Aguanomics

Flashback: 14 -- 20 Nov 2008

2009-11-22T15:47:00.000-08:00

These posts are still relevant, so please comment.

BEST: Recession is Good and Fixing Credit Rating Agencies -- an incentive-compatible way to reward them for good ratings. (A recent podcast I heard made it clear that "inaccurate" ratings continue b/c they allow bond buyers to buy higher risk without regulators seeing what's up.)

BEST: Cutting Fat or Muscle? Water conservation in cities is MUCH MORE expensive than conservation on farms. Hear that, 20% by 2020 people? Meanwhile, the DWR Has No Clothes because their water conservation strategies omit prices (still true, I think). Speaking of water mismanagement, Haves and Have-Nots outlines the winners and losers in the Central valley.

Moving House -- the people of the Maldives are searching for higher ground where they may live.

Water Filters too much plastic and marketing...

Local Food -- a few interesting concepts.

BEST: Engineers without Borders thought people wanted showers; they wanted drinking water. But USACE Plays Hardball with a staffer who wanted to save (not pave) a river.

Environmentalism is the New Religion was also recently in the news...

Speed Blogging

2009-11-20T13:26:00.000-08:00

Dam Down: Rogue River flows again
Nice iceberg photos like this -->
"A Regional Finance Strategy to Restore the Health of the Great Lakes" [PDF] can perhaps give some good ideas to people trying to save the Delta.
Biofuels and water (yes, still a big mistake)
"Research is revealing a hidden structure within liquids and gases that guides the movement of everything from pollution to aeroplanes" Speaking of science, check out this high-speed film of a water drop bouncing on water...
Green consumers are still destroying the Earth. ~~Buy Green~~ Don't buy anything!
Five economists talk sense on financial market regulatory reform
"How we can feed the world without trashing it?" with organics!
Coyote and others discuss hacking low-flow shower heads. Very funny and creative. The WSJ notes the battle between regulators who want low-flow and the customers who want more more more, but fails to note that higher prices are much more efficient in promoting conservation. Wake up Rupert!

hattips to JG, DL, CM, DM, HP and RW

Poseidon's Carlsbad project cost is $700 million

2009-11-20T12:43:00.000-08:00

Global Water Intelligence is an expensive (but worth it) source of timely and excellent analysis. This piece [$] caught my eye, and I quote heavily because it's gated for subscribers:

Poseidon Resources’ decision to apply for an extra $50 million of private activity bonds [see this post] caught my eye. It also seems to have captured the imagination of California’s media, but for quite different reasons. I was interested primarily because I am intrigued by how Poseidon is going to make a return that justifies the fantastic risks it has had to take on in order to get the Carlsbad project this far. It seems to me that the extra money is a sign that things are going well for the company.

The reason I think things are going well is because the construction costs are pretty well fixed at $360 million for the plant and the pipeline. The revenues are also pretty much fixed...

It seems to me unlikely that Poseidon has had to increase the amount of debt in the project from $480 million to $530 million simply because the debt has turned out to be more expensive than anticipated. The main reason why the cost of finance would rise would be because potential investors are worried about the level of risk in the project. If that were the case, it would be unlikely that Poseidon would be able to increase the amount they are borrowing. Rather they would need to be reducing the leverage in the project. In fact, it appears that the reverse must be happening: Poseidon is finding sufficient appetite in the market for exposure to the Carlsbad project, that it can increase the amount of debt, and reduce the amount of equity. For example it might have started with the assumption that it would need to split the debt and the equity 65-35, which would require $480 million of debt, but now it discovers that there is sufficient appetite in the market for Carlsbad private activity bonds to enable it to push for a 75-25 debt/equity split. Assuming that the total project cost is around $700 million, the total debt would then be $530 million.

Now this column is labeled as "speculation," but the analysis seems sound -- and interesting! But there are still two questions I've got...

Where that $700 million is being spent ($360 million for construction and $340 million for... start up costs? buffers? political contributions? help!)
Why nobody is talking about the project costing $700 million, since that's stated in a matter-of-fact way here. That matters, because those costs are going to get repaid, by someone, somewhere...

Your thoughts? Bottom Line: Although Poseidon's project may possibly make sense, I'd like to see a full financial accounting -- and so would Poseidon's customers!

Carbon Offsets = BS

2009-11-20T10:30:00.001-08:00

Yet again, the NY Times is following on my lead :)

In this 25 Oct post, I asked

Should I offset my "carbon footprint" if I fly in an airplane that's 1/2 full (and would have flown without me anyway)?

