Schadenfreude Now

The Ranks of the Unemployed GROW!

noreply@blogger.com (bleak) — Sat, 07 Nov 2009 18:00:00 +0000

The ranks of Karl Marx's reserve army of the unemployed swelled to 10.2% in October (as measured by U-3), a level of unemployment not seen since 1983.

Including people who are working part-time but would like to work full-time and those who have become discouraged, unemployment (measured as U-6) ballooned to a whopping 17.5%, a record level for this series.

Below is a graph of US U-3 and U-6 unemployment rates updated through the latest national data point (October).

The latest national trend is in stark contrast to a recent--dare I say--"trend" observed in Minnesota. Minnesota's latest unemployment rate (from September) is at 7.3% (a value for October should be provided in the next week or so).

Below is a graph of the national and Minnesota unemployment rates. National is updated through October, state is updated through September.

Based on the latest state-level data (September), Minnesota is faring better than the national average and most of the country.

Below is a graph of the minimum, the maximum, and the current unemployment rates since the last national low unemployment rate (4.4% in March 2007) by each state.

As you can see Michigan, Nevada, Rhode Island, and California lead the nation in unemployment in September, with current rates at or near highs for this employment cycle.

Several states, including Ohio, Indiana, Wisconsin, and Minnesota, are off unemployment highs experienced during this cycle.

Below is a min-max-current chart that includes data back to the earliest data point I could find (1976). This data will include the severe double-dip recession experienced in the early 1980's.

As indicated by the chart, with the exception of Nevada and Rhode Island, many states have experienced more severe rates of unemployment since 1976.

Teen unemployment accelerated. Unemployment for 16-17 (after school jobs) and 18-19 (out-of-high school job seekers) year-olds hit 30.0% and 25.6%, respectively. Unemployment among young adults (ages 20-24) hit 15.6%, while unemployment for 25-54 and 55 and over groups remained below the national average at 9.2% and 7.0%, respectively.

Below is a graph broken by age cohorts.

Notice the steep acceleration in unemployment for the two youngest cohorts that, on average, will have the least amount of work experience and skills. The levels of unemployment experienced by the "after school" and the "just out-of-high school" cohorts are much higher than levels experienced in the 1980's double-dipper recession. And we still haven't hit the aggregate 'worst levels' seen in the 1980's yet.

I pose a question: Could the acceleration in unemployment experienced by these two young cohorts be partially driven by the series of Federal Minimum Wage increases invoked in 2007-2009? (Here is a table of the minimum wage changes from the BLS.)

This isn't good news for the future and the current "Hope and Change" youth crowd. Welcome to Marx's reserve army of labor, youngins.

House Price Update

noreply@blogger.com (bleak) — Tue, 27 Oct 2009 23:00:00 +0000

I'm making a few changes to the way I report national and local house prices. Instead of reporting on the NSA (not seasonally adjusted) S&P/Case Shiller index, I will use the relatively new seasonally adjusted (SA) data set.

This morning the S&P/Case Shiller House price Index was released for August 2009. The 20-city SA composite index was up 0.97% from the month earlier but down 11.4% on a year-over-year basis. The local Minneapolis-St. Paul market was up a large 2.32% from the prior month, but local prices were down 13.8% from a year ago.

Adjusted for inflation, the 20-city composite increased 0.52% from the previous month and declined 10.1% from the year ago period. The local market increased 1.86% on a real (inflation adjusted) basis from the prior month and declined 12.6% year-over-year.

Below is a chart of the real SA index values.

The local market is performing better than the Cleveland and Detroit markets.

National composites and the local market continue their trend of higher prices first experienced during the summer. These price increases are likely driven in part by the first time home buyer tax credit that is set to expire in the next month.

Below is a graph of all markets and composites since 2000, adjusted for inflation and seasonality.

Adjusted for inflation and seasonality, the local market house prices are below the values seen in 2000 (value = 100) but off recent lows experienced this year. However, only 5 of the 20 index markets have performed worst than the local Minneapolis market: Atlanta, Cleveland, Phoenix, Las Vegas, and Detroit. Note the meteoric rise and, subsequent, decline experienced in super bubbly Phoenix and Las Vegas.

Only the Washington, New York, and Los Angeles markets have kept up or exceeded inflation, as measured by CPI-U. But even these markets have experienced massive increases and declines in prices since 2000.

Several factors remain to increase demand for housing: first-time home buyer tax credit, relatively low mortgage rates, and (maybe) pent up demand for housing.

