Monday, January 29, 2007

Great Lyrics Period

Goethe, Erlkönig

Original German
English Translation

Wer reitet so spät durch Nacht und Wind?
Es ist der Vater mit seinem Kind;
Er hat den Knaben wohl in dem Arm,
Er faßt ihn sicher, er hält ihn warm.

"Mein Sohn, was birgst du so bang dein Gesicht?"
"Siehst, Vater, du den nicht?
Den Erlenkönig mit Kron und Schweif?"
"Mein Sohn, es ist ein Nebelstreif."

"Du liebes Kind, komm, geh mit mir!
Gar schöne Spiele spiel' ich mit dir;
Manch' bunte Blumen sind an dem Strand,
Meine Mutter hat manch gülden Gewand."

"Mein Vater, mein Vater, und hörest du nicht,
Was Erlenkönig mir leise verspricht?"
"Sei ruhig, bleibe ruhig, mein Kind;
In dürren Blättern säuselt der Wind."

"Willst, feiner Knabe, du mit mir gehn?
Meine Töchter sollen dich warten schön;
Meine Töchter führen den nächtlichen Reihn,
Und wiegen und tanzen und singen dich ein."

"Mein Vater, mein Vater, und siehst du nicht dort
Erlkönigs Töchter am düstern Ort?"
"Mein Sohn, mein Sohn, ich seh es genau:
Es scheinen die alten Weiden so grau."

"Ich liebe dich, mich reizt deine schöne Gestalt;
Und bist du nicht willig, so brauch ich Gewalt."
"Mein Vater, mein Vater, jetzt faßt er mich an!
Erlkönig hat mir ein Leids getan!"

Dem Vater grauset's, er reitet geschwind,
Er hält in Armen das ächzende Kind,
Erreicht den Hof mit Müh' und Not;
In seinen Armen das Kind war tot.

Who rides, so late, through night and wind?
It is the father with his child.
He holds the boy in the crook of his arm
He holds him safe, he keeps him warm.

"My son, why do you hide your face so anxiously?"
"Father, do you not see the Erlking?
The Erlking with crown and cloak?"
"My son, it's a wisp of fog."

"You lovely child, come, go with me!
Many a beautiful game I'll play with you;
Many colorful flowers are on the shore,
My mother has many a golden robe."

"My father, my father, can't you hear,
What the Erlking quietly promises me?"
"Be calm, stay calm, my child;
It is the wind rustling in the dry leaves."

"Do you want to come with me, fine lad?
My daughters shall serve you;
My daughters lead the nightly dances
And rock you and dance and sing you to sleep."

"My father, my father, and can't you see there,
The Erlking's daughters in the gloomy place?"
"My son, my son, I see it well:
It is the old grey willows gleaming."

"I love you, your beautiful form entices me;
And if you're not willing, I shall use force."
"My father, my father, now he takes hold of me!
The Erlking has wounded me!"

The father shudders; he rides swiftly,
Holding in his arms the moaning child.
He reaches the yard with fear and dread;
In his arms, the child was dead.

Great Lyrics for Urban Economists

From Talking Heads


Think of London, a small city

It's dark, dark in the daytime
The people sleep, sleep in the daytime
If they want to, if they want to


I'm checking them out
I'm checking them out
I got it figured out
I got it figured out
There's good points and bad points
Find a city
Find myself a city to live in.

There are a lot of rich people in Birmingham
A lot of ghosts in a lot of houses
Look over there!...A dry ice factory
A good place to get some thinking done

Down el Paso way things get pretty spread out
People got no idea where in the world they are
They go up north and come back south
Still got no idea where in the world they are.
Did I forget to mention, to mention Memphis
Home of Elvis and the ancient greeks
Do I smell? I smell home cooking
It's only the river, it's only the river.

Thursday, January 25, 2007

Brad Delong cites AngryBear on Tyler Cowan

The issue of income distribution is problematic. We like to think that income is a function of virtue (i.e., hard work, honest dealings, etc.), but the reality is that it is also a function of endowments at time of birth. The most conventional of these endowments is parental wealth, but the most important (at least within the contect of the United States) is the initial store of human capital--that is, talent.

The initial distribution of talent is anything but "fair." Doctors make a good income in part because they work very hard to become Doctors, but if they also tend to be people who were lucky enough to be born pretty smart.

Remarkably, people seem to be more or less OK with the outcomes that the distribution of talent produces--there doesn't seem to be that much resentment of the incomes of Tiger Woods or orthopedic surgeons. But problems do arise and there is resentment when those who work 40 hours a week cannot grasp certain basics--an affordable house, a decent neighborhood, a decent school for their kids, a reasonable commute. It used to be that people without the intellectual acument to go to college could have these things, but they often no longer do.

These are not unreasonable things for working Americans to want, and there is only one way to make sure they have them--some form of income redistribution. There seem to be two acceptable ways to do this politically. The first is to increase the minimum wage. While conventional economic theory predicts that this will lower employment, the most likely outcome of an increase in the minimum wage is that businesses (all of which are subject to the wage floor) will raise their prices to consumers--implicitly tax all of us who consume. Personally, I am fine with that.

The other method for raising living standards for working Americans at the bottom of the income distribution is to get a larger Earned Income Tax Credit. To do this without increasing the fiscal deficit means some of us will have to pay higher taxes. I am fine with that too. My first choice: increase the tax on gasoline. We'll talk more about that soon.

Tuesday, January 09, 2007

New Orleans (again)

In 1960, New Orleans had 627,000 people and was the largest and perhaps still most important city in the South. It now is smaller than Lexington, Kentucky. Most of the reason for this is, of course, Katrina, but much of the reason is not. New Orleans had already lost around 20 percent of its peak population before Katrina, and as such was very much like unglamorous cities such as Milwaukee, Cincinnati, and Baltimore. So while it didn't lose as much as Buffalo, Pittsburgh, St. Louis and Cleveland, it was hardly putting in an all-star performance, even before Katrina hit.

