Just finished two very good book. First was "The Big Picture" by Edward Jay Epstein about the entertainment industry. Second was "Caucusus: Mountain Men and Holy Warriors" about the Caucus region south of Russia and north of Iran.
Both were fascinating reads for their own reasons. "The Big Picture" is great for anyone who is puzzled by why Hollywood does the wierd things it does, like "why the hell is Tom Cruise dating Katie Holmes even a relevant news story?" Read the book and you'll understand.
"Caucusus" was very interesting because this is a very volatile region of the world that we don't know near enough about. The main areas in the region are Georgia, Chechnya, Albania, Azerbijian, and Dagestan. I picked up this book because I had heard alot about Chechnya as it applies to terrorism and wanted to learn more.
Both are very good.
Enjoy
Tuesday, June 07, 2005
Monday, May 30, 2005
The Fate of the European Union
While some media outlets are attempting to downplay France's rejection of the EU Constitution, they do so at their own peril. In my opinion, this is a huge story. France, one of the founders of the EU and one of the protagonists of the Europe versus America power bloc, will not be a part of the supranational European Union.
This action was taken by voters for two main reasons: approving the Constitution would likely dismantle the welfare state the French are so proud of and would also likely destroy the labor unions and send artificially high paying jobs to low wage countries such as the former Eastern Block countries.
Because of this rejection, France faces a major problem: their economy is a major drag on growth and employment. Unemployment in France (like other major European economies) is about 10%. Further, employees cannot work more than 35 hours per week. Without the support of Europe, France faces the real problem of a long-term declining economy.
Hopefully a force will emerge within France to reinvigorate their economy.
This action was taken by voters for two main reasons: approving the Constitution would likely dismantle the welfare state the French are so proud of and would also likely destroy the labor unions and send artificially high paying jobs to low wage countries such as the former Eastern Block countries.
Because of this rejection, France faces a major problem: their economy is a major drag on growth and employment. Unemployment in France (like other major European economies) is about 10%. Further, employees cannot work more than 35 hours per week. Without the support of Europe, France faces the real problem of a long-term declining economy.
Hopefully a force will emerge within France to reinvigorate their economy.
Saturday, May 28, 2005
American Exceptionalism
What a term, eh? It has been a long time since this government has unequivocally said that we live in the greatest nation on Earth. Why is that? I believe we are lost in worrying about what others will think of us, rather than looking to us for inspiration.
In the book I am reading (The Big Picture), the author, Edward Jay Esptein mentions that many movies are molded into a format that Americans will enjoy. This format is where the good guys prevail in the end.
After watching Ronald Reagan's biography (which my sister-in-law got for me for Christmas) again, I remembered the things that make us great. We are an optimistic people. We are a kind people. And we are a generous people. And it is about time that we remember why our country is the best country out there.
I am simply exhausted by the moral equivalency that we hear from the press on a day-to-day basis. I don't care what happens in Iraq, Afghanistan or Guantanamo Bay; we live in the greatest nation on Earth.
In the book I am reading (The Big Picture), the author, Edward Jay Esptein mentions that many movies are molded into a format that Americans will enjoy. This format is where the good guys prevail in the end.
After watching Ronald Reagan's biography (which my sister-in-law got for me for Christmas) again, I remembered the things that make us great. We are an optimistic people. We are a kind people. And we are a generous people. And it is about time that we remember why our country is the best country out there.
I am simply exhausted by the moral equivalency that we hear from the press on a day-to-day basis. I don't care what happens in Iraq, Afghanistan or Guantanamo Bay; we live in the greatest nation on Earth.
Housing Bubble?
This morning, the New York Times ran an article about the surge in housing prices and asked if there was, in fact, a housing bubble. The answer: not really. Because in many towns, rental rates have been rising, this partly justifies the soaring cost of homes. In fact, when converted into a rental ratio (price of home/annual rent), this is much less of a bubble than the stock market was in 1999.
The article went on to indicate that some of the hottest markets have rental ratios between 20 and 35; much lower than price-to-earnings ratios on stocks in 1999.
I find this kind of weak analysis very amusing. The reason? Try to sell your home into a declining market and you will quickly find out. Stocks have (and must have for that matter) higher valuation metrics because of their liquidity. Furthermore, rents are ostensibly based upon personal income, which is probably a much more prudent measuring tool since rental rates fluctuate as much as housing prices. And, if you look at home values relative to median income figures, the statistics are much more telling.
Homes should sell at something like 3 X an area's median income. Of course, this is a rough estimate, but it should be based upon an individual's ability to service his mortgage debt. The above ratio, of course, assumes average interest rates. It also assumes that people aren't constantly cashing equity out of their homes (which is a significant problem, as families are relying upon this tool to fund consumption).
If you want to know what the average home in your part of town should be valued, look for the area's median income and median home price. In Portland, the median family income is $50,000. Therefore, the median home price should be about $150,000. In reality, the median home price in Portland as of about 6 months ago was about $185,000. This equates to approximately 25% overvalued. When this corrects (and it will), the decline generally overshoots the target. In short, when housing prices begin to fall, the decline will likely go to below $150,000. Maybe $140,000 or $130,000, causing value buyers to enter the market.
For some people, this will not be a problem. They don't need to move, have a fixed rate mortgage and aren't pulling equity out of their home. For some others, this could be devastating.
The article went on to indicate that some of the hottest markets have rental ratios between 20 and 35; much lower than price-to-earnings ratios on stocks in 1999.
