September 7, 2006

If the Economy Is Slowing….

Filed under: Economy,Taxes & Government — Tom @ 3:21 pm

….. as the Fed believes, why did the ISM Manufacturing and Non-Manufacturing Indices stay in expansion mode in August?

The Manufacturing Index dropped ever-so-slightly from 54.7 to 54.5, while the Non-manufacturing Index zipped up to 57.0 from 54.8. Any reading over 50 indicates economic expansion.

I would think that the recent drops in energy prices will shoot their way positively through both reports in the coming months.

Previous Posts:

  • June 4 — Psst: The Manufacturing Sector Is on Its Longest Winning Streak in Over a Quarter Century
  • August 5, 2005 — The Economy Must Be Good Since You’re Not Hearing About It

“H-P” Must Not Stand for “Honors Privacy”

Filed under: Business Moves,Corporate Outrage — Tom @ 1:29 pm

It has become clear, with this episode (HT Techdirt) that has to be read about to be believed, that Carly Fiorina of the $42 million “go away” package was not the only dysfunctional corporate bigwig at Hewlett Packard.

Fun with Tom and Rex: A Discussion of the Housing Market Situation

Note: The following e-mail exchange between me and Rex Nutting of MarketWatch began when I informed Mr. Nutting of the publication of this BizzyBlog post (“Existing-home Sales ‘Plunge,’ But This Is NOT an ‘Implosion’”) in response to his MarketWatch article (this link and others cited later requires free registration) about the housing market.

Since the last e-mail quoted at this post, I informed Mr. Nutting that I would be posting on the housing market after Labor Day. This morning, as I was posting this entry, I informed of this entry and the two related ones that preceded it:

  • September 7 — Unseen Housing Headline: “Home-Price Growth Returning to Normal”
  • September 6 — Bubble, Schmubble (so far)

I also sent the e-mail at the very end of this post after it went up.

I’ll let the exchange below stand as is without further comment, and you can decide who is more reality-based. I added MarketWatch links to the e-mail from Mr. Nutting where he cites previous articles so readers who wish can read the full articles he wrote.

I’ll update if there are any additional communications of interest. Click “more” if you are at the home page to begin reading the exchange.


UPDATE: Do read the exchange, but don’t miss Mr. Nutting’s comment #2. Mr. Nutting also separately sent an e-mail containing a number of graphs designed to prove his point that only go to prove mine. So many errors, misconceptions, and misunderstandings — so little time. I’ll deal with it tomorrow Saturday in a new post. It should be fun.


Unseen Housing Headline: “Home-Price Growth Returning to Normal”

Here are some of the headlines actually used in coverage of Tuesday’s Office of Federal Housing Enterprise Oversight (OFHEO) report (PDF) showing a 1.17% increase in second-quarter home prices:

  • USA Today: “Growth in home prices show(s) sharp slowdown in 2Q”
  • Boston Globe: “Home prices show huge slowdown”
  • New York Times: “Home Prices Fall in Nearly One-Fourth of Metropolitan Regions”
  • Associated Press: “Home prices show sharp slowdown”
  • The “US Home Prices Inch Ahead”
  • (The winner, Domestic Division, for most obvious unbridled and uncalled-for pessimism, which appears to have the fingerprints of former CNN and Wall Street Journal uber-liberal Al Hunt all over it) Bloomberg: “US Home-Price Gains Slow as Housing Slump Deepens”
  • (The International winner for hare-brained hysteria) Toronto Globe and Mail: “The housing collapse heard round the world”
  • Newsday (using Bloomberg content): “Home price growth takes dive”

Enough already.

Here is context missing from the reporting. The table below shows quarterly, annualized quarterly, and previous four-quarter home price increases during the 1990s, before 2000′s bubble economy and the post-September 11, 2001 interest-rate declines sparked a few years of strong home-price growth followed by a two-year-plus price boom:


This information is included at pages 3 and 4 of the OFHEO report issued Tuesday. Any reporter wishing to cover the story professionally should have at least looked at this information.

A trained reporter should see at least these important points of historical context when reviewing it:

  1. The “in a slump” 1.17% increase in the second quarter of 2006 is over 60% greater than the 0.73% quarterly average during the entire decade of the 1990s!
  2. That 2nd quarter 2006 increase, if annualized to 4.68%, would be greater than the actual increase in home prices in every calendar year from 1990 to 1997.
  3. The decade of the 1990s had six quarters where national home price growth was actually negative, and NO four-quarter period where housing prices increased by more than 5.5%.

How many times was the national housing situation described as a “slump,” “taking a dive,” or in a “huge slowdown” during the 1990s (after the effects of the Fall 1990-Winter 1991 recession were shaken off)? Answer: Almost never, and perhaps never at all.

