Future Demand Borrowing, Revisited and Forecasted

This kind of closes my case on future demand borrowing, 2 months later.



Demand won't collapse for another couple of months, due to a) the homebuyer tax credit, and b) the Fed buying mortgage backed securities through March.

But once those two demand stimulants go away.... watch out.

Source: Calculated Risk

Future Demand Borrowing, Revisited

Looks like my forecast on future demand borrowing was borne out.



Source: Rolfe Winkler

"It Flies"

An emotional engineer is a beautiful thing. Well done, gentlemen (and ladies).

"Future Demand Borrowing"

The homeowner tax credit didn't create many new home buyers. 5 out of 6 of them were "borrowed" buyers from 2010-11. The result is that 2009 volumes are higher, but 2010-11 volumes will be more anemic.

You'll hear more about this over the month or two, as November/December closed sales are published as being way down. The leading edge evidence comes from great analysis by Seattle Bubble.



The homebuyer extension is like one more RB&V at 3am when you're wasted; it'll keep you in the groove just a little bit longer, and make the morning after even worse.

Source: NWMLS: Tax Credit Boosts November Closed Sales as Pending Sales Drop Through the Floor

Buying votes for $250/per

January 2009: Social security payments go up by a 5.8% COLA due to increased energy costs.

December 2009: Energy prices drop 30%, so Social Security will go up by 0% (it cannot go down).

Congress/Obama want to thus give every senior $250, total cost $13 billion.

How can any this be anything else other than vote buying?

WASHINGTON (AP) - President Barack Obama called on Congress Wednesday to approve $250 payments to more than 50 million seniors to make up for no increase in Social Security next year. The Social Security Administration is scheduled to announce Thursday that there will be no cost of living increase next year. By law, increases are pegged to inflation, which has been negative this year.

Social Security payments increased by 5.8 percent in January, the largest increase since 1982. The big increase was largely because of a spike in energy costs in 2008.

Inflation has been negative this year largely because energy prices have fallen. Gasoline prices have dropped 30 percent over the past year while overall energy costs have dropped 23 percent, according to the Bureau of Labor Statistics. - AP Oct 14th

Breakfast of Champions

Mrs. Ninja's caloric intake from 6:00am to 3:00pm:

diet pepsi
rest of candy apple
chips
sponge cake

Classic Consulting Quotes

Job manager, upon seeing a slide I made: "Are you color blind, by the way?"

True story.

Thee Sunbeam method of Government Stimulus

The evidence on Cash for Clunkers is that it just borrowed from future demand rather than creating new demand. After a quick spike of sales, future demand will be lower.

The first time homebuyer credit is seeing the same effect - 5/6 of the people claiming the credit were going to buy there house anyways, either today or in the near future. So the effective cost per incremental new house sale was $43,000. What a waste.

These programs made 2009 go slightly better than it would have otherwise, but will make 2010-2012 slightly worse. What a stupid way to run a business, or a country.

You know who else did this? Sunbeam.

Is Obama going to be the next Chainsaw Al?

Information Visualization Irony

I wouldn't let a 22-year old analyst get away with publishing a chart like this. What stupidity.



Stephen Few's commenters excoriate this chart, rightfully so:

"BO is not a business "intelligence" tool. It is a presentation tool, overly simplistic in capability and overly complicated in execution. It lacks functionality and an efficient UI, and is overpriced." - Andy Holaday

"It's a cascading hierarchy of awfulness, which almost makes it challenging to critique!" - Tim Wilson

"But it’s not just the people with the purse strings who will buy something because its a) pretty, b) expensive and c) they’ve heard of it." - N Barrett

The merits of OurBeeswax.com

Within the walls of modern corporations, asking hard questions, providing negative feedback upwards, and questioning the statements of leaders is extremely dangerous. Those types of statements can lead to an idea being discarded; people attach themselves to their ideas; people with ideas under attack will regard it as a personal attack; and they will lash out at the source of the attack - the messenger.

This isn't news - anyone in a corporate environment knows this. It's also not news to say that this happens in a consultancy; after all, a consulting firm is just as, if not more so, driven by the ability of leaders to convince people (clients and underlings) that their ideas are truly unique and original.

The result is that few messengers are shot, because everyone knows the rules and holds their tongue. As a result, stupid ideas (that everyone in the organization knows are stupid) aren't killed before they do real damage. I'd cite an example, but everyone can think of a time when this happened in their organization.

What is new and interesting is how technology allows those hard questions to be asked within the walls of an organization, while protecting the messenger, and the carefully constructed corporate image.

Do you use Ourbeeswax.com? What's your take on it?