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Transparency Liquidity

Felix Salmon is a very smart person who writes very well. Also he once invited me to an instant messenger debate that he posted on his high traffic blog. So I’d like to make only polite criticisms. However, I can’t write well so I will please translate the following to polite in your heads.

Salmon wrote “The CDS market is actually more transparent, with smaller bid-offer spreads”. That is, Salmon equates “the CDS market is actually more transparent”, and “CDSs are more liquid.” Liquid and transparent are not synonyms. Take the metaphors literally, and look at an old analog thermometer. You will find that mercury is liquid but not transparent and glass is transparent but not liquid.
Serious discussion after the jump.

In the sentence which I mock above, Salmon is criticizing an incorrect claim in a New York Times editorial. The claim is “A big part of the problem is that derivatives are traded as private one-on-one contracts. That means big profits for banks since clients can’t compare offerings.”
As noted by Salmon this is not true. It could be true, but, in fact, people know the current price of CDS on something*.

On another topic, Salmon wrote “But it doesn’t necessarily mean lower trading costs for the buy side: just ask anybody who tries to buy and sell bonds listed on the Luxembourg exchange.” I think it is clear who Salmon means by “anyone who tries to buy and sell bonds”. This would not be any firm that ever issued a bond nor does it mean any investor who ever bought a bond. He is thinking of people who try to profit from active trading strategies. “Anyone” means “any trader.” This is Salmon’s point of view. He talks to professional traders. Often he criticizes them, but he thinks about their problems and challenges.

Here, however, he is commenting on an editorial discussing public policy. Obviously Salmon doesn’t think the final aim of public policy is to make the world convenient for traders, but he assumes that making the world convenient for traders will lead to good economic outcomes. He definitely thinks that smart people trying to beat the market make the market work better.

This would make sense if one accepting a strong by semi strong form efficient markets hypothesis where prices are optimal given public information, private information can be obtained at a price, and prices are what they would be if informed traders had rational expectations. This is exactly the dominant assumption in the finance literature. It is also clearly nonsense. Salmon assumes that traders were rational.

dangerous risk-taking is actually a good thing, in financial markets. When people engage in risky behavior on Wall Street, they stand to lose a lot of money, but they know that they stand to lose a lot of money, and government doesn’t end up having to step in and bail them out. The big systemic problems happen when leveraged actors think that they’re not engaging in risky, speculative behavior

So Salmon asserts that dangerous risk taking is a good thing, because when people take risks, they know they are taking risks, except for the people who don’t know they are taking risks. Does Salmon assert that the claim “people always know when they are taking risks” is plainly obviously true or plainly obviously false ? He asserts both, with equal confidence and absence of evidence.

I think I can guess what he thinks. The traders with whom he talks are smart, so they don’t take risks without knowing it. The former CEOs of Lehman and AIG are dumb. The problem is that one can be very smart without having rational expectations.

In the same passage, he also notes a cause of big systemic problems and confidently asserts that it is the only cause of big systemic problems. One could as well argue that all market crashes involve the text “.com.”

To quote Salmon, “What a mess.”

It is very easy to see that outcomes are not what they would be if informed traders were rational. Basically cut out the theoretical middle man. Salmon assumes that high trading volume leads to efficient pricing. High trading volume is what he means by “liquidity” and, here, “transparency.” Trading volumes have changed enormously. High trading volume always comes with high price volatility. Price volatility is vastly greater than it should be (google “Shiller” and “excess volatility”) . It is plainly obvious that, in the real world, markets with a high volume of trade are less efficient (in the sense of the efficient markets hypothesis) than markets with a low volume of trade.

History shows that making markets convenient for traders, including really smart traders, reduces the usefulness of the signals markets send to the real economy. That’s why titans of finance who become treasury secretary like Tobin taxes(note the absence of the word *all* those titans are Nicholas Brady who publicly supported one and Robert Rubin who inquired as to how one could be implemented). It is possible that Rubin is clueless about finance, but that is not the way to bet.

Now Salmon writes many smart things in his post. To paraphrase Salmon “the problem is that it gets to the right destination by using the kind of rhetoric which makes it seem as though the only people who are unhappy about [demanding] proposed [politicall unmentionable] derivatives regulation are the people who don’t understand the derivatives market.”

