US debt default

[BruceVC]

 

I'm quite concerned about the appointment of Yellen as the Fed chair. At least Bernanke had some qualms about helicopter money.

 

I don't buy it.  Jim Rickards makes some very good points about the Fed, but I just don't see Yellen being different than Bernanke at all.  In fact she has a better economics background than him.  The idea that she will just flip on the printing presses full time has little evidence to support it.

 

 

She is a very shrewd economist, she is a women and she predicted the housing crisis back in 2007. She is an excellent choice for the job

 

http://www.usatoday.com/story/money/business/2013/09/02/yellen-federal-reserve/2636541/

 

http://www.motherjones.com/politics/2013/08/janet-yellen-chair-federal-reserve-woman-summers

Edited October 18, 2013 by BruceVC

[Hiro Protagonist]

She is a very shrewd economist, she is a women and she predicted the housing crisis back in 2007. She is an excellent choice for the job

 

We always hear years later how someone predicted the housing crisis, the GFC or some other thing in history.

[BruceVC]

 

She is a very shrewd economist, she is a women and she predicted the housing crisis back in 2007. She is an excellent choice for the job

 

We always hear years later how someone predicted the housing crisis, the GFC or some other thing in history.

 

True but in this case she really did, see the information below from the links I provided

 

WASHINGTON — At a Federal Reserve meeting in June 2007, Fed Chairman Ben Bernanke said the weakening housing market posed "downside risks" to growth, but otherwise "the economy looks to be healthy," according to a meeting transcript.

San Francisco Fed President Janet Yellen stood out among Fed policymakers that day for her ominous outlook. "I still feel the presence of a 600-pound gorilla in the room, and that is the housing sector," she said. "The risk for further significant deterioration in the housing market, with house prices falling and mortgage delinquencies rising further, causes me appreciable angst."

[Hiro Protagonist]

True but in this case she really did, see the information below from the links I provided

 

WASHINGTON — At a Federal Reserve meeting in June 2007, Fed Chairman Ben Bernanke said the weakening housing market posed "downside risks" to growth, but otherwise "the economy looks to be healthy," according to a meeting transcript.

San Francisco Fed President Janet Yellen stood out among Fed policymakers that day for her ominous outlook. "I still feel the presence of a 600-pound gorilla in the room, and that is the housing sector," she said. "The risk for further significant deterioration in the housing market, with house prices falling and mortgage delinquencies rising further, causes me appreciable angst."

 

 

And how many predictions did she get wrong?

 

In a 2005 speech in San Francisco, Yellen predicted that the housing bubble "could be large enough to feel like a good-sized bump in the road, but the economy would likely be able to absorb the shock. She was wrong. The economy didn't absorb the shock. She (like others) will say two things at the same time to play both sides of the fence.

 

If the economy did absorb the shock, then she was right. If it didn't then she'll say it was the housing bubble that hurt the economy and she was right.

[BruceVC]

 

True but in this case she really did, see the information below from the links I provided

 

WASHINGTON — At a Federal Reserve meeting in June 2007, Fed Chairman Ben Bernanke said the weakening housing market posed "downside risks" to growth, but otherwise "the economy looks to be healthy," according to a meeting transcript.

San Francisco Fed President Janet Yellen stood out among Fed policymakers that day for her ominous outlook. "I still feel the presence of a 600-pound gorilla in the room, and that is the housing sector," she said. "The risk for further significant deterioration in the housing market, with house prices falling and mortgage delinquencies rising further, causes me appreciable angst."

 

 

And how many predictions did she get wrong?

 

In a 2005 speech in San Francisco, Yellen predicted that the housing bubble "could be large enough to feel like a good-sized bump in the road, but the economy would likely be able to absorb the shock. She was wrong. The economy didn't absorb the shock. She (like others) will say two things at the same time to play both sides of the fence.

 

If the economy did absorb the shock, then she was right. If it didn't then she'll say it was the housing bubble that hurt the economy and she was right.

