Wednesday, November 17, 2010

Time-lapse video on the spread of foreclosures in Colorado

Here's a time-lapse map I put together on foreclosures in Colorado. Primarily, I put it together to show the spread of foreclosures from Colorado's Front Range to mountain areas and Western Slope areas.

Video update on 3rd Q foreclosures in Colorado

In this video, I look at the latest trends in foreclosure events in Colorado.

Thursday, November 4, 2010

Latest video: Employment down 5.8% in Colorado, 11% in Grand Junction

In this video, I look at statewide employment and compare some trends in Grand Junction and Fort Collins. I also look at employment in construction and the service sector.

Wednesday, October 27, 2010

"Monopolist" Microsoft rapidly losing market share

Cross posted at Mises Economics Blog.

Microsoft is slowly dying as a consumer brand. As recently as five or six years ago, though, left liberals and other anti-business ideologues were still making comments about how Microsoft was a monopoly that was crushing competition in the market place.

The less sophisticated of these critiques centered on nothing more than the fact that Microsoft enjoyed huge market share ten years ago. The more sophisticated critiques noted that Microsoft had been successful at expanding market share through agreements with PC providers like Dell who pre-packaged their PCs with Microsoft software.

Anti-IP libertarians have made convincing arguments about patents, but the IP-loving competitors of Microsoft (and the Feds who make IP possible) hardly have a problem with IP.

None of this behavior around bundling products is remotely "monopolist" of course, since there were no real barriers to entry into the market beyond the fact that people really liked Microsoft's products and weren't interested in going out of their way to get other products. Linux and Apple's OS have always been available for purchase and use. People simply didn't like them as much.

We should mention, of course, that a lot of this anti-Microsoft hysteria came form the early Apple fanbois who saw (and still see) one's choice of computing products as some kind of moral issue. Thus, the Apple disciples never tired of portraying Microsoft as an evil corporation contrasted with the cute and cuddly people at Apple.

Other competitors of Microsoft resorted to monopolist talk also, and Sun Microsystems, which had been producing far less popular products for many years, sued Microsoft for "anti-competitive behavior."

Eventually, the federal judiciary sided with Microsoft's competitors, and federal judges who could not even turn a computer on, started making sweeping judgments about the software industry and computing and forced a variety of reforms in Microsoft's structure to make it less "monopolistic."

In spite of all of these efforts by competitors to use the power of the state to crush Microsoft, Microsoft continued for several years to dominate the computing market with both businesses and consumers.

Eventually, however, Microsoft ceased to be inventive and its browser, operating system and platforms either failed to impress, or were never adapted at all to deal with the new realities of modern computing.

The decline of Microsoft simply illustrates what many free market economists had predicted all along. Namely, that Microsoft, never having been a actual monopolist (monopoly only being possible within a framework of government privilege) would some day fade from view as other, more inventive organizations took over Microsoft's market share.

This happened to IBM, of course. IBM was once denounced as a monpolist, yet today, who could make such a claim without producing smirks in response?

Microsoft's retreat has little to do with the rent-seeking lawsuits levied against it by Sun and others, but has everything to do with the fact that Microsoft hasn't produced any interesting or inventive products in years.

With losing market share, Microsoft is no longer the bogeyman of the anti-monpolist crowd. Now it's Google that is supposedly forcing us all to bend the knee before its monopolist power.

(Better get the federal courts involved, or we'll all be living in Google-owned company towns within a decade!)

Unless they enjoy government privilege, (as was the case with Pan Am under the Civil Aeronautics Board, for example) these alleged "monpolists" come and go, and these reversals of fortune happen all the more quickly in the fast moving technology world.

The fact that Microsoft now struggles to even keep up with the rapidly-changing computing world illustrates just how unconvincing and short-sighted are the claims or monopoly that are usually little more than an expression of personal opinion and self-interest.

Thursday, October 21, 2010

Foreclosure-gate poised to do some major damage

The Market Oracle has a nice and detailed piece explaining the history of mortgage loan securitization and debt collection, and shows how the current crisis has the potential to inflict massive amounts of damage on the mortgage and banking industries.

Here's my favorite part:

Foreclosures can only be done by the note-holder, who has the legal standing to show up in court and ask the judge to foreclose and evict. In about half the states, they have to bring the ORIGINAL (not a photocopy or electronic version) document with "wet signature", so the judge can see the actual ink on paper. They have to prove the chain of title and that they own the note they intend to foreclose on.


Once the people going into foreclosure figure this out, they will stop paying and hire lawyers. Some will keep their homes for free.

Once the people who have been paying their mortgages figure out they might not need to pay, they will stop paying.

Once the lawyers figure this out, they are going to be busy for the next five years helping people sue the banks.

Once the shareholders of the bank stocks figure this out, they will sell the shares.

Once the pension funds figure this out, they will also sue the banks and return their now junk MBS.

Once real estate buyers figure this out, they will stop buying anything with the potential for a tainted chain of title. The foreclosures will stop selling (many already have).

Even the sheriff is figuring this out. What happens when the sheriff refuses to do the foreclosure?

The moral of this story is: If you're buying a house, don't cheap out on your title insurance.

Friday, October 1, 2010

How bad the jobs picture really is

Cross posted at Christian Science Monitor and the Mises Blog:

The people over at the Calculated Risk blog had a helpful post today that links to the BLS's primer on the differences between the "Establishment" employment data and the "Household" employment data.

Economist John Williams has often been referenced on these issues, and his site, is indeed helpful. However, if you want something straight from the BLS's mouth, the primer is very useful.