Tempering demand is the soft job market, job insecurity, and uncertainty about the future of the economy.

On the supply side, record foreclosures are continuing and adding housing inventory to the market. Near record vacant houses dot the landscape, and a looming and growing shadow inventory of houses kept off the market due to low prices.

Can't wait to see the Fall and the Winter data, after (if) the tax credit is allowed to expire.

Our Lost Decade

noreply@blogger.com (bleak) — Sun, 25 Oct 2009 19:30:00 +0000

A milestone will be marked in December: Japan will likely begins its third lost decade. Here's a Bloomberg story discussing the upcoming milestone.

It can't happen here in the US, right?

As you will see, we may already be heading down that road.

Below is a chart of the nominal (not inflation adjusted) values for the US Dow Jones Industrial Average (DJIA) of 30 stocks and the Japanese Nikkei 225 Index.

The nominal value of Japanese stocks declined sharply from the peak experienced in December 1989 to a value of about 10,000 in September 2009. US stock prices have not fared well either; US stock values have been effectively flat for the past decade.

Japanese stock performance for the post-peak period are similar in nominal and real terms. This is due to Japanese consumer prices being effectively flat, or even declining, for the past two decades. However, real stock returns in the US have fared worst due to the effects of inflation.

Below is a chart of real values for the two indexes using each country's respective Consumer Price Index to correct for the effects of inflation.

The nominal value for the DJIA on Sept 1, 2009 was 9,712, off a multi-decade low experienced in the first quarter of 2009. After adjusting the September 2009 reading for inflation (CPI-U: 1/2000=100), the inflation-adjusted DJIA returns a dismal 7,620, an inflation-adjusted value not seen since early 1997.

Will the US experience a lost second decade?

Seeing the Japanese experience and the policies the United States is currently employing to try to get out of its economic malaise, I fear that we may be heading down the same path as Japan. The Japanese policies were: massive fiscal stimulus (deficit spending), growing the national debt to fund stimulus and the growth of the welfare state (entitlements), and keeping firms alive that should have gone out of business (zombies).

Yet strangely enough, these are the exact same policy mistakes the US is engaging in.

Japan's aging population and welfare state is bankrupting it, and the US faces a similar situation due to unfunded Social Security, Medicare, and Medicaid entitlements.

By the time we are able to assess US policymakers' performance and make the appropriate--and likely difficult--policy decisions, another decade may be lost.

National and Local House Price Update

noreply@blogger.com (bleak) — Thu, 01 Oct 2009 00:45:00 +0000

(I'm going to try to produce some new interesting graphs that will be posted in the near future.)

I'm also going to shorten these regular posts for the sake of brevity.

S&P/Case-Shiller (CS) house prices for July were released for the national composite and the local (Minneapolis-St. Paul MSA) markets.

Nominal 20-city composite and local house prices increased 1.6% and 4.6%, respectively, from the prior month. On a year-over-year basis, nominal prices declined 13.3% and 17.3%, respectively. See following graph.

There is quite a pronounced bounce in prices in recent months, far beyond the usual seasonal effect seen during the summer.

On a real (inflation-adjusted using CPI-U) basis, month-to-month nominal prices increased by the same amounts for each market, reflective of the nearly unchanged rate of inflation on month-to-month basis. Real prices declined 11.6% and 15.7%, respectively, on a year-over-year basis. See following graph.

For both the local and the composite markets, this represents the third straight month of nominal and real price increases.

The ratio of CS to per capita income increased to a value of 90 from 86 in the previous month but remains far below the 10-year average (value of 96) experienced in 1989 to 1999, indicating a level of relative housing affordability compared to income levels. See graph below.

From peak, on an inflation-adjusted basis, prices for the composite and the local markets have been rebounding. See graph below.

Prices are down only 34.2% and 35.6% from peak, on an inflation-adjusted basis, for the composite and the local MSA, respectively. This is a pronounced bounce from lows experienced in April. For the local market (blue bars), this price increase is far larger than those experienced during this strong seasonal sales period.

In recent weeks, the sub-5%, 30-year mortgage rates will prop up sales and firm prices. The first-time homebuyer tax credit is set to expire in November, but, in the meantime, homebuyers scrambling to take advantage of this credit will add additional sales volume and demand to the market.

I suspect that, similar to the "Cash for Clunkers" auto sales program, the homebuyer tax credit is only pulling forward sales from the future.

But after the tax credit is allowed to expire and *gasp* interest rates rise, then what?

