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Scott Rasmussen analyzes the Massachusetts race.
On the surface, three recent polls on the upcoming Massachusetts special election to fill the Senate seat of the late Edward M. Kennedy seem to tell three different stories. …
… As always, it’s important to look at what the polls have in common to learn the real lessons from the data. A closer look at all three shows a lot of common ground. …
In Euro Pacific Capital, Peter Schiff responds to the Fed chairman’s recent speech claiming the Fed had no hand in the mortgage crisis. Schiff asserts that the Fed can claim a hefty share of the blame.
…The biggest issuers and insurers of ARMs were Fannie Mae and Freddie Mac. Both of these Government Sponsored Entities (GSE’s) had policies that allowed for borrowers to qualify based solely on their ability to meet the initial loan payments, not the higher payments that would eventually kick in. Why didn’t the Fed advise Congress to force the GSE’s to adopt more prudent standards? Either they did not recognize these mortgages as problematic, in which case they are incompetent, or they did and remained silent, which is worse. In either case, if they lacked the foresight or political will to prevent this crisis, how can we expect them to protect us from the next?
Furthermore, is it really possible that Bernanke is so clueless that he does not see the relationship between the proliferation of ARMs and interest-only mortgages and the low short-term interest rates that made them so popular? Without the ultra-low interest rates provided by the Fed, the vast majority of these problem mortgages never would have been originated. ARMs and interest-only mortgages existed well before the housing bubble began; however, it wasn’t until the Fed cut rates to historically low levels in 2002, and held them there through 2005, that they became so popular.
The only reason so many people were able to overpay for houses was because of the temporarily low “introductory” rates. Had the Fed not set interest rates so low, these options would not have been available, and house prices would have been held in check. In short, by keeping interest rates too low, the Fed inflated the housing bubble by enabling banks to issue mortgages that made overpriced houses seem affordable. …
In the Atlantic, Megan McArdle explains the unfolding commercial real estate crisis.
…In some ways, price declines are a bigger problem for landlords than for homeowners. Unless forced to move, homeowners with long-term mortgages who make enough to cover their payments can sit tight and hope the market recovers. Landlords, however, typically take out commercial loans for shorter terms of three to 10 years. In normal times, landlords coming to the end of a mortgage simply roll the debt over into a new loan. But collapsing asset values have wreaked havoc on this process.
Now, as loans come up for renewal, lenders have to reassess how much credit they’re willing to extend. Take a property that was worth $100 million in 2007, when it was financed with a four-year, $70 million mortgage. That’s a reasonably conservative 70 percent loan-to-value (LTV) ratio. But if the building is worth only $70 million when it’s time to roll the loan over, keeping the LTV at 70 percent means that the owners can now borrow only $49 million, and have to come up with tens of millions to pay off the original loan. Worse, as the markets tighten, lenders tend to want to see a lower LTV in the deals they finance.
That suggests that a lot of commercial loans are going to go bad. According to Joseph Gyourko, a Wharton real-estate professor, at least $250 billion worth of commercial loans are going to roll over in each of the next few years. When they do, many landlords will probably be caught short—and so will their bankers. Although most U.S. residential mortgages were bundled into mortgage-backed securities, only a fraction of commercial mortgages were securitized. Some bank or finance company still carries the rest on its books and will have to write them down if they can’t be rolled over; some of those banks will ultimately have to be taken over by the FDIC. As the banks’ loan portfolios are sold off, the write-downs of the underlying collateral will give bank examiners a new, lower reference price for the collateral held by other banks, possibly tipping those banks into insolvency as well. You get the picture. …
Ed Morrissey comments on an AP unemployment article that pulls no punches.
For a while, the Associated Press seemed determined to make “unexpected” and its variants the most overused term in economic reporting. Today, they give their readers an unexpected shock by dropping the forced sense of optimism normally used in giving bad economic news in their analysis of today’s jobless report. Instead, Christopher Rugaber reports the obvious — that the loss of 85,000 more jobs is nothing but bad news, and that the 10.0% figure hides the rot underneath:
“Lack of confidence in the economic recovery led employers to shed a more-than-expected 85,000 net jobs in December even as the unemployment rate held at 10 percent. The rate would have been higher if more people had been looking for work instead of leaving the labor force because they can’t find jobs. …
…When discouraged workers and part-time workers who would prefer full-time jobs are included, the so-called “underemployment” rate in December rose to 17.3 percent, from 17.2 percent in November. That’s just below a revised figure of 17.4 percent in October, the highest on records dating from 1994. …”
…Unemployment has not gotten better; it has gotten worse, and the statistics have hidden the real decline in 2009. Until now, only a few media outlets bothered to highlight the problem. The AP has finally made it clear — and that will mean a lot more attention in 2010 to the failed Porkulus legislation and the fumbled economic strategies of the Obama administration. (via Geoff A) …
In the Corner, Stephen Spruiel gives his forecast on the economy, and what Republicans should do.
…There are other reasons to think that, even with moderate GDP growth, unemployment could remain at 8 or 9 percent for the rest of the year. Home prices are likely to stay flat, i.e. the asset inflation that drove consumer spending during the credit bubble isn’t there to drive it now. The stock market has rallied, but an analysis of economy-wide stock prices to corporate earnings indicates that stocks might be overvalued. I tend to think that’s the case. Additionally, the number of people dropping out of the workforce is still quite high. As James Pethokoukis noted today, a growing economy will draw these discouraged job-seekers back into the labor force, offsetting jobs created and keeping the unemployment rate elevated.
