Why is housing supply so generous in Georgia and Texas? It isn’t land. Harris County, Tex., which surrounds Houston, has a higher population density than Westchester County, N.Y.
A rich body of research shows that regulation, which is intense in the Northeast and California but lax in the Sun Belt, explains why housing is supplied so readily down South. The future shape of America is being driven not by quality of life or economic success but by the obscure rules regulating local land use.
In a sense, the anti-regulation crowd is right that the laissez-faire attitude of the South and West explains their recent growth. But the usual argument focuses on the wrong regulations.
Housing regulations, more than those that bind standard businesses, explain the Sun Belt’s population growth. If New York and Massachusetts want to stop losing Congressional seats, then they must revisit the rules that make it so difficult to build. High prices show that the demand would be there if the supply is unleashed.
Such a time is what we are going through now. Many systemically important central banks have expanded their base money stocks and balance sheets massively. The Fed has doubled the size of its balance sheet. The Bank of England has tripled the size of its balance sheet. Many central banks have bought vast amounts of public debt. In the UK, out of the initial £175 bn of quantitative easing, as much as £173 was spent on gilts. The Fed has purchased only about €300 bn worth of Treasury securities, but has acquired a much larger amount of Treasury-guaranteed agency debt.
(…)The act of will in question is the collective attribution of value to something without intrinsic value. Being declared legal tender by a government may help achieving that status, but it is neither necessary nor sufficient.
In light of the crucial energy issues facing all Inations, nuclear physicistJeff Eerkens decided the world needed a wakeup call, and he delivers one in his new book, “The Nuclear Imperative: A Critical Look at the Approaching Energy Crisis.” Eerkens, a research professor at the University of Missouri Nuclear Science and Engineering Institute, addresses growing concerns over oil dependence and climate change. Recognizing that carbon dioxide emissions from coal plants contribute to global warming, he concludes that nuclear power is the only clean source of energy that can meet burgeoning energy demands. The book scientifically discredits both the longstanding public phobia of nuclear power and the belief that alternate sources of energy—such as solar, wind and biomass power—can produce the necessary quantities of energy to supply current use. In light of the significant amount of time required to bring new nuclear reactors on line, Eerkens urges immediate action to avoid an impending energy crisis. “This book is an admonition that the world must stop vilifying nuclear energy and rapidly expand this unique energy source so we can overcome the pending out-of-oil crisis,” Eerkens writes. “Nuclear proliferation concerns and nuclear security issues can be and must be resolved.” “The Nuclear Imperative” is the 11th installment in the Springer series “Topics in Safety, Risk, Reliability and Quality.” It is available for purchase at wwwspringercom.
When analyzing the price of gold it’s important to understand that gold prices do not move like most other commodities. It has certain built-in unquantifiable characteristics that drive price. The price of gold is actually a function of four things: 1) its replacement potential for the U.S. dollar; 2) the future rate of inflation, 3) Sentiment – generally fear based and 4) true supply and demand. Let’s take a look at each.
The move off the gold standard and convertible currency systems has generally been due to the inherent restraints imposed by such systems. For instance, trade deficit nations are at an inherent weakness when attempting to respond to recession because the trade imbalance results in rising unemployment and falling output and prices – an inherently deflationary environment. With your own currency this imbalance would naturally offset over time, but under a single currency system there is no opportunity for the floating exchange system to reach balance. This is just one very simple example of the types of inherent restrictions a single currency system imposes on a nation, but it’s particularly pertinent as we see this exact event unfolding in Greece – where the single currency system is destroying the country and handcuffing the government from properly defending their economy and thus providing for their citizens. Instead, they are risking default (a risk which does not exist within a sovereign issuing floating exchange system) and forcing their citizens into recession all so the surplus nation of Germany can enjoy price stability and continued high exports. Such a system is wondrous during the boom, but it can be catastrophic during the bust.
What Bode was saying was this: “Knowledge and productivity are like compound interest.” Given two people of approximately the same ability and one person who works ten percent more than the other, the latter will more than twice outproduce the former. The more you know, the more you learn; the more you learn, the more you can do; the more you can do, the more the opportunity – it is very much like compound interest. I don’t want to give you a rate, but it is a very high rate. Given two people with exactly the same ability, the one person who manages day in and day out to get in one more hour of thinking will be tremendously more productive over a lifetime. I took Bode’s remark to heart; I spent a good deal more of my time for some years trying to work a bit harder and I found, in fact, I could get more work done. I don’t like to say it in front of my wife, but I did sort of neglect her sometimes; I needed to study. You have to neglect things if you intend to get what you want done. There’s no question about this.
If these recommendations are too extreme, treat them as a thought experiment. Just don’t lie to yourself.
A quick (but BIG) caveat: there are VERY notable counter-examples. I think they generally fall into three categories:
Products that solve a problem that people don’t know they have (or one that they can’t articulate), but offer a solution that is so compelling and elegant that it can overcome this obstacle: Dropbox.
“Today you…. tomorrow me.”
Rolled up his window, drove away, his daughter waving to me in the rear view. I sat in my car eating the best fucking tamale of all time and I just cried. Like a little girl. It has been a rough year and nothing has broke my way. This was so out of left field I just couldn’t deal.
In the 5 months since I have changed a couple of tires, given a few rides to gas stations and, once, went 50 miles out of my way to get a girl to an airport. I won’t accept money. Every time I tell them the same thing when we are through:
“Today you…. tomorrow me.”
Every time I take an Apple product into an Apple Store to get it looked at by a Genius, two thoughts run through my mind. The first is how freaking packed they are these days. I haven’t been in an Apple store that wasn’t full of humanity of all stripes in years. People checking stuff out, buying stuff, or just surfing the net on one of the demo machines. Even people trying to get inside information out of the helpful employees who don’t know anything more about the next magical product in the pipeline than do you or I.
The second thought is that surely one of the secrets of Apple’s product design in the last decade has been the use of the data that these stores generate. There’s the obvious real-time point-of-sale and visitor data. But that’s not what catches my attention. Instead, it’s the data that’s generated at the Genius bar that fascinates me. This data, in aggregate, can tell Apple a lot about what machines break, how they break, and after how long in a much more direct way than what would come out of a third party service center. And, when Apple is interested in more information about certain failures, they can start asking customers for more information with very little delay.
In our view, the biggest obstacle to broader participation in the FHA “short refi” program and in the HAMP program is the unwillingness of the Administration to address the large number of second liens that are currently valued at unsustainably high current values on the books of several large banks. While accounting conventions allow these to be carried as “current” the reality is, if there is no equity in the first mortgage how can there honestly be any value in the second – other than as a retained call option on housing recovery. Perhaps before seeking to use the GSEs’ as a slush fund, Washington might consider first tackling the conflicts inherent in the servicing of first liens on behalf of MBS certificate holders by servicers who also service second liens on behalf of their own affiliated banks. If servicers were required to either divest the servicing of mortgages in which they have such a conflict or to divest their servicing businesses (which have failed to show any meaningful economies by being integrated anyway), we would expect to see a greater willingness to write down the value of second liens and, as a result, a greater participation in both HAMP and the FHA “short refi” program.