Furthermore, on the downside, there is discussion of a shadow inventory that could be around 7 million homes, and unemployment remains elevated at 9.6% in August.

House price readings at year end and in first quarter of 2010 will be telling.

Taking Another Dip in the Giant Pool of Money

noreply@blogger.com (bleak) — Wed, 30 Sep 2009 13:30:00 +0000

NPR's This American Life does a follow-up piece this week to last year's popular episode "The Giant Pool of Money".

The follow-up piece is worth a listen.

I'll try to get out the latest nominal and inflation-adjusted S&P/Case-Shiller house price values for July tonight. (I've been super busy lately.)

The Bigger Scandal: Catholic Church Funding of ACORN

noreply@blogger.com (silvercharm) — Sat, 26 Sep 2009 01:34:00 +0000

The evidence of Catholic collaboration with Marxist and “progressive” networks is substantial

Cliff Kincaid of the Canadian Free Press reported this week of The Bigger Scandal: Catholic Church Funding of ACORN.

The only thing wrong with the title is forgetting to mention it is the apostate Vatican II Counter Church that funded the radical leftist organization. Just another example of how the communist infiltration of the Church has led it to being nearly indistinguishable from Protestantism. No Traditional Catholic would be fooled into such heretical leftist propaganda promoted so much within the Novus Ordo.

"The evidence of Catholic collaboration with Marxist and “progressive” networks is substantial. A documentary, “The Democratic Promise: Saul Alinsky and His Legacy,” notes that “Alinsky envisioned an ‘organization of organizations,’ comprised of all sectors of the community-youth committees, small businesses, labor unions, and, most influential of all, the Catholic Church."

Pope Leo XIII, In Ipso (# 1), March 3, 1891: "Nevertheless, it grieves us to think that the enemies of the Church, joined in most wicked conspiracy, scheme to weaken and even, if possible, utterly wipe out that wondrous edifice which God Himself has erected as a refuge for the human race."

Eighteen Reasons Why You Should NOT Vaccinate Your Children Against The Flu This Season

noreply@blogger.com (silvercharm) — Thu, 17 Sep 2009 02:34:00 +0000

Bill Sardi gives 18 reasons why one should not vaccinate against the flu. This entire flu scare each year is really a sickening display of the government-media complex ala promoting government propaganda.. The numbers spouted out by the statistically-challenged media would be laughable if not so serious. It's likely the same group who want to vaccinate everyone are the same scrondrels who want to regulate vitamins and minerals--things that can arguably protect oneself against the flu more effectively.

#18. Will we ever learn if the flu vaccine this year is deadly in itself? In 1993 the federal government hid a deadly flu vaccine that killed thousands of nursing home patients. It was the first year that flu shots were paid for by Medicare. The vaccine-related mortality was so large that this set back the life expectancy of Americans for the first time since the 1918 Spanish flu! Mortality reports take a year or two to tabulate and the federal government may choose not to reveal the true mortality rate and whether it was related to the flu or the vaccines. You say this couldn’t happen? It did in 1993!

With respect to the swine flu there is this warning from a German lung specialist Wolfgang Wodarg. And a reminder that governmental health programs are usually no better than their collectivist economic programs.

Ben & Jerry's Ice Cream turns Homo

noreply@blogger.com (silvercharm) — Sun, 13 Sep 2009 03:52:00 +0000

...what a fricken disgrace

Ben and Jerry's renames ice cream Hubby Hubby in celebration of gay marriage

“Ben and Jerry's has changed the name of one of its best-selling ice creams to Hubby Hubby, in celebration of the legalisation of gay marriage in its home state of Vermont.”

June House Price Update

noreply@blogger.com (bleak) — Thu, 27 Aug 2009 00:00:00 +0000

Yesterday, S&P/Case-Shiller (CS) existing house price index was released for the 20-city composite and the local Minneapolis-St. Paul market for June 2009 (2-month reporting lag).

The CS reading came in at 141.8 and 113.5 for the composite and the local market, respectively, for June 2009. This represents a respective 1.4% and a 3.1% increase from the prior month, respectively, and a 15.4% and a 19.8% decline from the prior year ago period, respectively.

Below is a graph of these nominal changes.

Inflation-adjusted (real, adjusted by CPI-U) CS registered a 0.6% and a 2.4% increase from the prior month for the composite and the local markets, respectively. Year-over-year real declines were 14.4% and 18.9%, respectively.

Below is a graph of real index values. I have included a 1% real growth line, starting in 2000, as a reference.

