Then you need this.
There\’s something that doesn\’t quite make sense with this statement:
The shocker is the fraction of subprime borrowers who appear to have had credit scores good enough to receive cheaper, conventional loans: 55 percent!
One the one side we could argue that 55% of people taking out sub-prime loans were simply too stupid to know that they could have gotten the cheaper loans. Or, of course, as we\’re being invited to think, they were browbeaten or pushed or defrauded into the sub-prime loans.
Or there\’s another explanation. That conventional loans would not have been cheaper. Which is, I think, actually the truth. Now the past few years have made a number of changes to the US mortgage market and I\’m really not quite sure what "sub-prime" really means. A conforming loan is one that Fannie Mae or Freddie Mac will pick up from the issuer and then bundle and securitise. Now I could go off and find out all the details of this but can\’t be bothered, so you\’ll have to put up with what I can remember. To be a conforming loan it must be below $430,000 (or so). It can also be only for 80% of the value (it\’s not unusual to take a conforming loan for 80% of the value, a 10% deposit and a second mortgage at a higher rate for the other 10%.) It\’s also ( I think) a fixed rate mortgage: all other things being equal a fixed rate will be more expensive to the borrower than a floating rate because of who is taking the risk of interest rate changes. Finally, I think there are restrictions on income multiples.
Alt-A is the next segment down of the market. Similar to conforming, but breaching perhaps one or two of those conditions.
Sub-prime I\’m assuming is everything else below that.
Now sub-prime encompasses all sorts of things. Teaser rates (1 or 2 or 7 year ARMs perhaps) where there\’s a fixed rate for the first 1 (2 or 7) years, then it converts to a floating rate mortgage. We\’re familiar with this from the UK market. Those teaser rates could be very low indeed, funded by higher premiums over the floating rate in the longer term. There were also truly insane things like not only interest only mortgages (which can be appropriate for some) and reverse amortisation: you pay less even than the interest due each month, adding that underpayment to the capital owed!
But in there, there\’s an awful lot of "sub-prime" mortgages which were in fact cheaper "at that time" than conventional loans. Let\’s assume that you were one of those 55% with the credit rating to get a conventional loan. But you didn\’t have the 20% (or even 10%) deposit? Then sub prime is cheaper for you. Let\’s say you wanted a fixed rate for some period of years? Then an ARM (which means sub-prime) was for you.
Let\’s say that you took a floating rate mortgage (which is also, I think, sub-prime) rather than a fixed rate. At any given level of interest rates floaters are cheaper than fixed: for you are taking the risk, not the lender, or rates rising.
So, in many cases, I think the argument can be made that sub-prime mortgages were in fact cheaper than conventional loans. At least for some people.*
So it\’s not, I think, quite the slam dunk that Krugman thinks it is, that 55% of those with sub-prime mortgages could have got conventional ones.
* Note, we cannot look back now at interest rate changes since the mortgages were taken out and say cheaper or more expensive. That\’s hindsight and is cheating.
I can tell you what the effect of this will be:
Britain looks likely to lose its fight against the EU’s proposed new rights for temporary workers. Employers argue that the change, which would give Britain’s estimated 1.3 million agency workers the same pay and workplace conditions as permanent staff, puts 250,000 jobs at risk.
Ministers have run out of allies in frantic behind-the-scenes talks to block the legislation, after finding themselves on the wrong end of a piece of classic EU horse-trading. All but four of the 27 member states have swung behind the plans, enough to force Britain to go along under qualified-majority voting.
The rights, which are due to be decided by EU employment ministers tomorrow, would apply to workers hired through an agency or other third party and would take effect a maximum of six weeks after a worker has been hired.
No temp job will last longer than five weeks and four days. This is an advance in what manner?
She can be a little bloodthirsty, can\’t she?
It is good news too that more pregnant teenagers are opting for abortions – though at fewer than half, that\’s still low.
It\’s true however that sex education is quite bad:
This week the Youth Parliament marches in to see the education minister Jim Knight, armed with the results of its impressively large survey. Over 20,000 school students surveyed reported an abysmal standard of sex and relationship education (SRE): 40% said it was poor or very poor, 33% said it was average; worse, 55% of 12-to 15-year-olds had not been taught how to use a condom, nor had 57% of girls aged 16-17. More than half had never been told where to find their local sexual health clinic.
