The rationalizations that I’m noticing from people who want to deny the existence of a housing bubble are becoming more obviously contrived.
Last spring, the strangest one I noticed was this Tyler Cowen post, which notes the unusual rent-buy ratios, then ignores that anomaly and devotes the rest of the post to questioning a weaker argument for the housing bubble theory.
This month I noticed someone on a private mailing list who had enough sense to realize that current housing prices probably depend on a continuation of unusually low and stable long-term interest rates expressed confidence that the “psychological consensus against inflation” would make that likely. If such a consensus existed, I would have expected to see people expressing concern that the Fed’s policy being too inflationary, when in fact I see people jumping at any excuse (e.g. a hurricane) to advocate a more inflationary policy. Plus I see politicians racing to expand the federal debt to levels that will give them massive incentives to inflate or default when the baby boomers retire.
Now Chris Hibbert comes up with some stranger rationalizations:
The worst historical cases that I know of were times when housing prices dropped 10 or 20 percent.
I thought he read Marginal Revolution regularly, but that comment suggests he is unaware of this description of Shiller’s apparently more accurate housing price history which includes what looks like a 50 percent drop in U.S. housing prices. But that deals with a national average, which gives you the kind of diversification you might get with a mutual fund. Chris’s real estate investments sound less diverse – is that safer?
I was somewhat disappointed by the latest Accelerating Change Conference, which might have been great for people who have never been to that kind of conference before, but didn’t manage enough novelty to be terribly valuable to those who attended the first one. Here are a few disorganized tidbits I got from it.
Bruno Olshausen described our understanding of the neuron as pre-newtonian, and said a neuron might be as complex as a pentium.
Joichi Ito convinced me that Wikipedia has a wider range of uses than my stereotype of it as a dictionary/encyclopedia suggested. For example, its entry on Katrina seems to be a better summary of the news than what I can get via the traditional news media.
Cory Ondrejka pointed out the negative correlation between the availability of violent video games and some broad measure of U.S. crime. He hinted this might say something about causation, but reminded people of the appropriate skepticism by noting the correlation between the decline in pirates and global warming.
Someone reported that Second Life is growing at an impressive pace. I’ve tried it a little over a somewhat flaky wireless connection and wasn’t too excited; I’ll try to get my iBook connected to my dsl line and see if a more reliable connection makes it nicer.
Tom Malone talked about how declining communications costs first enabled the creation of large companies with centralized hierarchies and are now decentralizing companies. His view of Ebay was interesting – he pointed out that it could be considered a retailer with one of the largest number of employees, except that it has outsourced most of its employees (i.e. the people who make a living selling through Ebay). He also mentioned that Intel has some internal markets for resources such as manufacturing capacity.
Daniel Amen criticized modern psychiatry for failing to look at the brain for signs of physical damage. He provided strong anecdotal evidence that the brain imaging services he sell can sometimes tell people how to fix mental problems that standard psychiatry can’t diagnose, but left plenty of doubt as to whether his successes are frequent enough to justify his fees.
T. Colin Campbell described some evidence that eating animal protein is unhealthy. He didn’t convince me that he was a very reliable source of information, but his evidence against casein (a milk protein) sounded fairly strong.
One odd comment from Robin Raskin (amidst an annoying amount of thoughtless sensationalism) was that kids don’t use email anymore. They send about two emails per day [i.e. they've switch to IM]. The idea that sending two emails per day amounts to abandoning email makes me wonder to what extent I’m out of touch with modern communication habits.
An amusing joke, attributed to Eric Drexler:
Q: Why did Douglas Hofstadter cross the road?
A: To make this joke possible.
Book Review: The Singularity Is Near : When Humans Transcend Biology by Ray Kurzweil
Kurzweil does a good job of arguing that extrapolating trends such as Moore’s Law works better than most alternative forecasting methods, and he does a good job of describing the implications of those trends. But he is a bit long-winded, and tries to hedge his methodology by pointing to specific research results which he seems to think buttress his conclusions. He neither convinces me that he is good at distinguishing hype from value when analyzing current projects, nor that doing so would help with the longer-term forecasting that constitutes the important aspect of the book.
Given the title, I was slightly surprised that he predicts that AIs will become powerful slightly more gradually than I recall him suggesting previously (which is a good deal more gradual than most Singulitarians). He offsets this by predicting more dramatic changes in the 22nd century than I imagined could be extrapolated from existing trends.
His discussion of the practical importance of reversible computing is clearer than anything else I’ve read on this subject.
When he gets specific, large parts of what he says seem almost right, but there are quite a few details that are misleading enough that I want to quibble with them.
For instance (on page 244, talking about the world circa 2030): “The bulk of the additional energy needed is likely to come from new nanoscale solar, wind, and geothermal technologies.” Yet he says little to justify this, and most of what I know suggests that wind and geothermal have little hope of satisfying more than 1 or 2 percent of new energy demand.