What readers will notice is that there is a distinct uptick in nominal and real prices for both time series. Traditionally, the local market sees firming prices during the summer selling season. However, the 20-city composite has not exhibited a strong seasonal strength during this period.

Several markets across the company have experienced stabilizing or rising prices. Of course, all real estate is local, so market conditions could have reached bottom in some markets, and the effects of the first-time home buyer tax credit is spurring sales--at least until is scheduled to end in November of this year.

The following graph shows real price declines from peak.

Price declines from peak were less severe in June, with a 35.3% and a 38.4% decline for the composite and the local markets, respectively.

Again, seasonal strength is highlighted for the local market.

The following graph shows the ratio of CS to per capita income.

Local market readings are significantly lower than the average seen during the 1990's. The composite reading remains above the first available data point (2000).

Have house prices bottomed? I'm not sure. First-time home buyer tax credit has increased demand for housing (and is creating 'noise' in the time series). Savvy buyers sat on the sidelines for the past couple of years, watching prices fall. Lower prices and the tax subsidy could entice some of these buyers to enter the market and cause prices to firm.

On the flip side, foreclosures continue to soar. Vacancies are near record levels. Unemployment remains high and job growth remains elusive.

Option ARM resets remain on the horizon. The effect may be mitigated because of relatively low short-term rates, which these ARMs would be reset to. I also suspect that many of the "specuvestors" may have walked away long ago when house prices started to decline.

In recent weeks, affordability has improved as mortgage rates fall.

The proof will be next year when November and December readings come in and the effects of the tax credit disappear.

In the mean time, I suspect we will get 'interesting' house price readings through the rest of this year.

Fooled by Seasonality: Local and National House Prices

noreply@blogger.com (bleak) — Wed, 29 Jul 2009 02:30:00 +0000

S&P/Case-Shiller house price index (CS) was released this morning for the 20-city composite and the local Minneapolis-St. Paul market. Recall that CS is a house price index based upon the repeated sales of existing homes; the index is also lagged by two months.

For May 2009, house prices increased 0.5% and 1.2% for the 20-city composite and the local market, respectively, from the previous month. The month-to-month increase in the local prices is due, in part, to a strong seasonal effect experienced in the Spring.

Prices declined 17.1% and 21.7% for the 20-city composite and the local market, respectively, from the year ago period. Prices have been "rolled back" to April 2003 and September 2000 for the composite and the local market, respectively.

Below is a chart of these nominal (not inflation adjusted) price changes.

Real prices (inflation adjusted) increased 0.4% and 1.1% for the composite and the local market, respectively, from the previous month. Real prices declined 16.2% and 20.9% for the composite and the local market, respectively, from the year ago period. The smaller year-over-year decline in real prices is due to a decline in CPI-U observed over the past year (deflation anyone?).

Real prices have been "rolled back" to May 2001 and March 1998 for the composite and the local market, respectively.

Below is a chart of real prices. I have included a 1% real growth line for reference.

Notice the pronounced seasonal "strength" in prices in prior years. The lure to call a bottom is strong amongst the media.

Below is of the ratio of CS to per capita income.

The ratio value declined to 102 from 103 in the prior month for the 20-city composite. The ratio value for the local market is flat from the prior month at 80. The local ratio value of 80 is considerably lower than the average value (96) observed during the 1990's.

From peak, real house prices have declined from peak 35.8% and 40.0% for the 20-city composite and the local market, respectively. These are slight increases from the prior month but real prices have continued to decline significantly from the prior year.

Below is a chart of real price declines from peak. Notice the strong seasonal effect observed in the local market. One promising observation is that the 20-city composite's declines have leveled off, something not observed in prior years (part of that is driven by the disinflation and the "negative" inflation observed recently).

In a nutshell, nominal and real house prices actually increased from the prior month but are considerably lower from a year ago.

What's going to affect prices going forward? On the plus side, lower prices are spurring an increase in home sales, which will help liquidate the outstanding housing inventory. The federal first-time home buyer rebate will add incrementally to home sales and adds noise to the time series.

(What happens when that subsidy goes away? I suspect the government will just create another. How about a "cash for housing clunkers"?)

Working against house prices? Near record home vacancies (18.7 million units nationwide during Q2 2009), foreclosure moratorium expiration, rising foreclosures, rising unemployment, falling consumer confidence, and rising interest rates.

We'll see if prices stabilize with the fall home sales results, which won't be reported until near the end of the year (remember CS is lagged 2 months).

In the meantime, grab some popcorn and watch the show!

