Saturday, July 11, 2009

Energy Expert: Oil Will Fall to $20 a Barrel

Respected energy economist Philip Verleger makes case that oil will fall to levels not seen in over a decade.

HT: Craig Newmark

Consumer Spending

From Visual Economics, a graphical representation appears above (click to enlarge) of Consumer Expenditures in 2007, using data from the Bureau of Labor Statistics.

Note that total spending on food ($6,133), clothing ($1,881) and housing ($16,920) represented 50% of consumer expenditures and 30% of income before taxes in 2007. In 1997 by comparison, 51.1% of consumer expenditures were spent on food, clothing and housing, and 44.6% of income before taxes was spent on food, clothing and housing (data here).

New World Currency?

July 10 (Bloomberg) -- Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin (pictured above) of a “united future world currency.” “Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”

The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said. The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”

Mpls-Area Home Sales Increase 12th Straight Month

Update on this CD post, from today's Star Tribune article "A Few Good Signs for Housing" (print edition headline):

Pending home sales in the Twin Cities metro area in June were up 33.7% from this time last year, to 5,183. That number was the highest for the month of June since 2005, and marked 12 consecutive months of year-to-year increases, the Minneapolis Area Association of Realtors reported Friday.

In the Twin Cities, the housing market is showing slow improvement. Closed sales for June were up 20%, but more than 40% of those sales were the result of foreclosures or "short sales," where the lender agrees to a sale for less than the amount of the mortgage. Still, the percentage of home sales that were the result of foreclosures or short sales was down from 59.7% in January.

"The fact that short sales and foreclosures are coming down as a percent of total home sales is a good sign that could lead to at least a short-term bounce in housing values," said Scott Anderson, vice president and senior economist at Wells Fargo & Co. in Minneapolis.

ECRI: End of Recession is Near, Recovery Imminent

NEW YORK (Reuters) - A gauge of future U.S. economic growth edged higher in the latest week, sending its yearly growth rate to a two-year high that suggests a near-term end to the recession, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 118.5 for the week ended July 3 from a downwardly revised 117.4 in the prior period, which ECRI initially reported at 117.6 (see bottom chart above, data here). The index's annualized growth rate plowed further into positive territory to a two-year high of 5.4 percent from 3.9 percent the week prior, which was revised lower from 4.0 percent (see top chart).

It was the highest annual growth rate the gauge has seen since the week to July 20, 2007, when it read 5.7%. ECRI Managing Director Lakshman Achuthan holds that recovery is imminent before the year's end, as long as economic data continues to weaken at a slower pace. "It is increasingly evident that, despite widespread misgivings based on backward-looking economic data, the end of recession is at hand," said Achuthan.

Friday, July 10, 2009

Twin Cities Area Real Estate Market Rebounds

It's sure looking like the real estate market in the Twin Cities reached bottom earlier this year and is in a period of solid recovery, according to the June report from the Minneapolis Area Association of Realtors. Consider the following:

1. After falling pretty consistently for months during the last two years, the median home price in the Twin Cities area has increased by almost 17% since February, and by $25,000 in dollar terms (see chart above, click to enlarge). From April to June this year the median price increased by $20,500 compared to only a $500 increase last year from April-June.

2. Pending sales in June are up by 33.7% from the same month last year.

3. Closed sales in June are 20% higher than June 2008.

4. The average sales price in the Twin Cities area increased by $23,275 from April to June this year, compared to a $1,419 increase during the same period last year.

5. The current 7.3 months supply of inventory is more than 3 months lower than last year at this time (10.6 months).

6. The current Supply-Demand Ratio (SDR) of 4.90 homes for sale per buyer is 32.6% lower than last year's SDR of 7.27 homes per buyer. (Note: The SDR is calculated by comparing the number of homes for sale at the beginning of each month with the number of total pending sales for the month. The higher the SDR, the more supply there is relative to demand.)

Browser Marketshare for Microsoft Internet Explorer Falls from 80% to 66% in Two Years

According to The Economist, Microsoft Internet Explorer now has only a 66% market share for Internet web browsers, down from 80% two years ago, and probably the lowest level ever (see chart above). For Carpe Diem readers, only about 50% are using IE (6.0, 7.0 or 8.0), 35% are using Firefox/Mozilla, and 15% are using Safari (see chart below).