This will help you understand a bit more about the establishment survey's somewhat infamous "birth/death" model that assumes new businesses (and jobs) are created every time an existing business goes out of business. This sort of modeling, of course, makes employment look better than it is in the current environment.

Calculated Risk also credits a recent blog post by Nancy Folbre that looks at the futility of examining the unemployment rate as a measure of real-world job market health.

While one should always view government employment data with a critical eye, one need not debate the sampling models to see immediately that using the unemployment rate to discuss the job markets rather misses the point.

The unemployment rate is a function of both total employment and the labor force. Indeed, in a sense, it's just the delta between the total size of the labor force and the total number of jobs available.

But how big is the labor force? The labor force size depends on whether a person is actively looking for work or not. So, if a discouraged worker, or say, a recent college grad who hasn't even bothered to look for work given the economic conditions, reveals his or her lack of job seeking, that person will not be counted as a member of the labor force.

So, when we subtract all the older "retired" people who'd rather not be retired, the young people who are ecstatic with an unpaid internship or worse, and all the discouraged workers, we end up with a big decline in the labor force, and this is why labor force participation is at historic lows. As long as that's the case, that delta between labor force size and total employment will be smaller than if those people thought they could find actual full time employment, looked for work, and were counted as members of the labor force.

Folbre's point is that we should look to total employment for a real gut check on how the economy is doing, and not to unemployment. Taking Folbre's advice, we see that there aren't new jobs being created, and all the while high schools and colleges are graduating more and more people every December and every May, and as wages fall, spouses and non-wage earners in single-wage households may have to go out and look for work.

All of this in the face of extremely poor job creation.

Personal Income rises slightly in Colorado, remains in lowest quintile

I've put together this short analysis of personal income totals in Colorado. Income's been increasing, but at a slower pace in Colorado than in most states, and it's not likely that it's driven by jobs and wages.

Saturday, September 18, 2010

Book review: The Cult of the Presidency

My book review for The Cult of the Presidency, published in The Independent Review last year, is now online.

Friday, September 17, 2010

Rental houses popular in Denver

Here's my look at vacancies and rents in single-family rentals and similar properties in Denver

Thursday, September 16, 2010

A love letter from a reader

J.H. Huebert, a brilliant writer, libertarian, attorney and friend, wrote this column showing that Glenn Beck is not now and never has been a libertarian (even though some people refer to him as such for some unfathomable reason).

A fellow named Leon Haller wrote in calling Huebert a "leftist plant" and a "fool," which is fun in itself, but this part piqued my interest for obvious reasons:

"You are a free market egalitarian, Huebert, and I'm going to show up at any Mises Institute event in which I know you're going to be a speaker (at least someday, when I can arrange matters properly), and I'm going to expose for the world just what leftists you and [Mises Institute founder Llewellyn] Rockwell et al really are. I knew Murray Rothbard, and he would be disheartened and DISGUSTED at the "Modals" like you which turncoat Rockwell has allowed into the formerly paleolibertarian fold. Shame on you, Lew, for selling out, and building the careers of pathetic leftist nobodies like this Huebert, McMaken, Anthony Gregory, that Kramer freak, and similar jackasses."

Wuh oh. I plan to be at the Institute in March. Maybe 'ol Leon will be there to "expose" my crypto-leftism to the world too! Meanwhile, I guess the shade of the late, magnificent Murray Rothbard will weep at our treachery.

Wednesday, September 8, 2010

Week 2 of the Chart of the Week feature

This time, I discuss unemployment. I'm trying to make these a little livelier, but so far the comments I've received have been good.

Saturday, September 4, 2010

My favorite blog of the day: Marketing Japan

Today I stumbled across the Marketing Japan blog by Mike Rogers in Tokyo. I've corresponded with Mike a couple of times since we write for the same web site every now and then.

Being an expatriate who has fled these American shores, he's naturally one of the sanest people I know. If you're interested in learning about business from the Japanese, check out his blog.

Friday, August 27, 2010

The new "Chart of the Week" feature

I've begun putting together short videos on the economy that are two to three minutes long, and will be produced about once a week. Here's the first one. I should have another one posted by Monday:

Thursday, August 26, 2010

My prediction actually came true

It's a red letter day. One of my economic predictions actually came true. Note this snippet from the Denver Business Journal:

Foreclosure filings in Colorado's 12 largest counties fell 29.5 percent in July from a year earlier, although they were up slightly from June 2010, the Colorado Division of Housing reported Thursday.
Completed foreclosures in the state's urban areas, meanwhile, fell 15.4 percent in July from 2009 and were down 10.9 percent from June 2010.
The new figures appear to back up state experts' predictions earlier this year that Colorado foreclosure sales -- the last stage in the foreclosure process if a homeowner can't work out a deal with a lender -- would start to come down after months of year-over-year decline in foreclosure-filing rates.

Huzzah. My batting average is now about .100

Tuesday, June 29, 2010

Government owns 46 percent of foreclosed inventory

Cross posted at Mises Economics Blog

The latest data for the S&P/Case-Shiller Home Price Index were released today. The home price index for April is still down considerably from the July 2006 peak:

As of April 2010, average home prices across the United States are at similar levels to where they were in late summer/early autumn of 2003. From their peak in June/July of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. The peak-to-date figures through April 2010 are -30.5% and -30.0%, respectively.

