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If there is one economist on a long list that I particularly abhor it’s David Lereah of the National Association of Realtors. This shill insists on trying to pull the wool over people’s eyes about the reality of the housing situation–even getting the NAR to run ridiculous full-page ads pleading to convince people that it’s a fantastic time to buy a house. In fact it continues to be a horrendous time to buy property (unless you plan on staying there at least a decade) given the gross over-valuations, huge overhangs of inventory, and more property waiting to come onto the market from millions of over-extended users of exotic loans that are now facing foreclosure. The realtors don’t care about that though, they are getting desperate and they need people to buy houses so they can keep getting paid.

CBS MarketWatch does a great job calling out the NAR and Lereah in particular, exposing him for the cheap huckster/cheerleader that he is. He unfortunately gives economists everywhere a really bad name, by selling out his predictions for the sake of his bottom line rather than actually telling the truth. Article follows:
Realtors’ economist stayed sunny all year

Commentary: David Lereah saw bottom in first quarter, second quarter …
By Rex Nutting, MarketWatch
Last Update: 5:31 PM ET Jan 25, 2007

WASHINGTON (MarketWatch) — There are two universal truths at the National Association of Realtors: 1) It’s always a good time to buy or sell a home; and 2) We’ve seen the worst of the housing market correction. The second truth was in the script used throughout 2006 by David Lereah, chief economist for the NAR, even as sales plunged by 8.4%, the fastest decline in 17 years.

With annual sales of 6.48 million, 2006 was the third best ever, but after five years of steady increases, it was a rough year for the industry. Through it all, Lereah never stopped smiling.

At the beginning of 2006, Lereah was projecting home sales would fall about 4.4% to 6.79 million. In the end, however, the decline was about double what he’d projected. For 2007, Lereah is currently projecting a decline of about 0.9% to 6.42 million.

Here’s what Lereah was saying throughout 2006 and into 2007, and what the market was doing.

January 2006
Lereah’s forecast: “The market is in the process of normalization.”
Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.
Lereah’s post-mortem: “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead.”

April 2006
Lereah’s forecast: “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau.”
Actual sales: First-quarter sales fell at an annual rate of 8.6% to 6.79 million.
Lereah’s post-mortem: “This is additional evidence that we’re experiencing a soft landing.”

July 2006
Lereah’s forecast: “The market should even out just below present levels.”
Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million.
Lereah’s post-mortem: “The market is stabilizing.”

October 2006
Lereah’s forecast: “We expect sales activity to pick up early next year.”
Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million.
Lereah’s post-mortem: “This is likely the trough in sales.”

January 2007
Lereah’s forecast: “The good news is that the steady improvement in sales will support price appreciation moving forward.”
Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.
Lereah’s post-mortem: “It appears we have established a bottom.”

Conclusion

It’s unfair, of course, to single out Lereah’s forecasts. He wasn’t the only economist who was surprised by the extent of the collapse in housing in 2006; some were just as wrong on the other side by predicting the housing bust would bring down the whole economy.

But Lereah was the only one who presented his opinions alongside an economic indicator that’s treated as an objective gauge of the housing market. Along with his bully pulpit comes extra scrutiny.

Lereah was traveling on Thursday and unavailable to comment. The senior economist at the NAR, Lawrence Yun, said in an interview the most recent sales trends show almost no movement up or down since August or September.

“In hindsight, we did not anticipate how strong the demand from speculators had been,” Yun said of their 2006 forecast. “Now, with the speculators out of the market, and with low mortgage rates and steady job growth, we anticipate an improvement in sales.”

It’s possible that Lereah may be right, finally. The bottom must come some time, why not now, some 19 months after the bubble peaked?

But it’s also possible we could be far from the bottom, as in the housing bust of 1978-1982, when it took 42 months for the market to recover.

If so, it could be a long year for David Lereah.

A monthly roundup of technological breakthroughs in energy, computing, nanotechnology, and biotechnology–and how these converging technologies are transforming our society, solving problems, and creating new ones.

1) (Nanotechnology/computing) Scientists create memory chip the size of a white blood cell. It is the densest such chip ever developed. It provides a possible path for circumventing the physical limits of silicone-based chips in the years ahead. Also, it is a potential milestone for creating machines that can operate at the nano level inside our bodies and such.

2) (Nanotechnology) Gut-crawling microrobot to debut in 2009. Think that the idea of robots crawling through your body to fix you is fanciful science fiction? Coming soon to a doctor near you in just two years: a robot the width of two human hairs that can travel through the arteries and organs of your body, penetrating far deeper than current methods. It will be able to provide images, and even perform non-invasive microsurgery.