Hey, weren't we supposed to be worried about 10 years ago that Microsoft was an evil monopolist, and wasn't
it prosecuted for bundling Internet Explorer with its Microsoft Windows operating system, which was supposedly unfair because it restricted the market for competing web browsers?

Congressional Reality Check: The Laws of Supply and Demand Are NOT Optional

As if the recession hasn’t been rough enough on those near the bottom of the economic food chain, fresh bad news is on the way. Beginning July 24 (two weeks from today), the federal government will be making it more difficult for employers to hire low-skilled and unskilled American workers. Thanks to an ill-advised law enacted with bipartisan support in 2007, the cost of providing an entry-level job to individuals with few skills or minimal experience will be going up by more than 10 percent. Those who cannot find a job paying at least $7.25 an hour will not be permitted to work. Welcome to the latest chapter of America’s minimum-wage folly.

Those who press for a higher minimum wage often claim that making entry-level jobs more expensive won’t reduce the number of entry-level jobs. Were the government to compel a 41 percent increase (see graph above showing the 41% increase in the minimum wage from $5.15 in 2006 to $7.25 this year) in the price of gasoline or movie tickets or steel, every rational observer would expect a drop in the demand for gasoline, movie tickets, or steel. Yet when it comes to the minimum wage, politicians and journalists somehow persuade themselves that making workers more expensive won’t reduce the demand for workers.

But that’s exactly what it does. Artificial price floors - mandatory minimum prices set higher than what the market will bear - generate surpluses. Minimum-wage laws are no exception. The price floor imposed by the government on the supply of low-skilled labor results in a labor surplus, which is just another way of saying higher unemployment.

The laws of supply and demand are not optional. They weren’t enacted by Congress and Congress can’t override them. Minimum-wage laws don’t make low- and unskilled Americans more productive, more experienced, or more desirable. They merely make them more expensive - and more likely, therefore, to be unemployed.

It is bad enough that Congress and the president would deliberately price so many workers out of the market. What is worse is that they claim to be helping the poor when they do so (see cartoons below, both by Henry Payne of the Detroit News).

~Jeff Jacoby in the Boston Globe

Evian Ad: Roller Babies

Thomas Sowell on the "Affordable Housing Crusade"

Economist and Hoover Institution senior fellow Thomas Sowell, author of "The Housing Boom and Bust," discusses the economics of the housing boom on the National Review Online (NRO) TV program "Uncommon Knowledge."

Update: All five parts are now available:

Part 1, Part 2, Part 3, Part 4 and Part 5.

Here are some excerpts from an NRO article by Thomas Sowell, based on his book:

Let us go back to square one to consider the empirical consequences of policies in the housing market. Politicians in Washington set out to solve a national problem that did not exist — a nationwide shortage of “affordable housing” — and have now left us with a problem whose existence is as undeniable as it is painful.

Few things blind human beings to the actual consequences of what they are doing like a heady feeling of self-righteousness during a crusade to smite the wicked and rescue the downtrodden. Statistical studies about disparities between blacks and whites in mortgage loan approval rates might be said to have “jump-started” the housing crusades that began in the 1990s.

Politicians and the media led this crusade, with many community activists following in their wake, much like scavengers, able to extract large sums of money from banks and other institutions by raising claims of discrimination, whose power to delay government approval of bank mergers and other business decisions made pay-offs to these activists the only prudent course for those accused.

With rich rewards available — politically, ideologically, and financially — from the “affordable housing” crusade, there were ample incentives to keep this crusade going for years.

HT: Club for Growth

Thursday, July 09, 2009

The Zimbabwean Titanium Trillion Dollar Campaign

The Zimbabwean newspaper, has been driven into exile for reporting on how the Mugabe regime has rigged elections, crushed the opposition, caused poverty, disease and the total collapse of the economy. And now, having been exiled, the regime has slapped a 55% luxury import duty on the paper (as if freedom of speech is a luxury) that makes it unaffordable for the average Zimbabwean. To get the paper into Zimbabwean hands, it needs to be subsidised, and that can only be done by raising awareness, acquiring new customers and driving sales outside Zimbabwe.