Oh, and since someone will surely ask — The average quarterly home-price apprecation during the eight Clinton budget years (October 1, 1993 through September 30, 2001) was 1.14%.

Cross-posted at

Imagine That: Illegal Immigrants Have Been Flooding Colorado’s DMW with Fake Documents

Filed under: Consumer Outrage,Immigration,Taxes & Government — Tom @ 8:09 am

Now they’re getting detected (HT Interested-Participant), but unfortunately they’re not being rounded up and deported:

In the past month, about 2,100 applicants at DMV were told their documents needed further investigation. Of those, 177 met with investigators and were cleared as legal residents of Colorado. But more than 1,700 cases are pending.

Cooke believes DMV will never see those applicants again because they know their documents are phony.

“We’re asking them to go to our investigative unit so we can look into the matter, and we’re not hearing back from them,” Cooke said.

The 1,700-plus names have been sent to U.S. Immigration and Customs Enforcement officials, she said.

Who thinks ICE is going to apprehend even a small fraction of the 1,700?

See, Ohio, It Can Be Done

Filed under: Economy,Taxes & Government — Tom @ 8:04 am

Virginia repeals its death tax (link requires subscription):

Soon it will be safe to be caught dead in Virginia. Last week Democratic Governor Tim Kaine and the Republican-controlled legislature struck a deal to abolish the state’s estate tax, effective July 1 next year.

Only a few years ago nearly every state taxed estates at death, in part because a federal tax credit allowed states to keep part of the revenue that would otherwise go to Uncle Sam. Last year the federal tax credit was abolished and in two dozen states the death tax died along with it. But not at first in Virginia, which had decided way back in 1978 that it would go on collecting its death tax even without the benefit of a federal tax credit. Not any more.

I Agree with Mike Adams; This University President Should Resign

Filed under: Taxes & Government — Tom @ 7:59 am

After reading Adams’ column, you’ll agree. A state board of regents with any kind of backbone would force the issue

A Question to Consider Before Getting Too Smug about the Newspaper Circulation Scandals

Filed under: Business Moves,Consumer Outrage,Corporate Outrage,Scams — Tom @ 7:54 am

From Techdirt: “Will Online Traffic Scandal Make Newspaper Circulation Scandal Look Like Child’s Play?” I think it has the potential.

Home Loan Discrimination: Prove It, Don’t Just Shout It

Filed under: Economy — Tom @ 7:49 am

From AP:

Study Cites Disparities in Refinancing
Wednesday September 6, 6:20 PM EDT

WASHINGTON (AP) — Black and Hispanic homeowners were more likely to receive refinancing loans aimed at borrowers with low credit ratings than were whites, according to a nationwide study released Wednesday by the Consumer Federation of America.

In a survey of nearly 5 million refinanced mortgages made by 30 lenders nationwide, the consumer advocacy group found that about half of black mortgage seekers and one third of Hispanics got subprime loans with higher interest rates, compared to less than a quarter of white borrowers.

“Some of the differences in lending we saw are undoubtedly due to risk-based pricing, but the variation is too great to be explained by risk factors alone,” said Patrick Woodhall, senior researcher with Consumer Federation of America.

Translation: “I can’t prove anything, but I’ll complain about it anyway.”

That doesn’t fly around here, Ms. Woodhall. Get the data and come back when you have something real.

Positivity: Why Boston Red Sox Manager Terry Francona Is Still Alive

Filed under: Positivity — Tom @ 5:59 am

Francona appeared last week at the company whose device saved his life to promote participation in an upcoming Heart Walk:

Francona shows his heart’s in right place
Saturday, September 2, 2006

If it weren’t for a medical device made by Boston Scientific, Terry Francona might not have lived long enough to manage the Boston Red Sox to a World Series championship.Francona, who spoke to employees at Boston Scientific in Natick yesterday, said he spent seven weeks in intensive care in 2002 after suffering a pulmonary embolism, a sudden blockage in a lung artery caused by a blood clot.

Three days after leaving the hospital he suffered another blood clot and survived only because of a filter that had been implanted into his body during his first hospital stay. Francona said he didn’t even know what the device was until he was told it saved his life.

“When I got to the emergency room the doctor told me I would have been dead instantly if not for the filter,” Francona told Boston Scientific employees. “It saved my life and I will never forget it.”

Francona’s pulmonary embolisms were complications of deep-vein thrombosis. A Greenfield Vena Cava Filter made by Boston Scientific was implanted into his inferior vena cava, a large vein that carries blood from the lower part of the body to the heart.

The filter captures blood clots before they reach the lungs.