Legal Immunity for Swine Flu Vaccine Makers

noreply@blogger.com (silvercharm) — Mon, 20 Jul 2009 19:34:00 +0000

Now Legal Immunity for Swine Flu Vaccine Makers

The US Secretary of Health and Human Services, Kathleen Sebelius, has just signed a decree granting vaccine makers total legal immunity from any lawsuits that result from any new “Swine Flu” vaccine. Moreover, the $7 billion US Government fast-track program to rush vaccines onto the market in time for the Autumn flu season is being done without even normal safety testing. Is there another agenda at work in the official WHO hysteria campaign to declare so-called H1N1 virus—which has yet to be rigorously scientifically isolated, characterized and photographed with an electron microscope—the scientifically accepted procedure—a global “pandemic” threat?

"We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order."- David Rockefeller

Shiller and Roubini Interview on Bloomberg

noreply@blogger.com (bleak) — Sun, 12 Jul 2009 17:00:00 +0000

There is an excellent discussion on Bloomberg Surveillance with economists Robert Shiller and Nouriel Roubini on the financial crisis, asset bubbles, public policy and regulation. The MP3 is located here (about 50 minutes long).

Putting Housing Prices Into Perspective

noreply@blogger.com (bleak) — Sat, 04 Jul 2009 16:30:00 +0000

I wanted to put some perspective around the housing price correction we are experiencing.

As I have mentioned in the past, existing house prices typically track closely to inflation (measured as CPI-U) over long periods of time. Below is a chart of all S&P/Case-Shiller local market and composite (20- and 10-city) indices through the latest data point (April 2009).

As you can see, in the late 1980's and early 1990's a few local markets, like Los Angeles and Washington DC, experienced a boom relative to other markets. This supports the notion that "real estate is local". Different regional economic characteristics drive local real estate prices. Following the early 1990's recession, all local markets, including those that had outperformed, began to track below CPI.

Looking at the local market peaks (2006-2007) in the most recent housing bubble will give you some perspective of the scale and scope of the price distortions that have occurred and the subsequent price correction. Virtually all local house price indices, with the exception of Rust Belt markets, saw an unprecedented increase in prices starting at the beginning of this decade.

The next chart shows the post-2000 period in greater detail.

Notice the Rust Belt markets of Detroit and Cleveland. Neither appreciated much during the housing bubble. Now, they are certainly declining at faster rates, given the current economic problems in the auto and other manufacturing industries.

Virtually all markets, if they have not already done so, are heading towards CPI-U again. Given the years of languishing house prices we saw in the mid-1990's, I suspect that we will experience that again, and, perhaps, at an even more severe rate given the unprecedented price appreciation and residential real estate construction we saw during this cycle. In my humble opinion, prepare for an "overshoot" on the downside.

The last chart highlights the composites and two Midwest markets.

The 20- and 10-city composites are fast approaching the inflation benchmark. Both the local Minneapolis and the Chicago markets have already fallen below the inflation benchmark. As Spring and Summer 2009 data come in over the course of the next few months, we will likely see seasonal pricing strength, but what happens after Labor Day is anyone's guess.

Furthermore, with the popularity of mortgage equity withdrawal as a means for financing consumption earlier this decade (and putting oneself into further debt), house prices have (oddly) become a critical barometer of economic activity. Financial institutions, investors, and now the taxpayer have a vested interest in seeing house prices stop their decline and begin to appreciate. After all, those mortgage-backed securities have residential real estate as collateral, no?

Another Grim Housing Update

noreply@blogger.com (bleak) — Wed, 01 Jul 2009 19:00:00 +0000

Yesterday's S&P/Case-Shiller house price index indicated a 0.6% and a 0.7% decline in existing house prices for the 20-city composite and the local Minneapolis-St.Paul MSA, respectively, in the month of April 2009 from the prior month. This represents an 18.1% and a 22.1% decline from the year ago period. These price levels have not been seen since April 2003 and August 2000 in the composite and the local markets, respectively.

Below is a chart of the price two indices.

On a real basis (inflation adjusted), existing house prices declined 0.6% for both the composite and the local MSA from the prior month; down 17.6% and 21.6%, respectively, from the year ago period. Real prices at these levels were last observed since April 2001 and September ~~2007~~ 1997 (corrected) for the composite and the local markets, respectively.

Below is a chart of the inflation-adjusted indices.

From peak pricing, the composite and the local markets are down 36.0% and 40.5% in real terms. We approach a period of seasonal strength in the local housing market.

