According to yesterday's WSJ (8/14/08, David Wessel, A1), Greenspan agrees with my pro-immigration views, at least with respect to educated immigrants:
"The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants," he said...
"Perhaps 150,000 of [new households] are loosely classified as skilled...A doubling or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale--and hence stabilize prices."
So far, so good; however, the Journal makes a mistake when it tries to do its own analysis:
The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes would accomplish that...
The Journal doesn't seem to understand that skilled immigrants mainly come to the States by way of H1-B visas and would settle in already-strong economic areas, such as San Jose, San Francisco, Chicago, and other large, diverse cities.
The housing crisis is mainly in places where mortgage brokers and lenders granted credit to low-income employees or workers with unsteady incomes.
Las Vegas, NV is a prime example. Although Vegas is a strong union town, too many uneducated people entered the market with hopes of making it to the middle-class. The city simply couldn't absorb all of its new entrants. As for attracting educated foreigners, how many M.A.s in Physics does a casino need?
Stockton, CA and Merced, CA have become notorious for their high rate of foreclosures. Their residents are mainly non-college-educated workers. While that situation may change because of the new UC in Merced, for now, if you have a PhD in engineering, would you end up in Merced, CA or San Jose, CA? (And yes, that's a rhetorical question.)
When residents bought homes outside but near Boulder and Denver, Colorado, they forgot the law of supply and demand. When you live near cities with only 1/2 million (Denver) and 100,000 (Boulder) residents, there's not enough demand to justify a large, immediate increase in supply. While Denver does have Qwest and ProLogis, there aren't enough companies there to sustain an inflow of high tech talent. In contrast, in Santa Clara County, I get lost driving in Sunnyvale because there are so many little streets that lead to massive warehouses filled with tech companies I've never heard of.
Greenspan is still correct in his pro-immigration view, but there's a missing step. We need companies to open new branches outside of the major cities. Perhaps if the government changed the H1B program to increase the cap on companies willing to place educated workers in mid-sized or smaller cities, educated immigrants could be a boon to overlooked cities suffering from the economic downturn.
Greenspan has recovered some of his credibility--he said this in November 2002:
It's hard to escape the conclusion that at some point our extraordinary housing boom...cannot continue indefinitely into the future.
Then again, this is the same person who said this in October 2004:
[Home price declines] "likely would not have substantial macroeconomic implications... (2004)
And this gem comes from October 2006:
I think the worst of this [housing price decline] may well be over. (2006)
At the end of the day, we need more skilled immigrants or immigrants willing to work hard, but the question is where should they go? State governments and smaller to mid-sized cities should be more active in working with national and local corporations to set up the infrastructure necessary to attract foreign talent. It's a win-win situation for everyone. Local residents and businesses would benefit from higher prices due to increased demand. Foreign talent gets to come to America and make more here than they would elsewhere. I hope the local governments of Merced and Stockton are reading and thinking outside the box--if they don't follow the Rafat Rule ("being pro-immigration necessarily means being pro-capitalism"), more Southern cities like Louisville, KY, will beat them to the punch.
Friday, August 15, 2008
Thursday, August 14, 2008
U.S. Foreclosure Activity (July 2008)

Above is a map of American foreclosure activity in July 2008. One issue is defining "foreclosure activity" in a meaningful way. Many homeowners can file for bankruptcy, thereby preventing actual foreclosure. Therefore, a particular homeowner does not necessarily lose his or her home merely by having "foreclosure activity," such as a notice of default (NOD).
Wednesday, August 13, 2008
Sports Blog
I just found an entertaining blog on sports--even the tagline is great:
"By the common man, for the common man."
Check it out after the jump:
http://www.barstoolsports.com/
Some coarse language, but it's used effectively, not gratuitously. I like the article on Phelps, titled, "Swimming is dumb." An excerpt:
So while Michael Phelps is clearly a legendary swimmer all this talk about how he’s the greatest Olympian of all time is nuts. He just happens to compete in a sport where you can win like 42 times for doing virtually the same thing.
The man's got a point.
"By the common man, for the common man."
Check it out after the jump:
http://www.barstoolsports.com/
Some coarse language, but it's used effectively, not gratuitously. I like the article on Phelps, titled, "Swimming is dumb." An excerpt:
So while Michael Phelps is clearly a legendary swimmer all this talk about how he’s the greatest Olympian of all time is nuts. He just happens to compete in a sport where you can win like 42 times for doing virtually the same thing.
The man's got a point.
Government Unions and their Salaries and Benefits
Here is an interesting article, published in 2005, on government workers and their benefits:
http://www.city-journal.org/html/15_4_taxpayers.html
Astonishingly, the average state and local government employee now collects 46 percent more in total compensation (salary plus benefits) than the average private-sector employee, according to the nonpartisan Employee Benefit Research Institute.