In this 18 Nov story, we read:

In 2002 Responsible Travel became one of the first travel companies to offer customers the option of buying so-called carbon offsets to counter the planet-warming emissions generated by their airline flights.

But last month Responsible Travel canceled the program, saying that while it might help travelers feel virtuous, it was not helping to reduce global emissions. In fact, company officials said, it might even encourage some people to travel or consume more.

Bottom Line: Carbon offsets are a lot closer to indulgences than effective tools for saving the earth. If you want to save the earth, use less.

THIS is how you get people to use less water

2009-11-20T06:31:00.000-08:00

Aquacue is working with AQUAholics Anonymous to get UCSD students in dorms to use less water.

The strategy has three prongs:

Dormies can see their daily consumption. That's fast feedback. (That link will disappear at the end of the month, so look now!)
Residents can compare their current consumption to their numbers from the day or year before (click on the name of a hall to see the graphics). That creates an incentive to improve personal (or in-group) performance.
Residents can compare consumption to others in other halls, to see who is at the top of the league table. That comparison creates in-group vs out-group competition, which is very powerful.

Residents in the top three halls have cut their consumption by 35-40 percent against baseline -- to 22-37 gallons/capita/day. Students in the worst hall are using more but that's only using 60gcd -- still pretty good for indoor use.

And remember that these students are NOT facing financial incentives to use less water!

Shahram Javey at Aquacue is looking for financial and other types of support. If you like this, email him.

Bottom Line: People will use less water if they know how much they are using and how much relative to "normal" -- aka, their peers. (Oh, and it doesn't hurt to give financial reminders of high and low consumption :)

Why should I be an AWWA member?

2009-11-19T13:17:00.000-08:00

I joined the American Water Works Association to participate in the water community.

The "benefits of membership" have been disappointing to me:

Although I have spoken at a few AWWA conferences, I find them to be directed at selling pumps and water treatment devices, not at improving water management.*
Their webcasts are also more about money than spreading information.
I applied to serve on the water rates committee, but they never responded (let alone said yes or no).
I wanted to share articles from the AWWA, but they told me to take them down. With one exception, the AWWA is the only organization more concerned with protecting information than sharing it.

A heavy driver of AWWA's structure and "behavior" is its revenue model -- for most AWWA members, annual fees, conference fees, webcast fees, etc. mean nothing because they are paid by their ~~employers~~ customers, which gives them little reason to be picky about costs and benefits.**

Bottom Line: An organization's institutions say a lot about its priorities, customers, etc. The AWWA still appears to represent traditional water management (build stuff!) -- neither innovation nor the concerns of water customers. Oh well, I tried.

* Note that I do not have to be a member to give a talk...
** There's a principal-agent-beneficiary model to discuss!

Vegas charging more... to poor people

2009-11-19T10:31:00.000-08:00

The Directors of the Las Vegas Valley Water District (LVVWD) are proposing to increase monthly service charges for all customers. That means that all residential customers will pay $2 or $3/month more, no matter how much water they use.* Water use charges will not change from cheap [pdf].

That means that heavy water users will face a trivial additional cost, while people who use very little water will see relatively greater increases in their bills.

Say, for example, that you are LVVWD director Steve Sisolak, and you use just over 700,000 gallons of water a year (about 660% of the median 5/8" customer).

That means that your monthly bill (assuming a 1" connection) will go from $219.54/month to $222.45. Ouch! That's 1.33% more! Damn, that hurts! /sarcasm

Now say that you are the median customer, using 9,000 gal/mo on a 5/8 meter (that's still 296 gallons per day!) . Your monthly charge will go from $18.57 to $20.57, which is 10.77% higher.

So the "normal" person will have monthly bills that are 11 percent higher, while the heaviest water users (and directors of LVVWD) will pay only 1 percent more. Right, yes, I see....

Bottom Line: This rate increase puts the burden of higher costs (for getting more water!) on average customers, not the ones who are "causing" the shortages: The heavy users and the water managers who set prices too low and then complain of shortages.**

* Although I understand the virtue of matching fixed costs and fixed revenues, Las Vegas has a bigger problem to take care of -- consumption, and this rate increase does nothing to address that.
** LVVWD is led by Patricia Mulroy, General Manager.

