Those surging home prices - again

I guess the word "surge" can mean different things to different people. For example, when I referred to the Hudson River surging on the night Sandy hit the NYC metro area, I meant that it actually rose over its banks and swallowed parts of places like Hoboken, Weehawken, Edgewater etc in New Jersey.

I did not mean that the river stayed pretty much flat.

So, when I see CBS news claim Case-Shiller: U.S. home prices surging, I think that Case-Shiller price index is really pointing up — not staying flat.

But, by now, I know better. So, I plotted the trends in both the 20 City Composite Price Index and the Sales Pair Counts to see there really was any upward movement in either actual sales of homes or the prices those homes are fetching.

Here is the chart:

The vertical blue line corresponds to when the Democrats took over both houses of the Congress (January 2007) and the vertical magenta corresponds to the first inauguration of President Obama (January 2009).

The green squiggly line is the 20-City composite price index from S&P's Case-Shiller. I hope it is clear that it has been relatively flat with some downward swings since President Obama took office. I say "I hope" because apparently this is not so clear to a lot of people in the media or even to the people who put together S&P's press releases.

The price index stood at 143.11 in February 2009. Today, its value is 146.57. That means, nominally, prices have increased 2.4% since then. However, cumulative inflation since 2009 is about 9% according to the CPI Inflation Calculator.

That means, in inflation-adjusted terms, today's price index is about 6% lower than it was in February 2013.

That is not a surge. That is the doldrums.

The salmon colored bars represent actual sales activity by month. Clearly, some months are more active (say, August) than others (say, February), but if you can detect an upward trend in sales activity, I have an improbability drive I'd like to sell you.

Is attacking America the same as attacking a specific American?

Seriously, for example, is there a difference between stealing someone's credit card to charge some stuff and pawn it versus stealing a CIA agent's credentials to access sensitive national security information and passing it along to enemies of the United States?

One is theft. The other is espionage and most likely treason.

When a gang member in Rahm Emmanuel's Chicago shoots some innocent kid, that's murder.

When someone detonates a bomb in the middle of a crowd for the purpose of demoralizing the American public along with killing and hurting a bunch of them, that is terrorism. If the terrorists are following the directions of a foreign power, it is also an act of war. If the terrorist is an American following the directions of a foreign power, it is also very likely treason.

Attacking America is different than just harming a specific American.

Therefore, the perpetrators are not ordinary criminals.

The President's crew is engaged in an effort to conflate this very straightforward observation with military tribunals:

Q Some Senate Republicans — lastly, Jay — are saying that the Boston suspect should be treated like an enemy combatant. Is that something that you guys have looked at or made a determination on?

MR. CARNEY: He will not be treated as an enemy combatant. We will prosecute this terrorist through our civilian system of justice. Under U.S. law, United States citizens cannot be tried in military commissions. And it is important to remember that since 9/11, we have used the federal court system to convict and incarcerate hundreds of terrorists. The effective use of the criminal justice system has resulted in the interrogation, conviction and detention of both U.S. citizens and noncitizens for acts of terrorism committed inside the United States and around the world."

Let's recall why military commissions were established. Following the September 11 attacks, the U.S. was capturing a lot of non-Americans on battlefields, safe houses, traveling between various locations etc. Clearly, at least some of these individuals had potential knowledge of the inner workings of terrorist organizations which might be planning future attacks. Bringing them back to the U.S. might have accorded them rights normally associated with U.S. persons. For example, the detainees might have obtained access to information about how the information leading to their capture had been obtained. They could then pass this information back to their organizations so that whatever sources of information the U.S. had access to could be terminated. After, all the U.S. has a witness protection program for Mafia informants for a reason. Short of establishing U.S. witness protection programs for al-Qaida informants in foreign lands, isolating foreign detainees outside of the U.S. proper was the most expedient solution.

Therefore, the Bush administration moved them to a secure facility in Guantanamo Bay. This arrangement was immediately challenged by various groups, including the current president.

