Political Animal

HOUSING BUBBLE….Megan McArdle says this

HOUSING BUBBLE….Megan McArdle says this is not a good time to buy a house. I agree.

Every financial bubble is accompanied by a legion of commentators claiming that this time is different ? and trotting out some plausible sounding theories about why there’s been some fundamental change in the way the world works that will sustain these high prices forever. But it ain’t so.

We’re in a housing bubble right now, and it’s going to burst within the next year or two, maybe sooner. Save your money and buy then.

UPDATE: Always pay attention to historical fundamentals. Always. Every once in a while a genius comes along like Michael Milken who notices that some long-held financial truth isn’t quite right and who’s able to clean up for a while by exploiting this insight. (In his case it was the average return on non-investment grade bonds, which was higher than it should have been given the historical risk of default.) But you’re not Michael Milken. Hell, even the rocket scientists at LTCM turned out not to be Michael Milken.

Us ordinary folks should just look at garden variety fundamentals like PE ratios and the like and act accordingly. That’s my financial advice for the day.

FUN WITH MAPS….Friday it was

FUN WITH MAPS….Friday it was census tracts, today it’s aerial photographs.

Head off to MSN’s TerraServer site and you can get an aerial photograph of anyplace in the United States. You can’t exactly spy on your neighbors since the photos are from a 1994 survey, but it’s still kind of fun.

The photo at right is of the neighborhood I grew up in, right here in sunny Orange County. You can see my house, the house where my best friend lived, the school I attended through third grade, the railroad tracks (stick a penny on the tracks and wait for a train!), and the nearby ditch, always good for hunting frogs and tadpoles.

Check it out. It’s a fine way to while away a few spare minutes on a weekend.

UPDATE: Kieran Healy has some doubts that I’m revealing the full truth about my old neighborhood….

REBUILDING IRAQ….I know Tom Friedman

REBUILDING IRAQ….I know Tom Friedman gets a lot of grief from liberals, especially over his approach to war and rebuilding, but today’s column seemed spot-on to me:

Mr. Bush talks only about why it’s right to dismantle the bad Iraq, not what it will take to rebuild a decent Iraq ? a distant land, the size of California, divided like Yugoslavia. I believe we can help build a decent Iraq, but not alone. If we’re alone, it will turn into a U.S. occupation and make us the target for everyone’s frustration. And alone, Americans will not have the patience, manpower and energy for nation-building, which is not a sprint but a marathon.

Mr. Bush growls that the world is demanding that America play “Captain, May I” when it comes to Iraq ? and he’s not going to ask anybody’s permission. But with Iraq, the relevant question is not “Captain, May I?” It’s “Captain, Can I?” ? can I do it right without allies? No.

I think that’s exactly right: I too wish the rest of the world agreed with us, but the fact is that they don’t. And because of that there’s virtually no chance that the post-war rebuilding can be done in a way that actually improves our security instead of undermining it.

It’s not just the rest of the world, either. I’m reminded of a comment last month about Friedman’s appearance on Oprah as described by Jeanne d’Arc:

The interesting thing [was the reaction] to Friedman’s suggestion that war with Iraq will have to be followed by a twenty year occupation….When the camera turned to the audience after Friedman’s suggestion, you could see the shock on their faces. Mouths open. Shaking their heads. Friedman looked increasingly ridiculous saying that this twenty-year occupation is what Americans have to be prepared for, while (mostly) women looked at him as if he were out of his mind. One man in the audience, in fact, rose to tell him exactly that. Watching the show was worthwhile if only to see Friedman get taken down.

I’ll quibble with the loaded term “occupation” she uses, but otherwise this sounds about right. Improving America’s security means fostering democracy and tolerance in the Middle East, and whether your version of this is the vast neocon revolution or a more subdued humanitarian approach, it’s going to take a long time, a lot of people, and huge boatloads of money ? and even at that it might not work. Unfortunately, the American public is not prepared for this, and George Bush obviously is not willing to take the political risks necessary to sell it. He’d rather have a dividend tax cut.


HOPPING OFF THE CLUETRAIN….Greg Beato has a trenchant comment on yet another column from Doc Searls and David Weinberger of The Cluetrain Manifesto fame.

I can’t tell you how tired I am of reading commentary from self-styled net gurus saying, essentially, that the entire business world should simply give up and accept that the internet is going to destroy their industries. It’s not just that they are probably wrong, it’s that their misreading of human nature is so profound as to be mind boggling. Do they really expect Hollywood, for example, to just ditch the whole idea of copy protection and sadly watch as their revenues drop 99% because their content is being copied for free by anyone who wants it? Not in the universe I live in.

I read The Cluetrain Manifesto when it first came out based on the enthusastic recommendation of a marketing friend of mine, and I was just appalled. It was page after page of platitude, all based on the idea that marketing-as-we-know-it was doomed to extinction in the very near future. This in turn was seemingly based on the authors’ idea that traditional marketing doesn’t work too well on smart, technically literate nerds ? a market segment that accounts for about 1% of the consuming public ? and that smart, technically literate nerddom was shortly to take over the world.

This is just fantasy. When it’s all said and done, my money says that big marketing will adapt just fine to the internet and so will big business. In fact, it will probably make them stronger than ever, and unlike the utopian predictions of The Cluetrain Manifesto that marketing is shortly to become a frank, cuddly, conversation between buyers and sellers, that’s a prediction that should truly send shivers down our collectives spines.