Bureaucrats are anti-Entrepreneurs

2009-11-19T09:37:00.000-08:00

Arnold Kling puts his finger on it:

I created a list of entrepreneurial temperaments and found that when I reversed them--creating an "anti-entrepreneur"--the resulting personality is in fact a typical bureaucrat, colorless and rigid.

As an (economic policy) entrepreneur, this is both familiar and enlightening.

If you want to know more about bureaucrats, read James Q. Wilson's Bureaucracy.

Oh, and working for a bureaucracy doesn't automatically condemn you to being colorless and rigid, but watch out!

How much do subsidies cost, anyway?

2009-11-19T03:58:00.000-08:00

JR asks:

What is the annual dollar value of water subsidies? I know Jimmy Carter was trying to end water subsidies and the guy who wrote Cadillac Desert [Marc Reisner] said that for every two dollars invested in water subsidies, one dollar of economic value was created. In any event, what is the annual tax payer cost of water subsidies?

I can't give an answer to this question, but here are a few thoughts:

The biggest subsidy to water users is the "opportunity cost" of water they use, i.e., the difference between what they pay (say, $20/af) and what that water is worth to someone else ($50--1,200/af). If you charge them an "unsubsidized, cost of delivery" price of $50/af, they are still subsidized!

Without a market for water, it's hard to know the value of what's being used. Even if there was a market, we would only know the value "on the margin," which does not capture the (inframarginal) benefits that accrue to users.*

Timmins (Econometrica, 2002) estimates that water managers in western utilities invest too much in infrastructure, such that they last dollar (of their customers' money) invested only produces $0.45 of benefits. This result is not directly comparable to Reisner, but it indicates the same problem is little bang for the buck.

The value of water subsidies/rights are often capitalized in the land that those rights are attached to. A farmer who pays $20/af for water may have land worth $5,000/acre while land at a neighboring farm without water is only worth $1,000/acre.

Can you folks say more? Do you have any calculations of the value or water subsidies, on any scale, at any place on the planet?**

Bottom Line: Subsidies distort prices and therefore distort decisions on actions and allocations of resources. If we want to maximize the value of water, we should end subsidies and distribute water through competitive markets.

* If a $1 can of Coca-Cola is worth $5 to you, your "surplus" is $4; if it costs $0.50 to make/distribute, then total social surplus is $4.50. That may be inframarginal; your 10th can of Coke may only be worth $1.01; there's value, but not that much. Social surplus can ALSO go to zero at the margin when producer costs are rising, unlike my example.

** This PDF (via SH) discusses subsidies on California's State Water Project, pointing out that (urban) MWD has paid 62% of its costs for 31% of its water, while (agricultural) Kern County contractors have paid 13% of costs for 42% of the water. Although MWD should have higher costs (pumping a longer distance, over the Tehacapis) and this is prepared by Public Citizen (a group that sometimes imagines nasties), the report does raise good questions (and give numbers!)

Mixing fresh and salt water to produce energy?

2009-11-18T13:35:00.000-08:00

SB writes in, asking about this post:

A device that gleans usable energy from the mixing of salty and fresh waters has been developed by University of Milan-Bicocca physicist Doriano Brogioli. If scaled up, the technology could potentially power coastal homes, though some scientists caution that such an idea might not be realistic.

[snip]

Instead of using fresh water, an increasingly scarce global resource, a salinity power plant could use water that is polluted or slightly contaminated with salt, giving new life to unusable water, Brogioli said. Seawater could also be mixed with high-salinity water, obtained by evaporating seawater -- perfect for a desert community with little fresh water but sunshine to spare.

Sounds cool. Will it work?

Poll Results -- Water Bill Fail

2009-11-18T10:09:00.000-08:00

Hey! There's a new poll (gimme health!) to the right --->

California's Water Bill Package...
...will fix our problems	5%	2
...will improve things	16%	6
...will do very little	47%	18
...will make things worse	32%	12
38 votes total

Bottom Line: All sound, and very little fury. Looks like more work for lobbyists!

Buchanan's Wisdom

2009-11-18T09:37:00.000-08:00

Don Boudreaux writes:

Buchanan insists that we should always look upon “politics without romance,” that we ought never to forget that all the fine campaign phrases and soaring promises issued by politicians too often disguise the selfish, sometimes sleazy, reality of political activity.

As I learn more economics, I appreciate the genius of James Buchanan (and Gordon Tullock!)

A short lesson on the gains from trade

2009-11-18T03:36:00.000-08:00

J. Shogren gave this example of "obviously. NOT!" at a conference

Consider four sellers who value their goods at $5, 4, 2 and 1.

