Saturday, January 2, 2016

IW in 2015

Housing, housing, housing.  I'm not even going to compile the list of posts.  Just go to the monthly archive on the right margin and work your way back.  At the rate it's going, I might have another 100 posts in the series by the end of 2016.  If I had more time to compile data, I probably would already have another 50.

Of the housing posts, the most popular were:
Part 77: Housing is defining politics and the repercussions are dreadful
Part 8 - The crisis didn't happen the way you think it happened
Dr. Shiller, heal thyself
Part 88 - Supply, Demand, and Economic Migration
Part 1 - I was wrong. The mortgage deduction is just the tip of the iceberg.
Back then, this was mostly just an idle curiosity about taxes and home values.  I have, unfortunately had to leave some of the early questions unanswered as I discovered new avenues for research that have been more salient. Part 2 isn't nearly as popular.  I suspect a lot of people have read some of the later stuff, decided they should go back and start from the beginning, and after part 1, thought, "Shit, this is boring." 
Part 51 - Housing and Strong Form IMH
Part 85 - Housing Prices were sustainable because of migration
Part 76 - There are two Americas.
Part 65 - Reasoning from a Daisy Chain
Part 78 - The Intractability of economic stagnation with a supply constraint
Part 33 - Higher Home Prices can lead to Larger Homes

Other financial/economic posts that were popular included:
We Are the 100% (August)
We are the 100%... (February)
The huge potential value of NGDP Level Targeting, a CAPM and Risk Trading perspective

Other Nonsense:
Keystone pipeline: politics is not about policy

Some conceptual posts that I like, but didn't get as many clicks as the posts above:
A brief rant on monetary policy
Just a minute, honey. Someone on the internet is wrong.
The Problem with Corporate Social Responsibility
Institutions, individuals, and American Politics (aka: Progressivism becomes Conservatism)
Our discomfort with reward from risk leads us astray
If loving finance is wrong...
My National Review article, with Scott Sumner
Higher Asset Prices are not a Wall Street giveaway
Wages, profit, overtime pay, and "rights"
The residual claimant is equity (cyclically) and labor (secularly) and Residual Claimants, Pt. 2
The Minimum Wage, Sunk Costs, Returns, and Capital
Freedom of Entry is Huge
Random thoughts about capital income
Some Perspective on Housing Starts and More perspective on housing starts
Projecting Instability
Why are low interest rates such a mystery? and a Follow Up
Automatic Destabilizers
Real Economic Growth is What Moves Equity Prices
Hindsight is 20/200


  1. Kevin, I agree with you that the CRA was not the cause of the housing bubble. But there was a housing bubble. I know, I watched inventory during that time in bubble areas. I wrote on your number 77 article: So, Kevin, look at the chart. It doesn't lie. Private pools were responsible for the housing bubble and easy money originations. If economists teach that is not the case, then they are serving the purposes of the elite, not of the truth.

    1. Sorry, I posted it on article 8 not article 77. And I posted this: 64 percent to 69 percent was not a marginal change because it was centered in a few bubble states where it actually drove prices up. And securitization allowed the easy money. And securitization was permitted because the risk of MBSs was mispriced. BAC said the Fed does mispricing and I believe you have to include the housing bubble. And no, the CRA was not the main culprit. The private mortgage pools were the main culprit, and bogus AAA rated mortgages. That bubble was real, Kevin. Sorry, that history won't be rewritten. This most important chart proves the private sector goosed the real bubble until late 2007, when LIBOR went wild.

    2. I'm working on some homeownership data now, which I should be able to post about next week. From what I have seen, I don't think there is much relationship between the "bubble" and homeownership rates, between cities. It might even go the other direction.

      With regard to the other stuff, I know it's not really fair to say you have to read all 97 posts to comment, but I have addressed those issues, and I'm not going to take the time to dig through all the posts to find the responses to the other things. If you are interested, you can work your way backwards through them. My argument is what it is. Just reasserting the things that this whole project has been a response to doesn't really do much. It's ok if we don't agree. I'm just putting a story out there.

      I don't need to be reminded that there were a lot of private mortgage pools. If you don't find my counter-narrative convincing, we will both live to see another day. We don't need to compare notes until someone says uncle.

    3. Kevin, Sumner is dangerous. If you think like he does... Sumner said that he was all for 120 dollar oil. I think it had dropped to 90 at the time. I think he is dangerous. What do you think? I will tell you what I told him, I don't care if you agree with me, I just want to understand your dark thinking that is masked behind equations. If you think assets should be inflated, and BAC says the inflation is helped by the mispricing of risk, then this seems like a really evil thing to wish for. Certainly, I agree that no one wants 10 dollar oil, but isn't there a reasonable middle?

  2. A terrific body of work.

    Your blog converted me to the "highest and best use" school of property development, aka free markets.

    But for everybody....

    1. Thanks Benjamin. It's been a pleasure having you along for the ride.