Dean Baker's Blog, page 264

AP Is Upset that the Housing Bubble Has not Returned

That is the logical conclusion that would be drawn from an article headlined that "U.S. home price gains weakened in December on slower sales."

The piece begins:

"U.S. home values rose at a modest pace in December, a sign there are too few potential buyers to bid up prices.

"Real estate data provider CoreLogic says home prices rose 5 percent in December from 12 months earlier. That is down from the 5.5 percent price gain recorded in November. It’s much lower than the double-digit gains that o...

Debt Forgiveness in Greece: It's Easier Than the NYT Leads Readers to Believe

The NYT led readers to believe that meeting Greece's demand for changing the terms of its debt is far more difficult than is actually the case. It told readers:

"Writing down government debts, or stretching out when they need to repaid, causes losses for the institutions and individuals that hold the securities. Banks hold billions of euros in government bonds and, to make sure the banks remain stable, money would need to be found to replenish the big losses that the banks would suffer. Riche...

The Franken Amendment to Eliminate Rating Agencies' Conflict of Interest, Passed the Senate with 65 Votes

The Washington Post might have misled readers with its discussion of efforts to end the conflict of interest inherent in the current system where banks issuing mortgage backed securities hire the agencies that rate their debt. It told readers:

"Congress debated that idea when it put together the sweeping financial overhaul law in response to the 2008 crisis. But lawmakers pushing the idea were unable to include it into the final legislation."

The Senate actually overwhelmingly approved (65 vo...

Republicans Vote to Repeal Affordable Care Act Because the Earth is Flat

When politicians make assertions that are clearly not true, it would be useful if reporters pointed this fact out to readers. Reporters have time to verify claims by politicians, their readers do not.

For this reason, the NYT failed its readers when it reported on the Republican House vote to repeal the Affordable Care Act (ACA) because:

"Republicans said the law was driving up insurance premiums, burdening consumers with high out-of-pocket costs and leading some employers to cut back workers...

How Many Germans Are Over One Hundred Years Old?

That's one question that readers of Eduardo Porter's insightful column on the prospects of the euro must be asking. Porter commented on the concerns expressed by Germany about inflation in a context where the inflation rate has been drifting lower for years and is now near zero. He argued that:

"conditioned by memories of hyperinflation after World War I, they still fear higher inflation."

Hmmm, "memories of hyperinflation?" Let's see, we're talking about a burst of hyper-inflation that took...

It Ain't a Boom: Taking Matt O'Brien to the Woodshed

Matt O'Brien usually has interesting stuff on the economy is his Wonkblog pieces, but his post on the "economic boom" is not up to the usual standards. First, and most importantly, the idea of grading on a curve -- because things are better here than elsewhere we have a boom -- is rather dubious. Some countries were hit less hard by the depression than others. Would we want to say that they were experiencing a "boom?" 

Even if we accept grading on a curve it's not clear we have much of a...

Washington Post Tells Readers That Interest Payments on the Debt Will be Almost as High in 2025 as They Were Under President Reagan and Bush!

Actually the Post's budget piece didn't tell readers that. Instead it said:

"All told, Obama’s policies would add about $5.7 trillion to the debt over the next decade (compared with nearly $8 trillion under current law). Meanwhile, interest payments on the debt would climb to nearly $800 billion a year by 2025 — more than Obama proposes to spend on any program in that year other than Social Security and Medicare."

Pretty damn scary, huh? Just think of that -- adding $5.7 trillion to the debt,...

Context on the Obama Budget

Give the NYT credit, it is trying to write about the budget in a way that doesn't just bury people in really big numbers. Its main article on President Obama's budget included several references that indicated how large various items were relative to the size of the economy and used other comparisons to place them in a context that could make them understandable to readers. This is a good start, but it could be better.

One item that readers would miss in this piece is any sort of historical c...

The Enron Felons Believed in Enron: Corrective to Samuelson on the Housing Bubble

Robert Samuelson used his column today to tout a new study that analyzes home purchases by the income level of the buyer in contrast to previous work that analyzed data by average income in a zip code. The conclusion of the study is that increased aggregate debt to income levels was the result of more people buying homes, not higher ratios of debt to income among purchasers. This means that the problem was not a deterioration in lending standards. It also finds that the growth of debt was pro...

4th Quarter GDP: Happy Days Are Here Again (not)

The Commerce Department reported that GDP grew at a 2.6 percent annual rate in the fourth quarter, roughly a half point below most forecasts. This brought growth for the year (fourth quarter to fourth quarter) to 2.5 percent, a modest slowing from the 3.1 percent rate in 2013. Since GDP is the broadest measure of overall economic activity, the weak quarter and weak year-round performance might seem to fly in the face of all the upbeat news we've been hearing on the economy recently. But, most...