Second, I think it’s fair to blame Obama and the Democrats for creating a climate that is not conducive to job creation. (I think Ramesh probably agrees with that.) I have a piece up today arguing that the administration’s agenda has created a deleterious level of regulatory uncertainty, particularly with regard to health-care costs, which has suppressed job growth. I actually think this point ties in well with the larger point of Ramesh’s piece, which is that it’s time for Republicans to pivot from opposition to Obama-Reid-Pelosi-Care to a positive message on health care. …
…Republicans should run on the following message: The cost controls in the Democrats’ bill are a joke: Obamacare will drive premiums up and expose small businesses to new taxes and regulations. Republicans will repeal Obamacare as their first order of business and replace it with the right reforms, such as the refundable health-care tax credit that John McCain touted during his presidential campaign. Such a strategy would tie unease over the Democrats’ health-care bill to anger over high unemployment.
Robert Samuelson introduces us to the Statistical Abstract.
You may think that the last place to find a portrait of a nation is a book full of numbers. But turn to Page 673 of the Statistical Abstract of the United States, and you find these intriguing figures. About three-quarters of Americans (76.1 percent in 2007, to be exact) get to work by driving alone. Only 10.4 percent carpool, while 4.9 percent use public transportation and 2.8 percent walk. On average, Americans spend 25.3 minutes commuting each way. The state with the longest commuting time is New York, at 31.5 minutes; the states with the shortest are North and South Dakota, at about 16 minutes, followed closely by Montana and Nebraska, at 17.6.
I’m an avid fan of the Stat Abstract, published annually by the Census Bureau, because it tells so much so quickly. The just-out 2010 edition bulges with information. For me, the Stat Abstract is often the place to start a story, because it substitutes evidence for speculation. How do we compare with other countries? Sometimes favorably; sometimes not. …
Jennifer Rubin notices Maureen Dowd falling out of ObamaLove.
… Not even the grande dame of the Gray Lady can avoid the conclusion that Obama hasn’t panned out. The fellow whom she and the entire liberal media swooned over during the campaign and those very qualities the Left punditocracy touted as praiseworthy (e.g., intellectualism, emotional reserve) have proven ill-suited to the job. Obama is neither leading nor seeming to understand state craft.
How could they have gotten it so wrong? Well, they were plainly in love with the “historic” opportunity to elect an African American. And they saw in Obama one of them — elite educated, scornful of gun clinging and Bible thumping Americans, contemptuous of American exceptionalism, skeptical of “hard power,” and infatuated with the public sector. It turns out that this was a recipe for disaster when it comes the the presidency. …
Dale McFeatters, in Central Florida’s NewChief, tells us about a new trend in medicine; walk-in labs.
…As Lee Bowman of Scripps Howard News Service reports, a growing number of Americans are bypassing doctors and going directly to online and storefront labs for diagnostic testing. Most often they pay for these tests out of their own pocket. The results may persuade the consumer to pursue the matter further with a personal physician but, in any case, the consumer is in charge of who sees the results.
…The name of one fast-growing chain of walk-in labs encapsulates the field’s business model, Any Lab Test Now. The company says it can generally have testing results within 24 hours and at a cost that is as much as 80 percent less than going through a doctor. The lab franchises offer up to 1,500 tests, from a simple cholesterol check to more sophisticated packages of tests that address complex medical issues. …
…There is no federal oversight over medical testing, other than requiring that the labs that do the actual testing for the storefronts be properly certified. State regulations vary widely. As so often happens, the consumers seem to be far out in front of the lawmakers and regulators.
In the Corner, Robert Costa posts that Sarah Palin got it right again.
So this is why Sarah Palin isn’t going to CPAC (via Politico):
Palin is declining an invitation to address the Conservative Political Action Conference next month because, a source said, she does not want to be affiliated with the longtime organizer of the traditional movement confab.
At issue is the role of David Keene, head of the American Conservative Union which organizes CPAC. In September, POLITICO reported that Keene asked FedEx for between $2 million and $3 million to get the group’s support in a bitter legislative battle with rival UPS.
A source close to the Palin camp says that request led to a decision to stay away from the upcoming CPAC conference, calling it a forum that will place “special interests over core beliefs” and “pocketbook over policy.”
“That’s not what CPAC should be about and people are tiring,” the source said. “Palin is taking a stance against this just as she did in Alaska.”
Gerald Warner has more to say about the green fraud and those who are still drinking the cool-aid, in Telegraph Blogs, UK.
Fasten your seat-belt before you read this one. It’s a corker. It is a quote from Susan Watts, BBC Science Editor, on Newsnight, as she attempted to explain why the abysmal failure of climate “scientists” to predict current weather conditions does not in any way reduce their credibility in predicting global warming. Watts said: “In fact that seasonal forecast predicting a mild winter wasn’t actually wrong, but it left people with the wrong impression.”
If you think I am making this up, I cannot honestly blame you. I can only invite you to go to BBC iPlayer and view Newsnight for 7 January, in order to hear this garbage for yourself. So, the prediction of a mild winter “wasn’t actually wrong”. Does the term “in denial” have any more graphic illustration than that? If you look out the window you might get the impression of Arctic conditions. But please remember, that is only an impression – a wrong impression. In scientific terms, it is baking hot. …
… Global warming is all around us, only we are too sinful/sceptical/denying to see it. The total, insupportable falsity of the whole AGW scam is so blatant that its apologists’ excuses are now not so much infantile as cretinous. …