Housing Bubble...Europe More At Fault Than The US!

One of the great things about reading news originating in other countries is that you realize that the US is not as evil and guilty as you might assume it is, given the reportage of our masochistic Fourth Estate.  Here's a great example (tip of the hat to Mark B. in B.C.).  

Given comments like the headline on the satirical British website The Daily Mash: “Bastard Americans Ruin Your Life”, just about everyone in the US assumes that we caused the worldwide housing bubble, it's subsequent collapse and the resultant financial crisis.  Au contraire mon petite chou.... Neil Reynolds of Canada's "Globe and Mail"has an informed and interesting perspective on the US complicity in this current crisis, and it's an eye-opener for many of us (just disregard Neil's smug Canadian attitude, they'll get their's yet).....

Did the U.S. compel Iceland's three bankrupt banks (which didn't hold a single subprime mortgage) to guarantee 5.4 per cent on foreigners' deposits? Do we make the U.S. responsible for Europe's absurdly inflated housing prices? Aren't smart, affluent Europeans as responsible for Europe's housing crash as hapless, poor Americans? In 2006, after all, one-bedroom apartments in Dublin sold for $600,000 – as much as $125,000 more than they now forlornly list.

When the International Monetary Fund published its world economic outlook earlier this year, it calculated the top-of-cycle “bubble” component of housing prices, which it defined as “the house price gap,” in Canada, the U.S., Japan, Australia and 13 European countries. Among these 17 countries, the IMF determined that only two had a zero (or better) “house price gap.” Canada emerged as one of these, with average house prices 2 per cent less than the fundamental worth. (The other was Austria, with average house prices 6 per cent less than the fundamental worth.) The IMF found that the U.S. did, indeed, have a house price gap at the end of 2007 – a bubble factor of 10 per cent that “could not be accounted for by fundamental economic factors.” Compared with European house price gaps, though, the U.S. gap indicated only modest excess. The IMF put Ireland's price gap at 30 per cent, meaning that Ireland's housing price bubble is roughly one-third above fundamental value.

When the International Monetary Fund published its world economic outlook earlier this year, it calculated the top-of-cycle “bubble” component of housing prices, which it defined as “the house price gap,” in Canada, the U.S., Japan, Australia and 13 European countries. Among these 17 countries, the IMF determined that only two had a zero (or better) “house price gap.” Canada emerged as one of these, with average house prices 2 per cent less than the fundamental worth. (The other was Austria, with average house prices 6 per cent less than the fundamental worth.) The IMF found that the U.S. did, indeed, have a house price gap at the end of 2007 – a bubble factor of 10 per cent that “could not be accounted for by fundamental economic factors.” Compared with European house price gaps, though, the U.S. gap indicated only modest excess. The IMF put Ireland's price gap at 30 per cent, meaning that Ireland's housing price bubble is roughly one-third above fundamental value.

As well, the IMF calculated the mortgage debt of various countries as a percentage of GDP. Canada emerged, once again, as a country without inflated property values. Canada's housing debt was equal to 50 per cent of its GDP. In the Netherlands and Denmark, mortgage debt was equal to 95 per cent of GDP. (Selected other countries: Austria, 80 per cent; Spain, 60 per cent; Ireland, 70 per cent.) U.S. mortgage debt was equal to 78 per cent of GDP, midway between Canada, on the one hand, and the Netherlands and Denmark on the other.

Canada fared well in these (and other) comparisons. But the much-maligned U.S. didn't fare all that badly. (The United States, the IMF report concluded, was among the middle-ranked countries in “vulnerability” to a bubble-busting correction.) Most European countries are decidedly worse off. Some confront the prospect of catastrophic house price crashes; some apparently confront the prospect of bankruptcy. The Baltic countries (Estonia, Latvia and Lithuania) are desperate. Spain is desperate. (Spain built four million houses in the past decade, more than Britain, France and Germany combined – most of them as second homes for affluent Europeans.) Britain, France and Ireland are desperate. House prices are falling in all of these countries – and U.S. subprime mortgages have nothing to do with it. On the far side of every wave, the direction is always down.

So, there you go.  Put away the cat 'a nine-tails, stop flagellating yourself, and  feel better about being a citizen of the USA.  If we can stop the politicians from attempting to fix everything, it will get better.

McCain Ensuring His Senate Seat

Three weeks ago I posed the question of whether or not John McCain was sincere in his candidacy .  I have come to believe that he isn't.  He's pulling his punches.


When someone is going full out, you know it.  When someone has cut all safety lines in reaching for the golden ring, you know it.  When people sink the ship that they can return on, you know that they're really serious.  


In an interview the other day, John McCain mused in an aside that if he were to lose the election he saw himself returning to the Senate and continuing his mission there.  That's when it finally dawned on me that the reason that he has not attacked the most obvious targets of his campaign beside Obama - the Democrats in both the House and Senate who are the cause of this economic crisis, is because he's hedging his bets.


John McCain has a fall back position....the Senate.  I believe he envisions himself there, stepping into the role of a battle weathered "Silverback', as the "Lion" of the Senate - Kennedy, has not yet passed on.