Below is a chart of real house price changes from peak.

The ratio of the local S&P/CS index to per capita income hit a new low of 80 this month (below last month's low reading of 81), far below the 96 value observed between 1989 and 1999.

Below is a chart.

Nothing new for April. The breathtaking, epic housing correction continues. In upcoming months, we may observe some seasonal house price strength in the local market. However, house prices may continue their general decline as foreclosures continue to rise as government moratoriums expire, demand is sapped by higher unemployment and higher mortgage rates. Housing obsolescence and housing kept off the market due to low pricing power will help reduce inventories.

Podcast of the Week

noreply@blogger.com (bleak) — Mon, 08 Jun 2009 23:00:00 +0000

This week's This American Life is titled "The Watchmen". This installment looks at the financial crisis and the role (lapses) of regulators and the contribution of credit agencies in creating this mess.

(Recall that last year TAL did a fantastic piece (an instant classic!) on the housing bubble entitled "The Giant Pool of Money".)

The piece is worth listening in its entirety, and you can download the episode for free this week.

Regulation--or the lack thereof in the shadow banking system--fueled the housing bubble and, eventually, led to its bursting. TAL argues that part of the problem lies with financial firms "shopping around" for regulators, and the laxest regulator of choice during the go-go bubble years was the Office of Thrift Supervision (OTS). Many financial firms (that failed when the bubble burst and the credit crunch ensued) chartered themselves as a savings and loan, so that they could be supervised by the OTS.

In the second part of the episode, TAL discusses the contribution of credit ratings agencies on this mess and how financial firms shopped around among the three major credit ratings agencies for that sacrosanct triple-A rating.

Good stuff!

Pictures say a thousand words

noreply@blogger.com (silvercharm) — Fri, 05 Jun 2009 03:14:00 +0000

Florida's "Father Oprah" turns Episcopalian

noreply@blogger.com (silvercharm) — Tue, 02 Jun 2009 22:47:00 +0000

This story is quite revealing of what has happened to the Catholic Church. Below is the analysis from a traditional Catholic of the sedevacantism mode:

MHFM: Yes, for those who don’t know, “Fr.” Alberto Cutie was a popular and well-known priest in the Novus Ordo. He also appeared sometimes on EWTN. He was recently caught fornicating on a beach with a woman. A great scandal erupted and Cutie was forced to give up the woman or give up the Novus Ordo “priesthood.” Faced with the choice of giving up his illicit relationship and returning to the Novus Ordo or staying with the woman, he came up with a third route. He decided to become part of the Episcopalian sect. This, he thinks, will allow him to be a “priest” and stay with the woman. The whole story is outrageous, yet quite interesting on a number of levels. It’s interesting for what it reveals about the Vatican II Church.

First, this “Fr.” Cutie is an abomination. Not only was he sinning mortally with this woman (and as a heretic in the Novus Ordo), but the woman is (according to reports) already married! It seems like he plans on marrying her, but she’s already married. What does that tell you about the Novus Ordo “priesthood”? Cutie was so thoroughly filled with the “Catholic faith” in his Novus Ordo formation – not – that he not only has no problem becoming Episcopalian (and thus abandoning what he knows of Catholic dogma), but he has no problem accepting divorce and re-marriage. Episcopalians also accept artificial contraception and other moral evils. So, to summarize, in becoming Episcopalian Cutie is: completely denying what he thought of the Papacy; accepting things such as artificial contraception; accepting that Episcopalians have true priests and sacraments (a total rejection of Catholic teaching); accepting the concept of “marriage” to a woman who is already married; etc. This is really something.

What this reveals is that basically all Novus Ordo priests believe in universal salvation. Cutie was a Novus Ordo “priest” – in fact, he was (wrongly) considered one of their few “normal” and “successful” ones. Yet Cutie obviously believes that people who fornicate (e.g., himself), that people who divorce and remarry, that people who belong to non-Catholic sects and religions (Episcopalians), can be saved. He believes that everyone can be saved. That’s the truth.

Moreover, in becoming Episcopalian – and this is quite important to consider – Cutie has simply applied the false theology of the Vatican II sect. For in explaining his decision, he stated (in so many words): “My brothers (in Protestantism) serve God while married, so why can’t I.” He is simply logically applying the teaching of the Vatican II Church. In other words, he is saying that “we (in the Novus Ordo Church) already believe that Protestants are saved, so why should I not become Episcopalian and do what I want?” And there is nothing that any bishop or priest or “pope” in the Vatican II sect can say about it! They can’t say anything about it because their false Church officially teaches that Episcopalians are brothers in the faith and part of the Church and on the road to salvation.

