2012 Presidential Election

Today's report by Derek Kravitz at the Associated Press (also known to yours truly as the Administration's Press) covering the Census Bureau's December and full-year 2011 new-home sales release put a smiley-face on the “worst ever” year (the AP headline's term) in the category. I like the adjective used at Sweetness & Light's related blog post to describe Kravitz's crud: “unfazed.” The AP reporter follows four paragraphs of facts with three more paragraphs of sunshiny “analysis” which are so wholly unsupported by reality that you would fall off of your chair laughing if you didn't also realize that most readers, listeners and viewers who saw and heard this garbage today didn't know any better than to believe it: New-home purchases fall, 2011 worst ever for sales Fewer people bought new homes in December. The decline made 2011 the worst year for new -homes sales on records dating back nearly half a century. The Commerce Department said Thursday new-home sales fell 2.2 percent last month to a seasonally adjusted annual pace of 307,000. The pace is less than half the 700,000 that economists say must be sold in a healthy economy. About 302,000 new homes were sold last year. That's less than the 323,000 sold in 2010, making last year's sales the worst on records dating back to 1963. And it coincides with a report last week that said 2011 was the weakest year for single-family home construction on record. The median sales prices for new homes dropped in December to $210,300. Builders continued to slash price to stay competitive in the depressed market. Still, sales of new homes rose in the final quarter of 2011, supporting other signs of a slow turnaround that began at the end of the year. [1] Sales of previously occupied homes rose in December for a third straight month. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might consider buying this year. And home construction picked up in the final quarter of last year. [2] “Although this decline was unexpected, it does not change the story that housing has likely bottomed,” said Jennifer H. Lee, senior economist at BMO Capital Markets. [3] Notes: [1] — As seen here , actual sales of new homes rose from 66,000 during the fourth quarter last year to 68,000 during the most recent three months. We're supposed to be impressed? This would be like expecting a Major League Baseball team's fans to be happy because its players raised their total per-game run production from from 2.0 to 2.06 (the MLB average is about 4.5). But wait, there's more. October 2011 sales were “better” than October 2010 (25,000 vs. 23,000). November 2011 was “better” than November 2010 (22,000 vs. 20,000). But December 2011 was 9% worse than December 2010 (21,000 vs. 23,000). In other words, even the paper-thin illusion of recovery went away in December, and the downward spiral resumed. Pending revisions, which could send the number even lower, December 2011 tied January 2011 for the second-worst single month on record — the equivalent of an MLB team scoring less than 2 runs per game and seeing its slump deepen. “Turnaround,” schmurnaround. [2] — Existing-home sales are nice, but with the exception of home improvements, they don't represent much additional new economic output. The fact that people won't buy new homes even with rates at record lows demonstrates how awful the new-home market is. Homebuilder optimism is barely off the floor. And I'm sorry, Derek, construction did not pick up in the final quarter of the year by anywhere resembling enough to matter. The two most convincing pieces of evidence which pretty much prove that things really got worse are the following: In its construction release last week , the Census Bureau told us that “An estimated 583,900 housing units were completed in 2011. This is 10.4 percent below the 2010 figure of 651,700.” The number of single-family homes under construction at the end of the year, at 221,300 , is the lowest level seen since such records began being kept in 1970, plummeting below December 2010, which at the time was the lowest on record, by over 10%. “Pick up,” schmick up. [3] — Ms. Lee's opinion is far from universally shared. On a local market-oriented radio program last night, Chris Farrell of MarketWatch.com opined that he believed we may be near the bottom but aren't necessarily there yet, and that the new-home market may stay at or near the bottom for several years. “Bottomed,” schmottomed. Derek Kravitz shoved serious smoke up Americans' posteriors today. It's going to be a long year for those of us who monitor these things. Cross-posted at BizzyBlog.com .

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As New-Home Sales Wraps ‘Worst Ever’ Year, AP’s Kravitz Is ‘Unfazed’

If it's Saturday, I must be pointing out more simply stunning stupidity coming from the mouth of Bill Maher. Never letting me down, the host of HBO's Real Time Friday said the financial crisis was caused by “something new in politics where Wall Street was sort of betting on things to fail as opposed to for things to succeed” (video follows with transcript and commentary): BILL MAHER: I mean, if it was just about housing it wouldn't be that giant a crisis. It’s that the banks took side bets on failure. Isn’t it? I mean, that's something new in America. Is it not? I mean, it’s okay, we all want capitalism. I mean, I am not a communist. I'm not. But this is something new in politics where Wall Street was sort of betting on things to fail as opposed to for things to succeed.