3) (Computing) Military develops robotic insects. These nasty little bad boys will be remotely controlled, can fly into targets undetected, and will perform a variety of military operations from disabling computers to exploding. But can you imagine these little buggers in the hands of terrorists?

4) (Energy) Military unveils awesome projectile railgun. The military has been busy with futuristic technology. This nasty railgun, straight out of a Doom video game, can launch a small 7-pound projectile that can travel 250 nautical miles and hit its target with the force of a car at 380 mph. It can take down a building with one shot. Ouch! Who needs cruise missiles when you can lay down the smack with this nastiness?? (That goes for terrorists as well as us, of course–better not be finding this toy at the local Wal-Mart!)

5) (Energy) Military unveils new crowd-controlling ray gun. Isn’t it nice to know our military is putting our taxpayer dollars to good use with all this technology? Next up: a non-lethal ray gun it can point at people that can make them feel they are about to be burned alive, causing them to cease whatever rioting they may be doing and run away at top speed. The military says the gun is harmless, but critics claim they may have nasty side-effects.

6) (Computing) Researchers encode entire image onto a single photon. They essentially put a picture image onto a photon and were able to store it and retrieve it later. This could be a huge breakthrough in computer storage, as it would pave the way for society being able to store unimaginably large amounts of data using very little substrate.

7) (Energy) Company claims creation of new battery-ultracapacitor hybrid. EEStor claims to have created this new battery that has ten times the life of existing ones, and can be used on everything from laptops to cars. If true, it would transform our energy equation in a multitude of ways–from making intermittent solar/wind power much more reliable to allowing hybrid-electric cars to fully serve as stable backup for the power grid. Our iPod’s and laptops would run a hell of a lot longer too!

(Energy) New process makes ethanol out of trash. Forget corn, which we’d rather eat than shove down our gas tanks. A new process converts landfill and industrial trash into ethanol, with very little pollution created. We create enough trash to replace 25% of our gasoline if we used this process.

9) (Computing) Australia science agency demoes 6 gb/s wireless speeds. This new wireless peer-to-peer technology would let you download an entire DVD in six seconds. Researchers say this is just the beginning and will shortly be able to double these speeds.

10) (Computing) “Minority Report” style computer interface ready for prime time. Forget keyboards and mice, and take a cue from the (relatively primitive) iPhone. Direct manipulation of computer imagery, as shown in the “Minority Report” movie, is going to be a great new way to interact with our machines. There is a great video of the technology here, although it appears to be temporarily unavailable. Two videos showing the technology can be found on YouTube here and here.

11) (Computing) 65% of computer users spend more time with computer than with significant other. Lastly and sadly, this is not an innovation but a demonstration of a negative effect technology is having on society. Put down World of Warcraft and go cuddle your SO!

2007 is rapidly shaping up as the year where the world, including the United States, becomes united in its intention to do something serious about global warming. Incredible momentum is building especially in the US, which will hopefully take its place as a leader of the world on the issue in the years ahead. Consider:

1) Bush managed to snatch mediocrity from the jaws of leadership in his State of the Union speech last night by “merely” calling for a 20% reduction in gasoline in the next ten years replaced by ethanol instead of calling for a hoped-for cap on emissions (let’s hope that the technology for making ethanol out of cellulose is in place by then, because doing it from corn alone will require 11 billion bushels by 2015 which is larger than the entire US corn harvest). At least replacing this much gasoline will substantially reduce emissions, since ethanol is nearly carbon-neutral. Nevertheless, he broke new ground last night by actually uttering the words “climate change”, which surely drew gasps from people everywhere. Never before has this president so clearly stated his affirmative belief in the reality of global warming, and it’s about time.

2) The new Congressional Democratic majority is intent on tackling global warming in an urgent fashion. Some of their proposals do call for emissions caps, with backing from key Republicans like John McCain.

3) Politicians of all stripes are realizing the connection between climate change and national security, as any steps we take to reduce carbon-emitting fossil fuel dependency (especially for oil) are also steps taken in the direction of reducing our dangerous addiction to fuel from hostile countries.

4) A coalition of industrial and electric utility companies has recently formed and is loudly calling for the creation of an emission cap-and-trade program–even lobbying Bush himself to adopt caps. Why are they being so altruistic? Because they acknowledge the inevitability of having to do something about carbon emissions, and they fully realize that if they’re not at the table when deliberations begin they will end up on the menu. Some companies like GE also see enormous business potential in the “going green” movement, with emissions-reducing technology opening up vast new markets in the face of calls for carbon regulation.

5) A massive, four-part global warming report is about to be released, with the first part coming next week. This first phase is being composed by over 600 scientists, reviewed by another 600 experts, and edited by bureaucrats from 154 countries–and will rely on 19 computer models for predicting the future of warming. It will make the strongest argument yet that sudden and drastic warming is happening even now, that we are only at the beginning of the process, and that it is “very likely” that such drastic warming is directly caused by man-made emissions rather than natural causes.

It’s becoming increasingly clear that resisting the reality of man-made global climate change will become the province of a few Luddite Republicans. I think we’ll look back on this year as being the most important yet in turning the juggernaut of our civilization around to begin tackling this enormous problem.

As the Chinese proverb says..may you live in interesting times.

As Bush heads into his State of the Union speech tonight he faces a variety of humiliating poll numbers.

A CNN poll shows a seething electorate, with 61% saying the country is going in the wrong direction. 64% say Bush is a divider not a uniter, and 55% call his presidency an absolute failure. 51% trust Bush less than Clinton, and rather amusingly 67% say Bush has done something to piss them off since he took office.

The Washington Post points out that only twice in the last 60 years has a president given his State of the Union speech while in a position weaker than where Bush finds himself today: Truman during the Korean War in 1952, and Nixon during Watergate. Its poll reveals that 51% strongly disapprove of Bush’s performance, and solid majorities of Americans say Bush cannot be trusted in a crisis, has not made the country safer, and should withdraw troops from Iraq rather than add to them. 65% percent oppose the troop increase, and a huge 71% say the country is seriously off-track.

The heavy judgment of history is starting to weigh like a yoke on Bush during his remaining time in office, and it’s not looking pretty.

The Wall Street Journal is reporting this morning that the developed world used 0.6% less oil in 2006, marking the first decline in over 20 years. It was no doubt due to high oil prices and its attendant economic effects.

This is good news on a lot of fronts. America’s addiction to tightening supplies of foreign oil is a major economic and national security problem. Burning of petroleum also releases greenhouse gas. China and India are increasingly competing with the West for oil supplies. All these reasons work in favor of getting the world to use less of this resource.

There is so much waste in our society directly attributable to petroleum. Last night my significant other and I were shopping at Costco, and we couldn’t help noticing the wastefulness of the apples individually wrapped in plastic (a petrol product) and the bell peppers flown in from Israel. Is all this really necessary? We’re paying a terrible environmental and economic price for those apples and peppers that is not listed on the sales sticker. Those apples would be just as good in a single plastic bag, and I’m sure locally grown peppers taste just as good as Israel’s (probably better, actually, since they can probably get to your table sooner and are grown in season). If there’s anything encouraging about all this waste is that should oil production peak in the near future as some scientists predict there is a hell of a lot of waste we can cut out of our society before we start to suffer from oil deprivation.

Sometimes the GOP itself says it best. My favorite Republican shill Bob Novak:

As they adjust to the 2006 election returns, Republicans recognize that this was no isolated bump in the road. The loss of about 320 state legislative seats across the country to the Democrats classifies last year’s election as a midrange electoral disaster.

The internal Republican debate concerns how much Iraq contributed to this outcome. The White House and Republican members of Congress who voted for intervention in Iraq contend that many issues led to their defeat: incompetent management of the Hurricane Katrina crisis, widespread cases of corruption and abandonment of spending restraint. But Republicans at the grass roots tell me that Iraq was the central problem and must be erased as an issue.

…
One nationally prominent Republican pollster reported confidentially on Capitol Hill after the president’s speech that if at the end of the year U.S. troops are still in Iraq and U.S. blood is still being spilled there, the GOP disaster in 2008 will eclipse 2006. Thus, many Republican members of Congress have tied their hopes to Bush’s pledge that Iraqi forces will take over local security by September.

But Republican opposition has intensified rather than diminished since the president’s speech. What was whispered privately is now declared publicly. At last week’s hearing, the Senate Foreign Relations Committee’s second-ranking Republican — Chuck Hagel — called Bush’s new strategy “the most dangerous foreign policy blunder in this country since Vietnam.”

You can read his complete diatribe here.

The snipping sounds of the political scissors being applied to Bush’s testicles are getting louder. Wisely deciding to pick his battles more carefully in the wake of the Congressional trouncing the GOP received last month, Bush has decreed that his wireless surveillance program will now be submitted to the jurisdiction of the FISA court for review, instead of petulantly insisting he can order such illegal activities under the authority of the Constitution’s Article II.

