Or will there be?

Robert Burns's poetry might have been dismissed as "sentimental doggerel" by Jeremy Paxman but that hasn't stopped diminutive I'm A Celebrity contestant David Gest and pop legend Michael Jackson from recording an album of the much-loved Scottish poet's work. Gest's spokesman said the album is a modern musical take on some of Burns' classic poems, and had been a long cherished project.

Here is the full story.  Here is the evolution of earnings on some of MJ's other albums.  Here is a man who just died.

I happened to notice the following today. Has there been another period since the Google IPO when Microsoft led Google in stock performance over so many periods?

Just in case no-one else has noticed, apparently all is well with the homebuilders. After spending the last few months in the doldrums (and spiking way up earlier this year), the S&P Homebuilders SPDR is now almost back to breakeven for the year.

I guess everything’s now okay. Build on!

I am teaching two courses this term --- Econ 880 -- Austrian Theory of the Market Process I --- and HNR 131 -- Contemporary Society in Multiple Perspectives.

You can read the syllabi here.

Barack Obama, listen up!

In this video from August 13, 1962, when the highest marginal individual income tax rate was 91% and the highest marginal corporate tax was 52%, President John F. Kennedy announced his plan to introduce permanent, across-the-board tax cuts for both individuals and corporations. Kennedy argued that both "logic and equity" demanded tax relief for Americans, and that the dollars released from taxation would create new jobs, new salaries, and spur economic growth and an expanding American economy, thereby creating more tax revenues.

Kennedy's supply-side tax cuts were passed, and by 1964 the top personal tax rate was 77%, dropping to 70% in 1965. In 1965, the corporate tax rates were reduced to 22% and 48%, from previous rates of 30% and 52%. The Kennedy tax cuts did help expand the economy, resulting in a 106-month economic expansion during the 1960s, the longest expansion in U.S. history until the 120-month expansion from 1991-2001. Tax revenues grew by 65% from 1965 to 1970.

They sure don't make Democrats the way they used to.

Talking to David and Christie Romer about whether we are or about to be in a recession. I think that the maximum-likelihood estimates of the probability for all plausible models in which "recession" is a useful and meaningful term are all equal to 1.0000. But:

• We are not sure that "recession" is a useful and meaningful term.
• We are not the kinds of people who believe in ML estimation. Instead, we are Baywsians who are ignorant of our own priors..

My friends at the Fraser Institute so appreciated my plug in the earlier post that they passed along an opportunity for students.  Faculty readers might wish to pass this on to your students, or contact Fraser for more information.  See contact info below.

****

Here is a great opportunity for students to flex their public policy muscles and win some free stuff! The Fraser Institute is hosting a new Student Video Contest and students are eligible to win $10,000 in cash and electronics prizes.

The topic is: Incentives Matter - Fixing Health Care in Canada.

Students must submit a short concept paper by September 30th and then post their video on YouTube by October 31st. Friends and classmates can vote for the best video, and there are lots of prizes to be won. Canadian and foreign students are welcome to enter – the economic analysis is the same for everybody! Full contest details can be found at: http://www.fraserinstitute.org/studentsandlearning/forstudents/Video_Contest.htm

Student Video Contest promotional flyer and media advisory available courtenay.vermeulen@fraserinstitute.org">upon request. For more information, please contact:

Courtenay Vermeulen
Student Programs Assistant
The Fraser Institute
Direct: (604) 714.4533
courtenay.vermeulen@fraserinstitute.org

This is for my Ph.d. class and I've put it beneath the fold.  Can you guess who teaches IO, Part II?  Hint: it is someone I find it easy to coordinate with and he will be covering price discrimination, among other topics.  Click here to get to the list...