To paraphrase Donald Rumsfeld from a different context, it is close to impossible now to deny that the housing markets are in for a long, hard slog. Well, the places that have hit bottom are in for a slog. Some places, such as Las Vegas, are still on their way down. Comparing year over year, Las Vegas home prices actually fell 8.5 percent. April of 2009 was a disastrous month for home prices, but Vegas is now below even that.

This all assumes an owner's perspective, of course. It's a nice buyers' market out there right now for some people.

This is April data, so it doesn't compare directly to the May data I commented on here a few days ago, but the data continues to drive home the fact that home prices simply aren't going to bounce back. Thanks to bad public policy and perennial but unwarranted bullishness about real estate, lenders assumed that prices were going to bounce back. Consequently, mortgage servicers and investors have been dragging their feet on approving short sales and the liquidation of foreclosed properties.

Nevertheless, the holders of REO properties (foreclosed properties returned to the bank) are going to have to do something with them sooner or later. And worse yet, almost half of those REOs are held by the government:

Based on Radar Logic’s analysis, the federal government’s REO inventory — including homes owned by Fannie Mae, Freddie Mac, HUD, and the Department of Veterans Affairs (VA) — has increased steadily for over 24 months and now accounts for approximately 46 percent of the nation’s total REO supply.

Looking at information from the GSEs and HUD, Radar Logic says the government currently owns 209,500 homes as a result of foreclosure, and the company estimates there could be an additional 9,560 homes held by the VA, for a total of 219,060 government-owned foreclosed homes.

This will create additional downward pressure on prices for the foreseeable future.

In a larger context, the protracted growth of non-performing loans will likely continue to have a deflationary effect as lender portfolios contract with the value of residential real estate.

Monday, June 28, 2010

Twilight of the Economists

by Ryan McMaken

Cross posted at LRC blog.

The economics profession is experiencing a crisis of legitimacy. Well, not the whole profession, just the mainstream neo-Keynesian part that comprises the majority of the professional economist corps. Austrian economics, on the other hand, is in a state of renaissance since the old Keynesian sloganeering obviously isn't working anymore.

So, in response, an economist who works for the Federal Reserve, Kartik Athreya whines that the economics bloggers are mean and are undermining the real economists with PhD's who sit around with their computer models and debate whether the government should tax everything at a rate of 40 percent or 50 percent.

In reality, this isn't a matter of PhD's, since many brilliant economists from Ludwig von Mises to Joseph Salerno have had PhD's or an equivalent degree. So what Athreya really means is that non-PhD'ed economists -who point out the Olympus-like heights to which the non-Austrians have reached in being wrong about almost everything- should just shut up.

The Screed Against The Bloggers should be recognized as its very own genre of non-fiction now. It is a genre first developed by professional journalists who couldn't stand the fact that they were being upstaged by more informative, balanced and interesting bloggers who were gaining readership at the expense of the "official" organs of public information. Now the economists have joined in the game, and it's just as unseemly.

It is also worth noting, that there is no true real distinction between an economist with a PhD and one without. The National Association of Business Economists is filled with professional economists who lack PhD's but who are paid, professional economists. Yes, the economists with PhD's perhaps make up the majority of the NABE rolls, but Athreya's claim that real economists have PhD's is an arbritary novelty invented by Athreya in an effort to perhaps make himself feel better about all those years spent writing for obscure scholarly journals that no one ever reads.

Tax Credit Pumps Up Latest Home-Buying Bubble

by Ryan McMaken
Cross posted at Mises Economics Blog

Existing home sales did not do as well as expected in May, while new home sales fared even worse.

Last week's new home sales data released by HUD and the Census Bureau revealed yet again the underlying weakness in the housing markets in the United States. New home sales, not to be confused with existing home sales, fell 32.7 percent from April to May. The negative month-over-month change was expected by many in the real estate industry, although most major media outlets called the drop "surprising." The drop surprised no one who was watching to see the response to the expiration of the home buyer tax credit in April.

So, while the April to May drop was expected, the year-over-year drop signaled a significant lack of demand for new housing. From May 2009 to May 2010, new home sales dropped 18.3 percent. This is especially noteworthy since May 2009 was near the bottom of the market following the financial panic of late 2008.

One would be tempted to think that there was no where to go but up when comparing real estate trends to the first half of 2009, but the 18 percent drop put an end to that hope.

Existing home sales fared better. According to data released last week by the National Association of Realtors, existing home sales were up 2.2 percent from April to May and increased 19.2 percent from May 2009 to May 2010. The year-over-year increase from the doldrums of May 2009 was correctly anticipated.

Now, the lackluster performance of home sales in the absence of the homebuyer tax credit has spurred talk of extending the tax credit yet again. Staff at Moody's admits that the proponents of the tax credit had miscalculated how the tax credit would stimulate home buying.

Some supporters had "expected the tax credit to pique buyer interest in a manner that would carry over for months following the credit's expiration." How exactly this was supposed to happen remains a mystery. Real estate agents who work daily with buyers knew that the tax credit was merely cannibalizing buyers from later in the year. In other words, people who were planning to buy in, say, August, moved up their plans to take advantage of the tax credit. There has been very little evidence that the tax credit created any significant number of buyers who hadn't otherwise been considering a home purchase.

Now, with many of the summer's buyers electing to purchase before the end of April instead, the summer is looking to be particularly grim for home purchasing.

The latest real estate bubble isn't much of an argument in favor of a tax credit with the sole purpose of increasing spending on residential real estate. All things being equal, tax credits are good because they mean more control can be exercised by the taxpayer over his or her wealth. However, a tax credit that exists only to convince people to spend more money faster is problematic.

