Jar Jar Speaks

While we're on the subject of allocating blame for the sub-prime mess, I found these extracts from Bush speeches that might have a bearing on the matter.  In order to keep the Star Wars analogy going the choice of Jar Jar Binks was inevitable.

White House Conference on Minority Homeownership, Oct. 15, 2002

President Bush: Two-thirds of all Americans own their homes, yet we have a problem here in America because few than half of the Hispanics and half the African Americans own the home. That's a homeownership gap. It's a -- it's a gap that we've got to work together to close for the good of our country, for the sake of a more hopeful future. We've got to work to knock down the barriers that have created a homeownership gap.

I set an ambitious goal. It's one that I believe we can achieve. It's a clear goal, that by the end of this decade we'll increase the number of minority homeowners by at least 5.5 million families.

Some may think that's a stretch. I don't think it is. I think it is realistic. I know we're going to have to work together to achieve it. But when we do our communities will be stronger and so will our economy. Achieving the goal is going to require some good policies out of Washington. And it's going to require a strong commitment from those of you involved in the housing industry.

Just by showing up at the conference, you show your commitment. And together, together we will work over the next decade to enable millions of our fellow Americans to own a piece of their own property, and that's their home. ...

To open up the doors of homeownership there are some barriers, and I want to talk about four that need to be overcome. First, down payments. A lot of folks can't make a down payment. They may be qualified. They may desire to buy a home, but they don't have the money to make a down payment. I think if you were to talk to a lot of families that are desirous to have a home, they would tell you that the down payment is the hurdle that they can't cross.

First Yoda, now Obi-wan Kenobe

It was barely a month ago that I was reporting the mea-culpa of former Fed Chairman Alan Greenspan.  Now it's Bernanke's turn.  The current Fed Chairman, pictured at left with his friend and mentor Greenspan (who now appears in public only in hologramatic form for fear of being lynched) has been reported as saying that:

"I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.

Clearly all that Jedi mind-control training was a waste of time.

Save the last dance for me

As Citigroup thunders towards the precipice you can't help but cast your mind back to the wise words of its former Chairman and CEO, Charlie Prince, when describing the finer details of Citi's subprime strategy:

"When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."

That was July '07, and things have certainly got a little complicated since then.  Mind you, life for 50,000 Citi employees is about to get a lot simpler, as they'll be spared the grind of the daily commute.  Chuck too will now have time to smell the roses - he's sailed off into the sunset with a UD$38 million golden goodbye.  Still, with punditry like that who could quibble with $38m?

The DIX Index

There are a lot of measures of market volatility around the place, such as the Chicago Board Options Exchange VIX index, which measures the volatility of S&P 500 index options.

The thought occurs to me that, for Weatherman purposes at least, we really need a measure of the volatility of the interest rate forecasts set out by the financial market gurus we track on this site.

As we've recorded these forecasts since January 2000 it was a simple matter of measuring the standard deviation of each set of forecasts, and summing them month by month.

The result is the DIX index, a name which suggested itself.  As you can see it's been quite steady for years, and on several occasions hit zero as the forecasters were all in complete harmony.

Alas those days are long gone, with discord replacing harmony as it has with so many things. 

Return to Bretton Woods?

John Quiggin of the University of Queensland reckons we're due for a return to Bretton Woods.  Have a look at his presentation here.

Sounds good to me.  The place gets plenty of snow and has some sweet runs.  Ten lifts....four terrain parks....those central bankers sure know how to throw it down.

But what does it all mean?  You can check it out here, or if you're more interested in sliding try here.

That's not a rate cut....

This is a rate cut!

The he-men at the Bank of England have kicked sand in the faces of Glenn Stevens and the rest of the 97lb weaklings at the RBA by cutting rates a whopping 1.50%.

Perhaps if we cut by 2% in December they'll back off a bit.  Either that or the RBA boys sign up for one of those Charles Atlas programs.