Real Estate Prices Going Down

Econo-Girl employed the surest methodolgy for testing the local real estate market. She walked around Washington neighborhoods looking at houses that were for sale.

Good news, little dumplings! House and condo prices are starting to fall. Noticably fall.

Granted, we are talking the Washington, DC market and not necessarily all real estate in the land. But it is beginning to happen. A nice, two bedroom house has been on the market for over a week when it is going for $289,000. In DC terms, that's a steal.

Don't buy a condo or house in the next six months. You heard it here first.



Econo-Girl's eagle eye is out for any discrepancies between thought and deed.  She has alighted on benighted Bernanake, soon to be Fed chief.
Didn't Bernanke say that he wasn't going to be making extraneous comments about the economy at large, and restrict himself to the topic of interest rates?  Already he is commenting that there is NO REAL ESTATE BUBBLE. 
He is wrong.  Econo-Girl has gone on at length about this topic before, but let her sum it up for you.  The median income cannot buy the median-priced house.  The rental income from properties as part of a P/E ratio shows that real estate assets are overpriced.  Alan Greenspan says that the market is frothy in places, and he called the last bubble.  Houses are not investments, they are a place to live (unless you rent out a part of your house).
The important part is BERNANKE IS COMMENTING on things other than THE INTEREST RATE!  He isn't even in the new job and he can't resist chatting away about his opinion. 
And about his opinion, at least GREENSPAN WAS HONEST.  Bernanke is gilding the lily to prevent a storm on the real estate market.  Asset glut, indeed.


Failures of the Marketplace

Econo-Girl was discussing the issue of flu vaccines related to a previous post. The 'shortage' of flu vaccines is another example of the failures of a purely market-driven system of resource distribution. There was not economic incentive to produce enough vaccine for everyone. So enough was not created. That's what you call efficient?

Econo-Girl said it once, and will say it again:

Sometimes the Invisible Hand of the marketplace needs a slap from a ruler.


The Canary in the Gold Mine

Econo-Girl is willing to concede that occaisionally CNN Money has a good article. Click on the title to this post to see what a seasoned professional is doing with his US real estate: selling it.

Flu Vaccine Supply

Well my little dumplings, there is something new to be hysterical about, other than terrorism and the ineptitude of our own government during natural disasters. 
Who else remembers the President telling the American public to keep an eye out for terrorists, that there were big terror plans afoot and he trusted the American public to report any suspicions to avert an attack?  This is the same crowd that keeps Las Vegas a big money-maker.  (Yes, Econo-Girl hates Vegas and gambling).
But now we have something new to distract us from the looting of our national Treasury.  It is bird flu hysteria.  The latest fear orgy is dependent on the short supply of bird flu vaccine.
The BBC Newshour radio program had a segment about the prioritization of flu shots.  There is a couple there who claim that 70 years on Earth is a good, long time and the elderly should not be at the top of the list for getting flu vaccines.  Children should be.  Their evidence is that last flu pandemic after World War I, most of the fatalities were children, not the elderly.  So their argument is that children should get the vaccine first. 
A lot can be said about a civilization by examining how their resources are allocated.  Older people are valued more than in 1915.  But are children valued less?  Should older Americans be asked to volunteer their flu vaccine to a waiting child?  I bet a lot of them would do it.  Econo-Girl, the font of wisdom on most fronts, has no ready answer to this issue.  But it is one that should at least be discussed.


Consumer Sentiment Dips!

See this link:
How is it that the very people paid good money to watch the economy are SURPRISED that consumer sentiment is lower?  Don't they get their own gas and groceries?  Econo-Girl almost fell over dead at the cost of a few groceries Sunday night.  How can a family with children be making ends meet?  It's going to be a tough winter.
On a related note, Econo-Girl acquired a wood pellet stove a few years ago and it is her prized possession.  No one in DC or the surrounding suburbs even heard of a pellet stove.  And now, because her house was built in 1908, Econo-Girl has a coal-burning fireplace in the dining room she is going to outfit.
You can go on the Internet and get exact cast iron replicas of old fireplace inserts that also burn wood and wood pellets.
The purpose is to hedge our bets against the fall of civilization, or at least the loss of electricity for a week.  And it is so cozy!