The answer is not to end tax credits, but to make them far more broad. Why do renters not deserve tax credits? And why must one buy a house to get a tax credit? If the Keynesians in government want to really increase spending, shouldn't they just give everyone an $8,000 tax credit? Or they could cut tax rates.

Policymakers won't do this, however, because they fear that people would use such an open-ended tax credit or reduction to save money or pay off debt, which is totally unacceptable for the Paul Krugmans of the world.

Politics explains a lot in this case also since renters simply don't enjoy a powerful lobby as do the real estate agents, mortgage brokers and home builders. Thus, tax "breaks" are written to subsidize a single industry rather than provide relief for the taxpaying population overall.

Even if the tax credit were extended again, it would not produce any income growth or job growth any more than did the last extension of the credit. Without job creation and income growth, there will not be any sustainable increases in demand for home buying. Despite many claims to the contrary, demand for real estate will improve when the economy produces jobs and income growth, and not the other way around.

The need for actual job growth will especially be seen among younger home buyers, or lack thereof. One of the ways that the home buying bubble was sustained during the last decade was to make home purchasing available to younger and younger segments of the population. Job creation during the bubble allowed for wildly optimistic estimates of future job prospects and earning power for twenty-something who then looked to homebuying as the next logical step. Combined with incredibly low requirements for down payments and credit histories, 25-year-olds were buying up houses.

Today, with unemployment among twenty-somethings at 25 percent, and with income growth near zero, there is nowhere from where to draw new households looking to buy houses. The tax credit can be extended, but like so many of the "stimulus" efforts that have been used in the last two years, this one may have run out of steam.

Personal Income Rises With Government Spending

by Ryan McMaken

Cross posted at Mises Economics Blog.

Personal income information released this week by the Bureau of Economic Analysis shows total personal income increasing 0.4 percent, or $54 billion, from April to May 2010. Year over year, personal income is up 1.6 percent, or $191 billion. In spite of recent growth, total personal income is still down $24.4 billion, or 0.2 percent, from the peak reached during May of 2008.

In short, personal income has gone nowhere over the last two years as it plummeted $479 billion, or 3.9 percent, from May 2008's peak to March 2009's nadir. It has generally increased each month since.

Now that personal income has nearly recovered to where it was during the peak time, it is important to look at where the income has come from.

Job creation has been extremely weak since 2008. More than 7 million jobs have been lost, and as new high school and college grads have entered the work force, there simply haven't been enough jobs to provide for growth in the work force. Hence, unemployment hovers near 10 percent, and job creation in the private sector is essentially zero.

So, how is it that income growth has recovered? The answer lies in what is included in the income numbers. Total personal income statistics include wages earned, whether from public-sector or private-sector jobs, and will also include wages from government-funded stimulus jobs such as highway construction and other similar projects.

But more important for our analysis here is the fact that personal income totals also include "personal current transfer receipts" which include "benefits received by persons for which no current services are performed." Such benefits show up as personal income in the form of Medicare, food stamps, unemployment compensation, public assistance and a variety of other forms of income.

While personal income peaked in 2008, then crashed and slowly recovered, income in the form of transfer receipts have only increased. At the same time that personal income fell 0.2 percent from May 2008 to May 2010, personal current transfer receipts increased 12.2 percent. During those two years, as personal income saw a net decrease of 24.4 billion, transfer receipts increased 244.3 billion.

Indeed, a look at the last ten years shows that transfer receipts increased far more, both in absolute terms and in percentage increases, during the last two years than during any previous economic downturn dating back at least to 1959. (Although, there are almost certainly would have been very large increases in transfer receipts had they been measured during the New Deal.)

Today, the Dow rallied on news that personal income had grown faster than spending and that households were beginning to save more. This would be excellent news if this income had been produced by increases in wealth and income in the private sector, but unfortunately, increased personal income, while not totally due to public sector spending, has been largely buoyed by public sector spending, and has been a very significant portion of the growth in income that is now being trumpeted as proof that the recovery is taking hold.

However, as long as income growth is largely dependent on public-sector spending, growth is just a matter of income being redistributed from net tax payers to tax receivers, which is largely why personal income continues to improve in spite of only very small gains in private-sector employment. Ultimately, however, economic "growth" that is driven by mere transfer payments, cannot be growth founded any any true creation of wealth.

Friday, June 25, 2010

Wilma Zeimmer, RIP

My grandfather's sister, Wilma Zeimmer, recently died back in Indiana. Requiescat in pace.

Here is the funeral home's obituary:

Born: January 14, 1912
Died: May 23, 2010

J. WILMA ZEIMMER, 98, of Fort Wayne, passed away on Sunday, May 23, 2010, at Coventry Meadow Nursing Home. Born Jan. 14, 1912, in Fort Wayne, she was a daughter of the late Henry W. McMaken and Jessie (Freck). She was a homemaker and member of Arcola United Methodist Church. Surviving are three daughters, Mary Grepke and Norma (Terry) Closson, both of Fort Wayne, and Janice (Bob) Bell of Geneva; stepdaughter, Roxanna Baker of Tucson, Ariz.; stepson, Ronald Zeimmer of Ashville, N.C.; brother-in-law, Kenneth Becktol of Roanoke; 15 grandchildren; 30 great-grandchildren; and eight great-great-grandchildren. She was also preceded in death by her first husband, Joseph Carroll; second husband, George H. Zeimmer; daughter Lorraine Schorey; sons-in-law, Stan Fink, Harry Beatty and Tom Grepke; brother, Herbert McMaken; sister, Margaret Van Hoozen; and grandchildren, Joey Grepke, David Fink and Mick Blockson.