A post Olympic view:

via St Louis Dispatch

1. Deep Glamour, a new Virginia Postrel blog, linked to a forthcoming Virginia Postrel book

2. Videos of Nobel Laureates, recent talks

3. Beware what ye do not know, namely peanut butter 

4. Robert Solow takes down Kevin Phillips

5. Smash of Paul Theroux

A quick roundup of some of the more useful images and storm tracks for Hurricane Tropical Storm Gustav. Now southwest of Haiti, it is currently projected to makes its way into the heart of the oil-producing Gulf of Mexico by Monday. Upper-level winds are low, so there is minimal shear, and the Gulf is only marginally less warm than the average home spa, so there is lots of reason to expect Gustav will become Cat 3 or stronger by landfall Sunday/Monday.

The sole caution: Storm tracks that go between Yucatan and Cuba are notoriously prone to wild changes of course -- wait, I want to go to the Mexican Riviera! -- so it’s going to be a few days before it’s obvious where Gustav is going to end up.

Accuweather

Planalytics

National Hurricane Center

I’m sure this will be useful to some people, but there is something about this “Grovel at Jack Welch’s Feet” event coming up in Boston that rankles.

And $10,000 a person for 100 people, that’s …. hang on … carry the ones … add back the zeros … whoa, one million dollars. Shades of Dr. Evil.

I love that it snowed last night on the upper mountain at Whistler. Summer is wonderful in the mountains, but the first signs of a shift to fall -- cooler nights, surprise snowfalls, etc. – always make my heart beat a little faster.

The current picture from Whistler’s Roundhouse webcam is here.

Over the summer, I was asked to be the guest "professor" at the Fraser Institute's online "Ask the Professor" feature for students.  What Fraser is trying to do is get some basic economic literacy out on the web, with a free market twist of course, and give interested students the opportunity to interact with the author.  In June and July, I posted short (600-800 words) essays on "Prices and Profits" and "Competition and Knowledge."  For August, the topic is "Inflation."  The interaction takes the form of an online chat with the author for an hour each month.  This month's chat is on Friday at 2pm EDT.  Those chats have been fun and challenging and are a great opportunity to engage in some "taking economics to the streets" type interaction.

The fine folks at Fraser have asked me to continue on as "The Professor" (pun intended, for those who know my taste in music) throughout the fall.  So if you're an undergraduate or a non-economist looking to brush up on your basic economics, check back there each month for a new essay and chat.  And remember to support Canadian public policy organizations like Fraser because the best of life's most important things come from Canada - rock and roll, beer, donuts, and hockey. 

Via Mike Panzner, comes this list of the 50 down 50:

Since the S&P 500 hit a closing peak of 1565.15 on October 9th, the benchmark has lost 18.11% (through this morning). However, 50 stocks, or 10% of the index constituents, have actually fallen by more than 50%. Not surprisingly, the biggest losers are financials, though the list also includes a few dogs from the auto, newspaper and technology sectors, among others.

I am curious about the following: How many times has this happened before? What did the markets do 6, 12 and 24 months afterwards?

Click through for the infamous 50:

50 Stocks Down 50% or more from the S&P500

Freddie Mac    FRE    -95.16%
Fannie Mae    FNM    -92.52%
Wamu Inc    WM    -89.75%
Mbia Inc    MBI    -84.53%
Natl City Corp    NCC    -80.85%
Mgic Invt Corp    MTG    -80.14%
Lehman Bros Hldg    LEH    -79.38%
E*Trade Financia    ETFC    -78.65%
Xl Capital Ltd-A    XL    -76.18%
Cit Group Inc    CIT    -75.91%
Regions Financia    RF    -73.10%
Amer Intl Group    AIG    -73.04%
General Motors    GM    -72.82%
Wachovia Corp    WB    -72.44%
Sandisk Corp    SNDK    -70.58%
Slm Corp    SLM    -70.54%
Office Depot Inc    ODP    -68.36%
Tesoro Corp    TSO    -67.48%
Merrill Lynch    MER    -66.86%
Keycorp    KEY    -66.66%
Zions Bancorp    ZION    -65.47%
Whole Foods Mkt    WFMI    -65.46%
Titanium Metals    TIE    -64.53%
Nvidia Corp    NVDA    -62.63%
First Horizon Na    FHN    -62.61%
Citigroup Inc    C    -61.61%
Harman Intl    HAR    -61.12%
Gannett Co    GCI    -60.91%
Huntington Banc    HBAN    -60.34%
Qwest Communicat    Q    -60.28%
Ciena Corp    CIEN    -60.16%
Marshall &Ilsley    MI    -59.55%
Allegheny Tech    ATI    -58.97%
Fifth Third Banc    FITB    -58.67%
Sun Microsystems    JAVA    -58.52%
Gen Growth Prop    GGP    -57.64%
Adv Micro Device    AMD    -55.91%
Liz Claiborne    LIZ    -55.76%
Micron Tech    MU    -55.64%
American Capital    ACAS    -54.09%
Meredith Corp    MDP    -53.58%
Nyse Euronext    NYX    -53.16%
Valero Energy    VLO    -53.05%
Legg Mason Inc    LM    -52.77%
Lennar Corp-Cl A    LEN    -52.45%
Cb Richard Ell-A    CBG    -51.57%
Comerica Inc    CMA    -51.53%
Genworth Financi    GNW    -51.45%
Sprint Nextel Co    S    -50.27%
Sovereign Bancor    SOV    -50.06%