Consider four buyers who would value these goods (should they possess them) at $10, 8, 3 and 2.

Now, how much can we increase surplus if we allow trading?

Calculate your answer in terms of the increase in surplus and then click "read more"
Now, a naive accounting would answer with an $11 increase in surplus ($10 buys from $5, $8 from 4, and so on...), but that accounting assumes that buyers can only buy from sellers, who must sell.

It we merely look at the "gains from trade," we will see that those who have the greatest values should end up with the goods. That means that new owners should be Mr10, Mr 8, Mr 5 and Mr 4 (total value 27). Judged against the starting value of 12, we can see that the gains from trade are really 15.

Bottom Line: Trade is about maximizing value, not buying and selling.

If you think I was harsh on the water bills...

2009-11-17T17:16:00.000-08:00

Read this interview (via DW) with State Senator Wolk (D-Davis). Here are some nice (?) quotations:

She told The Record's editorial board Monday that, realistically, the efforts [water bills] were a waste. "It was awful, incredibly awful," Wolk said. "I've never seen anything like this."
She said the legislation was written by Westlands Water District, which serves western Fresno and Kings counties, and the Metropolitan Water District, which serves much of Southern California. "They wrote it in private meetings, and then it emerged in the middle of the night."
Wolk remains dumbfounded by the role of Sacramento Democrat Darrell Steinberg, president pro tem of the state Senate. Despite representing a county bordering the Delta, Steinberg pushed Schwarzenegger's water package through the Legislature. She called his role "disturbing." Steinberg threw Northern California Democrats "under the bus," Wolk said.
In the end, Wolk believes the bills, including an $11.1 billion bond requiring voter approval, were a step backward

Well, I guess we know how she would have voted in the poll!

Entrepreneurs, brokers and liars

2009-11-17T13:25:00.000-08:00

I have been around for awhile. I have studied corruption, organized crime and black markets. I have worked with frauds and cheats (my evil step-father for one). I have enough economic theory and empirical evidence to understand why and how people lie, strategically maneuver, etc.

But it still amazes me when people steal instead of working, or lie instead of being honest. What kind of delusional world do these people inhabit?

One guy stole my $500. I led the fight to get him caught, tried, convicted and imprisoned -- in Washington DC, no less!

A few months ago, I was contacted by Noah Israel, who claimed to have a biological desalination process that was green, etc. I talked to Noah on the phone. He told stories about his other inventions and work, how hard it was to raise money, and how a guy "with a wall of money" had sued him, costing him thousands.

After our conversations, I posted on "his" technology here. He reviewed and corrected that post, clarifying that he was "New Water LLC's president."

Well, he lied. It turns out that this technology belongs to Randy Behrens of New Water Aquaculture LLC. Noah had signed an investor/broker agreement with Randy, and Noah was trying to find other investors (via me, among other sources) so that he could get commissions.

I have nothing to say about Noah's other work, and I understand the role of brokers (I used to be one), but I do NOT accept lying about one's role. Noah was not the President of New Water, but (I suppose) he wanted to make it seem that he was, so he could collect a commission for raising money, so that an investor would not circumvent him and go directly to Randy.

I've seen this before, and the entire dynamic (the lies, the strategic disclosure, the NDAs, etc.) was the main reason that I left this kind of brokerage.

Anyway, I just wanted to apologize to you readers, the folks to whom I emailed this "investment idea," and Randy (who found me through this blog -- the water world is a SMALL world). So, if you want more information about this idea, email Randy.

Noah, btw, apologized to me, and I am passing that apology along to you, now.

Bottom Line: When I die, I won't care about how much money I have; I will only care about my reputation.

Thriving in The Clean Economy [PR]

2009-11-17T10:58:00.000-08:00

WED NOV 18, 2009 1:30 pm EST (10:30 am PST) -- that's tomorrow!

"Free Webcast features Coca-Cola, IBM, Nokia, and other Climate Savers partners sharing carbon-cutting innovations just weeks before Copenhagen. Discover how companies are finding innovative solutions to combat climate change and secure our energy future while increasing their bottom lines. WWF Climate Savers companies are leading by example, showing that economic growth, curbing carbon, and increasing shareholder value and can go hand in hand."

Register here.

Kill the growth zombie!

2009-11-17T03:29:00.000-08:00

In my article, I discuss how the "iron triangle" of politicians, water managers and real estate developers have driven growth beyond sustainable, beyond our limited water supply.