Wilma was actually the last of 6 brothers and sisters to die. Not mentioned here are her other siblings: Ruth, Henry and Edith. The siblings were all born between 1902 and 1914 and they grew up on a prosperous farm in Aboite Township, Indiana.

Wednesday, June 23, 2010

Free Sholom Rubashkin!

Bill Anderson has an excellent piece on this case today:

This week, Sholom Rubashkin, who was the vice-president of what was once the largest kosher meat processing supplier in the world, was sentenced to 27 years federal prison for "financial fraud." Prosecutors had asked for 25 years, and this is essentially a life sentence for Rubashkin, who is 51. However, a lot of other people, including a number of former U.S. attorneys general, called for leniency and are outraged by this sentence that was motivated more by politics and not by the law.

I will go against all of them. Sholom Rubashkin, in my view, does not need "leniency." He needs to be freed, period, for the man is not a criminal, which is more than I can say for the people who hounded and prosecuted him and destroyed his business, Glatt kosher Agriprocessors of Postville, Iowa. Let me begin.

Rubashkin is a Hasidic Jew, his family having fled the U.S.S.R. after the Nazi invasion. They came to the United States and set up a butcher shop in New York City. After marriage in 1989, he and his new bride moved to Atlanta on shlihut to do kiruv (Jewish outreach). That same year, Rubashkin’s father started a kosher meat processing business in Postville to better enable Jews living outside of main Jewish centers to be able to obtain kosher meat.

Before Glatt kosher Agriprocessors began to expand its business, Jewish families could only purchase kosher meat from small butchers and specialty stores that catered to Jews. This made things more difficult for Jewish families who did not leave near these kinds of stores, but by expanding the amount of kosher meat for sale, the firm was able to bring kosher meat to regular grocery stores, which was not a small development for jewish families.

Read more.

Tuesday, June 22, 2010

The market for news

Cross-posted at the Mises Economics Blog:

Historically, newspapers have made money in two ways. They make money from readers, and they make money from advertisers. Originally, most of the money that newspapers made came from readers. In the late 19th century and early 20th century the old newsboy sales model was based on incentives to move as many newspapers as possible at the highest possible price. Advertising was a source of revenue, to be sure, but not the primary source.

Over time, the emphasis would shift away from revenue provided by readers and toward advertiser revenue. Eventually, advertiser revenue would make up at least 70-80 percent of all revenue. Essentially, newspapers gave up on getting the readers to cover the full cost of the news a long time ago. The daily cost of a newspaper subscription is, more often than not, well below the cost of producing a paper copy of a newspaper. Until the last few years, the real money was to be made in advertiser dollars.

But with the significant decline in circulation (see here) advertisers know that they get less bang for their buck every month that circulation drops.

So, one day, after years of plummeting circulation and revenue, the newspapers suddenly realized they'd better get the readers to start paying for the news. Their most brilliant ideas revolved around erecting pay walls around content. In other words, the newspapers, to solve their revenue problem, returned to a revenue model that hadn't been used in decades. It hasn't been working out.

Mashable today carried a nice piece on some newspapers that are finally starting to look at innovative ways to make money. Primarily, they're finding ways new ways to make money off of advertisers.

The new innovation that some papers are showing results from the fact that some papers are finally starting to come to grips with reality. The new reality is that news can and will be produced without traditional newspapers.

For the last several years, the entire business model of the newspapers seemed to be "you'll miss us when we're gone, so give us money," which wasn't a rock-solid strategy to say the least.

But other organizations have already moved in to displace them. As the Mashable article notes, laid off journalists from closed and downsized papers have started to produce their own news. Here in Denver, at least one online newspaper aggregates news from a variety of blogs written by former newspaper writers and other bloggers. The blogs are sometimes funded by private firms, such as in the case of this real estate blog.

It has become clear that journalism will be funded, but that the new reality is far more decentralized, complex, and competitive.

The days are gone when one could ask "did you read the paper today" and everyone could discuss the same few news stories selected by even fewer news editors. Today, people can get the news they want, and different people are interested in different things. The market loves this kind of diversity and will move in to serve it in even more diverse ways.

The market is currently in transition, and transitions in the market produce winners and losers, but we're not sure yet who the big winners are in this. The losers are already pretty obvious. Capital needs to be moved to where it is demanded. That is to say, it will be moved away from physical printing presses and old-timey newspapers and toward new innovative leaders in delivering news. Some newspaper organizations will get learn to make money from this, and many will not.

Monday, June 21, 2010

Uh-oh, bigots don't like me

There's a web site called VDARE which many corporate web-surfing programs block for "racist content." They're a site that spins a variety of bizarre theories about the inferiority of non-Anglo Saxons and so on. Articles criticizing me for my moderately pro-immigration views have appeared more than once. On this site, a writer seems to (or at least did at one time) attribute to me the famous "Go back to Boston" tirade by Augustin Cebada of the Brown Berets. Comments that are a bit fiery for my tastes, and somewhat violent and in poor taste. And, I never wrote them. [Here is the original piece, although I don't want to link directly to such a site:]

This is simply an occupational hazard of writing a lot, I suppose, since sooner or later, someone would attribute something to me that I never wrote. In my original posting in which I quote (without endorsement) Cebada's views, I did point out the hypocrisy of those who claim to be so horrified by such a statement, while supporting similar sentiments in favor of Anglos. My piece is basically a historical analysis, which is why I compare modern sentiments to those of John C. Calhoun, although for some people, everything is a cause for histrionics. [Here's the archived link, since my old blog posts prior to 2007 have been deleted.]

