Tuesday, 15 December 2009

Barcelona passions

I examined a doctoral thesis the other day - a pretty good one, too. The acknowledgements normally don't make for exciting reading, and just before I moved on to the next section, I found the following...

You have to admit, as ringing endorsements of a city go, it's hard to beat.

Monday, 14 December 2009


Was it just yesterday that we finished admitting students for the class of 09-10? And here we are again, looking at the first hopeful applicants for 2010-11. Of course, it's still early days, but having 7 applicants already in the second week of December is a pretty good start. Here, I have used a small travel map generator to highlight the countries on the globe from which we have received applications already. So far, I like what I see. Since financial aid decisions are based on merit, and we allocate by late March, it's a good idea for anyone thinking of applying to ITFD to get their paperwork in early...

Wednesday, 9 December 2009

Swords into plowshares...

and alimony payments into rocket launchers and then, via some minor piracy and blackmail, into hard cash... sometimes life is better than any Hollywood comedy could ever be. Via the Financial Post comes this heart-rending story of the Somali divorcee who got lucky with her payout from the ransom for Spanish fishermen:

Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.

"I am waiting for my share after I contributed a rocket-propelled grenade for the operation," she said, adding that she got the weapon from her ex-husband in alimony.

"I am really happy and lucky. I have made $75,000 in only 38 days since I joined the 'company'."

You can pay with a rocket launcher in lieu of alimony? Who knew? The numbers seem pretty compelling, and you can get in on the act in cash, kind, or with your own life at risk:

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved.

"Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking," Mohammed said.

"The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials ... we've made piracy a community activity."
I particularly like the bit about "community activity"...

Tuesday, 1 December 2009

How many big booms in US real estate?

You'd think we would have a lot of data on how the price of housing has moved over time -- after all, it's the single biggest investment most people make in their lives. Oh, and housing is at the heart of that small meltdown in world financial markets that you might have heard about. Actually, you would be quite wrong. Eugene White from Rutgers, who is spending two weeks visiting us at CREi, has a new paper arguing that existing price indices for the 1920s and 1930s are off by a large factor. Case-Shiller, for example, relies on a survey of home owners to figure out what price movements were before 1932. Now, I haven't looked at the fine print, but it's pretty clear that one wouldn't want to write this history of prices of pretty much anything based on what people remember... Eugene finds that evidence from construction volume suggests a much bigger boom (and bust) in US real estate in the 1920s than previously thought. Standard histories - like Kindleberger's book on manias - mention speculation in Florida, but do not have much to say about nationwide price movements. This would imply that the pre-2007 mantra ("house prices have never gone down") is wrong.

I am prepared to believe that we got the house price series wrong (and actually, Tom Nicholas of Harvard B-School has a new series for Manhattan that suggests we can do much better than the data currently used). Crucially, Eugene asks why the big bust in housing at the end of the 20s didn't have the same effect on the financial system as it did today. Financing was more conservative, with 20% down regarded as quite risky already. Bank regulation was much tighter, with strong limits on how many mortgages could be kept on the books in relation to assets. Financing housing, it seems, need not create a powderkeg...