*I note in this footnote that the problem is that there is a current price of a CDS written on something. There shouldn’t be. Given counterparty risk, there should only be a price of a CDS written by someone on something. Comparing prices and buying the cheapest CDS is a great way to guarantee that if the underlying sercuirty defaults so will the CDS writer. I take that seriously. Sure traders had plenty of data and low bid ask spreads. However, IIUC the data were collected under the totally false assumption that counter party risk was negligible. That’s insane. It is like assuming that a mortgage is a mortgage and it doesn’t matter if the debtor documented income or just claimed income. In each case, totally incorrect assumptions of homogeneity were made so that one could make a big huge data set. Everyone did this so they guaranteed that their assumptions would be false – if someone assumes high or medium quality someone else can make a profit producing low quality.

The desire to play with computers caused people to forget that garbage in means garbage out. If all financiers had been math phobic and computer phobic, the world would be a better place today.

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Robert Waldmann

To obamanate V. To open an argument absurdly excessive concessions to one’s opponents.

Obamanation gerund of To obamanate.
Obamanation present participle of to obamanate.

I offer this definition in defense of Obama. The word will be defined, and he’d better hope my definition is adopted.

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Except for the drop in the workweek and aggregrate hours worked the February employment report was almost a duplicate of the January employment report. In both January and February the payroll survey reported a slight drop in employment and the household survey showed a modest increase in employment. Essentially both reports are showing changes so close to zero that they are well within one standard error of zero.

Generally, the payroll report is considered the better report. But at cyclical turning points the household survey tends to lead the payroll survey. I think that is because the household survey does a superior job of capturing trends changes among small firms and small business tends to respond more quickly to cyclical changes than large firms.

Both reports increase my confidence in last months analysis that the economy is in a transition mode. The period of wide scale lay-offs has ended but firms have yet to begin wide scale employment.

The pre-report apprehensions about the impact of the February snow storms were ill-founded.
The payroll survey reports how many people firms have on their payrolls. So even if people were not able to make it to work, they were still on firms payrolls. Consequently, the storms had no impact on firms payrolls. In the household survey the people who did not make it to work because of the storm would still think they had a job so they would report that they were employed.

Where the storms would have an impact is on the average work week and aggregate hours worked. Consequently the drop in aggregate hours worked and the weakness in weekly average hourly earnings probably was due to the storms. But we will have to wait until next month to really know.

However, the continued weakness in average hourly wages and weekly wages is a feature of this cycle and probably was not impacted by the storms.

Many look at weekly earnings as a leading indicator of consumer spending, and I know I am sometimes guilty of this. But the historic record is that real earnings is actually a lagging indicator of consumer spending at cyclical bottoms. Over the course of an expansion, and at cyclical peaks real income is very much a concurrent indicator of consumer spending. but at bottoms consumer spending is driven more by lower rates, better consumer confidence and lower inflation. Retail sales are highly skewed with the upper 40% of the income spectrum accounting for over 60% of retail sales. So the important factor is people who have stayed employed and those whose income stems from non-wage sources deciding to spend. Often this
is driven by greater wealth; especially from the stock market and rebounding home prices.
We are getting the higher stock market this cycle, but not the rise in home prices.

Historically, once the unemployment rate peaks, as it apparently has this cycle, it continues to fall for one to two years. Even in the last two cycles when the peak unemployment rate lagged the economic trough by months the unemployment rate continue to fall once it had peaked.
So the standard forecast, even by the administration and the CBO, that the unemployment rate will remain around 10% is a forecast of something that has never happened. I’m not saying that weak growth and high productivity can not keep the unemployment rate near the peak of 10%, but it is something that has never happened.

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Why China may have slowed Treasury purchases

by Bruce Webb

There has been a scattering of stories about how China has slowed or stopped buying U.S. Treasuries. This story offers a possible explanation

LA Times: China’s investments in U.S. up sharply

Beijing is using its accumulation of billions of American dollars to step up its investments around the globe. In the last year, Chinese acquisitions in the U.S. have ranged from a relatively obscure theater in Branson, Mo., to stakes in such famous brands as Coca-Cola and Johnson & Johnson.

China’s huge stockpile of dollars stems in part from Americans’ enormous purchases of relatively inexpensive Chinese manufactured goods and the significantly smaller volume of U.S. exports to the Asian country.