Which brings me to why I ever brought this up. The "racialists" (as they call themselves) who support these hyper-nationalistic views have twice now hurled insults at me in the comments section of the Mises Economics blog. Personally, I find it rather bizarre that some people have so much free time as to sit around starting fights over articles that were published 4 years ago. But there's a lot of variety out there I suppose.

Friday, June 11, 2010

Flat is the new 'up'

With the next several years looking quite grim, it seems that just neutral economic news will be good news.

From the Aurora Sentinel today:

Higher earners far from immune on foreclosure

AURORA | Not a single economic class or neighborhood in Aurora is immune to foreclosures.

Although foreclosures are more saturated in low-income neighborhoods, they are also dispersed throughout middle- and high-income neighborhoods, according to 2009 data from Arapahoe County.

Until recently, foreclosures were most prevalent in lower-income neighborhoods, among homeowners who were living paycheck to paycheck, afflicted with job losses and unable to pay their mortgages.

But as high unemployment persists and the aftermath of the recession continues to ripple across the state, wealthier neighborhoods with higher-income homeowners are becoming vulnerable to foreclosures as well.

Although the Arapahoe County Assessor’s office doesn’t track the incomes of people who have been affected by foreclosures, they do track the prices of homes that have been foreclosed upon.

Judging by those statistics, it’s evident that the rate of foreclosures has jumped from 2009 to 2010 in all levels of home prices — and, presumably in all economic classes.

“Every category did increase,” said Corbin Sakdol, Arapahoe County Assessor. “However, the heavy foreclosures are still in the $250,000 and below range.”

Since January, there were about 1,300 foreclosed homes in Arapahoe County in the price range of $250,000 and below, up from about 1,000 from January to June of 2009, Sakdol said.

In the price range of $250,000 to $500,000, there have been about 160 foreclosed homes since January, up from about 110 foreclosures in the same period of 2009.

The trend continues all the way up to the homes in the price range of $1 million and above. In that range, there have been 16 foreclosed homes since January, up from 11 in the same period of 2009.

Aurora still has the highest number of foreclosures out of any area in Arapahoe County, Sakdol said.

But data from the state of Colorado’s Division of Housing show that foreclosures are trending away from Aurora and into counties such as Jefferson, Douglas and Boulder.

“The fact that foreclosures have become more numerous in places like Douglas and Jefferson indicates that foreclosures are moving up the income scale,” said Ryan McMaken, community relations director for the state of Colorado’s Division of Housing. “We’re seeing movement in foreclosures toward areas that have more expensive homes, whereas they used to be centered in Denver, Adams, Arapahoe, and especially in Aurora.”

Foreclosures are quick to impact those people without college degrees, who most likely haven’t built coffers of savings to sustain them through a lull of unemployment, he said. That explains why the number of foreclosures were originally most concentrated in places like Adams County and Arapahoe County.

But since late 2008, as homeowners in high-income neighborhoods have slowly run out of money because of unemployment, they are now in the same position as those lower-income homeowners.

“The length of time that unemployment has been high is now starting to affect people with higher incomes because they are running out of savings,” McMaken said. “But people toward the lower end of the income scale are most impacted by the recession.”

Recent data suggests that the rate of people going into foreclosure statewide, including in Aurora, has reached a plateau.

McMaken said last month’s figures show the lowest foreclosure filings for counties since May 2009.

“Flat is the new ‘up’ in terms of good economic news,” he said. “Flat is what you like to see. Rather than foreclosures going up, if they can just stay flat for a while then you’re happy about that, and that seems to be what we’re looking at right now.”

Friday, June 4, 2010

#2 of ten things to not Tweet about

I especially enjoyed this one:

Translation: I don't have any actual knowledge about any actual industries. I just like to communicate about communications.

From The Oatmeal

More economic pain ahead

From my post at

In the chart below, provided by, one can see how grim the job situation has become. The long term-trend experienced since 1961 has been abandoned for what can only be described as stagnation in job creation. As jobs remain flat, of course, the size of the job force will continue to grow as more young people graduate from college and secondary school. This is partly why unemployment among teens and twentysomethings is now about 25 percent.

According to
Today, the Labor Department reported that nonfarm payrolls increased by 431,000 in May. It is worth noting that a large majority of last month's gain in payrolls was due to the hiring of temporary workers for the 2010 census. Today's chart provides some perspective on the US job market. Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery, however, job growth was unable to get back up to its long-term trend (first time since 1961). More recently, nonfarm payrolls have pulled away from its 40-year trend (1961-2001) by a record percentage (bottom chart). In fact, the number of US jobs is currently at level first reached in early 2000.

So far, the current "recovery" has produced a net loss of 133,000 jobs. During the same point in the last recovery (2003), the economy was adding 200,000 to 300,000 jobs per month. Calling the current situation a recovery is risible to anyone who is out looking for a job right now, especially since workers are now experiencing the longest periods of joblessness experienced in decades.

We can add to this the fact that the debt crisis in Europe has now spread to Hungary. So now, Greece, Portugal, Ireland, Italy, Spain and Hungary are all now facing serious debt crises and even risk of default. The European economy is in disarray, and investors were not pleased as the Dow plunged more than 300 points to below 10,000.