HT: Arthur Little

Stirrin' It Up in Flint, Michigan

University of Michigan-Flint professor: Is UAW vehicle profiling legal and fair?

A professor at the University of Michigan-Flint says the decades-old prohibitions at union-owned properties like UAW Local 599 in Flint are outdated because car makers like General Motors and Ford are making parts and vehicles outside the country while companies like Toyota have increasingly built vehicles and parts made by union workers.

Bill Jordan, president of UAW Local 599 (see sign above from the Local 599 parking lot), says Professor Perry's discussion of the gray areas between foreign and domestic vehicles misses the union's larger point about what are often poor conditions for workers outside the U.S. "We have a real problem when people are trying to compete in a market where (in another country) if a worker dies, it doesn't matter. They just replace them tomorrow," Jordan said. "If they would raise their standard of living to match ours ... there would be no problem."

MP: Forget about Mexico, I'm just trying to figure out if Local 599 would really tow a union-made car built in Canada (like a Buick Lacrosse) or a UAW-built car in the U.S. (Toyota Corolla)? And speaking of Mexico, would they really tow a Cadillac Escalade EXT assembled in Mexico?

Hey, I'm all for private property rights and owner-determined rules for their property, I just want to understand the UAW parking lot rules: which cars will be towed and which ones won't?

Lift the Embargo Against Cuba and Drill, Drill, Drill

The 47-year-old trade embargo against Cuba has been shaken by the revelation that drilling for oil and natural gas is about to take place less than 50 miles off the U.S. coast — in Cuban waters. The Cuban government is not only sitting on a potential oil bonanza but it has already awarded oil and gas exploration leases to companies from Canada, China, Spain, India, Venezuela and Norway. And Cuba is negotiating with Brazil's Petrobras, a company with years of experience in deepwater drilling.

If U.S. firms are forbidden by their own government to drill for oil and gas in Cuban waters, then the national oil companies of other countries will benefit while our investor-owned companies watch from the sidelines.

Congress should lift the trade embargo against Cuba. It is a failed economic policy that has stood since the Kennedy administration, but it has hurt ordinary Cubans, while failing to bring about the intended changes in human rights. On the other hand, resuming normalized trade relations could contribute to what everybody wants: a more productive, open and cooperative relationship with Cuba.

~It's Time to End the Cuban Trade Embargo

Ethanol Continues to Be Oversold As Magic Potion

Corn-derived ethanol has been heralded as the magic potion that can drive us to the promised land of energy freedom while at the same time slowing global warming and helping America’s farmers. To that end, the ethanol industry is urging Congress to increase the share of ethanol required in gasoline to 15 percent from 10.

This is not a surprising request, considering that the industry’s facilities are 20% idle and that several large ethanol refiners have recently filed for bankruptcy, despite a 45-cent-per-gallon tax credit and a high tariff to limit imports of sugar-based ethanol from Brazil and other countries.

Like most alternative fuel sources, the potential contribution of ethanol has been oversold. It has been estimated that converting the entire U.S. corn crop to ethanol would yield energy equal to a mere 12% of our gasoline consumption.

~Bernard Weinstein, professor of economics at University of North Texas,
in the Fort Worth Star-Telegram (HT: NCPA)

Cartoon of the Day

Note: If the opposite of "pro" is "con," then what's the opposite of "progress"?

Markets in Everything: U Miami Paying Accepted Law Students $5K to Defer Admission One Year

At a time when law-school graduates are facing greater debt and fewer job opportunities, the University of Miami School of Law has offered to pay accepted students to stay away—at least for a year. The school's unusual offer, which followed an unexpectedly high number of acceptances for this fall's entering class, comes during a period of soul searching in legal education about just how many lawyers the nation needs and whether educators have an obligation to paint a realistic picture of students' prospects for landing jobs that would justify taking out loans of $70,000 or more.