By recycling much of its dollar trove over the years back to the United States with the purchase of U.S. government debt, China has in effect helped Washington finance its deficits.

Now, Beijing is branching out. The country’s direct investments overseas rose 6.5% in 2009 to $43.3 billion — despite a global slump in such investments — and could jump to $60 billion this year, Chinese state media reported last week.

Formal estimates of Chinese investments in the U.S. last year, excluding bond purchases, range from $3.9 billion — a figure put out by New York research firm Dealogic — to $6.4 billion, a number that comes from Derek Scissors, a Heritage Foundation research fellow who tracks China’s global transactions

I’ll let the econoBears explain the significance here, my flip summary would be “Why rent when you can own”. It certainly doesn’t indicate that the Chinese are expecting some terrific crash in the medium term.

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This is a guest contribution by Marshall Auerback, Braintruster at the New Deal 2.0 at Newsneconomics

By Marshall Auerback

My colleague, Rebecca Wilder, recently concluded a “Tale of Two Recoveries: Malaysia vs Germany which brought back memories of my own time in the Far East and some of the advisory work I did for the government of Malaysia during the financial crisis of 1997/98.

Before the historical revisionists get hold of this period, it is important to note that Malaysia’s initial response to the crisis was a textbook illustration of how to exacerbate, not alleviate, a financial crisis. Of course, it was a consequence of taking stupid and economically ruinous advice from the International Monetary Fund, which is to economic development what John Meriwether is to asset management. If anybody had any doubts, those of us who observed the crisis first hand realized that the IMF and the so-called “Committee to Save the World” were more interested in saving the first-world banks who were exposed than caring about the local citizens who were scorched by harsh austerity programs. Same old, same old.
It was only when the Deputy PM/Finance Minister was ousted from the Cabinet and his pro-IMF policies completely repudiated, that Malaysia’s economy began its long road back to successful recovery.

There is little question that former PM Mahathir Mohammed was a political thug, but not an economic illiterate. But his sacking of Anwar from the Cabinet and decision to press ludicrous sodomy and abuse of power charges against his former heir apparent foolishly undermined his economic legacy. It is certainly wrong, however, to criticise his response to the Asian financial crisis of 1997/98. Vindicated now with the benefit of hindsight, at the time his embrace of exchange controls, and a 180-degree reversal away from the policies of austerity advocated by the Fund, were viewed as dangerously anti-free market, destined to render Malaysia an investment pariah.

Before the temporary triumph of the so-called “Washington consensus” school of economics in the late 1990s, the so-called “interventionist” East Asian alliance model of capitalism was highly lauded by institutions such as the World Bank and even the IMF itself. A common thread characterizing the economic development of countries such as Thailand, Korea, Singapore, and, yes, Malaysia, were policies which transferred resources away from “unproductive” toward “productive” uses—often in the form of transfers from unproductive groups to productive groups and sometimes in the form of policies to convert unproductive groups into productive ones. Creating “rents” (above normal market returns) by “distorting” markets through industrial policies was essential, first, to induce more-than-free-market investment in activities that the government deemed important for the economy’s transformation, and second, to sustain a political coalition in support of these policies. Disciplining rent-seeking so that it remained consistent with these two objectives was also essential.

It was precisely this model that came under such sustained attack during the late 1990s. Then Secretary of the Treasury Robert Rubin, his Deputy, Lawrence Summers, and their lieutenants saw the crisis as the perfect opportunity to destroy this model once and for all, and to do this, they wanted the International Monetary Fund to impose conditions on the economies of emerging Asia that went far beyond the Fund’s traditional boundaries. Thus the U.S. Treasury kept steady pressure on Fund officials to extract more and more concessions from South Korea, Thailand, Indonesia, and Malaysia including instant resolution of all trade related issues in favor of the United States. The exasperated Asians were soon accusing the IMF of always raising new issues at the behest of the United States—something that the Fund officials readily acknowledged later.

Foremost in the minds of Treasury officials was also the interest of Wall Street, especially American financial services firms. These biases were manifested in the types of IMF conditions imposed on the emerging Asian economies during the height of the crisis, which clearly served the brokerage firms on Wall Street far better than the needs of emerging Asia.