The homebuyer tax credits are gone, the stimulus is beginning to wear off, and there is nothing left that the feds can do to stave off another crisis since interest rates are already effectively zero and the federal government is more more broke than ever. State and local governments are in even worse shape.

Needless to say, this does not bode well for the "recovery."

Tuesday, May 18, 2010

New economics haikus

Here are a couple of haikus by economists I know. I didn't credit them because I'm too lazy to ask them, and it's easier to just cut and paste. Note: If you want me to credit you, just shoot me an email.

Helicopters fueled
Bernanke begins his flight
Paper-rain cuts me


Too much bank credit
Plans cannot be completed
Recession follows

I'll post any good new ones...

Tuesday, March 30, 2010

Good analysis on GDP growth.

All those big growth numbers above 5 percent come from manufacturing to replace burned off inventory. There's little actual growth. Oh, and there's zero employment growth.

This piece is helpful except for this statement: "As this remains a jobless recovery, it must therefore become a consumer spending recovery." That doesn't follow at all. This attitude only results in consumers going more deeply into debt. Just because the American economy is currently driven by consumer spending doesn't mean that has to be true. The economy could just as easily be based on saving and investment rather than on purchasing shiny trinkets.

But, as long as the Fed continues to ram down interest rates, consumers will prefer spending to saving.

Wednesday, March 17, 2010

My talk in Aspen

I was recently on an economics panel at the Aspen Board of Realtors' Economic Summit. The Aspen Daily news did a write-up.

Foreclosure filings up dramatically
by Catherine Lutz, Aspen Daily News Staff Writer
Monday, March 15, 2010

Expert: Locals in resort areas getting hit hard

Foreclosure filings in Pitkin County are more than triple what they were in early March last year, mirroring a disturbing trend in which experts are seeing rural resort regions getting hit harder later in the economic downturn.

There have been 22 foreclosure filings so far in Pitkin County in 2010, compared to six at the same time last year, according to treasurer’s office records.

Delinquent amounts range from under $100,000 to $1.5 million, and there doesn’t seem to be any rhyme or reason to the types of foreclosures being filed, said Tiffany Wancura, chief deputy public trustee for Pitkin County.

“They’re all over the place,” said Wancura. “They just keep coming in.”

A scan of the foreclosures list shows that mostly individuals and couples are affected, as opposed to LLCs, which tend to own commercial properties and oftentimes more expensive, second homes.

Pitkin County saw a total of 105 foreclosure filings in 2009, out of which 20 properties went all the way through to the foreclosure sale. It was the third highest number of foreclosures since 1973. (Records are unavailable before that.) By comparison, 2008 saw 35 foreclosure filings and five completed foreclosures in Pitkin County.

An economist who works for the state government addressed the issue of rising foreclosures recently at the Aspen Board of Realtors’ real estate summit.

Some resort regions saw 40-60 percent foreclosure rates two years ago, said Ryan McMaken, director of community relations for the Colorado Division of Housing. That’s when vacation home owners, initially hit by the economist crisis, were choosing to jettison their timeshares or other investment properties as values plummeted by simply not paying the mortgage. Owner occupants, meanwhile, qualified for a federal foreclosure deferment program, which saved many people from foreclosure sales.

But now, “local owners are losing their jobs or otherwise seeing a decline in income, so over time locals are impacted more and more,” said McMaken, an economist.

In the rural resort regions of Colorado, McMaken said, both new foreclosure filings and completed foreclosures are going up, and in some places are doubling and tripling since last year.

“It’s because places like this got hit later,” he said. “And it adds to the pain lasting.”

Statewide, data is not yet available for 2010. But trends from 2009 show that while foreclosure filings increased — there were 18 percent more in 2009 than in 2008 — foreclosure sales decreased by 4 percent.

These trends indicate that “lenders, borrowers and housing counselors are meeting success in implementing a variety of loss mitigation strategies,” according to a report from the state Department of Local Affairs. “However, the increase in new foreclosure filings indicates that foreclosure activity will continue in Colorado at least through the first half of 2010.”

The DOLA report also notes that “most of the new growth in foreclosure activity is taking place outside of the Denver Metro area.”

Foreclosure filings have risen across Colorado nearly every year since 2003, according to state data, with a big spike in 2007. Filings rose to 39,900 that year, from 28,400 in 2006. They went down just slightly in 2008, to 39,300, but rose again, to 46,400, in 2009.

Foreclosure sales have been decreasing since 2007, when there was a high of 25,000 completed foreclosures.

Both foreclosure filings and sales are roughly triple what they were in 2003.

The largest amount of foreclosure activity last year was taking place on the Front Range, even though some metro counties are seeing the biggest drops in foreclosure sales totals.

Mesa County (home to Grand Junction), on the other hand, saw about 300 percent more foreclosure filings and sales in the fourth quarter of 2009, compared to the same period in 2008 — likely due to the decrease in oil and gas activity. Otherwise, foreclosure rates (number of homes per completed foreclosure) have generally been lower in the mountains and on the Western Slope, according to DOLA.

Pitkin County’s foreclosure rate in 2009 was .3 percent, which translates to 393 households per completed foreclosure, among the lowest in the state. Garfield County had 408 foreclosure filings in 2009, and 82 foreclosure sales. That’s compared to 108 filings and 10 sales in 2008. Still, its 2009 foreclosure rate was .4 percent, compared to the state average of 1.1 percent.

Locally, it’s unknown how many of the foreclosure filings will translate into sales at auction. The first scheduled foreclosure sale of the 2010 filings in Pitkin County is May 12.