McCain may not be the most erudite candidate regarding economics, but he knows where the blame lies.  He knows the deals cut, he knows who was payed off by Fanny and Freddy.  He knows Senator Chuck Schumer took a highly unusual step of publicly criticizing a bank, sparking a run on it, just as big Democrat hedge fund donors were examining assets of the bank in hopes of buying them on the cheap should the bank fail. He knows what Reid and Pelosi have done.  He knows what Dodd and Barney Frank are responsible for.....


So where's the vitriol against these miscreants?  Where's the finger pointing and anger?


It's not there.  And, it won't be.  You can't go home to the Senate if you burn your bridges....you can't reach across the aisle if they won't take your hand.  When all you have stood for is being against your own party, it's really difficult to then run against the opposition.


But he does have vitriol, and he does point fingers......at Capitalism, Wall Street,  and George Bush.  I guess it's difficult to break habits....


Here's his comments from an interview that appeared yesterday in the Washington Times :

Sen. John McCain on Wednesday blasted President Bush for building a mountain of debt for future generations, failing to pay for expanding Medicare and abusing executive powers, leveling his strongest criticism to date of an administration whose unpopularity may be dragging the Republican Party to the brink of a massive electoral defeat.

"We just let things get completely out of hand," he said of his own party's rule in the past eight years.

In an interview with The Washington Times, Mr. McCain lashed out at a litany of Bush policies and issues that he said he would have handled differently as president, days after a poll showed that he began making up ground on Sen. Barack Obama since he emphatically sought to distance himself from Mr. Bush in the final debate.

"Spending, the conduct of the war in Iraq for years, growth in the size of government, larger than any time since the Great Society, laying a $10 trillion debt on future generations of America, owing $500 billion to China, obviously, failure to both enforce and modernize the [financial] regulatory agencies that were designed for the 1930s and certainly not for the 21st century, failure to address the issue of climate change seriously," Mr. McCain said in an interview with The Washington Times aboard his campaign plane en route from New Hampshire to Ohio.

"Those are just some of them," he said with a laugh, chomping into a peanut butter sandwich as a few campaign aides in his midair office joined in the laughter.

He also hit Mr. Obama for breaking his pledge to take public campaign financing; said Democratic vice-presidential nominee Sen. Joseph R. Biden Jr. has as much as acknowledged that Mr. Obama would make the world more dangerous; and cautioned that while he may be down in the race, he's not out.

Mr. Obama has spent virtually the entire campaign linking Mr. McCain to the president, saying a McCain term would be "four more years of George Bush" and identifying various Republican policies with the adjective "Bush-McCain."

Mr. McCain has in recent days sharpened his criticism of Mr. Bush, including adding a line from his final debate to his daily stump speech, that if Mr. Obama "wanted to run against George Bush, he should have run four years ago."

But on Wednesday, Mr. McCain went further in distancing himself from the man who beat him for the 2000 Republican presidential nomination. In addition to the long list of failures he attributed to Mr. Bush, Mr. McCain blamed the president for supporting the Medicare prescription-drug bill, saying, "They didn't pay for it."

"They put a trillion-dollar debt on future generations of Americans, then allowed the liberals to expand it so they're paying my — they're paying for my prescription drugs. Why should the taxpayers pay for my prescription drugs?" he said with exasperation.

He rejected Mr. Bush's use of issuing "signing statements" when he signs bills into law, in which the president has suggested that he would ignore elements of the bills, labeling them potentially unconstitutional.

"I would veto the bills or say, 'Look, I don't like it but I'll obey the law that's passed by Congress and signed by the president.' I think the signing statements was not a correct implementation of the power of the executive. I think it was overstepping," he said.

And Mr. McCain emphatically rejected Mr. Bush's claims of executive privilege, often used to shield the White House from scrutiny.

"I don't agree with that either. I don't agree with [Vice President] Dick Cheney's allegation that he's part of both the legislative and the executive branch," he said.

Still, Mr. McCain said Mr. Bush deserves credit for expanding faith-based organizations, which he said have done "enormously good things, domestically and overseas."

The Republican also targeted his own party, saying they got drunk with power and lacked the resolve of President Reagan.

"I think, frankly, the problem was, with a Republican Congress, that the president was told by the speaker and majority leaders and others, 'Don't veto these bills, we need this pork, we need this excess spending, we need to grow these bureaucracies.' They all sponsor certain ones. And he didn't do what Ronald Reagan used to and say, 'No'; say, 'No. We're not going to do this.'"

Rest of interview ....

Randall Hoven in the American Thinker had this most appropriate comment:

We'll not only have to hold our noses November 4, we'll have to put that cream on our upper lips like they do in autopsy scenes in movies like Silence of the Lambs.  I'm not sure I have enough of that cream.

Rare Film Shows 1904 London Life

It's a film that's been hidden from view for more than a century and now you can see London life on the big screen - 1904-style.

Professor Ian Christie, a historian, stumbled on the footage, 104 years after it was filmed, while doing a routine search in the Australian National Film Archive.

The 12-minute silent documentary, called Living London, was made by American film pioneer Charles Urban.In it you can see famous landmarks like Trafalgar Square and Buckingham Palace surrounded by horse-drawn carts and buses.But what is more interesting are the scenes of people going about their everyday lives - children playing in a park, fish traders at Billingsgate market and shoe-shiners in the West End showing us how they used to live.  

All ghosts now, but preserved forever.......

Rest of story ....