May-06
02
You Heard it Here First
By
I saw the following story this morning on Rivertowns.net. foreclosures If you have been a reader of this site, this is old news. Kudos go to kilowatt who has been on top of the rising number of foreclosures in this area for the past year. In addition, there is an article from the Von Mises Institute dealing with my earlier discussion on the “business cycle” and Rothbard – book “America – Great Depression”. business cycle
No related posts.
Mark, I am glad you pointed this out. Kudos also to kilowatt.
I would like to point out that I specifically asked the “perky demographer” from Madison back in 2003 if she used any “on the ground” socio-economic data in her population growth projections.
You may remember all of this, as it was my concern then, and still is today, that any demographer who simply limits projections of growth rates (especially the migration component)to be based on readily available data such as prior growth, and births, and then simply plug numbers into a spread sheet or a regression analysis calculation will be wrong in their analysis – such models work for large areas (such as the state as a whole) but are troublesome when trying to predict matters in a micro sense (specific localities).
The most difficult part of population growth prognostication is the migration component yet that is where all of the dramatic growth coming into St Croix (and neighboring) County is derived from, by and large. The problem is clear, you have to build into any projections the actual, on-the-ground, socio economic pieces of the puzzle. When you do this, it becomes a dampening or catalystic factor.
For example, during the late 90′s we experienced a bubble of “irrational exuberance” due to the dot com stock market bubble. In hind sight, we see it for what it was but during the bubble virtually no one saw it for what it was. Consequently, many people’s personal balance sheets were artificially inflated, sky blue projections of stock prices based upon multiples of projected potential theoretical heretofore unexperienced cash flows were used to value stocks – it was irrational. All one needed was a good story and boom, off went your stock – never mind your company had yet to earn dime one.
But not only did people want to believe it, they made life changing decisions because of it. On the margin, the idea of moving and building a new home was so luscious a thought that it was irresistable. Furthermore, their fictitous wealth simply fueled the fires. Hudson and the surronding area felt the effects through the late 90′s and into the early 2000 period.
Reality hit home, gas prices went up, companies resized (State Farm, for example, is no longer in Woodbury at the corner of Radio Drive and I94 – those people are in Lincoln, NE now) and the velocity of growth dropped precipitously in the Hudson area. I dare say, today the migration component is probably close to zero – maybe even negative…
Now we are seeing some of the fallout from that era of irrational exuberance, and the blood sucking mortage people who clearly took advantage of questionable customers. Let me be clear here, not all mortage brokers are blood suckers – I personally know some really great ones, but there are a number out there whose only qualification for the job was prior “sales” experience… It is showing up in 400% increases in forclosures.
It is also showing up in flawed population growth projections because none of those socio-economic factors were built into either the demographer back in 2003 or the current demographer’s projections. They only rely on readily available data that you or I can access – paying them for what they produce is another example of a waste of taxpayer money.
I applaud Eric Lundell in his efforts to ferret out the less than honest mortgage people. But one should ask the question as to what role, if any, population projections based on goofy thinking may have played in some of this as well. Frankly, I have little compassion for population prognosticators who fail to build their models without even touching on the factors that may affect their numbers the most… Judge Lundell, there are other factors going on in this matter as well, and phony, linear, projections of growth (played up by unscrupulous mortgage people) clearly should be viewed with a questioning eye. I wonder if any of Hudson’s brilliant banking minds don’t have just a little bit of egg on their faces…..
See past posts that predicted this over 8 months ago.
Housing Market
St. Croix County – Yellow Brick Road is Lined with Debris
The Foreclosure and Bankruptcy Watch Continues