In the early 1990s the economies at the core of the world economy (the U.S., “Euroland,” Japan), began to generate hugely excessive liquidity. In the early 1990s, mutual funds, pension funds, other institutional investors, hedge funds and—last but not least—banks became awash with deposits. They scoured the world for high returns. Investment houses like Goldman Sachs and Morgan Stanley sought the business of arranging the privatizations, securities placements, mergers, and acquisitions that surged on the wave of liquidity—business that became their main growth area. As a consequence, financial capital poured in to “emerging markets” (middle-income countries of recent interest to institutional investors).

Capital flows to developing nations in Asia and Latin America jumped from about $50bn a year before the end of the Cold War to about $300bn a year by the mid-1990s. From 1992-96, Indonesia, Malaysia, Thailand, and the Philippines were all experiencing money and credit growth rates of between 25-30 per cent a year. Emerging market stock markets boomed, nearly doubling their share of world capitalization between 1990 and 1993.

Proponents of capital liberalization justified these inflows on the grounds of (a) maximizing the efficiency of capital worldwide, (b) allowing a specific country to invest more than could be financed from its own savings, (c) bringing modern financial institutions into the country, and (d) deepening the liquidity of the country’s financial system and lengthening investor horizons, thereby making markets more efficient and more stable. In the end the case for free capital flows came down to the classic theory of comparative advantage, as though trade in dollars was essentially similar to trade in widgets.

In reality, however, the funds went into increasingly marginal and speculative developments and simply exacerbated an underlying credit bubble. Although they did not speak out at the time, a number of prominent economists and financiers have since pointed out the dangers of such “gypsy capital”. Joseph Stiglitz, for example, argued that the origins of the Asian financial crisis rested, in the first place, with the excessively rapid financial and capital market liberalization that the U.S. Treasury had pushed on these economies, on behalf of Wall Street, and over the protests of the Council of Economic Advisors, of which he was the chairman. “At the Council of Economic Advisors we weren’t convinced that South Korean liberalization was a matter of U.S. national interest, though obviously it would help the special interests of Wall Street” (Globalization and Its Discontents, New York: W. W. Norton, 2002, p. 102).

Similarly, Jagdish Bhagwati, one of free trade’s most passionate supporters for developing nations, argued that the idea of free trade had been “hijacked by the proponents of capital mobility”.

The end result of this drive to liberalise capital accounts in immature emerging economies was a series of booms and busts, culminating in financial crisis. Capital flows into emerging markets turn out to be less a diversification of assets, more another instance of “investment herding”, especially within regions, where market allocation was propelled less by differences between countries in their “fundamentals” (including “good” or “bad” policy) than by “push factors”—macro push factors like the amount of excess liquidity in different parts of the core zone of the world economy; and micro push factors like the incentives on institutional money managers and the corresponding drive to match the “benchmark weightings” devised by pension fund consultants, many of knew nothing of the various underlying markets. Money managers tend to be evaluated relative to the median performance of money managers in the same asset class. This encourages them to move in and out of markets together, producing “herding” or “trend chasing” or “positive feedback trading” and the crisis of 1997/98 was a textbook illustration of that phenomenon.

Malaysia was heading down this road in 1997. The currency, the ringgit, was collapsing, as the contagion effects from Thailand, Korea and Indonesia gradually extended into the country. Although Anwar had not placed the country under a formal imf program, he had been following the imf recipe: to forestall capital flight, fiscal policy was tightened and interest rates were hiked in order to protect the external value of the currency.

Based largely on their experience in Latin America, the Fund had already imposed directly these measures on Thailand, Indonesia, and Korea. The problem, however, is that whereas fiscal deficits have tended to be large and inflation chronic in Latin America, in the economies of emerging Asia, budgets had long been roughly in balance. In addition, as the Funds’ economists were unschooled in the links between macro conditions and corporate balance sheets, they failed to perceive the danger of high real interest rates in economies with high debt/equity ratios and low inflationary expectations. High real interest rates have deflationary and crisis-signalling consequences that prompt capital outflows regardless of the attractions of the high rates themselves.

Which is precisely what began to occur in Malaysia. The Malaysian economy experienced a contraction of credit growth from 30 percent in 1997 to minus 5 percent in 1998, reflecting a massive pullback of bank loans. The ringgit plunged, as capital outflows accelerated. A real estate collapse loomed.