Military commissions were set up to have a formal mechanism whereby a group of outsiders could review if a given detainee should continued to be held at the Guantanamo Bay. They had nothing to do with convicting ordinary criminals. It was about removing enemies from the battlefield and extracting information from them.

The current president thought this was a bad idea, and promised to shut down the Guantanamo Bay facility. Last I checked, it was still open. However, the current president also chose to avoid sending further detainees there. Instead, whenever they identify a high value enemy, he orders drone operators to blow him and a bunch of relatives up from afar. In addition to the humanitarian concerns I have (why kill a bunch of little kids in the tribal areas of Pakistan on purpose?), this has the effect of shutting down any possibility of obtaining information from people who might be planning future attacks on the U.S.

Maybe that's why there was no intelligence about the attack on the Boston Marathon before the attack.

Given that I was wrong, and the Boston attack is associated with al-Qaida, I believe this was not a one-off. I am assuming they have other teams in place in other cities to carry out similar attacks when the time comes. Information is more important than ever. Unfortunately, that is going to be in short supply if the administration continues to treat terrorists serving a foreign power the same as an ordinary American criminal while using sources of information for drone target practice.

In scientific computing, batch processing is king

Reinhart & Rogoff are out with their response to the critique by Herndon et al. Fine. Whatever.

I have never been a fan of Excel-jockeying. In fact, I do consider any study that depends on manipulating data in an Excel worksheet to be unscientific. Not only does Excel automatically change too many things behind one's back, but using a pointy-clicky interface also means you do not put together, however simple, a script that records the operations you performed on the data to get the result you got, and a log file of the actual output you generated.

Put simply, when it comes to scientific work, batch processing is king. Anything else, I have to take your word for what you did. Or, when it comes to the case of Carmen Reinhart and Kenneth Rogoff, they had to take the word of some R.A. whom they asked to do the Excel-jockeying.

I have mentioned before that I do not consider government budget deficits and debt to be the determinants of economic growth. The argument against big government does not depend on debts and deficits and it may not be possible to make the argument empirically because big government can produce high GDP numbers on paper.

So, in short, I find both the point and counter-point uninteresting and distracting from the main issue. But, something in Reinhart & Rogoff's response attracted my attention:

It is utterly misleading to speak of a 1% growth differential that lasts 10-25 years as small. If a country grows at 1% below trend for 23 years, output will be roughly 25% below trend at the end of the period, with massive cumulative effects.

For example, if the GDP grows at 1% for 25 years, at the end of the period, it will be 28% higher than the starting point. If it grows at 2% for 25 year, it will be 64% higher than the starting point, and if it grows at 3% for 25 years, it will be 109% higher than the starting point, representing more than a doubling.

So, the U.S. seems to have gone from mostly around or above 3% annual growth in real GDP, to about 2% in the recent years.

The reason for that is not current debt. It is the shadow the government sector (Federal, state, local) casts on the rest of the economy which feeds it.

The Rational Reason to Hope the Boston Marathon Bombing is not al-Qaida

As I mentioned earlier, I do not think it is likely that al-Qaida is behind the Boston Marathon Bombing.

I am a little perturbed, however, someone called David Sirota said:

you should hope the bomber was a white domestic terrorist. Why? Because only in that case will privilege work to prevent the Boston attack from potentially undermining progress on those other issues.

James Taranto, as usual, does an excellent job of handling this nonsense. As a Turkish Muslim immigrant to the United States, who has never been discriminated against based on his national origin and religious beliefs who supports real immigration reform now, I find that argument idiotic beyond belief. It is the kind of statement only a clueless person who lives in his own bubble can come up with.

Still, while we wait for the FBI to tell us about the suspects, I cannot help but hope that the bombing was not the work of al-Qaida.

Because if it were, this was just the beginning. A rehearsal, possibly. Because if it were, we now have to think about independent, isolated cells in other cities. If this is al-Qaida, we're looking at possible a crescendo.