Bernanke and Asset Bubbles

Everyone is lauding the appointment of Bernanke as America's First Banker.  Great.  Econo-Girl is happy for you, dude.
Part of the joy is market uncomfortability at Greenspan's murmurs about overpriced assets.  The first time he did this, all the talking heads spit and sputtered about an old outdated man who wasn't hip to the new economy.  Of course Greenspan was correct in the end.  How many annoyingly uninformed people wish they had listened to him now?
But at the time, it was the equivalent of mentioning that the Emperor had no clothes.  You would have thought that Greenspan poked them with hot pig iron.
Again, quite recently, Greenspan issued a warning about 'froth' in some parts of the housing market.  Again, all the people making money quickly protested, although this time they were nicer. 
The hopes of Wall Street are that the new guy will stop interfering with prescient remarks.  Stop stating the obvious, you Fed Chief, you!  Don't point out the way of common sense.  Don't refute the lies we tell to make money.
Econo-Girl is reminded when she got her last mortgage.  The mortgage broker said, "Take an interest-only mortgage.  The rates won't get that high." "How is that?" asked intrepid little Econo-Girl.  "Because THEY won't let it happen," was the reply.  "Who's THEY?" Econo-Girl asked.  Of course the poor man had no idea.  He went to a meeting at his company and some egghead getting a percentage said so.  THEY.  Who's THEY?
So the markets are hoping the U.S. is getting a less commentative Fed Chief.  That is impossible. Since the markets do NOT ACT RATIONALLY, but instead heave and ho like an orangutan looking for his Ritalin, and over-react to anything, it is necessary for any Fed Chief to fill in the blanks on what is motivating them.  And if a few sage words will work to highlight an oncoming train, then Greenspan, and now Bernanke, will indeed say something to the markets.
Even if it is afield of the topic of money supply and short term interest rates.


The New Guy

So there's going to be a new guy in town. The new Fed chief is rumored to be Bernake. What difference does that make?

Econo-Girl thinks that temperment plays a small part in the doings of the Fed. Even if you thought the last guy was a little off the mark, radical change would result in market panic. So if there are shifts, they will be slow in coming and, well, incremental.

You could be the Psychic of the Markets and All Things Financial, and if you made sudden and striking moves, the results would be counterproductive. Remember, we are dealing with a bunch of neurotic cokeheads here. They don't think rationally.

Expectations play a larger role and that is essentially what the Fed has to manage as well as the money supply.


Why I Hate Ayn Rand

For the same reason I hate Karl Marx.  Both are theoretical and have no grasp of human nature.  Econo-Girl is suffering through an Ayn Rand book right now because it's good for her.  And of course, one has to read it before dismissing it.
First of all, how can you trust someone who can't spell the simplest name in the English language?  Especially if it's her own name.
The book describes a person who is an individual in a totalitarian state.  Econo-Girl snorts with disgust because the author has no grasp of the underbelly of human nature, and therefore, human economies. 
Is she so naive that there is no room for a contraband economy?  Where is the very human dichotomy between what we say and what we do?  And the resulting opportunity to make money off of it?  And of course, the existence of an underground economy, resting on the reality of human nature, undermines totalitarianism.
Therefore it is Econo-Girl's conclusion that a totalitarian state is not possible in governing human beings.  Ants, maybe, but not people.
Don't you feel better now?


Economics of Poop

Yes darlings, there is an economy for human waste.  You learn these things working for the EPA, where Econo-Girl just started a few weeks ago.  There is a process whereby human waste is heated and then microbes added, and then is used for fertilizer.  Yum.  Love those vegetables.
And there is a way to take standard trash, put pressure on it and heat it, and then electricity is produced.  Isn't this wild?
Neither are cost-effective.  But with a little research ...  Econo-Girl feels that with a mere billion dollar investment the US could insulate itself from crazies elsewhere.  Cancel a few weapons programs.  Give Econo-Girl a copy of the US budget, and she'll make the cut.
When still a little one, Econo-Girl went through the gas crisis with the rest of the nation.  The real price of gas is not nearly as high as it was in the Seventies.  OK, OK, you suffered worse, you Baby Boomers.  Stop bitching already.  Nothing you go through is going to make you The Greatest Generation.  It still hurts, doesn't it? 
Then Jimmy Carter told the nation to conserve and that the government will investigate alternative fuels.  And did he get punished for that one.  If Reagan had continued this work we would not be in a pickle today.  Wonder how that cucumber was fertilized?

"Why Us?"

That was the plaintive cry from the Governor of Florida, Jeb Bush.  Hmmm.  I don't know, Jeb my boy, but maybe it is because you threw the election to your brother.  Think God might be mad?
Leisure Lad and myself have a good friend in the path of the next big storm.  I called him and asked that he come up north a week earlier than planned to avoid the storm.  He refused, claiming the need to 'batten down the hatches.'  Once again, Econo-Girl's nagging is less than fruitful.
That got her to thinking.  If people in the path of a major storm were to leave every time one was heading for them, would they be leaving their homes all the time?  Is that what explains the residents' stubborness?


CNN Money is Wrong Again

CNN Money, in the above link, is speculating whether it is the US consumer that will be paying higher prices, or Corporate America who will accept lower profit margins.

What do you think?