There is not one cleric in the entire Vatican II sect who would or could say that Cutie is on the road to Hell for leaving the Novus Ordo to become Episcopalian. This is so revealing. Cutie not only stands out as an example of an abominable false minister, but as a devastating and convicting symbol of the Vatican II sect’s false theology.

One must also say something about the despicable laypeople. In both the Novus Ordo parishes and in the Episcopalian church, people are clamoring for Cutie. These people have drifted so far from a concern for God’s law. They are so blind in their pride, impurity and vanity – they are so driven in their desire to justify the moral evils of themselves and others – that they are rushing to defend this horrible Cutie. They boldly proclaim that they have no problem with his mortal sins or his apostasy. They have no problem with what he has done and they boldly proclaim that he is justified. One can only imagine what God thinks of these people. God’s disgust at their impiety must be compounded by the fact that these heretics and sinful laypeople actually have the audacity to proclaim as acceptable actions He has specifically revealed are mortally sinful.

Circling the Drain: Local and National House Prices

noreply@blogger.com (bleak) — Tue, 26 May 2009 22:30:00 +0000

S&P/Case-Shiller existing house price index was released today for March 2009.

The results are bleak.

For the 20-city composite, existing house prices declined 18.7% on a nominal and inflation-adjusted (real) basis from the year ago period. Prices declined 2.2% on a nominal basis (2.0% real) from the previous month.

In the Minneapolis-St. Paul MSA, existing house prices declined 20.4% and 20.5% on a nominal and a real basis, respectively, compared with the year ago period. Prices declined a whopping (that's a technical term) 6.1% nominal and 5.9% real basis from the prior month.

Below are charts for nominal and real prices.

On a nominal basis, the composite price has not been this low since April 2003 on a nominal basis and May 2001 on a real basis. Local prices have not been this low since August 2000 on a nominal basis and February 1998 on a real basis.

From peak, real prices have declined a whopping 35.6% and 40.3% from peak pricing for the composite and the local markets, respectively. Below is the chart.

There may be some hope that local price declines level off starting in April due to seasonality observed in previous years.

Below is a chart of the ratio of the index to per capita income.

The local market registered a value of 81, far below the average value of 96 observed during the 1989 to 1999 period.

And finally, I wanted to post an updated chart of the crude, 'fit-by-eye' "forecast" I put together last year. With the exception of some seasonality that was not taken into account, actual price declines appear to track relatively well to this forecast.

When do prices bottom? Nobody knows.

House Prices Decline Again

noreply@blogger.com (bleak) — Wed, 29 Apr 2009 00:06:00 +0000

S&P/Case-Shiller was released this morning.

Local (Minneapolis-St. Paul MSA) and 20-city composite existing house price indices declined 20.3% and 18.6% in February 2009 respectively from the year ago period. Local and composite prices declined 3.1% and 2.2% from the prior month.

CPI was relatively flat from the prior month, and real prices declined by the same magnitude on a year-ago and prior-month basis.

Below is the graph of the price index for the 20-city and local markets (nominal, 'unadjusted' prices).

Below is a graph of inflation-adjusted (real) prices. I have included the 1% real growth reference line.

Here's an ugly graph... A graph of the ratio of CS to Per Capita Income.

Local MSA CS-to-per-capita-income index value declines to 86(!) in February. This is far below the 96 average observed from 1989 through 1999. The 20-city composite plummets to 106. There appears to be little 'deceleration' in the rate of decline.

My prediction is that nominal and real prices in the local market will continue their longer-term trends downward, especially given the recent, grim house vacancy figures. In the coming months, prices will likely increase in the local market due to annual seasonal strength in the local market. On the positive side, sales are likely to increase as prices continue to decline and excess inventory is liquidated.

Finally, below is the inflation-adjusted (real) price declines from peak.

On an inflation-adjusted basis, local MSA price declines from peak appear to be picking up at the same rate seen last year.

Nothing to do now but wait for more data and listen to the upcoming Spring selling season spin!

Home Vacancies Rise Again

noreply@blogger.com (bleak) — Tue, 28 Apr 2009 00:00:00 +0000

Bloomberg reports on first quarter home vacancies in the US (prior home vacancy here). Vacancies rose to 19.1 million units in the first quarter; home ownership declined for the third straight quarter to 67.3%.