That doesn't mean any other terrorist organization cannot stage subsequent attacks. However, their attacks are unlikely to have the kind of global consequences that would be created by repeated attacks by isolated independent al-Qaida cells in the U.S.

If al-Qaida can create an image that they are basically toying with the American psyche, that will have far-reaching consequences, especially following the impotent responses to the attack on the U.S. Embassy in Cairo and the Consulate in Benghazi.

That is why I hope this is a domestic group rather than the first in a series of attacks organized in the strongholds of Berlin, Paris, Istanbul, Cairo, and the mountains of Afghanistan and tribal areas of Pakistan.

It is a rational hope.

Could the Boston bombings be the work of al-Qaida?

Our thoughts and prayers are with those affected by the cowardly bombing at the Boston Marathon yesterday and with all victims of terrorism around the world.

Since I first heard about the explosions, I have been wondering if this could have been the work of al-Qaida. In the case of the Oklahoma City bombing, it was obvious that Muslim terrorists were not behind it (despite the chorus of voices who got really excited about that possibility at the time). Simply put, no matter what the real toll in human lives, blowing up some Federal bombing in a city which does not evoke images of America the Satan in the eyes of the bearded cave dwellers is not something on which they would risk their reputations.

Terrorists are driven to destroy what they regard as symbols of power. That is why places like New York City, Washington D.C., Chicago, and Los Angeles are at greater danger from Muslim terrorists than, say, Ithaca, NY is. It doesn't mean those other cities are immune to attacks from individual crazy Muslim terrorists, but they are unlikely to be targets of organized terrorism.

Boston is a very important city in American history, but it does not symbolize much to an average person born in the Middle East. On the other hand, it is not completely off their radar either as one of the planes taken over on 9/11/2001 had originated from Boston's Logan Airport.

In addition, terrorist attacks by Muslim terrorists tend to be followed immediately or pretty soon afterward by bragging and claims of responsibility. The apparent silence following this one is odd. They might be thinking the attack failed to create panic and slaughter on the scale they wanted and therefore not eager to "take credit."

Further, if this were an attack by al-Qaida or similar Muslim terrorist group, I am not sure why the administration would be so quiet about it. I know, they have tried to gloss over some past attacks and attempts, but I still don't see what incentive they would have to be so completely silent on it.

On the other hand, Tax Day, The Boston Tea Party, Patriots' Day evoke powerful imagery for an American.

Therefore, I find it far more likely that the attack would have been carried out by a homegrown individual or group whose focus is what's happening in the U.S. rather than anything associated with al-Qaida.

In fact, I somewhat hope that is the case, for if this was al-Qaida, it signals that they have learned some things I was hoping would have escaped them owing to their obsession with big, dominant symbols of American power.

Did China just tell the U.S. to shut up and behave?

In addition to surreal stories trumpeting the meteoric rise of the U.S. housing market, the U.S. press seems to be taken by another fiction. I am specifically referring to stories which claim that China is issuing threats to North Korea.

I do not speak Chinese but I was able to locate a story through english.gov.cn:

"As the current situation on the peninsula is complicated, China opposes any action that would undermine peace and stability on the peninsula," Hong said.

It seems, immediately afterwards, the U.S. canceled a missile test:

WASHINGTON (AP) -- Amid mounting tensions with North Korea, the Pentagon has delayed an intercontinental ballistic missile test that had been planned for next week at Vandenberg Air Force Base in California, a senior defense official told The Associated Press on Saturday.

It makes no sense to act like a chicken when people are playing chicken with you. It gives them a sense that they can get away with worse and worse. We saw examples of this early on during the conflict in Bosnia where Bill Clinton, NATO, the U.N., and the Europeans issued threat after impotent threat against the Serbs, and then got out of the way of every massacre. Eventually, Bill Clinton decided to intervene in Kosovo, but by that time the Serbs knew his words carried no weight, so the Bill Clinton ended up ordering of wholesale bombardment of the Serbian population, killing pregnant women and little children from the air and the bombing of the Chinese embassy in Belgrade.