My little dumplings will remember the blood feud Econo-Girl has going on with CNN Money. Their business coverage is one dimensional and conventional, all at the same time. Of course, CNN Money committed to nothing, with an analysis of "it could be this, it could be that, and we don't know."

Nor will they hazard a guess it seems.

Econo-Girl is happy to step into the void. Prices will rise on core necessities, increasing the Consumer Price Index and the Producer Price Index. Prices on non-core items will rise slightly but quality compromises will be made to reduce the costs of production/getting it to market.

Bank Names

A name, a name, what is in a name? A rose by any other name would smell as sweet.

This cheap paraphrase is the best expression yet of what Econo-Girl is suffering from these days: banks with undignified names.

"PNC"?!? Sure, good old Riggs was caught laundering money, and that certainly can be seen as hurting the brand, but "PNC"? Not to mention the goofballs behind the microphone in those commercials. The commercials have the self-confessional air of a speaker at an AA meeting, complete with angst and arm-waiving.

My regular little dumplings might be tempted to think that with my husband cracking up the car a second time in six months, that would be the forefront of my current concerns. No, all that means is he needs a beat up old truck.

Instead, Econo-Girl's mind reaches more broadly to society at large. And what is the meaning of these weird, disconnected bank names? Wachovia is another one. Dumb name. It reminds Econo-Girl of the commercial "With a name like Smuckers, it has to be good." Does it really? We're not talking a breakfast treat. We're talking MONEY.

There is a grand old RIGGS building near Econo-girl and they actually SAND-BLASTED the RIGGS name off and hung a plastic PNC sign. This is a classic old building. Ah well, maybe Econo-Girl is an old fogey before her time.


Econo-Girl Has the Blues

Leisure Lad wrecked the car again. The last time was six months ago. This time he is paying for it out of pocket because I can't get this many wrecks on my insurance record.

The good news is that Econo-Girl restrained herself from a spending spree and doesn't have to use a credit card at all. Still, it's a hassle.

And try and find a good garage.

I just started a new job and Friday my car was booted and now it is wrecked. Not a very good impression, I'm afraid.


No Living Room?

Econo-Girl reads with curiousity an article in the Washington Post that says Gen X home buyers don't want living or dining rooms in their houses.


So they all eat in their kitchen for Sunday dinner? Or maybe on trays in the Great Room? I'm having a hard time picturing it. Leisure Lad and myself got tv trays as wedding gifts. Sure, they're great, but what's wrong with a living room?

Econo-Girl likes winters chiefly because she can sit in front of her wood pellet stove and read and meditate. Such a peaceful feeling. I also gossip with friends there when Leisure Lad is having one of his classic t.v. marathons. Our living room is one of those small Victorian things but it is cozy.

Econo-Girl likes eating in a dining room, too, which makes her kind of a dinosaur these days. Isn't it nice to sit there with a nice table set, with a friend or two there, and all these home-made dishes for people to eat? Econo-Girl will confess that she also enjoys eating from matching dishes and serving plates, even if the negates your respect for her.

So we will see how this 'trend' shakes down. Will it survive a coming 'real estate slow-down'? What does it say about the current U.S. family? Probably that meal times are no longer the focal point of family activity anymore. Television is.


To Hybrid or Not To Hybrid ...

Econo-Girl reads with amusement the articles claiming that hybrid cars are not worth the extra price. Gas prices aren't high enough to justify the added cost of getting a hybrid.

Hybrids are a political statement. A hybrid car says "Let's be self-sufficient as a nation." It is a cool new technology, like electricity in the 19th Century. Like the advent of Scratch-N-Sniff in the Seventies. Like heat-sensitive paper in the Seventies (mood rings).

Hybrid cars also make the buyer feel as if he were getting over on the system. And you would not have to worry about running out of gas in traffic. Gas prices would take less of a bite out of the monthly expenses, too.

OK, OK, and maybe the buyer would feel just a little bit superior, a little bit more in the know. But isn't that a large part of what sells cars?


Inflation and Jobs and the Interest Rate

The post-Katrina job figures are out now and the 35,000 job loss isn't nearly as bad as was predicted. What has that to do with inflation?

If the economy grows faster than there are resources available, like we need 5,000 new workers to fill factory orders but only 4,000 are available, then there is competition for the resource of labor. So companies offer more money to workers to make their goods, and the Cost of Goods Sold increases, and then the price of the good sold is greater.

A lot of shortages in resources means that prices will be going up overall in the economy. That is called inflation. Traditionally, the Fed has tried to keep a lid on inflation by raising interest rates. The reasoning is that if it is more expensive to borrow money, then less people will be demanding a resource and with less demand, there will not be price competition.

