The Unassuming Economist

From American Enterprise Institute:

“One of my two all-time most favorite economists—Dr. Thomas Sowell— turns 92 tomorrow, he was born on June 30, 1930. Here is Thomas Sowell’s webpage and here is his Wikipedia entry. Milton Friedman (my other all-time favorite economist) once said, “The word ‘genius’ is thrown around so much that it’s becoming meaningless, but nevertheless I think Tom Sowell is close to being one.”

In my opinion, there is no economist alive today who has done more to eloquently, articulately, and persuasively advance the principles of economic freedom, limited government, individual liberty, and a free society than Thomas Sowell. In terms of both his quantity of work (49 books and several thousand newspaper columns) and the consistently excellent and crystal-clear quality of his writing, I don’t think any living free-market economist even comes close to matching Sowell’s prolific record of writing about economics. And as I’ve mentioned previously on CD, as a writer Thomas Sowell is truly the “Master of Idea Density”—he has the amazing talent of being able to consistently pack more ideas, insight, and wisdom into a single sentence or paragraph than what typically takes an entire essay or book for even the best writer!

Even in his 80s, Thomas Sowell remained active and was writing two syndicated newspaper columns almost every week for the last 25 years until he “retired” from those weekly deadlines at the end of 2016 (see CD post here). On his birthday last year at the age of 90, Thomas Sowell released his 49th book “Charter Schools and Their Enemies” which amazingly was his 11th book since 2010 and his 24th book since the turn of the century! To honor Thomas Sowell’s 92nd birthday tomorrow, I present below 15 of my favorite quotations from Dr. Thomas Sowell and three bonus videos of the great economist:

 1. Knowledge. “The cavemen had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today.”

2. Obamacare. “If we cannot afford to pay for doctors, hospitals, and pharmaceutical drugs now, how can we afford to pay for doctors, hospitals, and pharmaceutical drugs, in addition to a new federal bureaucracy to administer a government-run medical system?”

3. Economics vs. Politics I. “Economics and politics confront the same fundamental problem: What everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want and letting those individuals make their own trade-offs when presented with prices that convey those costs. That leads to self-rationing, in the light of each individual’s own circumstances and preferences. Politics deals with the same problem by making promises that cannot be kept, or which can be kept only by creating other problems that cannot be acknowledged when the promises are made.””

Continue reading here.

From the IMF’s latest report on Bulgaria:

“Despite recent measures, credit risk could increase, including due to spillovers from the war. During the pandemic, macroprudential measures provided banks room to manage a possible deterioration of loan quality without limiting credit flows, while broader measures supported borrowers’ repayment capacity. Nominal credit to households is now growing at a rapid pace, driven by housing mortgages. To prevent the buildup of new risks, the BNB appropriately announced gradual increases in the countercyclical capital buffers (CCCB), up to 1.5 percent in 2023 from 0.5 percent currently. Possible further increases will need to consider the strength of the recovery to ensure that credit to corporates remains sufficiently available to support private investment. The introduction of borrower-based measures could also be considered if signs of overheating in the real estate market were to emerge. Supervisors should continue to ensure that banks monitor asset quality for possible deterioration and proactively resolve NPLs, as credit risks may rise with the lagged impact of withdrawing COVID-19 related support, the impact of surging commodity prices and supply-chain disruptions on corporates, rising interest rates, or the emergence of imbalances in the housing market.”

On cross-country:

• The World’s Bubbliest Housing Markets Are Flashing Warning Signs. Global monetary tightening is squeezing homebuyers, adding risks that a slowdown could ripple through the economy. – Bloomberg
• The property industry has a huge carbon footprint. Here’s how to reduce it. Some buildings should be retrofitted, others torn down – The Economist

On the US:    