The eyes.  Other results vary across genre, for instance gospel and blues sing more about hands than eyes.  And get this:

As for the genre that talks about body parts the most, hip hop takes the honors with more references than any other genre. Meanwhile, gospel refers to the body the least. There are plenty of other data points to peruse. It's nice to know that 23.64 percent of hip hop songs refer to the behind, while 11.83 percent of rock songs talk about eyes.

Here is a summary of the results:

As Thomas Pogge has noted in his recent biography John Rawls: His Life and Theory of Justice, Rawls was especially sensitive to issues of luck because of a sad occurrence in his own life. Two of his brothers died in childhood because they had contracted fatal illnesses from him. Pogge calls the loss of the brothers the “most important events in Jack’s childhood.” In 1928, the 7-year-old Rawls contracted diphtheria. His brother Bobby, younger by 20 months, visited him in his room and was fatally infected. The next winter, Rawls contracted pneumonia. Another younger brother, Tommy, caught the illness from him and died.

That's from libertarian David Gordon, whom I suspect has never infected anybody.  The hat tip goes to Will Wilkinson, who in his post describes himself as a "neo-sentimentalist."  I can just imagine Kerry (his girlfriend) saying to Will on their third date: "Oh, Will, you're such a neo-sentimentalist!" 

Today's guest post comes from Mark Thoma, who labors tirelessly in the pacific Northwest. Mark is a Professor of Economics at the University of Oregon, where he also pens the well regarded blog, Economist's View.

In today's guest commentary, Mark hits upon a subject near and dear to our hearts, the perennial Housing bottom callers. (see our earlier discussion of the anti-Cassandras).