Let's perform a back-of-the-envelope calculation. There are approximately 300 million people (men, women and children) in the United States. Assume that the average household contains 2.5 people, there are approximately 120 million households in America (300 million divided by 2.5 people per household).

So let's put this in perspective... 19.1 million empty houses in a country with approximately 120 million households.

Too much supply, anyone? How does that bode for prices in the near future?

It's a Smaller World After All

noreply@blogger.com (bleak) — Wed, 22 Apr 2009 14:00:00 +0000

The AP reports today that the global economy shrunk for the first time in 60 years. The IMF estimates that the global economy contracted 1.3% in the past year. More chatter about the worst global recession since the Great Depression.

Amazing that this constitutes for news, since many analysts, who were ignored, have been predicting this for quite a while.

April Housekeeping

noreply@blogger.com (bleak) — Wed, 15 Apr 2009 13:30:00 +0000

I wanted to take an opportunity to thank our many readers and commenters over the past year.

In recent weeks, I have not not had the opportunity to blog very much. Commitments to work and a personal life (yes, I have one) have been demanding.

Going forward, I will continue to update the monthly S&P/Case-Shiller report and, as time permits, try to post important, relevent stories as they come along.

I know Silvercharm has been extraordinarily busy with work on his dissertation and with a wife and a newborn on the way.

Please feel free to add this blog to your RSS feeds for regular updates or sign up for e-mail updates. The buttons for these function are on the right side of this blog.

First Annual Decline in CPI Since 1955

noreply@blogger.com (bleak) — Wed, 15 Apr 2009 13:15:00 +0000

Bloomberg reports:

April 15 (Bloomberg) -- The cost of living in the U.S. unexpectedly fell in March, underscoring Federal Reserve forecasts that inflation will be contained in coming months.

The consumer price index decreased 0.1 percent compared with a 0.1 percent gain projected by the median forecast of economists surveyed by Bloomberg News, according to figures from the Labor Department issued today in Washington. In the 12 months ended March, prices fell 0.4 percent, the first decline since 1955.

Today's CPI report is further indication that deflation is a distinct possibility. The key is if price declines become persistent.

Market observers continue to look for any signs that the declines in economic activity are slowing and that a turning point is at hand.

Local and National House Prices Down Again

noreply@blogger.com (bleak) — Wed, 01 Apr 2009 00:00:00 +0000

S&P/Case-Shiller house price index for local (Minneapolis-St. Paul MSA) and 20-city composite was released this morning for January 2009. One word describes the latest reading: punishing.

Local and 20-city composite existing house prices declined 20.4% and 19.0%, respectively, from the year ago period on a nominal basis. Prices declined 4.7% and 2.8%, respectively, from the prior month.

Local and 20-city composite prices have reached June 2001 and September 2003 levels, respectively.

Below is a graph of nominal prices.

On an inflation-adjusted basis (CPI-U), local and 20-city composite real prices declined 20.3% and 18.9%, respectively, from a year ago. Real prices declined 5.0% and 3.0%, respectively, from the prior month.

Real prices have returned to June 1999 and March 2002 levels for the local and 20-city composite markets, respectively.

Below is a graph of inflation-adjusted (real) prices.

On the positive side, prices relative to incomes have not reached levels this low since before 2000. The ratio of S&P/Case-Shiller to per capita income is at 93 for the local market (2000=100), compared to an average of 96 seen from 1989 to 1999. The 20-city composite appears to have more to fall.

Below is a chart of this ratio.

Finally, local and 20-city composite real prices have declined a whopping 34.1% and 32.5% from peak.

Below is a graph of the declines from peak.

I would expect prices to remain soft and decline for the foreseeable future as labor markets continue to deteriorate in the near term and excess inventory continues to be liquidated. Mitigating these declines are lower borrowing rates and new government subsidies to purchase houses.

I suspect prices will likely overshoot on the downside.

New Marching Orders from Washington

noreply@blogger.com (bleak) — Sun, 29 Mar 2009 23:00:00 +0000

Update at bottom...

It's as if I woke up in the middle of a Dali painting.

In exchange for another bailout, the CEO of General Motors has caved in on the Administration's demand to step down (link to WSJ).

What political-connected (union or ACORN-connected) crony gets appointed to the corner office is anyone's guess?

Again, why is GM--a company with an outmoded cost structure and that produces (and continues to produce) products too few people want to buy--too big to fail?

Unbelievable...

Update: (3/30/2009) Is this the change I was hoping for?!?! The US Government (read: taxpayers) is going to start backing US auto warranties.