Ultimately, seeing the failure in these policies, Prime Minister Mahathir sacked Anwar, and re-imposed capital controls to insulate his economy from the deleterious consequences of rapid hot money outflows. (The trumped-up political charges, which led to the latter’s imprisonment, only came later.) Monetary and fiscal policy became expansionary, the ringgit was pegged to the US dollar, and crisis credit conditions began to diminish as domestic rates were reduced drastically. Although Western finance ministries and institutional investors protested apocalyptically and predicted that Malaysia would remain beyond the pale of the investment world for the foreseeable future, six months later even The Economist, one of the IMF’s great apologists, was forced to acknowledge that the embrace of capital controls had done “short-term wonders” in assisting recovery.

This is all old history. But it is worthwhile recalling the actions of the Fund in the context of what it is advising countries like Iceland and Latvia to do today. Or when considering the hair shirt economics which seems to be championed by Germany’s economic elites.

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Fed policy: complicating an already complicated situation

by Rebecca Wilder

The Federal Open Market Committee (FOMC) is making tough decisions right now. Its mandate, “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates”, is a seriously tall order given current economic conditions.

The unemployment rate sits at 9.7%, while prices have bounced back to 2.6% Y/Y in January. On the surface of it, inflation appears to be gaining some traction; but the big numbers are representative of base effects, and that is really all. The drag on prices remains very real.

But there is one little kink in the headline figures of unemployment that complicates an already complicated task: extended unemployment insurance. From the FOMC’s Jan. 26-27 minutes:

Though participants agreed there was considerable slack in resource utilization, their judgments about the degree of slack varied. The several extensions of emergency unemployment insurance benefits appeared to have raised the measured unemployment rate, relative to levels recorded in past downturns, by encouraging some who have lost their jobs to remain in the labor force. If that effect were large–some estimates suggested it could account for 1 percentage point or more of the increase in the unemployment rate during this recession–then the reported unemployment rate might be overstating the amount of slack in resource utilization relative to past periods of high unemployment.

Why would extended unemployment benefits increase the unemployment rate? In order to claim unemployment benefits, one must be “in the labor force”; and that means looking for work. Therefore, some workers who would otherwise be classified as “not in the labor force” remain in the work force as “unemployed”. Therefore, the current unemployment rate is elevated above the rate that would occur without the extended benefits. The Fed suggests this differential to be roughly 1% point.

I am in no way proposing that the extended benefits be rescinded; nor am I deluding myself into thinking that the labor market is anything short of awful. But Fed policy is calibrated to the non-inflation-generating level of the unemployment rate. And the current unemployment rate may be closer to the long-run level than the headline number suggests.

I have talked about this before (see this post) from another angle: the long-run level of unemployment may be a moving target right now, i.e., it’s likely rising. Therefore, if the long-run level of unemployment is rising and subsidies are masking the true level of the current unemployment rate, then we may very well get some inflation while the economy is still weak.

Of course, I do not believe that we are even near such a threshold level; but it does complicate an already complicated situation. A modified Taylor rule demonstrates the implications for policy.

The chart above illustrates the estimated Taylor Rule using the current unemployment rate (in blue line) versus one in which 1% point is shaved off the unemployment rate for every month since January 2008 (green line). The modified rule does suggest that the Fed policy rate is currently at (or now below) the prescribed rate.

Just some food for thought. Rebeca Wilder crossposted with Newsneconomics

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Why does IQ halve when people write about IQ

Robert Waldmann

So it turns out that extreme liberals have higher measured IQs than extreme conservatives and atheists have slightly higher IQs than biblical literalists.

What does this tell us ? Matthew Yglesias sent me to this and I learned that people will not accept the fact that not all stochastic variables are normally distributed.

I mean the extreme blind faith in the normal distribution is just not normal.

Razib Khan wrote

“Assume the “very conservative” and “very liberal” categories are normally distributed in intelligence. The mean is 95 and 106. What percentage of people within each category are going to have IQs of 130 and above?
Assume the “very conservative” and “very liberal” categories are normally distributed in intelligence. The mean is 95 and 106. What percentage of people within each category are going to have IQs of 130 and above?

0.92% of “very conservative” individuals
5.48% of “very liberal” individuals

That’s like writing “Assume my grandmother has balls. Is she my grandfather? 100% of my grandmother is male.”

Anyone who knows anything about IQ scores knows that they are not normally distributed. IQ scores have a fat upper tail. In other words the calculation is total nonsense and has nothing to do with any intelligent estimate of the fractions of very liberal and very conservative people with IQs over 130.