At the University of Miami, a higher-than-expected yield prompted Dean Patricia D. White to send accepted students an e-mail message last month offering $5,000 scholarships if they deferred their admission for a year and completed at least 120 hours of public service by next June. Doing so would also improve their chances of winning the school's three-year, $75,000 public-interest scholarship, she said.

At least 10 new law schools are on the drawing board around the country, in addition to the 200 already accredited by the American Bar Association. At the same time, the demand for legal services has dropped during the economic recession, prompting hundreds of firms to lay off lawyers, cut salaries, and delay the start dates of new associates. As law schools continue to churn out graduates, the resulting bottleneck could make the competition for jobs even more fierce.

Law Schools Mull Whether They Are Churning Out Too Many Lawyers" in today's Chronicle of Higher Education (subscription may be required)

MP: Maybe with fewer restrictions on new medical schools, we could have the same "problem" with "too many doctors"? One way we might know that we have a doctor surplus is when they start advertising that they will make housecalls again, like in the old days?

Jobless Claims Drop Steeply To a 22-Week Low

The Department of Labor reported today that initial claims for unemployment insurance fell by 52,000 to a much lower-than-expected 565,000 (seasonally adjusted) for the week ended July 4, from 617,000 the previous week. It was the lowest level of weekly claims since January. Analysts polled by Reuters had forecast claims to drop to 605,000 from a previously reported 614,000.
The 4-week moving average of 565,000 claims (adjusted to smooth volatility in the data) also fell to the lowest reading since January, reaching a 22-week low (see chart above).

Wednesday, July 08, 2009

U.S.: Medical Innovator; Europe: Free Rider

Most all the world pays a marginal cost for drugs, medical devices, and procedures that does not come close to repaying the development effort that went into those products. Further, most of the world has regimented medical systems that have very strong immune systems against any sort of innovation. As a result, almost all medical innovation occurs and is paid for in the United States, with the rest of the world acting as a free rider. Sure, some Swiss or Japanese firms still develop a few drugs, but most of those efforts are still justified by profits in the US market.

~Coyote Blog

The U.S. is still driving quite a bit of product innovation. Our messy, organic, wasteful, unfair, irrational system allows experimentation, and Europe cherry picks the best results. If we stopped doing this, their system would stop looking so good.

~Megan Mcardle

Quote of the Day: Underestimating Markets

Economists have an undeserved reputation for "religious faith" in markets. No one has done more than economists to dissect the innumerable ways that markets can fail. After all their investigations though, economists typically conclude that the man in the street - and the intellectual without economic training - underestimate how well markets work.

~Bryan Caplan in "The Myth of the Rational Voter"

Global Financial Crisis, Mortgage Tsunami, Housing Bubble Can All Be Traced to Federal Government Intervention to Create Affordable Housing

Excerpts from "The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008," a 26-page report released yesterday by the U.S. House of Representatives Committee on Oversight and Government Reform:

The housing bubble that burst in 2007 and led to a financial crisis can be traced back to federal government intervention in the U.S. housing market intended to help provide homeownership opportunities for more Americans. This intervention began with two government-backed corporations, Fannie Mae and Freddie Mac, which privatized their profits but socialized their risks, creating powerful incentives for them to act recklessly and exposing taxpayers to tremendous losses. Government intervention also created “affordable” but dangerous lending policies which encouraged lower down payments, looser underwriting standards and higher leverage.

Finally, government intervention created a nexus of vested interests – politicians, lenders and lobbyists – who profited from the “affordable” housing market and acted to kill reforms. In the short run, this government intervention was successful in its stated goal – raising the national homeownership rate. However, the ultimate effect was to create a mortgage tsunami that wrought devastation on the American people and economy. While government intervention was not the sole cause of the financial crisis, its role was significant and has received too little attention.

The real tragedy of the government’s affordable housing policy is the impact on average Americans, particularly those of modest means. Millions of these borrowers, who were supposed to have been helped by federal affordable housing policy, have now been forced into delinquency and foreclosure, destroying their asset base, their credit, and in some cases their families. For example, Latino homeowners, who once appeared to be among the most frequent beneficiaries of affordable housing policies, are now the victims of the policies that their political representatives in Washington once championed.