 

I suppose so

[Walsingham]

Judging by this article from the Daily Beast, the healthcare reform this was all about is going to be technically unsound in any case.

 

If correct, I suggest Obama's best bet for a solid legacy is to call off the battle and surrender the issue. Fielding something broken will only discredit him, and the entire effort. 

[Gfted1]

What? They're pissing money into a system that doesn't work? Shocking!

[BruceVC]

Judging by this article from the Daily Beast, the healthcare reform this was all about is going to be technically unsound in any case.

 

If correct, I suggest Obama's best bet for a solid legacy is to call off the battle and surrender the issue. Fielding something broken will only discredit him, and the entire effort. 

 

Why would Obama give up on Obamacare because of a badly implemented software program? I agree that this must be frustrating but this can be fixed and the problems addressed the same as any complex software program.

 

In South Africa the Home Affairs department about 4 years ago implemented a new system to track and expedite the creating of ID documents. The system was very buggy in the beginning and basically useless. People were very angry as for about 2 months there was almost  no progress or allocation of important documents. But they fixed the issues and now there is a national working database

 

I can't judge the success or failures of Obamacare on the application used to manage the various transactions as it can be fixed.

[Raithe]

I have to admit, I'm a tad surprised there haven't been more jokey comparisons between the US Shutdown and the '75 Constitutional Crisis in Australia..

[Malcador]

Hard to do with the systems being different. And him dismissing Congress would probably result in a rebellion

[Raithe]

But still, there's got to be a few jokes over it. 

"We're doing a Government Shutdown because we can't agree on stuff!"  

"Okay. You're fired. Let's get in a new Prime Minister and get this show back on the road.."

[Amentep]

Why would Obama give up on Obamacare because of a badly implemented software program? I agree that this must be frustrating but this can be fixed and the problems addressed the same as any complex software program.

The problem is they have a short deadline. Anyone not insured by February is subject to fines taxes for not enrolling - whether the system was too crap to allow them to register or not.

[kgambit]

 

Yep, the latest trend is up but the prices are horrendously suppressed to previous values.

 

 

Is the barometer for successful recovery a return to the pre-bubble-burst values?

 

 

Sorry for the slow reply.  It took me some time to find a graph with all three Shiller indices on it.

 

One way to define the recovery is when housing prices have regained values comensurate with historical price trends.  It doesn't matter when the peak of the bubble occurs or exactly when the bubble actually starts as long as we pick a comparison point that is free of the bubble influence.

 

Robert Shiller "defined" the start of the bubble as 1997.  Fair enough.  Who am I to argue with a Nobel Laureate?    In fact, let's start four years before that in 1993.

That should be safe, right?

 

Shiller tracks 3 housing price indices; the CS-10 and CS-20 (which measure housing prices in the 10 and 20 largest US metro markets) and US National. Here are the values from yesterday, October 17:

 

Shiller National - 146

Shiller 20 - 162 (called CS20)

Shiller 10 - 176 (called CS10)

 

Here's Shiller's Metro 10 and Metro 20 price indices  from 2001 to July 2013:  Now look at this plot (you'll have to click on the link to open it):

 

http://www.chpcny.org/wp-content/uploads/2013/09/Summary-CSHomePrice_History_Jan1987toJuly2013WebVersion.jpg

 

The trend line shows how the (CS10) index would have changed if home prices had appreciated at the historically expected rate of 5% per annum starting with Jan 1993 prices.  (That's also in the midst of a small pre-bubble price slump so the projection is going to come in a bit low)

 

You're free to check my trend line projections: I used 5% annual appreciation with a starting value of ~76 on January 1, 1993 until October 1, 2013.  That 5% figure was derived from an analysis of 50+ years of national housing prices.  It's the appreciation rate that was used to project the price trend on that graph - I didn't pick it out of the blue.  My calculated historical trend price index value was 209 (which actually apears to be a bit lower than the graph).  A couple of weeks difference in timing isn't going to make a huge difference in the final value projection.