I mean if one is going to make assumptions which are demonstrably false, one might as well assume the conclusion (yes economics profession I am thinking of us too).

I am very liberal and atheist and *I* think this post (to which Yglesias linked) is clearly total nonsense.

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Spurious Correlation of the Day

Correlation is not causation, more research and testing is required, etc.

I was working from the concept that home Internet service is a luxury item—or, at the very least, non-essential.*  In short, that you would tend to give up home Internet access if the choice is between that and staying current on your mortgage.

Looking at the State-level data, though, produced the following regression:

HomeINetAccess = 0.78736*(FICO>660) – 0.1934*(Pct with Current Payment) – -0.1662*(Lying Broker Loans) + 73.36

R-squared = 0.4311 Adj. R-squared = 0.3956**

Fortunately, only the FICO>600 (t=4.10) and the constant (t=7.77) were clearly significant at the 95% confidence level. (Current t = –1.38, Lying Broker t = -0.95). And it seems intuitively obvious that people with better credit scores are more likely to be able to afford (and demand) home-based Internet access.

Removing the “Lying Broker Loans,” strangely, didn’t change the sign, though it did reduce the perceived effect and lower the base constant.

HomeINetAccess = 0.65055*(FICO>660) – 0.1159*(Pct with Current Payment) + 67.42

R-squared = 0.4204  Adj. R-squared = 0.3967

Fortunately, Pct with Current Payment remains an insignificant variable (t = –1.02); indeed, it becomes even more unlikely.

Curiously, there is one random regression that does appear significant.

HomeINetAccess = 0.43854*(FICO>660) – 0.3099*(Mortgage Originated in 2005 or before) + 80.89

R-squared = 0.429; Adj. R-squared = 0.4057

Here, both variables and the constant appear significant (t=3.5, –3.81, and 14.16, respectively).  So we need a story to explain the negative sign, especially since running the same regression against  the“Originated in 2006” or “Originated in 2007” values produces a larger R-squared and results with the intuitively-correct sign:

HomeINetAccess = 0.40822*(FICO>660) + 0.5340*(Mortgage Originated in 2006) + 47.62

R-squared = 0.5217; Adj. R-squared = 0.5022; t(FICO>660) = 2.98  t(2006) = 3.41

HomeINetAccess = 0.53598*(FICO>660) + 0.5476*(Mortgage Originated in 2007) + 55.02397

R-squared = 0.5034; Adj. R-squared = 0.5112; t(FICO>660) = 4.63 t(2007) = 3.57

So people who bought at the peak of the bubble, or even when the bubble was beginning to break, are more likely to have Home Internet access than those who have been living in their house for a longer period of time.  Indeed, having lived in your house for a longer period of time correlates negatively, on a State level, with having Home Internet access.

Were we to speculate, we might guess that people who have been living in their homes longer did not have Internet access easily available and affordable when they bought their home, and have not decided to add it now.  (This would imply either that there are major transaction costs associated with gaining Internet access or that the people who bought in the pre-2006 environment are resource-constrained in other ways.)

As a reasonable speculation, people who bought in 2006 and 2007—arguably, the top of the market—have (or believed they have) less price sensitivity than those who bought while the bubble was inflating.  This might suggest that the people who were buying in 2006 were more likely to be “trading up” than buying for the first time. There is anecdotal evidence to that effect. Looking at the graphic of U.S. home ownership percentage:


it appears that by 2006, the market consisted more of homeowners and speculators than it did new buyers, but the data I’m using does not have the granularity either to accept or reject that hypothesis.***

In any event, further research appears to be needed—or, maybe, this is just the Spurious Correlation of the Day.

*Jim Henley—and any other parent whose daughter is a Club Penguin devotee (for instance, me)—might disagree.

**Those not in the social sciences will look at these R-squared values and wonder if there is anything being presented.  40% is, I am told, a very good result.  Indeed, since the entirety of Real Business Cycle theory is hung on an R-squared close to 0.50, certainly a finger exercise with a result that is only 80% of that would be, if not earth-shattering, then at least publishable.

***Suggestions for sources that might indicate whether buyers were speculators—e.g., state-level data that indicates if property was being purchased to be a primary residence or second (“vacation”) home—might be available are welcome in comments or via e-mail.

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