Wages average a hefty 37 percent higher in the public sector, but the differences in benefits are even more dramatic. Local governments pay 128 percent more, on average, than private employers to finance workers’ health-care benefits, and 162 percent more on retirement benefits.
The Conspiracy Against the Taxpayers
by Steven Malanga
City Journal, Autumn 2005
http://www.city-journal.org/html/15_4_taxpayers.html
Astonishingly, the average state and local government employee now collects 46 percent more in total compensation (salary plus benefits) than the average private-sector employee, according to the nonpartisan Employee Benefit Research Institute.
Wages average a hefty 37 percent higher in the public sector, but the differences in benefits are even more dramatic. Local governments pay 128 percent more, on average, than private employers to finance workers’ health-care benefits, and 162 percent more on retirement benefits.
The Conspiracy Against the Taxpayers
by Steven Malanga
City Journal, Autumn 2005
Update on Nvidia (NVDA) and Long's Drugs (LDG)
A couple of highlights:
1. CVS bought out Long's Drugs. I predicted this would happen on May 29, 2008:
http://willworkforjustice.blogspot.com/2008/05/longs-drugs-stores-corporation.html
Longs is going to be a good company and attractive takeover target, assuming its insurance company purchase works out. It's too difficult for new entrants to get into the pharmacy business, so there seems to be a wide moat here. Also, no one (except maybe Walgreen's) has the stores in California that Long's has, so CVS is going to be knocking one of these days. As long as anti-trust issues don't harm any possible deal, Longs should be a decent long term investment.
2. NVDA stock increased 10.75% today, one day after I indicated the stock was oversold and bought shares. I sold today, making 8% (I had existing shares bought at higher prices, lowering my gain).
People seemed concerned about NVDA's numbers, and some headlines mention "big quarterly loss" and "disappointing" results. These headlines are overblown. Analysts expected 12 cents a share. If you exclude one-time charges and go with the non-GAAP numbers, NVDA beat earnings and earned a diluted net income of 13 cents per share. See numbers here:
http://biz.yahoo.com/prnews/080812/aqtu102.html?.v=54
Put simply, I believe the non-GAAP numbers and the share buyback are the reasons for the 10.75% increase today.
1. CVS bought out Long's Drugs. I predicted this would happen on May 29, 2008:
http://willworkforjustice.blogspot.com/2008/05/longs-drugs-stores-corporation.html
Longs is going to be a good company and attractive takeover target, assuming its insurance company purchase works out. It's too difficult for new entrants to get into the pharmacy business, so there seems to be a wide moat here. Also, no one (except maybe Walgreen's) has the stores in California that Long's has, so CVS is going to be knocking one of these days. As long as anti-trust issues don't harm any possible deal, Longs should be a decent long term investment.
2. NVDA stock increased 10.75% today, one day after I indicated the stock was oversold and bought shares. I sold today, making 8% (I had existing shares bought at higher prices, lowering my gain).
People seemed concerned about NVDA's numbers, and some headlines mention "big quarterly loss" and "disappointing" results. These headlines are overblown. Analysts expected 12 cents a share. If you exclude one-time charges and go with the non-GAAP numbers, NVDA beat earnings and earned a diluted net income of 13 cents per share. See numbers here:
http://biz.yahoo.com/prnews/080812/aqtu102.html?.v=54
Put simply, I believe the non-GAAP numbers and the share buyback are the reasons for the 10.75% increase today.
Tuesday, August 12, 2008
Nvidia (NVDA) Reports Earnings After Market Close
If you're looking for a quick, high risk bet, check out Nvidia (NVDA). They release earnings after the close today. I now own over 600 shares at a purchase price of around 11.10. Although both AMD and Intel are going after NVDA's turf, NVDA has no debt and its competitors have been trying to muscle into the high-end GPU business for years, without success.
In addition, Intel's Larabee won't be released till 2009, meaning NVDA needs to duke it out only with AMD/ATI for X-Mas laptop and desktop sales. Bottom line: from my vantage point, NVDA stock looks oversold at 11 dollars a share.
I don't expect NVDA to go above $13-15 in the near term because whenever Intel enters a market, a rough road lies ahead for everyone else. For now, the only real competitor is AMD, with its ATI GPU chips; however, AMD/ATI chips have a reputation for poor quality here in Silicon Valley, whether deserved or not, so NVDA probably isn't concerned about ATI.
Right now, I am captivated by the siren songs of value investors: one, no debt; and two, very low expectations.
Greatest Hits List: I correctly called a short-term bottom in the financial stocks; I was correct about CNB; and about the oversold dollar. If NVDA goes to 12 dollars or more within the next week, I will add them to my list of greatest hits.
Disclaimer:
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
In addition, Intel's Larabee won't be released till 2009, meaning NVDA needs to duke it out only with AMD/ATI for X-Mas laptop and desktop sales. Bottom line: from my vantage point, NVDA stock looks oversold at 11 dollars a share.