It is truly fascinating how liberal media members will do anything to protect the reputation of Fannie Mae and Freddie Mac. On this weekend's “McLaughlin Group,” Newsweek's Eleanor Clift revised history to largely absolve the two government-sponsored enterprises for last decade's mortgage collapse while predictably blaming it on Wall Street and of course George W. Bush (video follows with transcript and commentary): ELEANOR CLIFT, NEWSWEEK: Because Wall Street wants to make it look like Fannie and Freddie were the drivers behind the mortgage collapse, when in fact Wall Street led the way and Fannie and Freddie basically caught up. I think, you know, Fannie and Freddie were the product of government policy, both parties, and President Bush championed the ownership society, and pushing low-cost mortgages were part of the Republican inroad into the Hispanic community. So this wreaks of politics, but you cannot say that Fannie and Freddie led the way with all those financial instruments. Fannie and Freddie got into the act when they lost a great section of the mortgage market because Goldman Sachs and Merrill Lynch and everybody else was trading on these financial instruments, and, and, and the unregulation allowed them to go ahead. So, they were, they were part of the crowd, but they did not, they did not lead the way. The “Wall Street” character Gordon Gecko famously said, “A fool and his money are lucky to get together in the first place.” I'd love to know what he'd say about this nincompoop. To claim that Fannie and Freddie weren't leaders in expanding the mortgage market that led to the housing bubble and the eventual near collapse of the entire financial services industry is addle-minded even for Eleanor. To quickly refute her claim, let's cite a source she trusts; in September 1999, the New York Times reported : In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. Readers are advised that this was months before the Financial Services Modernization Act of 1999 was enacted largely deregulating financial institutions to do virtually whatever they wanted, and roughly fifteen months before the Commodity Futures Modernization Act of 2000 deregulated derivatives. As such, it is quite absurd to say Fannie and Freddie didn't lead the way in driving the mortgage bubble or that George W. Bush played a significant role. But there's more in this Times piece that folks like Clift conveniently ignore: In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. So, back in September 1999, under pressure from the Clinton administration to make more loans to minority and low-income home owners with bad credit ratings, Fannie eased the credit requirements on loans it would purchase. At the same time, someone familiar with the industry was cautioning that such a move would force a government rescue of the GSE if the economy slumped. As we all now know, the rest is history except for folks like Clift who feel they need to revise it in order to protect the institutions and the Party they so deeply adore. Nice try, Eleanor.

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Eleanor Clift: Fannie and Freddie Didn’t Cause Mortgage Collapse – It Was Bush and Wall Street

