Baum on Money: Maestro Greenspan's Chutzpah
Happy Friday, all. The shutdown is over, the weekend is upon us and your daily reads await you.
Scathing doesn't cover this review
Alan Greenspan is back with a -- get this -- guide to forecasting. No, it's no joke. The Maestro, who failed to see the biggest housing bubble in history, is now marketing his forecasting techniques to the rest of us. Daniel Akst shreds this "clueless" new book, "The Map and the Territory," in a review on Bloomberg. Here's a sample: "The plodding text oscillates maddeningly between equivocation and chutzpah." "An infuriating book" by someone who is "so helplessly lost." Greenspan resorts to first-person plural to explain "how we got all got it so wrong." Even the idea of the double bubblemeister instructing us on the finer parts of forecasting is absurd. "A guide to economic forecasting by Greenspan is about as credible as art history by Mr. Magoo," Akst writes. Ouch.
Clean is in the eye of the beholder
What looked like a pretty clean bill to reopen the government and raise the debt ceiling was not pork-free. Even at a slim 14 pages, the bill (H.R. 2775) managed to squeeze in $1.2 billion for an Ohio River lock-and-dam project, a gift to Senate Minority Leader Mitch McConnell's home state; $450 million to repair flooded roads in Colorado; and a one-time payment to Senator Frank Lautenberg's widow. And no, there is no means-testing for gifts to rich widows.
House-flipping is back… for high-end buyers
Washington D.C. is a great place to live, work and flip a high-end house for a $260,000 profit, reports the Washington Post. Yes, the rich have discovered what the not-so-rich enjoyed in the last decade. In the third quarter, the number of homes flipped in the $1 to $2 million price range rose 42 percent compared with a year ago. In the $2 to $5 million category, the increase was 350 percent. Los Angeles has been a flipper's paradise, with 2,100 homes bought-and-sold last quarter. But don't get any ideas. Real estate agents report there's very little flip-able supply under $400,000.
When he talks about the Fed, people listen
The Wall Street Journal's Jon Hilsenrath, Fed reporter par excellence, answers questions on the U.S. economy, the effect of the shutdown and what it means for the Fed in this 23-minute video. Did you know the Fed's decision to taper is "data dependent?" And the data the Fed is dependent on won't be the statistics distorted by the government shutdown. "Maybe we'll get some clean data by the end of the year," Hilsenrath says. He doesn't rule out a first tapering step in December or January. Then again, the new year brings new budget deadlines, the prospect of another government shutdown and more "uncertainty" about fiscal policy.
Consumer price index is casualty of the shutdown.
Speaking of data, researchers at the Cleveland Fed expect the repercussions of the shutdown to affect the CPI for at least seven months. That's because of the reduced time to collect data for the September and October reports. (The Bureau of Labor Statistics has hundreds of part-time economic assistants who check prices on prescribed items each month. I spent a day with one once, so I'm an authority on the subject!) The researchers expect greater processing errors, due to the reduced time to compile the data, and sampling errors, because of a smaller sample. It just so happens that September's report, to be released on Oct. 30, is the missing element for the government's annual cost-of-living adjustments. The researchers claim that the year-over-year CPI "will continue to be quite reliable."
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)