The consequences of these policies have also brought the entire global financial system to the brink of collapse, destroying trillions in equity and untold numbers of lives. It is essential to reexamine the borrow-and-spend, high-leverage policies that became prevalent in the mortgage market as a result of well-intentioned-but-reckless decisions made by elected officials on behalf of the American people.

Washington must reexamine its politically expedient but irresponsible approach to encouraging higher levels of homeownership based on imprudently small down payments and too little emphasis on borrowers’ creditworthiness and ability to repay their loans. Without such a return to fiscal discipline and responsibility, we will continue making the same mistakes that led us to the current financial crisis.

HT: Tom Sullivan

Burton Malkiel on Low-Cost Index Investing

What I suggested in 1973 is that investors would be much better off if they had simple, low-cost index funds. But there weren't any index funds in 1973. The first one available for the public wasn't started until 1976, by Vanguard.

We have a lot of information about how index funds have done, as well as the typical actively managed mutual fund. I find that consistently two-thirds of active managers are beaten by the indexes, and those who beat the index in one year are not necessarily the ones who beat it the next year.

Over a very, very long period, sure, there are a few people who have outperformed the index. But you can almost count them on one hand. I still believe -- even more strongly than I did in 1973 -- that most investors would be much better off having at least the core of their portfolio in a low-cost index fund.

~Burton Malkiel interview in Smart Money (HT: Greg Mankiw)

Quote of the Day: Walter Williams on Slavery

Reparations advocates make the foolish unchallenged pronouncement that the United States became rich on the backs of free black labor. That's utter nonsense. Slavery has never had a very good record of producing wealth. Think about it. Slavery was all over the South. Buying into the reparations nonsense, you'd have to conclude that the antebellum South was rich and the slave-starved North was poor.

The truth of the matter is just the opposite. In fact, the poorest states and regions of our country were places where slavery flourished: Mississippi, Alabama, and Georgia while the richest states and regions were those where slavery was absent: Pennsylvania, New York and Massachusetts.

~Walter Williams

For Professor Williams' "Proclamation of Amnesty and Pardon Granted to All Persons of European Descent," click here.

Tuesday, July 07, 2009

Markets In Everything: Medical Tourism in S. Korea

SINGAPORE: South Korea revised its law two months ago to allow hospitals to directly seek foreign patients. And this has reaped results, going by the latest statistics. In May, the number of foreigners who visited South Korea for medical treatment jumped by about 40% to 1,061, compared to a year ago. South Korea is the latest country to jump on the medical tourism bandwagon. Under the new law, hospitals can go all out to attract foreign patients, such as paying commissions to agents for referrals. The country has also eased visa regulations for overseas patients.

The global medical tourism sector is expected to grow by 15 to 20% every year. Asia's medical tourism market is worth over $5 billion and will attract over 6 million patients by 2012. South Korea plans to tap on this potential by marketing its accessibility and low cost. Brian Suh, researcher of Global Healthcare Business Centre, Korea Health Industry Development Institute, said: "Korea has good medical skills and easy accessibility, and there's no waiting time."

Top 10 Ways UK Rations Healthcare to Save Money

WALL STREET JOURNAL -- Speaking to the American Medical Association last month, President Obama waxed enthusiastic about countries that "spend less" than the U.S. on health care. He's right that many countries do, but what he doesn't want to explain is how they ration care to do it.

Take the United Kingdom, which is often praised for spending as little as half as much per capita on health care as the U.S. Credit for this cost containment goes in large part to the National Institute for Health and Clinical Excellence (NICE). Americans should understand how NICE works because under ObamaCare it will eventually be coming to a hospital near you. NICE has established the principle that the only way to control health-care costs is for this panel of medical high priests to dictate limits on certain kinds of care to certain classes of patients.

For example:

1. In March, NICE ruled against the use of two drugs, Lapatinib and Sutent, that prolong the life of those with certain forms of breast and stomach cancer.

2. This followed on a 2008 ruling against drugs -- including Sutent, which costs about $50,000 -- that would help terminally ill kidney-cancer patients.