Without further adieu . . .

~~~~

In the news today, I've been hearing once again that we are near the bottom of the housing cycle, the inevitable bottom call. For example, though the more optimistic analysts are a little more cautious than at times in the past, they still believe the end of the housing downturn may not be to far away:

Although U.S. home prices fell faster than ever in the second quarter, the rate of acceleration slowed in June... Experts hailed the slight deceleration as a harbinger of an eventual recovery in the dismal real estate market. ...[O]bservers seized upon a sliver of good news: ... "I consider it good news that you're seeing price declines decelerate," said Terrin Griffiths, economist and industry analyst with the California and Nevada Credit Union League. "While the markets haven't reached bottom, we're getting closer to there." [source]

or

Two announcements suggested that a bottom could be nearing for the housing market [source]

But enough quotes, you already know how this goes.

Hearing that "the end is near", that the bottom is in sight, I couldn't help but think about Barry and his reaction to bottom calls. Going back almost two years to November, 2006, this is a post of his called, appropriately, Near a Bottom in Housing?:

...I have been ... skeptical about the staying power of the most recent rally... The rally appears to be based on several false premises: A soft landing, a bottom in real estate, a mid-cycle slow down that resumes almost as soon as it starts.

Indeed, if the bulk of the housing recession is behind us, then this would go down in post-war history as one of the shallowest housing corrections on record.

This week, the news out of the Homebuilders belied the "Housing is Bottoming" meme. The simple truth is that 46 year low interest rates (~5.125%) created a generational boom in Housing construction, sales, investment, and speculation. Now that rates have increased..., and home prices have nearly doubled in 7 years, all the while inventory built to record levels -- the blush is off the rose.

And, moving forward another month, to December, 2006:

Yeah! Housing Will Recover in Q1!: Or so says the NAR:

"The worst of the U.S. housing slump is over, according to the National Association of Realtors. ...

David Lereah, NAR's chief economist "Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards." Lereah did not offer any evidence for his statement.

Call it wishful thinking... The NAR has not shown itself to be a particularly astute forecaster... Calling the bottom in Real Estate has been a losing gambit this year. In addition to the NAR's chief economist, several other cheerleaders have erroneously called for the same, including former Fed Chief Alan Greenspan. They have so far been proven wrong. ...

Real housing bottoms require more than wishful thinking; They require solid evidence, and more than mere price reductions. A significant decrease in inventory, plus motivated sellers, would go a long way to seeing a bottom form. So far, we have yet to see any evidence of that.

As you read through Barry's posts, you can see his respect for NAR economists grow (e .g., " NAR economist Lawrence Yun? Puh-leeze! He's been optimistic housing would stabilize for years now."). In fact, I think the level of respect may be entering Greenspan territory, and we know how much respect Barry has for his housing calls (among other things). In case you missed his post on Greenspan a couple of weeks ago:

Recall Greenspan's first Real Estate bottom calling attempt came in late 2006... He repeated the calls many times since then. Most recently, in April 2008, when he said "the drop in U.S. home prices will probably end well before' early next year as the number of houses on the market diminishes, aiding an economic rebound."

Wow, that's three strike in just one swing: Inventory remains high, home prices continue to fall, and we are still waiting for the economic rebound

Many of today's current woes are traceable right back to Greenie: Keeping interest rates too low too long is just the start; his malfeasance in refusing to regulate the lending industry. -- Wessel politely called it "regulating too lightly" but that's horseshit -- Greenspan made the ideological decision to allow the free markets to just sort it all out. That's what's happening now, and no one likes it very much (except a few hard core free market types, who find it all delightfully anarchic)

So far, the bottom calls have been far off. But there will a bottom, and one of these days we'll get there. But when, and how will we know? What signs should we look for? Above, Barry says two things to watch for are:

A significant decrease in inventory, plus motivated sellers

Sellers may be motivated, but there hasn't been a significant decline in inventories:

[via Calculated Risk (larger)]

And the main point of the news today was that another thing we need for recovery to take place, price stabilization, may not be too far away. Is that correct?

Martin Feldstein is pushing his housing rescue plan in the Financial Times, the same one he's been pushing over the last few months (e.g. WSJ and Washington Post). The plan involves stabilizing housing prices to reduce foreclosures (through "mortgage replacement loans" from the government). He s ays:

The current decline of house prices is the natural result of the bubble that by 2006 had raised house prices to 60 per cent above their long-term trend. The sharp decline since then means that today's prices are about 15 per cent above the trend level. But while a further 15 per cent decline may be inevitable, there is nothing to stop prices declining even further.

This doesn't sound much like a bottom call:

The large and growing number of homeowners with negative equity will increase the rate of defaults and foreclosures and therefore drive the downward spiral of prices. Defaults are likely to accelerate as the ratio of the debt to the home value rises. ... Each such default puts downward pressure on existing prices, increasing the like-lihood of further defaults. It is this spiral that threatens the American economy and the global financial system.

The policies adopted until now will not stop the downward price spiral.

Are we near the bottom? Is the end near? I wish I could answer yes, but I think we have a ways to go yet. Paul Krugman says:

When will it all end? The answer is, probably not until 2010 or later.

I'm hoping it won't be that long, but so far the crisis has unfolded in an almost eerily slow fashion - sort of like watching a train wreck in slow motion and being unable to do anything about it - and there's no reason to think that will change.