Archive for December, 2008
December 31st, 2008 - About today’s awful Case-Shiller number
A month ago, David Stiff of Fiserve informed me, “in general, sales of bank-owned (REO) properties are included in the repeat sales pairs used to estimate the indexes if they occur at least 6 months after a previous arms-length transaction.”
There are currently markets in which foreclosure sales make up 40 to 50 percent of all sales. These transactions are almost surely not representative of the housing stock, and so the CSI is currently a biased estimate of house price changes. I admire both Case and Shiller a lot, but they really need to fix this.
December 30th, 2008 - See Milk
Sean Penn is truly wonderful, and the story is both uplifting and tragic. MBA courses in organizational behavior could also use it as a teaching tool.
December 30th, 2008 - Ten favorite American Buildings
These are just personal favorites. One rule: no more than one building per city. There is no particular order to the list
1. Trinity Church, Boston (Richardson). Copley Plaza is among the best urban spaces I know.
2. Seagram’s Building, New York (Mies van der Rohe and Johnson). It also has my favorite restaurant in it.
3. East Building, National Gallery, Washington (Pei)
4. Carson, Pirie, Scott, Chicago (Sullivan)
5. City Hall, Philadelphia (MacArthur and Walter) It is a silly, overdone, wonderful building.
6. IDS Building, Minneapolis (Johnson again). The rare, iconic, financially successful building.
7. Indiana University Campus, Bloomington. This is cheating, but I think IU has the nation’s most beautiful college campus. And no, I never went or taught there.
8. Eastern Building, Los Angeles (Beelman). The city’s best building is a lovely Art Deco number from 1930. The Wiltern Building is special too.
9. Coit Tower, San Francisco (Brown and Howard)
10. Terminal Tower, Cleveland (Van Sweringen brothers)
December 22nd, 2008 - Why we need newspapers
The blogosphere likes to take pot-shots at the main-stream media, some of which the MSM has earned. Political coverage is often vapid, and the culture of “balance” (”some say earth is round, others disagree’) is often self-satirizing.
But every now and then, the hometown paper here, the once-great and rapidly deteriorating Los Angeles Times, reminds us that there is o substitute for great, shoe-leather reporting. Ken Ellingwood has been reporting the tragic story of Mexico under siegeover the course of the fall. The story is vivid, and could only be told be someone on the ground, with the resources behind him to visit many places and interview many people. This is the sort of thing that only a major news organization could do.
Newspapers used to be closely held by families–the Ochs-Sulzbergers in New York, the Grahams in Washington, the Pulitzers in St. Louis, the Binghams in Louisville, the Chandlers in Los Angeles. When a family owns a business, it needn’t worry about quarterly results–it can focus on other values. In the end, we may not all always like those values (those of Charles Foster Kane, er. William Randolph Hearst come to mind). Nevertheless, beyond that fact that technological change is undermining the newspaper business, it would appear that the publicly traded company model for owning newspapers is fundamentally flawed. And heaven help us if we need to reply on the blogosphere alone for news.
December 19th, 2008 - David E. Bloom David Canning and Günther Fink find that Urbanization has no impact on growth
Science last February had a special issue on cities. Among the articles was the Bloom, Canning and Fink piece, which ran cross-country regressions that showed (1) that urbanization levels in 1970 did not predict economic growth in the years since then and (2) that urbanization did not Granger cause growth. They therefore recommend that policy makers avoid promoting or discouraging urbanization.
Around a year ago, I wrote:
“Every affluent country in the world is urbanized. Among OECD countries, 77 percent of people live in urban areas, and among World Bank-designated high-income countries, 78 percent of people live in urban areas. The poorest two countries in the OECD, Turkey and Mexico, are 67 percent and 76 percent urbanized, respectively. The least urbanized affluent country, Portugal, is 55 or 59 percent urbanized, depending on source. At the same time, the world’s lowest income countries are generally not urbanized: in 2004, the urbanization rate among the World Bank’s designated low income countries was 31 percent. All of the countries with urbanization rates of less than 20 percent, Burkina Faso, Burundi, Cambodia, Ethiopia, Malawi, Nepal, Papua New Guinea, and Uganda, are low-income countries, all with Gross National Incomes Per Capita of less than $660, and most with GNIs that are substantially lower than that.[1] The correlation between urbanization and PPP Per Capita GDP in 2000 was .70. In short, urbanization accompanies affluence.”
