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Monday, September 20, 2010


Yes, a strange combination, but just descriptive, not related.

The housing bubble, it is said, was the catalyst of the recent Great Recession.  In mid-summer of 2008, when oil peaked at $147/barrel, the 30 year interest rate for home loans was at 6.5%.  The crash came, and by the end of the year, this interest rate had dropped to 5%.  Today, it is at 4.5%.

How does 4.5% compare, historically

Early 60's     6%
1970             8%
1980           12%
1981           15%  (after second energy crisis)
1990             9.5%
2000             8%
2003             5.7% 
2006             6.5%
2010             4.5%

In other words, we are at a half century historical low for home loan interest rates.

Yet, arguments are growing to rent rather than purchase.  In 1900, 46.5% of homes were owner occupied, dropping a few percentage points by the end of the Great Depression.  There was then a continuous climb, where ownership was more than 60% in the late 50's, peaking at 69% just around the time of 9/11/2001.  Since then, there has been a decline to 67%.

How does the U.S. home ownership rate compare with other countries (GDP/capita)?

Spain            89% ($34,144)
Mexico          84% ($13,900)
India              83% ($3,100)
Italy                82% ($38,730)
U.S.               68% ($56,092)
Japan            61% ($49,041)
Germany       56% ($45,606)
Switzerland  35% ($73,798)

Of course, the homes are not the same and government policy on interest rate deductions can make a big difference.  Yet, you can only wonder about the logic of percentage ownership.  Is Switzerland the future of what home ownership will be?

Totally changing subjects, I went to three movies this weekend.  To my surprise (because those films that are shown in 3D/IMAX theaters normally draw the blockbusters), The Town ended up #1 and Easy A #2.  I'm spoiling it for the future moviegoer, but, what the heck, Ben Affleck gives himself a surprisingly happy ending in the first one.  If the crazy character looked familiar, that was Jeremy Renner of Hurt Locker fame.  Affleck could well become the next Clint Eastwood as an actor who also became a director.

About EA, I snarkily say again, when did Malcolm McDowell get so old?  Not as good as Superbad in 2007 or  The Hangover last year, but pretty entertaining summer youth lifestyle fodder.

The third film, a documentary, was 442:  Live with Honor, Die with Dignity.  It has been 60 years since Go For Broke, that film with Van Johnson and a cast of American-Japanese actors.  Robert Pirosh, who wrote the screenplay was actually nominated for an Oscar in 1951.  But there is something a lot more fulfilling about this new film.  I was touched, maybe even with a tear or two or more.  Senator Daniel Inouye was particularly featured.  The 442nd Regimental Combat Team (much later, in 1963, I was part of this group), which included the 100th Battalion, was the only military unit personally honored by a president, Truman.  14,000 (two-thirds from Hawaii) served, earning 9,486 Purple Hearts (I worked for U.S. Senator Spark Matsunaga, who won one of these, and carried a shrapnel in his knee after being injured).  These volunteers also earned 21 Medals of Honor, including a recent awardee, Senator Inouye (1945 photo to left), who lost his right arm during the battle for which he was honored.  I guess because I owe so much to them, I thought this final film was the highlight of the three.

The Dow Jones Industrials jumped $146 to $10,754, while world markets almost all went up (but not Shanghai), with the Japanese Nikkei leaping another three digits, increasing 117 to 9626.  The Nikkei and Dow Jones most of this year seemed to track each other until the messy politics of Japan intruded.   Yes, gold hit another all-time high, +$4/toz to $1281, while crude oil settled just under $75/barrel.  

There are six ocean storms, but Typhoon Fanapi already made landfall over China, there is a new disturbance east and south of the Philippines not expected to cause trouble, and a third south of Baha.  The three Atlantic storms are running their courses.


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