Meanwhile, banks that have been acquiring more and more property due to foreclosures are doing everything they can to avoid future foreclosure sales.

If a foreclosure sale goes through, there are additional costs to the bank, including legal fees, property taxes and the time spent by staff, said Scott Gordon, president of Alpine Bank Aspen.

“The bills add up pretty quick,” said Gordon.

Gordon also pointed out that property values have been low recently, and while the bank may prefer to hold the property for a couple years in hopes of better recouping costs when the market goes up, federal regulators want them to sell it sooner rather than later.

“We’re not in the business of buying and selling real estate; that’s not apart of our core business model,” he said.

Gordon said that it’s to everyone’s advantage to try to negotiate avoiding a foreclosure sale.

“Strategically the best thing you can do is to find what the borrower and the bank can work out,” he said. “If you have some level of income coming in, the last thing you want to do is not have a conversation with your bank.”

Tuesday, March 9, 2010

CBS4 Promotions

The Foreclosure Hotline communications guru (Sarah Noel) and I helped put together a nice little partnership between the Colorado Association of Realtors and the Foreclosure Hotline that has led to a series of spots on CBS4 featuring foreclosure issues and homeownership. They can be viewed here.

Tuesday, March 2, 2010

February 2010 Housing Snapshot

Housing Snapshot is a very brief summary of the housing economy in Colorado. It's 4 pages of short articles and graphs covering mostly job growth and housing demand, and the housing markets in general.

Here's February's issue.

Monday, March 1, 2010

The latest Case-Shiller index data

In case you're looking for it, here's the link to the latest Case-Shiller home price index data.

Thursday, February 18, 2010

Why didn't reporters attend your press conference?

Because it was a waste of time.

I'm generally against press conferences and other made-up events that are supposed to create news out of nothing. Press conferences are rickety, wizened old antiques from the 20th century. It is all well explained by Daniel Boostin in his classic book The Image: A Guide to Pseudo-Events in America. Press conferences are non-events dressed up as events.

That may have worked ten or twenty years ago when reporters were looking for things to do, but in the modern era when no reporter has the time to travel to a press conference, listen to a bunch of self-congratulatory chit chat, and then drive back to the office, something else must be done.

Conference calls tailored to specific reporters work well. But only if there is actual news worth reporting. That latter part is the tough part. But even if it's only sort of news, if you get a 100-word brief out of it, you've done well since you didn't waste a bunch of time planning an enormously inefficient press conference.

Not all events are necessarily bad, though, if they serve a purpose other than simply restating what's in a press release. The Bianchi Biz Blog has a nice piece here on how to get reporters to those events that are actually worth attending.

Monday, February 1, 2010

Apartment vacancies fell in fourth quarter

Apartment vacancies fell in fourth quarter
February 01, 2010 11:50 AM

Local apartments filled up late last year at a pace not seen in eight years.

The vacancy rate for Colorado Springs-area apartments was 8.7 percent during the final three months of 2009, down from 10.4 percent in the fourth quarter of 2008 and the lowest for any fourth quarter since the rate was 8.9 percent in 2001, according to a report released today by the Colorado Division of Housing.

More troops at Fort Carson and a lack of new apartments being built in the area contributed to the falling vacancy rate, said Gordon Von Stroh, a University of Denver business professor and who authored the report.

Even though the demand for apartments is on the upswing, rents averaged $711.66 in the fourth quarter, which was about $1.60 less than the same period a year earlier.

Rents likely remained stable because of poor economic conditions, particularly shrinking payrolls and rising unemployment, said Housing Division spokesman Ryan McMaken. If the apartment vacancy rate continues to fall, however, expect rents to begin to rise significantly, he said.

The Housing Division's report is somewhat similar to a report by Apartment Insights, an online research company, which showed the apartment vacancy rate fell to 7.4 percent in the fourth quarter. While different in their numbers, both reports showed the apartment vacancy rate trending downward from the same period a year earlier.

Monday, January 25, 2010

Examiner article: Unemployment up

Unemployment rises in Colorado to 7.3 percent
January 22, 2:57 PM Denver Economy Examiner Ryan McMaken

Colorado's unemployment rate (not seasonally adjusted) increased six-tenths of one percentage point from 6.7 to 7.3 percent in December, according to new data released today by the Colorado Department of Labor and Employment. Nationally, the unemployment rate remained at 10 percent for the second month, according to the Department of Labor's Bureau of Labor Statistics (BLS). December's seasonally adjusted unemployment rate in Colorado was 7.5 percent.

Year over year, the December rate increased in Colorado from 6.0 to 7.3, and the national rate increased from 7.4 percent to 10.0 percent.

Thursday, January 21, 2010

Consumer prices down 0.2% in West, nationwide

Here's my latest piece as the Economy Examiner for

Consumer prices fell 0.2 percent in Western states, including Colorado, from November to December. Prices in the region have risen 2.2 percent since December 2008 according to the report released Friday by the Department of Labor's Bureau of Labor Statistics.

Nationwide, consumer prices in December increased 2.7 percent over December 2008 and fell 0.2 percent since November 2009. Numbers are not seasonally adjusted.


Generalizing regional data to Colorado can be problematic. The West, as defined by the BLS, includes a large number of states with economic conditions that differ from Colorado's. Nevada and California, for example, are both included in the region yet differ significantly from Colorado in employment figures and in real estate prices. States with high unemployment and depressed real estate and more likely to see falling overall prices than states with more moderate unemployment and with more stable real estate prices.

Read the full article.