I find this kind of weak analysis very amusing. The reason? Try to sell your home into a declining market and you will quickly find out. Stocks have (and must have for that matter) higher valuation metrics because of their liquidity. Furthermore, rents are ostensibly based upon personal income, which is probably a much more prudent measuring tool since rental rates fluctuate as much as housing prices. And, if you look at home values relative to median income figures, the statistics are much more telling.
Homes should sell at something like 3 X an area's median income. Of course, this is a rough estimate, but it should be based upon an individual's ability to service his mortgage debt. The above ratio, of course, assumes average interest rates. It also assumes that people aren't constantly cashing equity out of their homes (which is a significant problem, as families are relying upon this tool to fund consumption).
If you want to know what the average home in your part of town should be valued, look for the area's median income and median home price. In Portland, the median family income is $50,000. Therefore, the median home price should be about $150,000. In reality, the median home price in Portland as of about 6 months ago was about $185,000. This equates to approximately 25% overvalued. When this corrects (and it will), the decline generally overshoots the target. In short, when housing prices begin to fall, the decline will likely go to below $150,000. Maybe $140,000 or $130,000, causing value buyers to enter the market.
For some people, this will not be a problem. They don't need to move, have a fixed rate mortgage and aren't pulling equity out of their home. For some others, this could be devastating.
Friday, May 27, 2005
Abu Musaab al-Zarqawi
As some of you may know, since September the 11th, I have attempted to get my hands on as much data about terrorism and terrorism networks as I could possilby read. This has led me to some interesting information about what is going on out there.
Abu Musaab al-Zarqawi is alleged by some to be injured, by some to be dead, and by some to be doing well and planning additional insurgent attacks.
Right now, a disinformation campaign is occurring (probably by our CIA in conjunction with the Iraqi ruling parties). We are betting that by claiming Zarqawi is injured or dead (and leaking intelligence as such), that the insurgent networks that support him will do three things: scramble to verify his health, claim he is healthy, and those who cannot confirm this will struggle for power. So far, this is exactly what is happening. When there is a power vacuum, bad things happen to those in the vacuum.
Abu Musaab al-Zarqawi is alleged by some to be injured, by some to be dead, and by some to be doing well and planning additional insurgent attacks.
Right now, a disinformation campaign is occurring (probably by our CIA in conjunction with the Iraqi ruling parties). We are betting that by claiming Zarqawi is injured or dead (and leaking intelligence as such), that the insurgent networks that support him will do three things: scramble to verify his health, claim he is healthy, and those who cannot confirm this will struggle for power. So far, this is exactly what is happening. When there is a power vacuum, bad things happen to those in the vacuum.
Thursday, May 26, 2005
The New Yorker Magazine
About 18 months ago, one of my clients proffered a complimentary subuscription of the New Yorker magazine to me. The New Yorker is not exactly a bastion of libertarianism, but nontheless, each month, the magazine publishes one really good, in-depth, well-researched article. The May 16th issue is no different.
The title of the article is, "A Hard Faith; How the New Pope and His Predecessor Redefined Vatican II." While I can't say that I know that much about Vatican II (other than it allowed Catholics to eat meat on most Fridays and Latin was no longer the language of Mass), I would guess most of the synopsis is rubbish. Having said that, there is a great sidestory about the bishops appointed under John Paul II and how the more orthodox sects of the faith are growing like the evangelicals, while the more "mainstream, liberal" sects are losing vast followings.
There are also some great quotes about doctrine I had never heard, but found fascinating, such as:
"We're at a time for the Church in our country when some Catholics - too many - are discovering that they've gradually become non-Catholics who happen to go to Mass. That's sad and difficult, and a judgment on a generation of Catholic leadership. But it may be exactly the moment of truth the Church needs." Archbishop Charles Chaput, Denver, Colorado
If you have an interest in reading the article online, you can access it via the following link: http://www.ctaww.org/articles/boyer_ahardfaith.htm
Sorry there is no hyperlink above, but I haven't yet figured out how to do that, or post pictures for that matter. Just copy and paste.
Enjoy!
The title of the article is, "A Hard Faith; How the New Pope and His Predecessor Redefined Vatican II." While I can't say that I know that much about Vatican II (other than it allowed Catholics to eat meat on most Fridays and Latin was no longer the language of Mass), I would guess most of the synopsis is rubbish. Having said that, there is a great sidestory about the bishops appointed under John Paul II and how the more orthodox sects of the faith are growing like the evangelicals, while the more "mainstream, liberal" sects are losing vast followings.
There are also some great quotes about doctrine I had never heard, but found fascinating, such as:
"We're at a time for the Church in our country when some Catholics - too many - are discovering that they've gradually become non-Catholics who happen to go to Mass. That's sad and difficult, and a judgment on a generation of Catholic leadership. But it may be exactly the moment of truth the Church needs." Archbishop Charles Chaput, Denver, Colorado
If you have an interest in reading the article online, you can access it via the following link: http://www.ctaww.org/articles/boyer_ahardfaith.htm
Sorry there is no hyperlink above, but I haven't yet figured out how to do that, or post pictures for that matter. Just copy and paste.
Enjoy!
Sunday, May 22, 2005
Today's Agenda
Today is the Pug Crawl. The sun is shining and hopefully, we will be heading out to Northwest Portland to join dozens of other pug lovers. It is a great Oregon Humane Society event, and a good way to get our girls out of the house. It should be lots of fun. The website to the event is www.pugcrawl.org (sorry no hyperlink; I am still learning).
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