Polly\’s solution to the State providing such crap is:
It is extraordinary that sex education still isn\’t compulsory in all secondary schools.
Yup. The State is shite at sex education thus it should be compulsory for the State to provide it.
Sets out his pudding and pie today.
When you warn people about the dangers of climate change, they call you a saint. When you explain what needs to be done to stop it, they call you a communist.
Well, no George, I don\’t actually call you a communist. A millennarian socialist perhaps, but not a communist. But I think the best phrase to use to describe you is Luddite.
The government proposes to cut the UK\’s carbon emissions by 60% by 2050. This target is based on a report published in 2000. That report was based on an assessment published in 1995, which drew on scientific papers published a few years earlier. The UK\’s policy, in other words, is based on papers some 15 years old. Our target, which is one of the toughest on earth, bears no relation to current science.
This is indeed all true. As indeed, all of the IPCC\’s work is based upon the SRES, the Special Report on Emissions Scenarios. The economic models which then feed the emissions numbers into those climate models. The SRES is also of the same vintage and now that we\’re 10% of the way through the prediction period we really ought to buck up and revisit it, for it is the very basis upon which the entire concern is built. Indeed, I can think of one insignificant blogger who suggested as much before AR4 came out but due to insignificance, no one listened.
I looked up the global figures for carbon dioxide production in 2000 and divided it by the current population. This gives a baseline figure of 3.58 tonnes of CO2 per person. An 85% cut means that (if the population remains constant) the global output per head should be reduced to 0.537 tonnes by 2050. The UK currently produces 9.6 tonnes per head and the US 23.6 tonnes. Reducing these figures to 0.537 means a 94.4% cut in the UK and a 97.7% cut in the US. But the world population will rise in the same period. If we assume a population of 9 billion, the cuts rise to 95.9% in the UK and 98.3% in the US.
The IPCC figures might also be out of date. In a footnote beneath the table, the panel admits that "emission reductions…might be underestimated due to missing carbon cycle feedbacks". What this means is that the impact of the biosphere\’s response to global warming has not been fully considered. As seawater warms, for example, it releases carbon dioxide. As soil bacteria heat up, they respire more, generating more CO2. As temperatures rise, tropical forests die back, releasing the carbon they contain. These are examples of positive feedbacks. A recent paper (all the references are on my website) estimates that feedbacks account for about 18% of global warming. They are likely to intensify.
All of which is entirely true, as far as it goes. Now, can we also wonder whether the figures might be overstated due to negative feedbacks? There are papers that insist that there are such: greater plant growth for example.
Preventing 2C of warming means stripping carbon dioxide from the air. The necessary technology already exists: the challenge is making it efficient and cheap. Last year Joshuah Stolaroff, who has written a PhD on the subject, sent me some provisional costings, of £256-£458 per tonne of carbon.
Quite possibly. So let\’s go and spend a few tens of millions on looking at the Planktos suggestion, shall we? Seeding the oceans with iron filings. No, I\’m not insisting that it will work, just that we ought to find out, for a trivial cost, don\’t you think?
The Kyoto protocol, whose replacement the Bali meeting will discuss, has failed. Since it was signed, there has been an acceleration in global emissions: the rate of CO2 production exceeds the IPCC\’s worst case and is now growing faster than at any time since the beginning of the industrial revolution.
Erm, I\’m not wholly convinced that that is true actually. I\’m reasonably certain (open to correction of course) that we\’re actually following the A1 family. Thus we are still within the IPCC projections (scenarios, call them what you will).
Even the age-old trend of declining energy intensity as economies mature has gone into reverse.
Err, that I\’m entirely certain is incorrect. Carbon intensity (the amount of carbon emissions per unit of GDP) is still declining. As it has been for decades.
Underlying the immediate problem is a much greater one. In a lecture to the Royal Academy of Engineering in May, Professor Rod Smith of Imperial College explained that a growth rate of 3% means economic activity doubles in 23 years. At 10% it takes just seven years. This we knew. But Smith takes it further. With a series of equations he shows that "each successive doubling period consumes as much resource as all the previous doubling periods combined".
Trust an engineer to say something like this. On one level it\’s blindingly obvious (double the economy you double, err, the economy) on another it\’s insane. For he\’s assuming that the only contribution to a growing economy is growing resource use. Which, as any random passing economist will tell him, is insane.