The disaster of the '70's threw all of this logic in the toilet, however. A couple of reasons have been offered for this: huge influx of women in the workplace which effectively increased the number of workers in the US by a LOT in a short period of time, and the shock of rapidly increasing oil prices which affect many products and not just running our cars.

So where are we going now? Are we going to have high unemployment along with inflation? We definitely will have higher interest rates from the Fed since Greenspan is keeping a gimlet eye on employment numbers. The latest numbers show there is a lot more people working than was expected. So the resource of labor is in shorter supply than the eggheads thought. You and I might think of more people working as a good thing, but Wall Street sees ever higher interest rates and gets depressed.


Ha! So now they get it!

Click on the title to this installment, and you will see that Secretary Snow finally got it. China didn't do much with its currency revaluation. Again, why would they? What's in it for them? The US consumer is going hog wild spending on cheap goods made in China. So why would the Chinese government want to make their goods less attractive by increasing the cost?

They wouldn't. Surprise!



Econo-Girl is trying to talk herself into capital purchases because the price of everything is about to rise. Shouldn't she get it now when it is cheaper?

The thing is, she really doesn't need anything. We have two t.v.'s, more than enough. Our bedroom has an old boombox where the volume and the station are stuck. That's fine, since all we listen to is NPR on volume = 20 to wake us up in the morning.

How about a new car? Well, the current Mercedes joined our household a year ago. It is a 1998 C230 and is a damn fine car. So scratch that one.

Econo-Girl has tenants in her basement apartment and would like some kind of music in the living room for privacy. And it would add a bit of class when we are laying around reading, which what we do with most of our free time.

We got an icemaker that doesn't work. Or maybe it does but we just haven't figured out how to get it going yet.

The front and backyards are finished, no small task. When we moved in, the backyard was all broken glass, old trash and broken cement. Now there is a deck and a garden and a little brick patio. There is even an upper level to the deck so the dogs can see who they are barking at.

We have two computers and one has high-speed internet access.

We have two cats. One of them catches mice like a demon but has issues about being held. Like she'll bite you hard if you try it. But if you sit still she will climb on you and purr like a lawnmower. Which leads you to thinking that, maybe, this time she'll consent to being held. And then, CHOMP.

The other cat does nothing at all but let you pick him up and purr. He is Johnny. Johnny also hangs around with our three dogs in a very dog-like manner.

We have three dogs. Merlin is the alpha male and the erstwhile boss. He is too stupid to realize that the pit bull/german shepard mix is actually always getting her way even though he is the loudest. Amber is the pit bull we got for nine dollars from drug dealers. She is smart and very protective. Econo-Girl had to have an unpleasant conversation with the downstairs tenants recently and Amber was the only one to see that tension. She guarded the door to the downstairs apartment for two hours after the tenant went downstairs. Molly is the puppy we just got. She is very low key and won't budge for most things that get the other two excited. Odd for a puppy.

So what do we need? Econo-Girl has already confessed to her interior stained-glass mahogany door, a sin long passed.

We have what we need. Except a baby. Next year we are going to adopt. Leisure Lad wants a Russian child. Econo-girl doesn't because of all the bad things she has heard about those Russian kids coming over from their orpanages. We'll see.

The Presiden'ts Working Harem

President Bush has a 'work wife' in the shape of our latest Supreme Court nominee. She is singularly devoted to the President, whom she refers to as the "most brilliant man I ever met." Talk about being blinded by love. She's even worse than Hillary, who at least had the sense to throw a lamp at Bill once in a while.

But let's stand back for a moment. Doesn't the President have a harem of working wives? This one seems to have absolutely NO LIFE outside of working for the President. And there's the Secretary of State, Condolezza Rice, also an unmarried woman dedicated to the President.

Who are the others? Who's that image-making Ambassador of goodwill at the State Department? Karen Hughes? Wasn't she only recently married and then decided to go to Texas again? Of course, now she is back and getting an earful from audiences overseas.

I wonder how the First Lady feels about all of this? Not too bad, I imagine, since the President doesn't spend much time working.

New Supreme Court Justice

Slate.com had an interesting reflection on our current Supreme Court nominee's passion for punctuation:

Finally, how can Ms. Miers reconcile her alleged dedication to established rules of grammar with her decade-long dedication to one of the worst grammatical evildoers in American history?


Blood for Oil

Latvia is complaining that Russia is doubling its oil prices to the tiny nation as a political pressure tool. They probably are. It's why anybody cares at all what happens in the Middle East. So they're killing each other? So what?

How many local conflicts has the world ignored because there was no economic relavance to the place?

That's why Econo-Girl thinks our number one national priority should be alternative fuel research and setting up the infrastructure for working at home. So if someone decides to pressure the US by turning off our oil supply, we can weather it.

Then the idiots can kill themselves until none are left. It will no longer be our problem.