I continue:
“That urbanization accompanies affluence does not, however, mean that urbanization causes affluence. First, it is worth noting that Latin America and the Caribbean are 77 percent urbanized, and the countries in that region are certainly not among the World’s richest (nor are they in general, among the poorest). There are also very poor countries in Africa–Cameroon, Mauritania, and Senegal–that are at least 50 percent urbanized. All of these countries have per capita GNIs of less than $1010.[2] Hence affluence does not necessarily follow urbanization.”
The thing that strikes me is that all rich countries are urbanized, but not all urbanized countries are rich. This suggests to me the following hypothesis: that urbanization is a necessary but not sufficient condition for economic growth. A linear regression does not allow one to test this particular hypothesis.
December 19th, 2008 - David E. Bloom David Canning and Günther Fink find that Urbanization has no impact on growth
Science last February had a special issue on cities. Among the articles was the Bloom, Canning and Fink piece, which ran cross-country regressions that showed (1) that urbanization levels in 1970 did not predict economic growth in the years since then and (2) that urbanization did not Granger cause growth. They therefore recommend that policy makers avoid promoting or discouraging urbanization.
Around a year ago, I wrote:
“Every affluent country in the world is urbanized. Among OECD countries, 77 percent of people live in urban areas, and among World Bank-designated high-income countries, 78 percent of people live in urban areas. The poorest two countries in the OECD, Turkey and Mexico, are 67 percent and 76 percent urbanized, respectively. The least urbanized affluent country, Portugal, is 55 or 59 percent urbanized, depending on source. At the same time, the world’s lowest income countries are generally not urbanized: in 2004, the urbanization rate among the World Bank’s designated low income countries was 31 percent. All of the countries with urbanization rates of less than 20 percent, Burkina Faso, Burundi, Cambodia, Ethiopia, Malawi, Nepal, Papua New Guinea, and Uganda, are low-income countries, all with Gross National Incomes Per Capita of less than $660, and most with GNIs that are substantially lower than that.[1] The correlation between urbanization and PPP Per Capita GDP in 2000 was .70. In short, urbanization accompanies affluence.”
I continue:
“That urbanization accompanies affluence does not, however, mean that urbanization causes affluence. First, it is worth noting that Latin America and the Caribbean are 77 percent urbanized, and the countries in that region are certainly not among the World’s richest (nor are they in general, among the poorest). There are also very poor countries in Africa–Cameroon, Mauritania, and Senegal–that are at least 50 percent urbanized. All of these countries have per capita GNIs of less than $1010.[2] Hence affluence does not necessarily follow urbanization.”
The thing that strikes me is that all rich countries are urbanized, but not all urbanized countries are rich. This suggests to me the following hypothesis: that urbanization is a necessary but not sufficient condition for economic growth. A linear regression does not allow one to test this particular hypothesis.
December 19th, 2008 - David E. Bloom David Canning and Günther Fink find that Urbanization has no impact on growth
Science last February had a special issue on cities. Among the articles was the Bloom, Canning and Fink piece, which ran cross-country regressions that showed (1) that urbanization levels in 1970 did not predict economic growth in the years since then and (2) that urbanization did not Granger cause growth. They therefore recommend that policy makers avoid promoting or discouraging urbanization.
Around a year ago, I wrote:
“Every affluent country in the world is urbanized. Among OECD countries, 77 percent of people live in urban areas, and among World Bank-designated high-income countries, 78 percent of people live in urban areas. The poorest two countries in the OECD, Turkey and Mexico, are 67 percent and 76 percent urbanized, respectively. The least urbanized affluent country, Portugal, is 55 or 59 percent urbanized, depending on source. At the same time, the world’s lowest income countries are generally not urbanized: in 2004, the urbanization rate among the World Bank’s designated low income countries was 31 percent. All of the countries with urbanization rates of less than 20 percent, Burkina Faso, Burundi, Cambodia, Ethiopia, Malawi, Nepal, Papua New Guinea, and Uganda, are low-income countries, all with Gross National Incomes Per Capita of less than $660, and most with GNIs that are substantially lower than that.[1] The correlation between urbanization and PPP Per Capita GDP in 2000 was .70. In short, urbanization accompanies affluence.”
I continue:
“That urbanization accompanies affluence does not, however, mean that urbanization causes affluence. First, it is worth noting that Latin America and the Caribbean are 77 percent urbanized, and the countries in that region are certainly not among the World’s richest (nor are they in general, among the poorest). There are also very poor countries in Africa–Cameroon, Mauritania, and Senegal–that are at least 50 percent urbanized. All of these countries have per capita GNIs of less than $1010.[2] Hence affluence does not necessarily follow urbanization.”
The thing that strikes me is that all rich countries are urbanized, but not all urbanized countries are rich. This suggests to me the following hypothesis: that urbanization is a necessary but not sufficient condition for economic growth. A linear regression does not allow one to test this particular hypothesis.