As if on cue, we get these amazing stories:

Sacramento bureaucrats overrode control systems to issue more building permits to K. Hovnanian Homes in Natomas (my favorite candidate to be the next Atlantis). The bureaucrats have been put on administrative leave, but one is the son of a local politician. This was NOT an accident. Here's more on the city employee who caught the crime, and the Mayor Johnson's attempts to cover it all up. Pathetic.
A Temecula water district rejects a moratorium on new buildings when developers convince the board that new houses will lead to growth and jobs. Is anyone paying attention the crappy real estate market? or are they just working for developers? Temecula is in Riverside county!
Meanwhile, (more clever) water managers are asking for a hookup moratorium in Monterey.

Bottom Line Growth and development are fine when they are sustainable, as in this proposal. Building in floodplains or areas with poor supply is NOT sustainable. Unfortunately, homeowners and taxpayers will pay the price of the iron trangulates' stolen gains.

hattip to DW

Water on the moon and other fantasies

2009-11-16T13:31:00.000-08:00

Peter Gleick says:

I have mixed feelings about the value of the space program, and without a doubt, this is probably the most expensive water we've ever found. But, if we go to the moon, it could turn out to be among the most valuable as well.

Fleck calculates the price of that water to be about $1 trillion/af.

Peter's thought on the "value" of that water got me to thinking. Maybe we can bring an acre foot back, sell it to the Chinese and thus rescue our economy.

Whaddya think? :)

Or perhaps some people need to remember what opportunity cost means?

Bottom Line Stop the space fantasies -- we have real problems to solve here.

Monday Morning Smile

2009-11-16T10:19:00.000-08:00

(via CC) Two chickens break up a rabbit fight (Chickens for Peace?)

And a little political ~~truth~~ ~~lie~~ truth:

Some more comments on the water bill (aka FAIL)

2009-11-16T03:30:00.000-08:00

As I said two weeks ago, I was not pleased at the lack of progress embodied in California's water bills. (Someone else's critique)

Here are a few more items on that:

Senate President pro-tem Steinberg (D-Sacramento) indulged in the most blatant hypocrisy and non-leadership I've seen in years, by inserting a $10 million earmark for his pet project (a community center). He was shamed into removing it. Dan Waters also points out that Steinberg -- a guy who claims to support transparency -- is directing his "investigations" team towards political ends. He should be impeached.
This article shows where the $11 billion is supposed to go. I see a whole bunch of pork for projects that should be funded by locals/users, and not the general fund/bonds.
Speaking of pork, Assemblywoman Lori Saldana (D-San Diego) told environmentalists that she was going to vote against the bond, before she voted for it. In between her no and yes came $100 million in earmarked funds for SDCWA. Coincidence? I think not!
Schwarzennger rewarded John Benoit (R-Riverside) with a Riverside county supervisor position on the same day as the vote for the water bills. Benoit claims this was a coincidence. I think not!
This Fresno Bee article does a pretty good job at profiling pork-laden Westlands. One farmer claims that "If that were true [Westlands has big political muscles], why wouldn't we have more success at getting the water we need?" Nice try. If Westlands didn't have all its political pull, it would have been shut down years ago. But that's not the best part of this article. Try this:
"It would be a tragedy and a blow to national security if we did not have Westlands," Costa said. "Where would the food products come from for Americans' dinner tables?"
Well, Jim, how about other farmers? I sure hope that Rep Costa (D-Fresno) gets LOTS of campaign contributions for his ~~kind words~~ propaganda.
I reviewed the bills' shortcomings to my class, not so that they would hear me rant, but so they would understand the gap between words and deeds. The class is about "environmental economics and policy," after all! Watch this video (from 54:55) if you want to hear some harsh criticism of our "leaders."

As I said in that lecture, the four "governance" reforms do very little:

The Delta Council can be stacked with the governor's fans. It has no enforcement power.
Groundwater regulation is timid, at the wrong scale (monitor at the basin level activities that take place at the irrigation district or farm level, with penalties at the county level), and administered by DWR, an organization that's controlled by agricultural interests.
The "increase in resources" at the SWRCB is trivial (25 staff?), when what's needed are annual water permit fees, retirement of paper permits, strong penalties for illegal diversions, control over groundwater use (when it interferes with surface water), etc. None of this is happening. Even worse (as Michael Hanemann never fails to point out [PDF], SWRCB has consistently failed to do its job -- for more than 40 years. What makes anyone think they will start working now?
20% reduction in urban water, but "try hard" for ag water? Yeah right.