 

My personal experience with house value appreciation over long time frames tells me that 5% is not only reasonable but that it's dead on. That's anecdotal so YMMV

Back to the trend.  The difference between the current value of the CS10 index (176) and the calculated historical trend projection (209) represents a 16% loss of home equity. 16% is pretty significant and until the housing market recoups that lost value, imo the recovery isn't complete.

 

I think the comparison probably understates the lost equity for two reasons:  1) the CS10 index has historically been the highest of all the housing price indices. 2) the 5% appreciation rate is based on historical national prices trends not just the 10 large metro markets.

 

 

The National price and CS10 indices were nearly identical in 1993.  Over time, the national and metro indices have separated; possibly due to a reduction of available land in metro areas for housing development which would tend to apply additional upward pressure on housing prices.

 

Since the starting values are nearly identical, the national price projection would be identical if we use the 5% national appreciation rate.  If you use that rate for a projected current national price, and then compare to Shiller's National price index (146) the equity loss is actually closer to 30%. In any case, the two calculations provide upper and lower bounds on how much housing prices are still devalued.    

 

It's also certainly possible that the housing market is still undergoing a correction to a over-compensated deflation of the original bubble.  Something akin to a damped pendulum.  The most recent price trends show short term increase in values. so maybe the over compensation is working itself out.  Either way, housing prices are still suppressed.   On the flip side, housing starts are still down.

 

As I said, the economic news wasn't entirely bad.

 

 

 

 

Edited October 18, 2013 by kgambit

[PK htiw klaw eriF]

Judging by this article from the Daily Beast, the healthcare reform this was all about is going to be technically unsound in any case.

 

If correct, I suggest Obama's best bet for a solid legacy is to call off the battle and surrender the issue. Fielding something broken will only discredit him, and the entire effort.

 

That links to WSJ for me, not DB....

 

The article I read at DB was an opinion bit by a bloke named Nick Gillespie, who I would argue is generally biased. If I'm reading the wrong article, I apologize.

[Guard Dog]

I have a private high deductible insurance policy that renews in March. I'm cringing at what the cost will go up to.

[Walsingham]

 

Judging by this article from the Daily Beast, the healthcare reform this was all about is going to be technically unsound in any case.

 

If correct, I suggest Obama's best bet for a solid legacy is to call off the battle and surrender the issue. Fielding something broken will only discredit him, and the entire effort.

That links to WSJ for me, not DB....

 

The article I read at DB was an opinion bit by a bloke named Nick Gillespie, who I would argue is generally biased. If I'm reading the wrong article, I apologize.

 

 

You probably are. Sorry. Didn't realise they'd crosslinked. I also don't generally read the Beast. So apologies if it's too biased.

[kgambit]

 

 

Judging by this article from the Daily Beast, the healthcare reform this was all about is going to be technically unsound in any case.

 

If correct, I suggest Obama's best bet for a solid legacy is to call off the battle and surrender the issue. Fielding something broken will only discredit him, and the entire effort.

That links to WSJ for me, not DB....

 

The article I read at DB was an opinion bit by a bloke named Nick Gillespie, who I would argue is generally biased. If I'm reading the wrong article, I apologize.

 

 

You probably are. Sorry. Didn't realise they'd crosslinked. I also don't generally read the Beast. So apologies if it's too biased.

 

 

The Beast article doesn't paint a rosy picture but it's clearly biased.  My favorite line:

 

After the search for bin Laden, the Obama administration’s biggest manhunt has turned out to be for someone—anyone—who managed to actually sign up for and enroll in an insurance plan offered by the federal exchange. As The Miami Herald declared in a recent headline, “Obamacare enrollees become urban legend.” So far, you’ve got a better chance of turning up a gerbil escapee scurrying down Richard Gere’s leg than finding a couple dozen satisfied customers of healthcare.gov.

 

http://www.thedailybeast.com/articles/2013/10/17/the-abysmal-pathetic-obamacare-rollout.html

Edited October 18, 2013 by kgambit

[Walsingham]

Still, it wouldn't be the first government information technology (GIT) system that was utter balls.