• America Faces a Housing Bust. All ingredients seemed in place at 2022’s start for a continued housing boom, but now the market has priced itself for a sharp reversal – Wall Street Journal
• The State of the nation’s Housing 2022 – Joint Center for Housing Studies of Harvard University
• Is another housing crash on the way? – The Economist
• Investors’ Housing Bets Are on Shaky Foundations. Cash has been pouring into residential property on the assumption that an unprecedented run up in rents will continue – Wall Street Journal
• We’re Already Seeing the Stock Market Selloff Spill Into the Housing Market. It’s especially notable in places where stock-based comp is significant. – Bloomberg  
• U.S. labor market appears to cool; homebuilding slumps as rates surge – Reuters
• US Housing Starts Decline to Lowest Level in More Than a Year. May construction fell to 1.55 million pace after April surge. Builder backlogs remain elevated even as sales decrease – Bloomberg
• Housing Just Hit a Wall. What’s Next for Prices, Brokers, and Builder Stocks. – Barron’s
• Work From Home and the Office Real Estate Apocalypse – SSRN
• The Size and Census Coverage of the U.S. Homeless Population – NBER
• Housing’s Slowdown Has Economy on the Edge. News of a cooling housing market might be a relief to some, but we’ll be living with the aftereffects for a long time to come. – Bloomberg
• Hot Housing Market Keeps Home Foreclosures at Bay. Robust home prices and government relief programs are giving financially squeezed homeowners options to avoid foreclosure – Wall Street Journal 
• US House Prices Are Likely to Drop as Rates Rise, Capital Economics Says – Bloomberg
• The Left-NIMBY meltdown. It’s getting harder to pretend that blocking new housing helps poor people. – Noah Smith
• Cancel Zoning. If we want to fix the housing-affordability crisis, segregation, and sprawl, zoning must go – The Atlantic
• In Pursuit of Affordable Housing: The Migration of Homebuyers within the U.S.—Before and After the Pandemic – Freddie Mac

On China

• China’s Once-Sizzling Property Market Has Started to Cool. New home prices in China have fallen, and would-be buyers are thinking twice. That’s bad news for the overall economy. – New York Times
• Chinese Developer Accepts Wheat, Garlic as Payment to Woo Buyers – Bloomberg
• China’s Property Slump Is a Bigger Threat Than Its Lockdowns. The worst decline on record could hold growth below 4% for the rest of the decade. – Bloomberg

On other countries:  

• [Australia] Sydney house prices still 20% above pre-pandemic levels despite rising interest rates. Economists say while property prices could come down by up to 20%, affordability has ‘never been worse’ – The Guardian
• [Australia] Sales slow down in Sydney’s suburbia-on-sea. After a period of rising prices, homebuyers are starting to get more for their money, while some sellers lose out – FT
• [Canada] Distressed Deals Pile Up in Canada’s Once-Booming Housing Market. Prices are falling in some of the urban markets that had the biggest increases over the past two years. That’s leading to broken and renegotiated deals. – Bloomberg
• [Israel] Israel lawmaker seeks larger mortgage loans as home buyers priced out – Reuters
• [Sweden] Sweden’s Housing Bubble Deflates as Realtors Sound Alarm – Bloomberg
• [United Kingdom] Are the Days of UK Property Booms and Busts Over? Tougher mortgage regulation in 2014 sought to contain overstretched buyers. Its effectiveness is about to be put to the test. – Bloomberg
• [United Kingdom] Bank of England to Get Rid of Mortgage Affordability Rules. UK central bank will end the affordability test from Aug. 1. The BOE raised the benchmark interest rate last week to 1.25%. – Bloomberg

From IMF’s latest report on Greece:

“There are nascent signs of emerging systemic vulnerabilities. Residential real estate prices have rebounded by almost 25 percent since 2018, accompanied by a significant increase in price-to-rent and income ratios. Commercial real estate prices have also rebounded, albeit to a weaker extent. Household credit expansion has surpassed disposable income growth, with demand for mortgage and corporate loans expected to mirror the recent rise in new lending to households and corporates, although after a period of pronounced private sector deleveraging (…). Model-based analyses suggest positive private sector credit gaps for Greece. A further acceleration of credit growth is anticipated from NGEU loans being channeled through the banking system.”

From the IMF’s latest report on Qatar: