Wednesday, February 25, 2009

Lies, Damned Lies and Statistics

We, the body politic, has been slammed by a number of alarming "scientific" studies over the past few years. There was the "hockey stick" graph "proving" global warming, the Emory university prof book claiming that colonial Americans didn't own guns,and the Boston Fed study "showing" discrimination against blacks in the granting of mortgages, and a bunch of others. All of these "scientific" studies were later proved false, but only after serious damage was done.
Frazier Institute members B.D. McCullough and Ross McKitrick described these and other sham studies in "The Case for Due Diligence".
A key finding, in every case, the authors of the study refused to release their data and the computer program that analyzed said data, making it difficult to impossible to check the conclusions of the study. Only when critics made Freedom of Information requests, or sued, did the authors reluctantly release the data upon which their conclusions were based. In all cases, critics were able to show the data had been edited (contrary examples discarded) or the computer program had bugs in it.
The McCullough & McKitrick paper is good, but somewhat heavy going. Take away, don't place much trust in "scientific" studies unless other scientists have checked the data and programming. "Peer review" prior to publication in a scientific journal doesn't mean any one checked the work. If the conclusion is politically controversial, watch out and hang onto your hat.

Monday, February 23, 2009

Wall St clings to "dirivatives"

Way back on page c3 of today's WSJ we have a headline "Controlling Swap's Risk is Still Vexing". These are credit default swaps, a crude kind of bond insurance. The buyer pays money, the issuer promises to pay up if so-and-so defaults on his bonds. This is the security that last year, destroyed AIG, largest insurance company in the world.
The real problem with "swaps" is that all they do is sooth nervous bean counters on Wall St. The bean counter can buy securities from risky or walking dead companies, and tell his boss, "It's OK, it's insured." A good deal of money that could be financing real economic growth is siphoned off to placate bosses. When the market crashes, the swaps become useless because the issuers go broke before paying off the claims.
But Wall St loves them. According to the writer all will be well after a central clearing house for swaps is constructed. Good luck on that one.
Then there is this:
" Many financial institutions that are large sellers of credit protection are themselves facing crises of investor confidence. That's limiting swap trades in the broader markets because hedge funds and dealers don't know if the can count on their counterparties to provide the protection they need."
Well. Sounds like some of the Wall St suckers are finally wising up.

The end of college textbooks?

Heard this on NH public radio this morning. College textbooks will be replaced with E-books read on laptops. The advocates were making the usual happy noises about progress and change and whatever. I kept thinking about those awful no text book courses my children were subjected to. With a textbook, you have something to study from and to review before the test. Without a textbook, all you have is your own classroom notes, and memory. With a textbook, parents can help with home work. Without one, forget it. Far as I am concerned, teaching a course without a textbook is student abuse.
How long will e-textbooks last before the next release of Windows renders them unreadable? Or the coming hard drive crash erases them for good? I have college textbooks still on my shelf that served me well at work for better than 40 years. I've got a lot of e-stuff around that is no longer readable, 9-track mag tapes, 8 inch and 5 inch floppy diskettes for example. Won't be long before the 3.5 inch floppies go away too.

More Snow. Cannon gets 16 inches

Snowed all last night. It's deep and powdery. Skiing will be superb. And it's school vacation week too.

Saturday, February 21, 2009

Real Estate Market, down, but not dead

North country home sales for Grafton County NH (Littleton, Bethlehem, Franconia) and the St Johnsbury area in Vermont are down 20% from 2007. Prices are down about the same amount. According to the Smith Peabody Real Estate Buyers Guide (a freeby that turns up in your mail box now and then) 638 homes were sold in 2007 and only 514 in 2008, a 19.4% drop. Average price was $230,597 in 2007 and dropped to $182,107 for 2008, a 20% drop. That's bad, but not as bad as it might be. It's clearly a good year to buy, or at least better than last year.
The drop in home prices means anyone who bought last year with 20% down is underwater (or at least decks awash). Anyone who bought with less downpayment is deep underwater. Refinancing is not an option when you are underwater. Selling underwater means the owner takes a bath.
Surprisingly, the length of time a home is on the market hasn't changed much. It takes about 6 months to sell a house, a figure that actually dropped 6 days.

Friday, February 20, 2009

Homemade chicken pot pie

Comes out just as good as the frozen supermarket type. In a casserole combine chicken (cooked or raw), peas, corn, carrots, potato, onion, and mushrooms. The colorful veggies improve the eye appeal. Add one can Campbell's cream of chicken soup for gravy. Bake in the oven, covered, at 350 F until the carrots are getting tender. (Maybe 45 minutes) When the carrots start getting tender, add crust. Use Pillsbury biscuits, the kind that come in the round pressurized cardboard tubes, the ones you slice with a knife to open. Place a layer of uncooked biscuits on top of the chicken and veggie mix. Cook uncovered at 400F long enough to brown the biscuits. (about 12-15 minites). Comes out as tasty and good looking and virtuously homemade. Quantities are not critical, just fill the casserole fairly close to the top.

Snow, Cannon gets 12 inches of powder

It snowed all day yesterday and all last night. I had 12 inches on the porch this morning. Light fluffy powder. Doesn't get much better than this.