His reference on page 55 to “the devastating effect that illegal file sharing has had on the music-recording industry” seems to say something undesirable about his perspective.
His comments on economists thoughts about deflation are confused and irrelevant.
On page 92 he says “Is the problem that we are not running the evolutionary algorithms long enough? … This won’t work, however, because conventional genetic algorithms reach an asymptote in their level of performance, so running them for a longer period of time won’t help.” If “conventional” excludes genetic programming, then maybe his claim is plausible. But genetic programming originator John Koza claims his results keep improving when he uses more computing power.
His description of nanotech progress seems naive. (page 228) “Drexler’s dissertation … laid out the foundation and provided the road map still being followed today.” (page 234): “each aspect of Drexler’s conceptual designs has been validated”. I’ve been following this area pretty carefully, and I’m aware of some computer simulations which do a tiny fraction of what is needed, but if any lab research is being done that could be considered to follow Drexler’s road map, it’s a well kept secret. Kurzweil then offsets his lack of documentation for those claims by going overboard about documenting his accurate claim that “no serious flaw in Drexler’s nanoassembler concept has been described”.
Kurzweil argues that self-replicating nanobots will sometimes be desirable. I find this poorly thought out. His reasons for wanting them could be satisfied by nanobots that replicate under the control of a responsible AI.
I’m bothered by his complacent attitude toward the risks of AI. He sometimes hints that he is concerned, but his suggestions for dealing with the risks don’t indicate that he has given much thought to the subject. He has a footnote that mentions Yudkowsky’s Guidelines on Friendly AI. The context could lead readers to think they are comparable to the Foresight Guidelines on Molecular Nanotechnology. Alas, Yudkowsky’s guidelines depend on concepts which are hard enough to understand that few researchers are likely to comprehend them, and the few who have tried disagree about their importance.
Kurzweil’s thoughts on the risks that the simulation we may live in will be turned off are somewhat interesting, but less thoughtful than Robin Hanson’s essay on How To Live In A Simulation.
A couple of nice quotes from the book:
(page 210): “It’s mostly in your genes” is only true if you take the usual passive attitude toward health and aging.
(page 301): Sex has largely been separated from its biological function. … So why don’t we provide the same for … another activity that also provides both social intimacy and sensual pleasure – namely, eating?
Why did many people decide not to leave New Orleans in advance of Katrina? Part of the problem may have been that they relied on storytellers rather than weather experts.
NBC’s Brian Williams reports on his blog NBC’s reaction to this weather alert:
URGENT – WEATHER MESSAGE
NATIONAL WEATHER SERVICE NEW ORLEANS LA
1011 AM CDT SUN AUG 28 2005
…DEVASTATING DAMAGE EXPECTED…
HURRICANE KATRINA…A MOST POWERFUL HURRICANE WITH UNPRECEDENTED
STRENGTH…RIVALING THE INTENSITY OF HURRICANE CAMILLE OF 1969.
MOST OF THE AREA WILL BE UNINHABITABLE FOR WEEKS…PERHAPS LONGER.
AT LEAST HALF OF WELL CONSTRUCTED HOMES WILL HAVE ROOF AND WALL
FAILURE. ALL GABLED ROOFS WILL FAIL…ALL WOOD FRAMED LOW RISING
APARTMENT BUILDINGS WILL BE DESTROYED. … WATER SHORTAGES WILL MAKE
HUMAN SUFFERING INCREDIBLE BY MODERN STANDARDS.
Williams says “The wording and contents were so incendiary that our folks were concerned that it wasn’t real”, and implies that he and others at NBC translated this into something less scary for their viewers.
My most memorable experience with hurricane forecasts was with hurricane Gloria in 1985 when I was in Block Island (off Rhode Island). I recall a TV weather forecast that winds might reach 135 to 175 mph, and marine weather radio forecasts of 50 to 70 knot sustained winds with gusts to 90 knots (i.e. less than 105 mph). The marine radio forecasts seem to be more direct relays of what the weather service puts out, and it was fairly simple for me to determine that the TV forecast was bogus (the marine radio forecasts proved pretty accurate).
So it’s easy to imagine that people are aware that TV forecasts have a habit of overstating the threat from storms, and thought they could infer expert forecasts from TV forecasts by assuming a simple pattern of exaggeration, when it may be that the storytellers have a more complex model of how viewers’ behavior should be manipulated by biasing their reports. Do people actually rely on TV reports rather than more direct and reliable sources of expert opinion when accurate forecasts are important? If so, is it because they use weather forecasts mainly as entertainment or a catalyst for smalltalk at parties, and don’t want to be aware of the flaws?
And of course there was the problem of key government leaders failing to believe the expert forecast: (from The Agitator) [then] FEMA Director Brown:
Saturday and Sunday, we thought it was a typical hurricane
situation — not to say it wasn’t going to be bad, but that the
water would drain away fairly quickly. Then the levees broke and
(we had) this lawlessness. That almost stopped our
efforts…Katrina was much larger than we expected.