The Neocon Right is pissed:

Is there no principle subject to negotiation? Is there no course subject to reversal? For the Bush administration to argue for years that this program, as operated, was critical to our national security and fell within the president’s Constitutional authority, to then turnaround and surrender presidential authority this way is disgraceful. The administration is repudiating all the arguments it has made in testimony, legal briefs, and public statements. This goes to the heart of the White House’s credibility. How can it cast away such a fundamental position of principle and law like this? –Mark Levin, National Review

Bush is submitting because he has no choice. He has no political capital left and cannot continue to oppose the American people on so many issues. It is clear to all (except to the National Review) that this warrantless surveillance program was illegal, it violated the 4th Amendment, and that submitting a warrantless wiretap for FISA emergency review did nothing to dimish the president’s powers to protect the country against terrorism. It was a fight he simply could not win.

Snow in Los Angeles. Hurricane Kyrill sweeping across Germany, Austria, Poland and the Czech Republic (in January, in parts of Europe that never see hurricanes).

Yes, I think the climate instability threatened by global warming may be here.

Since taking office, one of Bush’s many sins has been his staunch opposition to doing anything substantive about global warming in the face of thousands of studies showing the reality of climate change as a result of man-made emissions. His refusal to lead on this issue has been particularly infuriating to both progressive Americans and the rest of the world given the US’s position of creating 25% of the world’s pollution while having only 10% of its population.

Evidence is mounting that Bush may be about to make a major U-turn on his global warming stance. First came the surprise announcement that his administration intended to place polar bears on the endangered species list due to disappearing arctic ice they need to survive (and if there’s anything that can raise American consciousness about global warming, it’s the thought of the cuddly Coca-Cola polar bears going extinct). Now comes word from Downing Street (UK) sources that Bush is preparing to make a drastic change to his position on global warming when he gives his next State of the Union speech later this month. Speculation is that he will for the first time accept some kind of cap on emissions, and that may pave the way to a post-Kyoto Protocol international agreement that includes the US.

If true this would be pretty unbelievable. 2007 is already shaping up to be the year where the world made a drastic turning point on the issue of global warming. From the sudden leadership being seen from corporations to a Republican governor of California mandating emissions caps to now possibly the news on Bush, the issue of climate change is being put front and center before the American people.

It’s about damn time, and not a moment too soon.

Chinese manufacturers, the makers of the collective cheap garbage and detritus consumed by Western culture, are screaming because the government is allowing the Chinese currency (yuan) to appreciate a mere 6% against the dollar.

Serves them right.

In order to compete on the world market and help its manufacturers, China has for a long time artificially pegged its yuan to a certain exchange rate with the dollar, so that it goes up and down as the dollar does instead of just based on market forces. This has caused its exports to America to remain dirt-cheap, and has created a huge problem and trade deficit for the US. It has made manufacturing unprofitable in the US compared to China, and many of our factories and jobs have fled as a result. China has taken its enormous trade surplus with us and invested it in US Treasury bonds–IOU’s by the government that it must eventually repay. Just like a bank really owns your house as long as you have a mortgage on it, China is the US’s biggest creditor and can use that leverage in the future to enormous effect.

But cracks are appearing in China’s scheme to achieve world domination by manufacturing cheap garbage. Its economy is overheating and faces a meltdown if it continues its current rate of expansion. It also faces pressure from trading partners to loosen the Yuan-dollar peg or eliminate it altogether. Bowing to reality China has recently allowed the yuan to rise 6% against the dollar.

Suddenly, all these makers of cheap hats, toys, and other worthless gizmoes are having their only competitive advantage ripped from them. They can’t compete on brand name (can you name a single Chinese manufacturing company ala Nike, etc.?). They can’t compete on new or advanced technology. All they have to compete with is a dirt-cheap price on very low-margin products. Make that price increase even a little and profit goes to zero…hence why the manufacturers are screaming.

Our government has for too long tolerated this trade imbalance–although we as Americans have helped it along by buying all the cheap crap sold at Wal-mart. There’s always a day of reckoning though…and as China is being forced more and more to play on a level field with the rest of its partners it is becoming clear that China is still little more than a medieval backwater when it comes to technology and innovation–albeit one with a hell of a lot of money at its disposal.

As market forces re-assert themselves, and as manufacturing continues to become cheaper around the world, China had better find new and better ways to drive its economic growth engine, lest it slowly run out of gas. Designing high quality products instead of landfill filler would be a great start.