As numbers go, the results of surveys are not my favorites. Especially with regard to economic issues, I’m a lot more interested in what folks actually do with their money than what they say to a stranger who calls them on the phone and asks them what they think.
Still, numbers are still numbers and there’s a lot to be said for quantifiable data of any kind relative to the opinions and speculations of those of us with the time to type. And one of my favorite places for numbers is Gallup.com. The site is just filled to the brim with juicy tidbits, and more arrive every day.
For example, Joe Biden is unpopular. I think of him as an amiable place-holder, certainly more likable than the last few veeps. (Darth Vader, The Inventor of the Internet, and Mr. Potatoe Head, respectively.) Alas, America does not agree with me, giving Joe lower favorability ratings than his predecessors. The same survey shows that Obama is about as popular as George W. was at this point in his term, which is surprising, given Obama’s margin of victory last fall and Bush’s non-margin of victory in 2000.
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Yesterday at 9 AM Standard and Poor’s released the latest Case-Shiller Home Price Index data, showing that existing homes actually increased in price in May, for the first monthly rise since July 2006. All the major media outlets ran with it as their lead story, the stock market zoomed up more than 5%, and Fed Chairman Bernanke announced that the recession is now officially over.
Okay, I made most of that up. But the C-S 20 city composite really was up for the first time in 33 months. And that’s really a big deal, not that anybody seems to have noticed. This is not an index that changes direction often. Before the run of 33 down months was a run of 55 consecutive up months going back to January 2002. (In fact, other than small declines in December 2001 and November 1998, the 10 city index was up every month from March 1997 to June 2006.)
Obviously, there is no guarantee that this will be the start of a long run of positive months, but a change in direction is a comparatively rare event and ought to be newsworthy. All the more so given the centrality of house prices in the causes of the Great Recession. And yet this isn’t apparently a big story.
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This week the travelling circus of money pitched its tents at Good Financial Cents, where my post on when to take Social Security was an editor’s pick. Seeing my name at the top of a carnival always puts me into a good mood. Let’s see how long that lasts.
Squawkfox was also an editor’s pick with 6 Surefire Ways To Avoid a Mortgage Meltdown. It’s a solid post with tips that would have been considered painfully obvious ten or fifteen years ago, but are worth giving out now in the Great Aftermath. My one objection is to the idea that ordinary folks buying more house than they can afford is somehow different from "that whole subprime lending mortgage mess". Ordinary and well intentioned people spending more on a house than they could afford is exactly what got us into that mess.
Useful and important tips on spotting an investment bubble were contributed by Steadfast Finances. Not that I think this will help in the future. One of the remarkable things about investment bubbles is that in the late stages many, if not most, participants are perfectly aware it’s a bubble. They just think they can get out just before it bursts.
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Friday’s edition of Wealth Matters in the New York Times told us about the children of rich people. Turns out that if you are rich enough, instead of just relying on your spouse, you can hire somebody to tell you what a lousy parent you are.
One of the several intriguing things about Wealth Matters is that the author apparently doesn’t know any rich people, or at least none that will allow him to quote them. Instead, the columns seem to be written based on talking to people who talk to rich people. Or so they claim.
Sources for this week’s installment include a partner at a consultancy called Relative Solutions which "works with family businesses" and a partner at "BBR Partners, an adviser to ultra-high-net-worth clients." I suppose that both are keen to be quoted because they hope potential clients will read the column. I’m not sure that’s a sound business strategy.
What these advisors to the rich reveal is that if you’ve got so much money that your kids will never need to work for a living, it is hard to get them to work for a living. Good to know.
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Time for another episode in my continuing series People Are Idiots. Previous installments have included how to sell your students wine and how to get rich on the internet.
Today we visit another phenomenon of cognitive misbehavior, what I like to call the Small Percentage Effect. (It has some other fancy name among behavioral economists. I like mine better.)
Imagine that you have decided to buy the latest, totally cool and sexy, iPod. It retails for $200. You are about to pick it up at a shop near your home when you hear that all the way across town a store is running a one-day special promotion, selling this iPod for only $100. It is a 90 minute round-trip drive, but you gleefully head off to score your bargain iPod.
Unfortunately, after a while you realize that the iPod is not attracting nearly the number of members of the opposite sex that you expected. So you hatch Plan B, an even more totally cool and sexy convertible. The dealership near your house will let you drive it off the lot for $50,000. But then you find out that another dealership, coincidentally next to the place where you got the bargain on the iPod, will sell it to you for only $49,900.
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