3. In 2007, NICE restricted access to two drugs for macular degeneration, a cause of blindness. The drug Macugen was blocked outright. The other, Lucentis, was limited to a particular category of individuals with the disease, restricting it to about one in five sufferers. Even then, the drug was only approved for use in one eye, meaning those lucky enough to get it would still go blind in the other.

4. NICE has limited the use of Alzheimer's drugs, including Aricept, for patients in the early stages of the disease.

5. NICE rejected the use of Kineret, a drug for rheumatoid arthritis.

6. NICE rejected Avonex, which reduces the relapse rate in patients with multiple sclerosis;

7. NICE rejected Lenalidomide, which fights multiple myeloma.

NOTE: Private U.S. insurers often cover all, or at least portions, of the cost of many of these NICE-denied drugs.

NICE has also produced guidance that restrains certain surgical operations and treatments.

8. NICE has restrictions on fertility treatments.

9. NICE has restriction on procedures for back pain, including surgeries and steroid injections.

10. Several young U.K. women developed cervical cancer after being denied pap smears by a related health authority, the Cervical Screening Programme, which in order to reduce government health-care spending has refused the screens to women under age 25.

Bottom Line: Rationing = Lower cost = lower quality healthcare

HT: Bob Wright

Low Union=High Growth; High Union=Low Growth

From 2003 to 2008,the aggregate gross domestic product (GDP), in constant, chained 2000 dollars, for the states with the lowest share of workers under union monopoly control increased by a healthy 17.3%. In these 10 states, as of 2003 4.7% or less of private employees were forced to accept a union as their monopolybargaining agent. Meanwhile, the real GDP of the country as a whole grew by just 12.7%. And in the 10 states with the highest private-sector unionization, aggregate output grew by just 9.9% -- roughly 57% as much as in the lowest-union-density states (see chart above).

At a time when the country is struggling to pull out of a recession, Congress must not pass any legislation to promote union monopoly bargaining, which has a strong negative correlation with economic growth generally and with job growth in particular. Enactment of S.560 (the Senate version of the proposed anti-worker "card check" legislation) or its near equivalent would mean millions more employees hamstrung by wasteful union work rules and slowdowns that destroy good jobs.

Another consequence would be millions of additional workers forced to pay union dues or fees just to keep their jobs. Much of the confiscated cash would be funneled by Big Labor into efforts to elect even more anti-Right to Work, Tax & Spend politicians to Congress. That's why Right to Work members and supporters are preparing for an allout battle to ensure that not just S.560 and H.R.1409 themselves, but all phony card-check 'compromises,' are defeated in Congress this year and in 2010.

National Right to Work Committee President Mark Mix

Canadian Couldn't Wait for Healthcare, Came to US

HT: Club for Growth

Minimum Wage Increase in Two Weeks Will Likely Send Teenage Jobless Rate to a Record High

The current (June) unemployment rate for teenagers of 24% (data here, paid subscription required for full access) is within 1/10 of a percent of the all-time high of the 24.1% teenage jobless rate set back in November and December of 1982 (see chart above). The teenage jobless rate of 24% is more than double the national average of 9.5% for June, and for African-American teens the unemployment rate was almost 38%.

When July employment data become available in early August, watch for the teenage unemployment rate to jump to a new record high. Reason?

-- The federal minimum wage is set to increase later this month as the job market shows signs of further decay. The federal minimum wage will go to $7.25 an hour on July 24 from its current level of $6.55, according to the U.S. Department of Labor. The impact will be felt in 29 states, and many of them plan to match the federal minimum when it goes through.

Seven states already have laws mandating $7.25 minimum pay, while 14 states and Washington, D.C., exceed the new minimum. Employers are required to pay whichever is the highest: Federal or state.

Thomas Sowell on the "Affordable Housing Crusade"

Economist and Hoover Institution senior fellow Thomas Sowell, author of "The Housing Boom and Bust," discusses the economics of the housing boom on the National Review Online (NRO) TV program "Uncommon Knowledge."

Part 1.

Part 2.