Edited October 18, 2013 by Walsingham

[kgambit]

Still, it wouldn't be the first government information technology (GIT) system that was utter balls.

 

QFT

[BruceVC]

 

Why would Obama give up on Obamacare because of a badly implemented software program? I agree that this must be frustrating but this can be fixed and the problems addressed the same as any complex software program.

The problem is they have a short deadline. Anyone not insured by February is subject to fines taxes for not enrolling - whether the system was too crap to allow them to register or not.

 

 

Okay I didn't realize the deadline, that's does makes things more serious but still not insurmountable.

 

There would have to be an extension to this deadline if the system isn't stable, that would be the only logical option

[BruceVC]

I have a private high deductible insurance policy that renews in March. I'm cringing at what the cost will go up to.

 

Its okay GD I'll pay for you. Send me your banking details

 

I just want you to start saying how great you think Obamacare is

[Walsingham]

that would be the only logical option

 

 

...You... haven't worked with government much, have you?

[PK htiw klaw eriF]

 

 

Judging by this article from the Daily Beast, the healthcare reform this was all about is going to be technically unsound in any case.

 

If correct, I suggest Obama's best bet for a solid legacy is to call off the battle and surrender the issue. Fielding something broken will only discredit him, and the entire effort.

 

That links to WSJ for me, not DB....

The article I read at DB was an opinion bit by a bloke named Nick Gillespie, who I would argue is generally biased. If I'm reading the wrong article, I apologize.

 

You probably are. Sorry. Didn't realise they'd crosslinked. I also don't generally read the Beast. So apologies if it's too biased.

TBH, most opinion articles make me roll my eyes. I prefer to read hard facts and make up my mind.

 

I do agree that the ACA isn't good, as it is a wildly inefficient way to accomplish the stated goal.

[kgambit]

 

 

Why would Obama give up on Obamacare because of a badly implemented software program? I agree that this must be frustrating but this can be fixed and the problems addressed the same as any complex software program.

The problem is they have a short deadline. Anyone not insured by February is subject to fines taxes for not enrolling - whether the system was too crap to allow them to register or not.

 

 

Okay I didn't realize the deadline, that's does makes things more serious but still not insurmountable.

 

There would have to be an extension to this deadline if the system isn't stable, that would be the only logical option

 

 

Bruce, please take a look at this article and tell me what you think. 

 

http://www.realclearpolitics.com/articles/2013/10/18/what_if_obamacare_software_crashes_and_burns_120373.html

 

I shouldn't be surprised that the government sat around until spring of 2013 to start getting the system put together, and effing wasted nearly three full years that could have spent fine-tuning the system. 

Edited October 18, 2013 by kgambit

[BruceVC]

 

 

 

Why would Obama give up on Obamacare because of a badly implemented software program? I agree that this must be frustrating but this can be fixed and the problems addressed the same as any complex software program.

The problem is they have a short deadline. Anyone not insured by February is subject to fines taxes for not enrolling - whether the system was too crap to allow them to register or not.

 

 

Okay I didn't realize the deadline, that's does makes things more serious but still not insurmountable.

 

There would have to be an extension to this deadline if the system isn't stable, that would be the only logical option

 

 

Bruce, please take a look at this article and tell me what you think. 

 

http://www.realclearpolitics.com/articles/2013/10/18/what_if_obamacare_software_crashes_and_burns_120373.html

 

I shouldn't be surprised that the government sat around until spring of 2013 to start getting the system put together, and effing wasted nearly three full years that could have spent fine-tuning the system. 

 

 

That does paint a very morbid picture, thx for ruining my Friday night

 

But on a serious note I mentioned I work with software so I like to think I know a little about how  these things work. The one think that will destroy Obamacare this year is if the code is faulty. You can fix resource utilization, network speed, load distribution and integration into other systems but at this stage you can't fix the code if its fundamentally flawed