December 19th, 2008 - David E. Bloom David Canning and Günther Fink find that Urbanization has no impact on growth
Science last February had a special issue on cities. Among the articles was the Bloom, Canning and Fink piece, which ran cross-country regressions that showed (1) that urbanization levels in 1970 did not predict economic growth in the years since then and (2) that urbanization did not Granger cause growth. They therefore recommend that policy makers avoid promoting or discouraging urbanization.
Around a year ago, I wrote:
“Every affluent country in the world is urbanized. Among OECD countries, 77 percent of people live in urban areas, and among World Bank-designated high-income countries, 78 percent of people live in urban areas. The poorest two countries in the OECD, Turkey and Mexico, are 67 percent and 76 percent urbanized, respectively. The least urbanized affluent country, Portugal, is 55 or 59 percent urbanized, depending on source. At the same time, the world’s lowest income countries are generally not urbanized: in 2004, the urbanization rate among the World Bank’s designated low income countries was 31 percent. All of the countries with urbanization rates of less than 20 percent, Burkina Faso, Burundi, Cambodia, Ethiopia, Malawi, Nepal, Papua New Guinea, and Uganda, are low-income countries, all with Gross National Incomes Per Capita of less than $660, and most with GNIs that are substantially lower than that.[1] The correlation between urbanization and PPP Per Capita GDP in 2000 was .70. In short, urbanization accompanies affluence.”
I continue:
“That urbanization accompanies affluence does not, however, mean that urbanization causes affluence. First, it is worth noting that Latin America and the Caribbean are 77 percent urbanized, and the countries in that region are certainly not among the World’s richest (nor are they in general, among the poorest). There are also very poor countries in Africa–Cameroon, Mauritania, and Senegal–that are at least 50 percent urbanized. All of these countries have per capita GNIs of less than $1010.[2] Hence affluence does not necessarily follow urbanization.”
The thing that strikes me is that all rich countries are urbanized, but not all urbanized countries are rich. This suggests to me the following hypothesis: that urbanization is a necessary but not sufficient condition for economic growth. A linear regression does not allow one to test this particular hypothesis.
December 19th, 2008 - David E. Bloom David Canning and Günther Fink find that Urbanization has no impact on growth
Science last February had a special issue on cities. Among the articles was the Bloom, Canning and Fink piece, which ran cross-country regressions that showed (1) that urbanization levels in 1970 did not predict economic growth in the years since then and (2) that urbanization did not Granger cause growth. They therefore recommend that policy makers avoid promoting or discouraging urbanization.
Around a year ago, I wrote:
“Every affluent country in the world is urbanized. Among OECD countries, 77 percent of people live in urban areas, and among World Bank-designated high-income countries, 78 percent of people live in urban areas. The poorest two countries in the OECD, Turkey and Mexico, are 67 percent and 76 percent urbanized, respectively. The least urbanized affluent country, Portugal, is 55 or 59 percent urbanized, depending on source. At the same time, the world’s lowest income countries are generally not urbanized: in 2004, the urbanization rate among the World Bank’s designated low income countries was 31 percent. All of the countries with urbanization rates of less than 20 percent, Burkina Faso, Burundi, Cambodia, Ethiopia, Malawi, Nepal, Papua New Guinea, and Uganda, are low-income countries, all with Gross National Incomes Per Capita of less than $660, and most with GNIs that are substantially lower than that.[1] The correlation between urbanization and PPP Per Capita GDP in 2000 was .70. In short, urbanization accompanies affluence.”
I continue:
“That urbanization accompanies affluence does not, however, mean that urbanization causes affluence. First, it is worth noting that Latin America and the Caribbean are 77 percent urbanized, and the countries in that region are certainly not among the World’s richest (nor are they in general, among the poorest). There are also very poor countries in Africa–Cameroon, Mauritania, and Senegal–that are at least 50 percent urbanized. All of these countries have per capita GNIs of less than $1010.[2] Hence affluence does not necessarily follow urbanization.”
The thing that strikes me is that all rich countries are urbanized, but not all urbanized countries are rich. This suggests to me the following hypothesis: that urbanization is a necessary but not sufficient condition for economic growth. A linear regression does not allow one to test this particular hypothesis.
December 19th, 2008 - George Bailey explains bank runs
Within the past two weeks the New York Times has had two reviews (here and here, where you click on the AO Scott video) of it’s A Wonderful Life. They point out the real reason to movie is great–it is an extraordinarily dark and in some ways tragic film.
Beyond that, this scene does a great job of explaining financial disintermediation. It is fun to use in class.