Here are some excerpts from an NRO article by Thomas Sowell, based on his book:

Let us go back to square one to consider the empirical consequences of policies in the housing market. Politicians in Washington set out to solve a national problem that did not exist — a nationwide shortage of “affordable housing” — and have now left us with a problem whose existence is as undeniable as it is painful.

Few things blind human beings to the actual consequences of what they are doing like a heady feeling of self-righteousness during a crusade to smite the wicked and rescue the downtrodden. Statistical studies about disparities between blacks and whites in mortgage loan approval rates might be said to have “jump-started” the housing crusades that began in the 1990s.

Politicians and the media led this crusade, with many community activists following in their wake, much like scavengers, able to extract large sums of money from banks and other institutions by raising claims of discrimination, whose power to delay government approval of bank mergers and other business decisions made pay-offs to these activists the only prudent course for those accused.

With rich rewards available — politically, ideologically, and financially — from the “affordable housing” crusade, there were ample incentives to keep this crusade going for years.

HT: Club for Growth

6th Monthly Increase in Used Vehicle Price Index; June Jump Is Largest Monthly Increase On Record

MANHEIM CONSULTING -- Wholesale used vehicle prices moved significantly higher in June. With a reading of 114.1, the Manheim Used Vehicle Value Index is now 5.8% above its year ago level. The adjusted increase in used vehicle values since the beginning of 2009 has been 16.4% (see chart above, click to enlarge, recessions are shaded).

From a previous Manheim Consulting report:

Some analysts have suggested that the rapid rise in wholesale used vehicle pricing is a precursor to an improvement in new vehicle sales and may even point to a recovery in the overall economy.

MP: The 5-point June increase in the Manheim used vehicle value index was the largest single monthly increase in the history of the index back to 1995, and marked the sixth consecutive monthly increase (every month this year), following decreases in 10 out of the previous 14 months (from October 2007 to December 2008).

The year-to-year increases in both May and June follow 17 consecutive months of consecutive year-to-year decreases (Nov. 2007 to April 2009).

Monday, July 06, 2009

Markets in Everything: Attic Junk Worth $1m

NEW YORK (Reuters) - A woman who inherited some Chinese carved jade from her father has scored the first $1 million appraisal from experts on the U.S. television program "Antiques Roadshow," the producers said on Monday. In a record for the show, four pieces of Chinese carved jade and celadon from the Chien Lung Dynasty (1736-1795), including a large bowl crafted for the Emperor, were given a conservative auction estimate of up to $1.07 million.

"For 13 years, we've been hoping to feature a million-dollar appraisal on 'Antiques Roadshow;' it's been our 'Great White Whale,'" executive producer Marsha Bemko said. "We're thrilled that, despite this year's slow economy, 'Roadshow' finally captured this elusive trophy," she said in a statement released by Boston-based production company WGBH, which licensed the format from the British show of the same name produced by the BBC.

On both shows, members of the public bring in items to be appraised by professionals in the hope of discovering that junk from the attic is actually a valuable treasure.

Markets in Everything: Stand and Fly for Cheap

UK TELEGRAPH -- The low-cost airline Ryanair would charge passengers less on "bar stools" with seat belts around their waists. Michael O'Leary, the chief executive, has already held talks with US plane manufacturer Boeing about designing an aircraft with standing room.

HT: Russell Harris

Markets in Everything: Live Bait Vending Machines

Spotted in Calhoun, TN near the Hiwassee River

HT: Eric Holcombe

Europeans Warn Against Government Healthcare

ASSOCIATED PRESS -- "I would warn Americans that once the government gets its nose into health care, it's hard to stop the dangerous effects later," said Valentin Petkantchin, of the Institut Economique Molinari in France. He said many private providers have been pushed out, forcing a dependence on an overstretched public system.

"The minute you make health insurance mandatory, people start overusing it," said Dr. Alphonse Crespo, an orthopedic surgeon and research director at Switzerland's Institut Constant de Rebecque. "If I have a cold, I might go see a doctor because I am already paying a health insurance premium."