The $11 billion bond will go down in flames, of course. Nothing like spending money you don't have (and that's not yours!) on Projects of Regional Koncern!

Bottom Line: Our political leaders tried to hit a grand slam, hit a foul ball and then claimed a triple. Fail.

hattips to DW and CM

Minimum Wage

2009-11-14T21:58:00.001-08:00

I don't really like it. I don't like most government actions if they prevent individuals from voluntarily making themselves better off. Some may say that is too simple a view, but I trust people, and I trust them to know what is best for them. Recently, the NY Times said the following in a recent editorial:

The country also needs a program that would create jobs for teenagers — ages 16 to 19 — whose unemployment rate is currently a record 27.6 percent. Deep and prolonged unemployment among the young is especially worrisome. It means they do not have a chance, and may never get the chance, to acquire needed skills, permanently hobbling their earnings potential.

Some articles mildly frustrate me, but this one angered me enough to respond, and they published my letter (3rd one down). Although it's quite nice to get published, it's disheartening to read the other letters and to reread the editorial and come to understand that my viewpoint is probably considered kooky, especially because I live in Bezerkeley. I think most economists agree that the minimum wage hurts, so we must not be very good at conveying the terrible costs of the minimum wage.

Bottom Line: Let people sell their time for whatever they feel is fair.

Open thread for the weekend of November 14

2009-11-14T04:21:00.000-08:00

Talk amongst yourselves about new ideas, old posts, things overlooked, things to forget...

Flashback: 7 -- 13 Nov 2008

2009-11-14T03:10:00.000-08:00

These posts are still relevant -- please comment!

Saving the Fish, Saving Themselves -- fisheries are still collapsing, and some fishermen (e.g., EU tuna) are still fighting against sustainability.

Water Markets in Spain are big, but desalination is growing fast. Water Wasters Will NOW Pay More at Eastern MWD. I wonder how that worked out?

BEST: A Primer on California Water -- this is the one that said "regulate groundwater." Not sure we've got very far on that in the latest bill (regulation is on the basin level, with irrigation districts "encouraged" to coordinate reports. DWR, that captive organization, is supposed to take over if they don't. Right.) Speaking of that, Water for the World is about global monitoring of water.

BEST: Resource and Environmental Economics -- an overview. Wars for Kids -- how to use games to teach about resources.

Organic Efficiency -- as in organics are better. Some flaws in that report.

BEST: Neither Pro nor Anti-Privatization -- the evolution of an academic from anti-market to pro-community oversight (like me).

Carbon Taxes in the Bay Area -- yes, and they work (administratively). I wonder when we will dump the cap and trade charade and go for a simple tax solution. Speaking of complicated, Cooking the Books outlines how to lie with C&T.

Housekeeping note

2009-11-13T15:03:00.000-08:00

Hi Folks,

In preparation of various transitions, I am ending weekend discussions (Fail) and will post no new material on weekends. Instead, I will post an "open thread" (write whatever you want, talk to each other) and a "flashback" to the year before (some things never change; some things need updates) on Saturday morning.

Cheers!

More on the macroeconomy and real estate

2009-11-13T13:55:00.000-08:00

Gary Watts may look like the cat that just ate the canary, but he's got a lot of interesting things to say [pdf] about the macroeconomy and real estate in California and the US. Scary facts:

40 million US homeowners have no equity.
90% of Option ARM borrowers are paying the minimum.
California foreclosures were 236,231 in 2008 -- up 180% on the 84,375 foreclosures in 2007!

Russ Roberts' talk with Charles Calomiris is amazing. Calomiris has an excellent grasp (as if I can judge!) of the markets and political economy. Most interesting is his recollection that "Joe Stiglitz, Jonathan Orszag, and Peter Orszag were hired by Fannie Mae to write a paper in 2002 defending the claim that the odds of Fannie Mae ever getting into financial trouble were extremely low." Good call, ~~academics~~ consultants. /sarc

Oh, and has anyone considered how frail the "I will buy a place and make higher monthly mortgage payments because I hate throwing my money away on rent" logic looks, now that equity has gone to zero or negative? So much for that conventional wisdom!

Bottom Line: Things are bad, and they will not be better for awhile. The "guys in charge" may have contributed to the problem, but I don't think they know how to get us out of it. (I'd stop wasting our money.)