GDP (which is what we\’re measuring with our 3% or 10%) is not a measure of resource use. It\’s a measure rather of the efficiency of resource use. More formally, it\’s the value added to the resources being used. It\’s entirely possible to have GDP growth without any increase in resource use at all.
Now, I\’ll agree, there has indeed been increased resource use, as well as increasing efficiency from the onward march of technology (see declining carbon intensity of GDP for example). But to insist that a doubling of GDP necessarily means a doubling of resource use is, I\’m sorry to have to say it, deeply ignorant.
As an example to make this clear. We\’ve got George and his friends at Tinker\’s Bottom (or whatever that commune was called). They have a turnip field. Someone invents a new form of turnip weeding. Excellent. It\’s a more efficient form. It allows either less labour to be used in the fields for the same number of turnips or more turnips to be grown on the same land with the same labour. In the latter case we have a rise in GDP wth the same resources being deployed. In the former case we have the same GDP with fewer resources being used.
See, there is no direct link (or perhaps there is no "necessary" link) between rising GDP and increased resource use.
In other words, if our economy grows at 3% between now and 2040, we will consume in that period economic resources equivalent to all those we have consumed since humans first stood on two legs. Then, between 2040 and 2063, we must double our total consumption again. Reading that paper I realised for the first time what we are up against.
Indeed, we\’re up against economic idiocy.
But I am not advocating despair. We must confront a challenge that is as great and as pressing as the rise of the Axis powers. Had we thrown up our hands then, as many people are tempted to do today, you would be reading this paper in German. Though the war often seemed impossible to win, when the political will was mobilised strange and implausible things began to happen. The US economy was spun round on a dime in 1942 as civilian manufacturing was switched to military production. The state took on greater powers than it had exercised before.
Hmm, the necessary solution is that the State take over the detailed direction and operation of the economy? No wonder people are calling you a communist George.
Debating these matters makes us neither saints nor communists; it shows only that we have understood the science.
Please, crack open an economics textbook would you? That\’s also a science, one that you clearly don\’t understand and also one that you desperately need to.
The revolutionary process underway in Venezuela has delivered remarkable social achievements, on the back of rising oil prices, in health, education, poverty reduction, democratic participation, socialisation of land and property and national independence.
Socialisation of land and property is an achievement?
Seems a bit odd that The Telegraph is dissing Lord Ashcroft. Still, I think the anger from the Labour side over his role can be found here:
But Lord Ashcroft is far more than a donor. "He\’s really about management not money," one frontbencher said.
Lord Ashcroft has by his own admission never liked being a "passive investor" in business or politics.
"I much prefer to be involved – to make sure that my investment is wisely placed and where I can to help," he wrote, shortly after the 2005 election.
All politicians are infested with the idea that they know how to run things best. It\’s the definition of the beast if you wish. Now someone has turned up and shown how business actually works: not the fantasy that so many have, of grinding the faces of the workers ino the dust, but actually looking at what is happening on the ground and then organising scarce resources so they can be used to best effect. And given the noises being made about this marginal seats operation they are indeed being used to good effect.
The furore is not actually anything to do with the money (as is noted, his donations are lower than Lord Sainsbury\’s to Labour) nor his residence, but the fact that he\’s showing up the pretentions of the policial class as a whole: businessmen really do know how to run things better than politicians.
They\’ll never forgive him for that, never.
So he resigns and then gets another job within a couple of weeks.Scandal? Actually, no, this looks eminently sensible:
A statement from the Cabinet Office stated that Mr Gray resigned from HMRC with immediate effect on 20th November.
It said: "However, for contractual reasons, he remains a senior civil servant. He will be leaving the civil service at the end of this year.
"In the meantime, he has agreed to a request from Cabinet Secretary Sir Gus O’Donnell to undertake a short piece of work on cross-government matters until Christmas.
"When he resigned with immediate effect, Paul Gray\’s period of notice meant that he would be paid until the end of the year.
"As a result, he could receive payment for no work, or receive payment for doing some work.
"It was thought to be better in the public interest that he did some work. There is no additional cost to the public purse. He will leave the payroll on 31 December."