I don't expect NVDA to go above $13-15 in the near term because whenever Intel enters a market, a rough road lies ahead for everyone else. For now, the only real competitor is AMD, with its ATI GPU chips; however, AMD/ATI chips have a reputation for poor quality here in Silicon Valley, whether deserved or not, so NVDA probably isn't concerned about ATI.
Right now, I am captivated by the siren songs of value investors: one, no debt; and two, very low expectations.
Greatest Hits List: I correctly called a short-term bottom in the financial stocks; I was correct about CNB; and about the oversold dollar. If NVDA goes to 12 dollars or more within the next week, I will add them to my list of greatest hits.
Disclaimer:
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
For the Record: Teachers
Let me say, for the record, I like teachers. I hate teachers' unions.
I hate the principal who gets fat off of taxpayer money and sits at a desk all day making phone calls. I hate the vice principal who doesn't teach kids but who gets paid more than the math teacher with a Master's degree. I hate the unions, who are opposed to vouchers, even though they know charter schools can help many poor children. I hate seeing teachers not get the resources they need while unions pay lawyers to sue states like California for more taxpayer money. I hate seeing property taxes go towards a failing system. I hate how PTAs have to do bake sales and car washes to upgrade their facilities or get new books because their schools can't figure out how to handle taxpayer money competently. Most of all, I hate how the union-mandated seniority system rewards experience and incompetence over youth and fresh ideas.
More on teachers' unions in general, after the jump:
http://www.city-journal.org/html/15_4_taxpayers.html
Thanks to union-friendly legislation that requires public school teachers to become members or pay dues even if they don’t join, the size and wealth of teachers’ unions have made them fiercely intimidating lobbying and electoral forces almost everywhere...
Unions have also convinced Americans that teachers are underpaid, when they now take home considerably better pay packages on average than professional workers in the private sector. The federal government’s national compensation survey estimates that local public school districts pay teachers an average of $47.97 per hour in total compensation, including $12.39 per hour in benefits—figures that far outstrip not only what private school teachers earn, but also the average of what all professional workers earn in private business, a category that includes engineers, architects, computer scientists, lawyers, and journalists....
The education lobby’s success most clearly shows up in the stunning growth of U.S. public education spending. In the last 30 years, per-pupil spending has nearly doubled, after accounting for inflation, to about $10,000 a year—far more than in most other industrialized countries, according to the Organisation for Economic Co-operation and Development, whose latest figures show that the U.S. outpaces Germany in per-pupil spending by 66 percent, France by 56 percent, and the United Kingdom by 80 percent. Even so, American students rank only in the middle of countries on student achievement tests, the OECD reports.
The Conspiracy Against the Taxpayers
by Steven Malanga
City Journal, Autumn 2005
I hate the principal who gets fat off of taxpayer money and sits at a desk all day making phone calls. I hate the vice principal who doesn't teach kids but who gets paid more than the math teacher with a Master's degree. I hate the unions, who are opposed to vouchers, even though they know charter schools can help many poor children. I hate seeing teachers not get the resources they need while unions pay lawyers to sue states like California for more taxpayer money. I hate seeing property taxes go towards a failing system. I hate how PTAs have to do bake sales and car washes to upgrade their facilities or get new books because their schools can't figure out how to handle taxpayer money competently. Most of all, I hate how the union-mandated seniority system rewards experience and incompetence over youth and fresh ideas.
More on teachers' unions in general, after the jump:
http://www.city-journal.org/html/15_4_taxpayers.html
Thanks to union-friendly legislation that requires public school teachers to become members or pay dues even if they don’t join, the size and wealth of teachers’ unions have made them fiercely intimidating lobbying and electoral forces almost everywhere...
Unions have also convinced Americans that teachers are underpaid, when they now take home considerably better pay packages on average than professional workers in the private sector. The federal government’s national compensation survey estimates that local public school districts pay teachers an average of $47.97 per hour in total compensation, including $12.39 per hour in benefits—figures that far outstrip not only what private school teachers earn, but also the average of what all professional workers earn in private business, a category that includes engineers, architects, computer scientists, lawyers, and journalists....
The education lobby’s success most clearly shows up in the stunning growth of U.S. public education spending. In the last 30 years, per-pupil spending has nearly doubled, after accounting for inflation, to about $10,000 a year—far more than in most other industrialized countries, according to the Organisation for Economic Co-operation and Development, whose latest figures show that the U.S. outpaces Germany in per-pupil spending by 66 percent, France by 56 percent, and the United Kingdom by 80 percent. Even so, American students rank only in the middle of countries on student achievement tests, the OECD reports.
The Conspiracy Against the Taxpayers
by Steven Malanga
City Journal, Autumn 2005
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