Had the Clinton administration not clearly broadcast the message that the U.S. will chicken out when the going gets tough, had the U.S. intervened strongly and decisively during the Siege of Sarajevo, instead engaging in pinprick attacks against Serbian forces, their word would have been taken much more seriously.

Immediately following Operation Enduring Freedom and Operation Iraqi Freedom, every little despot knew that the U.S. administration meant what they said. The Iranians came clean with their nuclear program, and Gaddafi renounced [Libya's] possession of weapons of mass destruction, decommissioning its chemical and nuclear weapons programs.

Since then, there has been a concerted effort by the Democrats and their allies in the media to undermine U.S. credibility in the world. The President has not been shy about stating his belief that the U.S. should cut and run out of conflict zones without obtaining decisive victories. U.S. forces have been in Europe since the end of the Second World War, making sure the Nazis could not stage a comeback and standing against the expansion of the Soviet Union. What then justifies conceding the entire Middle East to the Russians and their friends in Iran and Syria?

Contrary to the stories being pushed by the friends of the administration, North Korea is not an isolated country:

Out of these webs of proliferation activities, it is the Iran-North Korea connection that has been emerging as the most virulent, immediate threat. As business partners, they are a particularly neat fit. Iran, with its visions of empire, has oil money. Cash-hungry North Korea has nuclear technology, an outlaw willingness to conduct tests, and long experience in wielding its nuclear ventures to extort concessions from the U.S. and its allies. Both countries are adept at spinning webs of front companies to dodge sanctions. Both are enriching uranium. The stage is set for North Korea, having shopped ever more sophisticated missiles to Iran, to perfect and deliver the warheads to go with them.

Notice how, following the statement from China that China opposes any action that would undermine peace and stability on the peninsula,, the U.S. responded by canceling a missile test, while the North Koreans took steps to end cooperation with South Korea.

It certainly looks like the Chinese just told the U.S. to behave.

Is there any news on the unemployment front?

It's been interesting watching some of the reactions to the latest unemployment claims report:

In the week ending March 30, the advance figure for seasonally adjusted initial claims was 385,000, an increase of 28,000 from the previous week's unrevised figure of 357,000.

and the March employment situation report

Nonfarm payroll employment edged up in March (+88,000), and the unemployment rate was little changed at 7.6 percent …

The civilian labor force declined by 496,000 over the month, and the labor force participation rate decreased by 0.2 percentage point to 63.3 percent.

You get the picture.

We had a ride for the last few months of 2012 owing to Third World election economics, amplified by QE3, and so there were a few spikes in "good" directions at various opportune times, but the U.S. economy is in the doldrums. There is boom in stock market indices because there is a lot of free money floating around —I find it cute that the Obama administration keeps helping the really rich get richer— but everything else, with the exception of natural gas, has been flat.

In the coming months, expect more flat. Just plain flat. You'll know everything that matters is flat because every minute change from a previous low will be trumpeted as a sign that things are getting better. But key indicators will remain flat.

Take a look at the household survey data: In March 2012, 141.4 million people were employed. In March 2013, that number was 142.7 million. That's about 1.3 million more people employed in a year. But, over the same period, the civilian noninstitutional population grew by 2.4 million. As a result, employment to population ratio was 58.3% in March 2012, and it is 58.2% today.

In March 2007, a couple of months after Democrats took control of Congress, employment was at 145.3 million and civilian noninstitutional population was at 231 million, giving an employment to population ratio of 62.9%.

Yes, in absolute numbers the fact that 2.6 million fewer people are employed today than right after Democrats took office may not look like a huge deal. But that four percentage point difference in employment to population ratio represents 9.8 million people.

9.8 million.

I thought Mr. President's stimulus was supposed to prevent this.