Greg Palmer

As usual, Barry Ritholtz is right on the money when it comes to the credit crisis:

- From 2003 to 2006, Real Estate was driving the economy;
- Housing wasn’t a “true” bubble; Rather, credit was a massive bubble;
- Inventory has continued to build throughout the downturn, delaying any housing bottom;
- High quality homes in good locations priced appropriately are still good sellers;
- As Mortgage Equity Withdrawal (MEW) slowed, consumer spending would also slow;
- A 35% correction in prices, from the highs, was possible.

This housing slump is really taking a toll…seller optimism seems to be shaky, leading to huge price cuts. 8.2 percent is a lot of money for a seller to have to absorb to unload their home!

The average price in Westport, Connecticut, home of chief executive officers Herbert Allison of TIAA-CREF and Jeffrey Kindler of Pfizer Inc., and actor Paul Newman, fell 8.2 percent to $1.56 million in the first four months of 2007 from the same period last year, according to multiple listing service data. In Chappaqua, New York, where Bill and Hillary Clinton live, properties sit on the market an average of seven months before they sell, up from five months a year ago.

Wealth and excellent credit have until now spared bedroom communities in New Jersey, Connecticut and New York’s Westchester County from declines in home prices. Now the tightening of credit in response to rising subprime defaults has disrupted the real estate food chain, bringing the national housing slump to Manhattan’s doorstep. Prices fell as much as 18.8 percent this year in 15 of the 24 areas in which data was collected.

Update: Saw this in my old hometown paper and thought it was interesting. Bank of America is offering “no-fee” mortgages to buyers, cutting 3-5% off the cost of buying. They claim their interest rates remain competitive…I’m wondering how much of this is a response to the down market and business they’re losing.

Following up on the parking meters post:

As expected, he has both caught grief and heard hosannas for his most contentious proposal: a charge of $8 for cars and $21 for commercial trucks that enter Manhattan below 86th Street during weekday business hours. It’s the vaporizer solution: a way to break up congestion, all that traffic choking Manhattan streets.

For decades, little has modified driving habits that pretty much everyone agrees are wasteful and unhealthful. Many people drive into Manhattan because they prefer to, not because they necessarily have to. Some don’t even mind traffic jams. In the age of cellphones and BlackBerries, the car can double as an office during a crawl through Midtown.

Mr. Bloomberg’s goal is to nudge these drivers into subways and buses, or force them to pay for refusing to change their ways.

I haven’t looked - are there studies on how well this has fared in London? (And sorry that the link is TimesSelect only…)

…I was browsing around the internets and came across the Bank of England’s site, which nicely sums up its mission:

The Bank sets interest rates to keep inflation low, issues banknotes and works to maintain a stable financial system.

As opposed to the Federal Reserve:

The Federal Reserve, the central bank of the United States, was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system.

My guess is that the Bank of England took some time trying to make their job easier to understand. The Federal Reserve grabbed some boilerplate text and repurposed it for the web.

I’ve lately been annoyed by a bunch of folks who have been comparing the cost per gallon of gasoline to the cost per gallon of other items. While I respect the attempt at reducing consumption, especially around Earth Day, I think the comparison is more than vaguely misleading.

Let’s be realistic here - the cost of something is related to the amount of consumption. The more people require of a substance, the easier and cheaper it becomes to obtain. It doesn’t help anyone to compare the cost of Evian to gasoline, because we don’t consume the same amounts for even remotely similar purposes. I don’t care that Evian is $6.40 per gallon. What is that supposed to prove? That gasoline is too cheap? Of course it is!

But, regardless of the monetary value of gasoline, our entire lifestyle and economy is based on the mobility it provides in some ways easy to quantify and others tough to fathom. This isn’t true of Evian bottled water or Folger’s coffee grounds, so frankly the comparison isn’t applicable. But nice try.

This strikes me as a convincing explanation for a big problem. Congestion would drop if prices on traffic meters and over-limit infractions rose. It’s simple, but a tough sell for local businesses in most places other than large cities (and perhaps there, too). I think back to when I lived in Bethlehem - business owners would have raised hell if meter rates went up.

What causes this astonishing waste? As is often the case, the prices are wrong. A national study of downtown parking found that the average price of curb parking is only 20 percent that of parking in a garage, giving drivers a strong incentive to cruise. As George Costanza once said on “Seinfeldâ€?: “My father never paid for parking, my mother, my brother, nobody. … It’s like going to a prostitute. Why should I pay when, if I apply myself, maybe I could get it for free?â€?

Like George Costanza, drivers often compare parking at the curb to parking in a garage and decide that the price of garage parking is too high. But the truth is that the price of curb parking is too low. Underpriced curb spaces are like rent-controlled apartments: hard to find and, once you do, crazy to give up. This increases the time costs (and therefore the congestion and pollution costs) of cruising.

(via kottke.org)

I’m keeping it low key tonight and staying in, catching up on the New Yorker, PBS, and other favorites. I even turned off my Blackberry; not just put it on silent, turned off the power. Crazy, I know.

One of my favorite shows is PBS NOW. The scarcity of long-format journalism/interview programs makes NOW a real highlight of my week (it’s also why I love Charlie Rose). I watched an episode from two weeks ago featuring former Medtronic CEO Bill George. He talks about selfish corporate leaders and how increased volatility is having negative effects on financial markets. It’s a fascinating look into ethics and the large effect they can have on the world around us.

Another great thing about NOW is that you can watch the interview or download it as a podcast.