a soft landing? Tell me how the homes sold in CA in the last 30 days were financed?
There's a huge difference between "misunderstanding" and spewing rhetoric that's expected of you. The simple truth is there is NO upside & a whole lot of downside for these Public Relations Experts to be straightforward & honest in sharing what they KNOW with the public.
So, instead of wailing on & on for fairness & accountability, maybe we'd all do better to start each morning singing together a few refrains of Bob Dylan's, "Everybody's got to serve somebody"?
Lazear, in talking nice about the economy, is the model of a modern White House economic advisor. There is a story told about both Alfred Kahn and Herbert Stein, in which the protagonist uses the word "recession" and is roundly criticized. Knowing that he cannot do his job without discussing the possibility that output may fall as well as rise, the protagonist announces that he will henceforth use the word "banana" when "recession" is what he means to say, but cannot.
Since Kahn is less well known than Stein, and served in the White House first, I'd guess Kahn is the real source of this lexical switch, but you get the point. Lazear cannot say bad things about the economy in public. Very likely, he can't keep his job if he says bad things about the economy too often in private.
Greenspan's bubble. Greenspan's war. Greenspan's Presidency.
When will people wake up to the fact that Alan Greenspan ruined America?
Honestly, do any economists realize that Housing (permits) is a LEADING indicator and employment is a LAGGING indicator? To forecast a strong economy because of currently strong employment makes no sense. I am no economist, but shouldn't these guys know that? Either they are ignorant or completely disingenuous. I'll guess I'll have to go with the latter.
Honestly, do any economists realize that Housing (permits) is a LEADING indicator and employment is a LAGGING indicator? To forecast a strong economy because of currently strong employment makes no sense. I am no economist, but shouldn't these guys know that? Either they are ignorant or completely disingenuous. I'll guess I'll have to go with the latter.
"It makes no sense for us to argue that Lazear, BB & too MANY more don't fully comprehend what drove the housing Bubble and what the most probable outcomes for this debacle are."
Did the captain of the Titanic comprehend what was happening to his ship as one bulkhead after another failed? Did he realize how few lifeboats there were, or how cold the water was?
So what were his options: to instruct the orchestra to play a nice Strauss waltz, or perhaps something a bit more contemporary? I personally favor Strauss, although I may be inclined towards some Mozart as the inevitable draws closer.
Wishing you all a stiff upper lip, and a Happy Thanksgiving!
Geoff, yes - the BLS only started breaking out Residential specialty trade contractors in 2001. It's been awhile since I tried to estimate the number - I'll have to dig through some of my old spreadsheets.
Best Wishes.
Any Mozart but the Requiem Mass, 4shzl. Personally I could use some Magic Flute, but I doubt I'll get it. Perhaps a comprise on a little night music?
Bless you, dear CR. I hope after wading through all this textual turkey you get some of the real thing tomorrow . . .
Following kharris (de-lurking from my usual stalking position people) [You gotta follow someone otherwise they lock you up for loitering.] here:
There is a story told about both Alfred Kahn and Herbert Stein, in which the protagonist uses the word "recession" and is roundly criticized. Knowing that he cannot do his job without discussing the possibility that output may fall as well as rise, the protagonist announces that he will henceforth use the word "banana" when "recession" is what he means to say, but cannot.
We saw a real shift in the office of Sec Treas with Snow (very ripe banana) replacing O'Neill (very green banana) IMNotcontaminatedbybananasO.
We expect Lazear to paint/sell/market the rosy picture; we expect the independent, almost bipartisan, keeper of stable prices... (and don't forget reasonable employment...like Poland), Fed to market less and take reasonable steps, not self-interested ones (see? 4.4% unemployment) [and 10% stock price increases with 0% wage increases] that might propel the stock market and those shareholders (M&A and LBO traders esp) at the expense of ordinary people (that B us!) whose main source of income is employment.
So how ripe are the bananas in the MSM? How compliant are they with the Lazear rosy picture and how critical are they about identifying the thorns in this bouquet?
Why I post here: real snoops brave enough to face a few thorns.
So how ripe are the bananas in the MSM?
So ripe its time to make banana bread out of them...
bailey: My take is they have enough data to know how things are generally looking, and that in some detail, but even when future developments are always based on fundamentals that are known with some specificity, at the end of the day events are carried forward by global group dynamics that defy measurement and even description.
It's like forecasting the weather -- with good enough monitoring and modeling you can predict the larger patterns, but confidence declines rapidly when narrowing down, both in time and space. E.g. it will quite likely rain, but when and where?
Which is not to say there is an excuse to announce sunshine when a storm front is coming up.
I think 4shzl has it right; telling the truth would make the situation worse, so they have to distort the picture
CR,
You bring great clarity to all the data. One can only hope the damage is contained. If the historical correlations hold true, (which I would venture to guess they will) I suppose it's prudent to conclude that the S&P 500 could very well be plumbing sub 1200 depths by mid 2007...?
telling the truth would make the situation worse
No. Telling the truth would get us to the bottom faster, and that would be better in the long run.
i sport book i sport book i sport book. home loan mutual rate washington home loan mutual rate washington home loan mutual rate washington.
cash advance minneapolis cash advance minneapolis cash advance minneapolis. generic picture valium generic picture valium generic picture valium.