CNN's Eliot Spitzer arrogantly lectured about the benefits of Keynesian economics Sunday while accusing fellow panelists on “Fareed Zakaria GPS” of not knowing what they were talking about because they weren't business owners. This led British historian Andrew Roberts to point out that President Obama's administration are mostly academics, and Ann Coulter to ask Spitzer, “What business have you ran? You’re a governor” (video follows with transcript and commentary): ELIOT SPITZER, CNN: Just so it’s clear before Ann starts jumping up and down, I actually believe Keynes was right. I believe that Keynesian economics works and is also true of the Constitution, something the Tea Party may not agree with. And I think the President needs to defend not just in the context of the auto bailout where it’s easy to point to GM and Chrysler and say, “Look what we accomplished,” but the entire economy would have been so much worse. The implosion of both confidence, the financial system, job creation, would have been devastating had we not put in place that cushion of the stimulus package. Now, you’re arguing it counter-intuitively, you’re saying, “It would have been worse but for,” and that’s not an appealing political argument, but it’s economically beyond question. And I think the President now at this moment of intense weakness, lack of job creation, needs to bring all of this oratorical and intellectual skills to bear to say, “Here’s what the record shows us.” David Cameron may be a great leader, the British economy is not faring terribly well because of those cuts. I mean, there is a certain mathematical reality… ANDREW ROBERTS, BRITISH HISTORIAN: In Britain, we’re trying to deal with this debt. CHRYSTIA FREELAND, THOMSON REUTERS: But maybe you’re doing the wrong thing. ROBERTS: Maybe we are, but, but, but he has been elected to try and see this through, and he is seeing it through, and if he does turn out, as I believe, to actually to get away with it, then the anti-Keynesian view will be proven right. The Hayekian view, this next election is going to be a classic Hayekian versus Keynesian election. FREELAND: In the U.S. ROBERTS: In the U.S. ANN COULTER: We’ve run this experiment at different times in this country over and over and over again, and every time nothing is done, there is no Keynesian spending, the economy recovers like that and we have a boom. It did in the ’20s, it did in the ’80s, and every time FDR and Obama jumped in… FAREED ZAKARIA, HOST: In the ’80s, I would call a massive increase in defense spending during the Cold War… COULTER: And massive cuts in taxes… ZAKARIA: Which are Keynesian. Keynes was in favor of taxing. He never made a particular distinction between government spending and or taxing. His point was you need demand in the economy, you need to stimulate demand. COULTER: Right, but, no, no, no Ronald Reagan winning the Cold War was not part of his taking a Keynesian approach to the economy. SPITZER: Ann, your statement would be nice if it were true, but it’s not. The reality is if you look at the economics, and you look at what the impact is of both cutting the marginal rates, government spending, the incentives you create to job creation, Keynes has been right at every turn in terms of understanding. If you actually sat down and either were a business person making capital allocation decisions, hiring, you’d understand that what you look at is your return. In reality, I quite agree with Spitzer that business people making capital allocation and hiring decisions are best-suited to understand how the economy works. Unfortunately, the former New York governor turned CNN host doesn't qualify, as his curriculum vitae identified absolutely no business experience whatsoever. After graduating from law school, Spitzer first clerked for Judge Robert W. Sweet in Manhattan, then went to a variety of law firms and the Manhattan district attorney's office before entering politics in 1994. As such, there is not one second of actual business experience in Spitzer's background. Yet, he's lecturing fellow panelists about his economic acumen while claiming businessmen are better suited to make such decisions: SPITZER: Right now there’s a demand crisis of enormous volume. That’s why we need to create demand in this economy to generate things that we can buy… COULTER: And Obama’s been following your policies, and that’s why we have a crisis. SPITZER: The executives are sitting on $2 trillion of capital. The key to getting that capital back into the economy to hire people is demand for the products being made. There has not been a whole lot of ambiguity about that. COULTER: We have been creating demand with the stimulus money and oddly enough it hasn’t worked, and what the businessmen themselves are asking for is, “Release us from taxes and regulations.” ROBERTS: The kind of tax cuts that Mr. Pawlenty is talking about, the huge tax cuts that Mr. Pawlenty is talking about, and indeed cutting back the GDP, the amount spent on GDP from the 24 percent it is now to the 20 percent that Mr. Romney wants or the eighteen percent is going to allow moneys to come back into the economy through tax cuts. SPITZER: Explain to me why. If people are sitting on capital, who are sitting on capital right now who are not investing because capital gains rates are 15 percent… ROBERTS: Yeah. SPITZER: You’re saying if you take that fifteen percent, you’re assuming they’re going to invest even when there’s no demand for the product? FREELAND: Right. What Eliot is pointing out is there’s a lot of money, there’s a lot of money on the sidelines. Now watch Spitzer stick his foot in his mouth: SPITZER: Have you ever made, have you been in business? ROBERTS: Not myself. SPITZER: You don’t understand how these capital allocation decisions are made. You really don’t. ROBERTS: Okay, sorry, how many of President Obama’s actual, of which he now only has one left, Mr. Geithner from his original team, they all have left, how many of them actually did businesses themselves? Very few of them. Most of them were academics. So don’t just attack people simply because they think differently than you do. Indeed. As JPMorgan's Michael Cembalest wrote at Forbes in 2009, Obama's cabinet has few members with actual business experience. Using Spitzer's guidelines, shouldn't they be exempt from making economic decisions for this nation? More importantly, shouldn't Obama who also has ZERO experience in the private sector and NONE as a business owner? And why should Spitzer be qualified to lecture about something that by his own standards he's unqualified for? Coulter didn't miss this hypocrisy: COULTER: What business have you ran? You’re a governor. SPITZER: Ann. COULTER: You’ve been in politics your whole life. You’re haranguing us. “If you were a businessman.” This is the strangest conversation I’ve ever seen. SPITZER: No, Ann, because you’re making statements that are so completely counter-factual… ROBERTS: I'm a historian. I didn't live in ancient Rome but I can still write about it. SPITZER: You're statements about the economy are simply counter-factual, contrary to every piece of evidence… COULTER: You’re right, you’re right, the economy is just booming right now. That Keynesian economics Obama gave us has been a delight. Indeed. The reality is that Spitzer once again showed himself to be a staggering hypocrite. On the own hand, he lectured guests about economic theory having majored in international affairs at Princeton University and attended Harvard Law School. He then claimed that others sitting with him were unqualified in matters of finance and economics due to their lack of business ownership while having never himself owned a business. As I agree with him that folks with actual business experience are likely far more adept in financial and economic affairs, it would be nice to see him and other Democrats now lecturing Americans about their expertise in such issues to disqualify themselves as quickly as they are those on the other side of the aisle that have spent their entire adult lives in the private sector. Or is that asking too much from a disgraced politician turned disgracefully biased journalist?