Slight disconcerting to find that somewhere in the woodpile there\’s actually someone sensible.
I think we should start a campaign.
The conceptual artist Mark Wallinger, otherwise known as the Dancing Bear, has won the £25,000 Turner Prize for his monumental political work, State Britain, a recreation of the one-man Parliament Square anti-Iraq war protest destroyed by Tony Blair\’s government.
Most weird that a direct copy, a stencilling almost, should win an art prize. Thus we should campaign fo the prize (and the £25,000 cheque) to be stripped from Wallinger and award to Haw. He did, after all, make the original and isn\’t that what "Art" is about? Originality?
Something of an indicment of the current way of doing things, don\’t you think?
Sex education lessons are so poor that most teenagers have no idea about sexually transmitted diseases or pregnancy, according to new research published today.
I understand about the problems with teaching 20% of them to read: it\’s not, after all, a natural activity. \’Ritin\’ is also a bit odd.
But you\’ve got to have a really bad education system if you can\’t teach teenagers to fuck properly.
The weirdest thing happened over the weekend. I had a post up at the other place which was getting some fairly serious traffic. 10,000 page views a day or so.
Then, sometime early Sunday morning, Google dropped that post from the index. In fact, they dropped all of my posts that were made on the same day from the index. They haven\’t reappeared today either (and I\’ve no idea about how to actually get in contact with Google themselves).
It just seems very weird. Just like everyone else there\’s a few scraper sites that pull off my RSS feed. They\’re still there, still showing the post. There\’s the various blog consolidation sites they\’re still showing the post is there. The index parts of the blog are shown to be on Google too. Just the actual posts from that day used to be in Google and now aren\’t.
Weird or what? Anyone got any ideas about it?
One other thing. Is there actually any way of finding out about the volume of searches on specific keywords? I kinda doubt there is as everyone would simply be targeting those, but anyone know?
The paperback of Nick Cohen\’s book on the left is now out, with the postcript up at his site.
Cohen is something of a friend of this blog: I\’m absolutely certain that at some point in the not too far distant future we\’ll get him from being librul to classically liberal.
Instead, the party has become, at best, just another consumer good provided by big business, and, at worst, a cabal of megalomaniacs clinging to office for its own sake.
I\’d argue slightly. At best "a cabal of magalomaniacs…."
At worst would be "a cabal of competent megalomaniacs…"
There\’s an awful lot of ruin in a nation and one of our best defences against those limits being breached is that those who put themselves forward to try and rule it are inevitably dipstick third raters.
I sorta get Kaletsky here:
The bad news is that the $400 billion worth of extra economic activity gained by US businesses and workers will be exactly matched by losses in Europe, Asia and the rest of the world.
And I sorta don\’t. He\’s saying that a switching from EU production to US consumption hurts the EU producers as much as it aids the US producers. OK. But what about the consumers? Isn\’t it a basic point of trade economics that the benefits to them have to be taken into account?
Mbunting we will go, Mbunting we will go…..
Hearteningly, we know it can be done – our parents and grandparents managed it in the second world war. This useful analogy, explored by Andrew Simms in his book Ecological Debt, demonstrates the critical role of government. In the early 1940s, a dramatic drop in household consumption was achieved – not by relying on the good intentions of individuals (and their ability to act on that coffee-stained pamphlet), but by the government orchestrating a massive propaganda exercise combined with a rationing system and a luxury tax. This will be the stuff of 21st-century politics – something that, right now, all the main political parties are much too scared to admit.
Rationing, planners, naught, naughty household consumption. You can actually hear her licking her lips at the prospect of this, can\’t you?
time poverty (a much overlooked aspect of environmental sustainability is how much time it requires)
Ooooh, I don\’t think it\’s been over looked. I know of at least one person who has pointed out that recycling costs us more in time alone than the amount saved by recycling.
Better minds than mine have worked at this problem and they haven\’t found a solution either:
Is there a method of convicting more rapists without convicting large numbers of innocent men? The government has not yet found a way – not through want of trying – and its options are getting fewer and fewer. It may be there is no realistic solution.
The Guardian asks the Great and the Good what would be the single most important thing that would beat climate change.
First up, Kofi Annan.
"More money to international bureaucrats."
My, that\’s a surprising answer, isn\’t it?
So, does he go quietly in 2012?