Brad Setser has a disturbing post about the risks that the hedge fund industry is taking, and which might cause a market crash. Puts are looking cheap these days, and I’m buying a modest amount of them just in case.
The reports in the news media of people shooting at rescuers have been puzzling, and it has been obvious that the storytellers didn’t know much about it. Now thanks to Andrew Sullivan, I’ve seen some reports from apparently informed people, especially this first hand account that includes repeated instances of government agents creating enough problems that reasonable people started treating those agents as threats. Also this report and this quote:
3:32 P.M. [Monday] Ben Morris, Slidell mayor: We are still hampered by some of the most stupid, idiotic regulations by FEMA. They have turned away generators, we’ve heard that they’ve gone around seizing equipment from our contractors. If they do so, they’d better be armed because I’ll be damned if I’m going to let them deprive our citizens.
Add to this Louisiana’s refusal to let the Red Cross into the disaster area, and it becomes understandable that residents have been treating some government agents in a less friendly fashion than Gaza settlers have been treating their government.
Preliminary evidence suggests that many local, state, and federal officials ought to lose their jobs over this, but we should be patient about judging individual people until more people who were on the scene are able to make detailed reports.
And let’s not forget the government employees that did something right. The weather service didn’t screw up. There are reports of National Guard and LA Fish and Wildlife employees doing good jobs.
I was recently surprised to discover that California has price controls which are designed to encourage hoarding in emergencies and to discourage stockpiling in preparation for emergencies. The law in question is called an anti-gouging law, and temporarily limits price increases to 10 percent in some emergencies. I’ve seen conflicting reports about whether Bush’s declaration of emergency triggers the price controls, or whether it requires a state declaration of emergency. The governator has indicated that he has no plans to join the Bush/Lockyer exploitation of Katrina, but my limited observations suggest that gas stations in the bay area have limited their gas prices increases to 10 percent, and a few of them ran out of gas over the weekend.
It looks like the gas supply problems will ease soon enough that the price controls won’t have done much harm this time (diversions of gas shipments that were intended for other parts of the world will any week now spread the supply reduction over large enough regions that a fairly small price premium over what would have prevailed without Katrina should keep supply and demand in balance).
On a related note, Alex Tabarrok made a claim that suspending gas taxes won’t help consumers. I’m suspicious of his belief that a temporary suspension will have little effect on supply. I expect that oil companies will have an important incentive to draw down their inventory more than they otherwise would, especially just before the taxes are reinstated (since their profit margins will decline when taxes resume). I expect this effect to reduce prices to consumers by a modest fraction of the amount of tax relief. This will come at the cost of increased vulnerability to new supply disruptions. I doubt that the voters who have caused politicians to suspend gas taxes have given much thought to the wisdom of this tradeoff.
Randal O’Toole has a provocative claim that New Orleans residents had trouble evacuating because fewer of them own cars than in typical cities (urban planners accomplished their goals).
This is clearly not the main reason for the unusual death toll from Katrina (the death toll in Mississippi seems to be an order of magnitude higher than I would have expected based on results of recent storms with similar winds and the long-term trend of declining storm deaths), but it deserves more discussion.
After wading through many online dating web sites, and being depressed at having to choose between searches on superficial features which return thousands of uninteresting results, or keyword searches which rarely return any results, I found OkCupid! (thanks to Wayne Radinsky). I have some hope that it will do for online dating what Google did for searches.
It encourages people to provide it with lots of information that can be used to compare people, mainly by asking lots of yes/no or multiple choice questions (many submitted by users). A few examples (selected more for their amusement value than importance):
Eventually, a computer will write the best novel ever written.
I should be able to sell my vote for cash if I feel like it.
Would you rather get caught masturbating by your mother or father?
Could you date a giant carnivorous reptile?
Would you ever date or mess around with a good friend’s ex?
Ethnicity restrictions? You racist. Please note that unless you leave these blank (which we recommend), you’ll only match with people who’ve submitted their ethnicities.
They have some way of deducing from user responses how valuable each question is.
They’ve written and open sourced their own web server.
It’s free and plans to stay that way, and is supported by ads.
I’m a bit disappointed that they claim the site shows “a disregard for profit”. I doubt they’re any less interested in profit than Google is, although they’ve clearly avoided the cover-your-ass culture of large bureaucracies. The site doesn’t yet have enough people to be terribly valuable, but it appears to be growing quickly enough that it will succeed.
So for I’ve got one message from a person who is a good deal more interesting than anyone I’ve met on the usual dating sites in quite a while, except that he’s in Pennsylvania (OkCupid doesn’t seem very good at handling geographic preferences).
I’m annoyed that their menu for languages in which I’m fluent offers Khmer, C++, LISP, and some languages I don’t recognize, but not Python.
It has a Friendster-like provision for lists of friends. If I know you and you become an OkCupid member, please let me know.