Government influence in health care may also stifle innovation, other experts warn. Bureaucracies are slow to adopt new medical technologies. In Britain and Germany, even after new drugs are approved, access to them is complicated because independent agencies must decide if they are worth buying. When the breast cancer drug Herceptin was proven to be effective in 1998, it was available almost immediately in the U.S. But it took another four years for the U.K. to start buying it for British breast cancer patients.

"Government control of health care is not a panacea," said Philip Stevens, of International Policy Network, a London think-tank. "The U.S. health system is a bit of a mess, but based on what's happened in some countries in Europe, I'd be nervous about recommending more government involvement."

Real Healthcare Reform: Competition and Choice

The choice facing us now is not between Obama's plan for healthcare micromanaged by the government or doing nothing. Rather, it is a choice between government control, regulation and rationing on one hand, and free markets, choice and competition on the other. That is the real healthcare debate.

So what exactly would a free-market approach to reform look like? Quite simply, it relies on those time-tested building blocks of marketplace efficiency: competition and choice.

1. We need to move away from a system dominated by employer-provided health insurance and instead make health insurance personal and portable, controlled by the individual rather than government or an employer. Employment-based insurance hides much of the true cost of healthcare to consumers, thereby encouraging overconsumption. It also limits consumer choice, because employers get the final say in what type of insurance a worker will receive.

2. Changing from employer-provided to individually purchased insurance requires changing the tax treatment of health insurance. The current system excludes the value of employer-provided insurance from a worker's taxable income. However, a worker purchasing health insurance on his own must do so with after-tax dollars. This provides a significant financial reward for those who have employer-provided insurance. That should be reversed.

3. The other part of effective healthcare reform involves increasing competition among both insurers and health providers. Current regulations establish monopolies and cartels in both industries. Today, for example, people can't purchase health insurance across state lines. And because different states have very different regulations and mandates, costs can vary widely depending on where you live.

4. We also need to rethink medical licensing laws to encourage greater competition among providers. Nurse practitioners, physician assistants, midwives and other non-physician practitioners should have far greater ability to treat patients. We also should be encouraging such innovations in delivery as medical clinics in retail outlets.

~Michael Tanner, senior fellow at the Cato Institute, in the Sunday Los Angeles Times


Cartoon of the Day

Sunday, July 05, 2009

Jobless Claims as Percent of Labor Force Fall for 3rd Month in a Row, First Time Since Early 2006

With June employment data now available, the graph above of Initial Jobless Claims as a Percent of the Labor Force (1975-2009) has been updated to reflect the June labor force of 154,926,000 and the June average for initial unemployment claims (618,187.5 for the 4-week moving weekly average). That measure of initial jobless claims adjusted for the size of the labor force shows that we are currently above the levels of the last two recessions (1990-1991 and 2001), but still far below the levels of the previous three recessions in the mid-1970s and early 1980s.

For current initial jobless claims to reach the peaks of the 1970s and 1980s of about .60% (see chart above), we would have to have initial jobs claims today of about 929,000, or 50% above current levels. By this measure of the employment situation, it seems unlikely we'll get anywhere close to the recessionary levels of the 1970s and 1980s.

Toyota Is The Most American Car Company

The Toyota Camry is more American than the Ford F-150, at least according to's annual American-Made Index. The findings further muddy the Buy American debate that rages across the country. Toyota Motor Corp. also is the most American car company, according to the rankings of the index in terms of U.S. content in its cars and trucks.

~Today's Detroit News (HT: Lee Coppock)

Do those signs above mean that the "most American car" in the U.S. would be towed?

PJ O'Rourke: Why Politicians Love Trains, Hate Cars

There's something romantic about trains, but try getting the tracks to come to your house. When it comes time to unload the groceries, the romance of the train ends immediately.

Politicians love trains. Why? Because they can tell where the tracks go. They know where everybody's going. For policiticians it's all about control and power. Politicians hate cars because cars make people free. Not only free in the sense that they can go anywhere they want, which bugs politicians, but they can move out of the political districts that the politicians represent.

Politics itself is nothing more than an attempt to achieve power and prestige without merit. That's the definition of politics.

~P.J. O'Rourke on "Where Was The Government With Studebaker