Hannah Green sends me to Nadeem ul Haque on development in Pakistan

From Radio OpenSource:

Nadeem ul Haque introduced himself with a bit of bluster as Pakistan’s official “growth” strategist, then began blurting out his frustrations. There’s no growth to speak of in Pakistan, he said — less than inflation anyway, and nothing like India’s 8-percent boom. The government he came home to serve in Pakistan is going nowhere. And then the line that spun my head around: “This is the country that can kill the world,” he said. “And your country hasn’t the foggiest idea what you’re doing here. Find a way to educate youth in Pakistan — 90 million under 20 — or don’t sleep at night. You haven’t got enough bullets to kill them… We can do without the Beltway Bandits and even the billions of dollars in what they call aid. What America should be sending Pakistan is C-SPAN and National Public Radio, and then reopen the USIA libraries… What you send is Raymond Davis and Blackwater… Are you out of your …. minds?”

The conversation we recorded a few days later is a slightly tempered version of that first burst at a farewell party in Islamabad for an American aid official. We’re getting Nadeem ul Haque’s heartfelt version of the Post-Colonial Blues. First, fond memories of the British and American cultural centers and mentors in the 1950s and 60s who propelled him to the London School of Economics, the University of Chicago and a career at the World Bank. Second comes the the appalled realization that a new native elite had slipped into the palaces, polo grounds and clubs of the old colonialists with, if anything, less interest in the mass of the population. And third, a rough critique of a distant and disdainful American connection with Pakistan: bullet proof cars for aid workers when they get out of the office at all; “they don’t use our toilet paper,” he says; and nobody, but nobody, knows where the other-than-military money goes.

Maybe the reason Tim Tebow does option plays...

...is that he is high variance.

My colleague Dowell Myers says, “'Show me your papers' should be replaced with 'Welcome to English class.'”

He has a lovely op-ed in the New York Times:

  

How do we change course and begin treating immigrants as a vast, untapped human resource? The answer goes to the heart of shifting from an immigration policy to an immigrant policy.

For starters, the billions of dollars spent on border enforcement should be gradually redirected to replenishing and boosting the education budget, particularly the Pell grant program for low-income students. Some money could be channeled to nonprofits like ImmigrationWorks and Welcoming America, which are at the forefront of helping migrants assimilate.

Second, the Departments of Labor, Commerce and Education need to play a greater role in immigration policy. Yes, as long as there remains a terrorist threat from abroad, the Department of Homeland Security should have an immigration component. But immigration policy is all about cultivating needed workers. That means helping immigrants and their children graduate from high school and college. It means that no migrant should have to stand in line for an English class. It means assistance in developing migrants’ job skills to better compete in an increasingly information- and knowledge-based economy.

Thanks to our huge foreign-born population (12 percent of the total), America can remain the world’s richest and most powerful nation for decades. Shaping an immigrant policy that focuses on developing the talents of our migrants and their children is the surest way to realize this goal.

Chicago: if not back to the city there, then where?

The ASSA meetings were in Chicago this year.  Even though the meetings take place in January, I always look forward to their return there, because I enjoy visiting Chicago more than any other American city.  It helps that my daughter goes to school there, but I also find Chicago's urban landscape to be uniquely appealing.  It is somehow dense without feeling overcrowded, the art and restaurant scenes are remarkable, and the architecture is world renowned.  Few things for me are as life-affirming as a walk down Wacker Drive.

Chicago also has decent transit and, for a beautiful large city, is inexpensive.  The median price of a house in Chicago is around $200,000, and even at the peak, prices remained more or less sane. 

Yet between 2000 and 2010, Chicago shed seven percent of its population.  This was not just because the region in which it sits grew slowly; Cook County outside of Chicago gained slightly, and Lake and Kane Counties grew smartly.  Employment in Cook County has fallen more than 10 percent over the past ten years.

I like cities and I root for them.  Yet even in an era when sprawl has become a pejorative, more people leave some of our most appealing cities than move into them.  I suspect a lot of the problem is school quality, and I give Congress for New Urbanism president John Norquist a lot of credit for recognizing this fact.  But many people like living in detached houses on spacious lots.  In the absence of policy interventions such as higher gasoline prices, I don't see this changing anytime soon.

If Commercial Real Estate Investors Avoided the Nine Vernon Martin Traps, We would all be in Better Shape.

In 1988, an appraiser named Vernon Martin III published a six page paper in Real Estate Review called Nine Abuses Common in Pro Forma Cash Flow Projections.  They are:

Over-inflated expected income
Under-inflate expected expenses
An assumption that tenants will always pay expenses
Failure to examine individual leases
Underestimation of vacancy and collection losses
Forgetting that tenant improvements and lease brokerage fees are real expenses
Going-out cap rates that are lower than the going-in cap rates
Ignoring sales expenses
Understating the discount rate.

Thanks to Argus, people are pretty good now at looking at individual leases.  But they don't always do a great job of avoiding the remaining abuses.

The Fed writes a white paper on the GSEs

The conclusion's opening paragraph:

The challenges faced by the U.S. housing market today reflect, in part, major changes taking place in housing finance; a persistent excess supply of homes on the market; and losses arising from an often costly and inefficient foreclosure process (and from problems in the current servicing model more generally). The significant tightening in household access to mortgage credit likely reflects not only a correction of the unsound underwriting practices that emerged over the past decade, but also a more substantial shift in lenders’ and the GSEs’ willingness to bear risk. Indeed, if the currently prevailing standards had been in place during the past few decades, a larger portion of the nation’s housing stock probably would have been designed and built for rental, rather than owner occupancy. Thus, the challenge for policymakers is to find ways to help reconcile the existing size and mix of the housing stock and the current environment for housing finance. Fundamentally, such measures involve adapting the existing housing stock to the prevailing tight mortgage lending conditions--for example, devising policies that could help facilitate the conversion of foreclosed properties to rental properties--or supporting a housing finance regime that is less restrictive than today’s, while steering clear of the lax standards that emerged during the last decade. Absent any policies to help bridge this gap, the adjustment process will take longer and incur more deadweight losses, pushing house prices lower and thereby prolonging the downward pressure on the wealth of current homeowners and the resultant drag on the economy at large.

Back with commentary in a bit.

Bob Shiller supports a tax credit to fix a housing mess

He writes:

We used to talk a lot about helping homeowners in trouble.
Instead, the bankers were bailed out - and now we hardly talk at all about aiding ordinary Americans. 

Yet the problems facing homeowners today are even bigger than they were in the dark days of the financial crisis. According to the S&P/Case-Shiller 20-city Home Price Index, home prices have fallen 13.2 per cent since Lehman Brothers collapsed in September 2008. Over the same period, of course, unemployment has climbed.
In other words, more homeowners are underwater on their mortgages - and more Americans are out of work. And home prices are still falling. 

So we need to overcome the sense that real help is impossible - and to think about approaches that might be politically feasible. Despite concern over our national debt and a general distaste for spending taxpayer dollars on people who may have been less responsible, there are some potential solutions. 

The piece continues....