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Ann Coulter Smacks Down Arrogant Eliot Spitzer: ‘What Business Have You Ran? You’re a Governor’

New York Times columnist Paul Krugman was in his predictable defend Obama at all costs mode on Sunday's “This Week.” When former Bush administration official Torie Clarke said unemployment remains high because the private sector is concerned about future regulations, the Nobel Laureate scoffed, “All of this stuff about uncertainty is just a myth being made up to blame this on Obama” (video follows with transcript and commentary): TORIE CLARKE, FORMER ASSISTANT SECRETARY OF DEFENSE: But here’s the failure of policy I think. What would really get the private sector humming and hiring a lot of people is if they have predictability and certainty about things like regulatory regimes, and are some of these trade agreements going to go through that we really need because it is a global picture and not just a domestic one. And I know there’s a lot going on, but nobody seems to be focusing on that. Not the Administration, not Congress, and Paul’s laughing, but you agree? PAUL KRUGMAN, NEW YORK TIMES: Can I say, ’cause that’s not, the reason businesses are not investing is they have tons and tons of excess capacity. There’s a very clear relationship historically between the amount of unemployment and, and the amount of business investment. When unemployment is high, capacity is low, investment is low, there’s nothing. All of this stuff about uncertainty is just a myth being made up to blame this on Obama… CLARKE: No, money’s a coward. Money’s a coward: it’s not going to go unless it can make money. KRUGMAN: There’s nothing in there. There’s nothing in there. It’s exactly what you’d expect. You have to wonder whether Krugman is actually this clueless or if he knows what he's saying is nonsense but understands how important it is for him to deflect criticism of Obama regardless of merit. There's absolutely no question small, medium, and large businesses are concerned about ObamaCare for example and exactly how it's going to impact them. Until the Supreme Court rules on its Constitutionality, no employer knows what they have to comply with concerning this legislation. Taxes are another issue, for the compromise the White House reached with Congress in December only settled this question through 2012. No one knows what tax rates are going to be in 2013, and this has to be acting as a business inhibitor. So, too, is the possibility the Environmental Protection Agency will begin regulating carbon dioxide emissions. Almost as important are concerns throughout the banking, lending, and real estate industries that changes to Fannie Mae and Freddie Mac might further shock the mortgage market. And the entire oil industry is currently being inhibited by Obama-imposed restrictions on offshore drilling. The reality is there are a huge number of uncertainties that companies have to deal with as a result of this Administration's business-unfriendly posture, and the idea that someone like Krugman thinks this isn't having the slightest negative impact on hiring is absurd. Ironically, this Nobel laureate wonders why voters are so ill-informed.

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Krugman: ‘All This Stuff About Uncertainty is a Myth Made Up to Blame Unemployment on Obama’

On Wednesday, with a bit of an assist from the Census Bureau's seasonalizers, the Associated Press's Derek Kravitz, with the help of Martin Crutsinger, covered the Bureau's just-published January data on housing starts and building permits. Though no one could accuse the AP pair of excessive cheerleading, they missed the most important comparison: How did January 2011 compare to January 2010? The answer: It was worse. Here are key passages from their writeup : Apartments pushed home construction up in January

2010 will be by far the worst ever in the 48 years records of new home sales have been kept, and there is little if any reason to believe things will get better soon. The news on existing home sales has hardly been better, given the price reductions sellers have had to make to move their homes. Graphics will follow shortly indicating just how bad the market for new and existing homes has been this year. These on-the-ground realities explains why one's jaw has to almost hit the ground when reading the headline and first few paragraphs of Julie Schmit's December 23 front-pager in USA Today's Money section : Optimism for home sales adds up Demand for existing houses continues to rise read more

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USAT Builds a False Alternative Reality in Reporting on Housing Market

The Associated Press The Associated Press WASHINGTON The Obama administration’s central foreclosure-prevention effort won’t reach its original goals and the government…

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Govt anti-foreclosure program needs goals: panel

On Thursday, I noted (at NewsBusters ; at BizzyBlog ) that the Associated Press's Marty Crutsinger and Chris Rugaber worked very hard to

AP – Nevada had unrealistic growth expectations before the nation’s financial meltdown battered the state’s tourism industry and erased billions of dollars in real estate equity, an economist told a federal commission examining the causes of the Great Recession.

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Panel examining recession’s causes meets in Vegas
(AP)