A question I want to focus on over the next year is why New Orleans--a city I rather love--has evolved (devolved?) as it has. Race certainly has a lot to do with it, but cannot by itself explain the city's fade. Atlanta is a heavily black, southern city that has performed far better--if less charmingly--than its neighbor to the southwest.

Of the course if this year, I will be president of a small association of academics who do what I do--the American Real Estate and Urban Economics Association. I will be giving my presidential address next January in New Orleans. I therefore think that the focus of the address should be about New Orleans. I have a lot of reading to do between now and then; I welcome suggests for reading, people to talk to, and just opinions from well-informed people about the city's history and its future. You may read my preliminary views in the archives.

Thanks for any suggestions or help.

Wednesday, January 03, 2007

News from a tough real estate market: Metropolitan Detroit

Susan Carter, a Realtor from the Detroit area, writes:

As I thought about ways to best characterize the real estate market in Southeast Michigan in 2006 I looked at last year’s market report…and found I could almost repeat word for word the general market condition comments I made at the end of 2005. The characteristic optimism of Realtors has again been tested by the challenging economic issues facing Michigan AND continued consumer concerns about making major financial commitments. The supply of homes and condos for sale has been high all year and the number of motivated buyers low (especially in the over $250,000 price range)… a condition that can only be sustained for so long without discounted values…basic economics 101. 2006 saw a softening of prices in all areas and price ranges, in some cases up to 12-15 percent of 2004 values. Sellers who simply had to move in 2006 decided there was no point in waiting for a price recovery, especially as we saw the erosion of values tied to supply and demand as the market year progressed. People who wanted to trade up often could not sell their current house or condo, disrupting the typical home ownership cycle….first home, second home, then the keeper until retirement. The current soft real estate market is a complicated issue, one with many factors influencing the fundamentals of supply/demand/pricing, including…
1. Highly motivated sellers: relocation or long term owner sales. When employees are transferred or leave the area for new job opportunities some employers have guaranteed buy-out or sales support programs in place but most do not. At some point in a slow market people without relocation benefits just do not want to own or maintain homes here any longer….and they become the most motivated sellers in town. Owners undercut the market, reducing the list price to below the price of competing homes, to generate offers. When the property sells, the sales price is used to establish market value for future sales. Long time owners with a lot of home equity have started to do the same thing…undercut neighborhood pricing to sell instead of waiting for a market recovery. Buyers have access to sales data and make offers based on the lowest neighborhood price these days as opposed to overbidding in hot markets ten years ago.
2. I have said for the last 5 years that trendy, creative mortgage programs can be good tools when used in the right circumstances…the right buyer and the right home. Many of these programs are based on an assumption of appreciating real estate values, sustained employment and increasing incomes. Unfortunately most lenders do not explain the potential downside of interest only, balloon, adjustable, negative amortization or highly leveraged financing programs…and the impact of job loss or layoffs, which can make refinancing of adjustable or balloon mortgages impossible. Homeowners can be forced to sell if they cannot afford to refinance at current interest rates.
3. Michigan has the highest foreclosure rate per household in the country. Many people bought homes in the last few years counting on a continued robust, appreciating real estate market. Then the local market softened and people could not sell without bringing money they did not have to the closing table. Buyers just stopped making payments and waited for the inevitable. The number of foreclosed homes scares potential purchasers…they think that the bottom has fallen out of the real estate market and the only prudent thing to do is take a wait and see attitude while assessing the direction prices are heading.
4. The media often has banner headlines about the number of unsold homes without looking at the hard facts of real estate sales: there are a lot of reasons a home does not sell besides a weak local economy including a negative equity position that does not allow for price negotiation, changing buyer tastes in terms of style, location and lifestyle, a price that is way out market value range or the overall condition of the home. The power of the press in creating or killing consumer confidence has always amazed me.

While unemployment is high…almost 7 percent in Oakland County…I prefer to focus on the 93 percent of the people in the area who are working and could buy homes if they wanted or needed to. Housing corrections do not last forever and there are indications that consumers are feeling confident about local market conditions and are ready to move back into the housing market in 2007. Literally dozens of people have told me that they are tired of waiting; this will be the year to make a move. Once there is market activity I suspect that prices will rebound within 12-24 months. Our market is unique in that pricing still bears a relationship to actual construction costs. The number of sales tied to speculators is quite low here compared to other parts of the country. It seems to me that people are spooked by perceived loss of home equity…remember the stock market bust and the huge loss of paper wealth ….but they will not need a lot of encouragement to get back in the housing game if they need more space, want a different location or style of home. Home ownership can be a warm, fuzzy lifestyle benefit, hard to put a price tag on or quantify as strictly an investment.

While I think Susan overstates the power of the press, she is otherwise very much on target as to what is happening in her region. I also appreciate her remarks about exotic mortgage products.

I also think Susan demonstrates something that people don't think about very often when they think about Realtors--that the good ones know their markets exceptionally well, and that it takes a lot of diligence to know markets so well. The is the reason most people who go into the real estate business do not succeed--the median compensation for real estate agents is very low. As is the case in most businesses, long term success in the residential real estate market requires intelligence and hard work. I remember driving down a street in Madison some years ago with a well-known broker from that town, and he could tell me something about every single house on the street.

So how does one choose a good Realtor? When we are buying in Bethesda, we began by going to someone who was a leader in number of listings, a man named Gary Ditto. It turns out he was completely obsessed with the market. Susan seems pretty obsessed too. Go for the obsession.