Fear at the Fed

From a May paper entitled “U.S. Household Deleveraging and Future Consumption Growth” by the Federal Reserve Bank of San Francisco:

Since the start of the U.S. recession in December 2007, household leverage has declined. It currently stands at about 130% of disposable income…. The Japanese stock market bubble burst in late 1989, followed soon after by the bursting of the real estate bubble in early 1991. Nearly 20 years later, stock and commercial real estate prices remain more than 70% below their peaks, while residential land prices
are more than 40% below their peak. In both countries, leverage ratios rose rapidly in the years before the peak. After Japan’s bubbles burst, private nonfinancial firms undertook a massive deleveraging, reducing their collective debt-to-GDP ratio from 125% in 1991 to 95% in 2001. By reducing spending on investment, the firms changed from being net borrowers to net savers. If U.S. households were to undertake a similar deleveraging, their collective debt-to-income ratio would need to drop to around 100% by year-end
2018, returning to the level that prevailed in 2002.

This has very, very bad implications for the most important component of GDP, Personal Consumption Expenditures, which hit a historic high of 71.2 percent in the first quarter of 2009. Translation: the stock market is no better an indicator of future economic growth now than it was when it was hitting historic nominal highs in 2008.

On the basis of their deleveraging calculations, the FRBSF calculates a US savings rate of 10% by the end of 2018. One has to presume Paul Krugman hasn’t read this paper or he would have stroked out already.

The defender of the Darwinian Faith

I wonder what excuse PZ will produce for ducking this challenge? Or is it possible that he might surprise us all and actually put his reputation where his mouth is?

Non-crackpot arguments are more challenging and require more thought, and are ultimately more satisfying. However, there is a problem when the focus is on an issue rather than an individual. Some issues, and I would put evolution in this category, don’t match this model well. While the issue is real and red-hot in the culture, the Green Zone of Worthy Opponents is unfortunately rather underpopulated. There is no one in the green box. So what should we do? Simply ignore the mobs of people populating the red box?

I posted the following at his blog: “Well, my dear Dr. Myers, since you were previously afraid of a radio debate with me on the evidence for the existence of gods, perhaps you’ll be more willing to engage in a written debate on the scientific evidence for evolution. After all, if the issue is so comprehensively settled in evolution’s favor, it should be no trouble whatsoever to make your case to everyone’s satisfaction, however initially dubious they may have been. And since you have now asserted that there are no Worthy Opponents, you no longer have any need to hide behind your stated belief in my supposed crackpottery.”

So, will PZ dare to enter the Red Box? Given that this is the area of his scientific and academic expertise and I am, according to him, “a pathetic little twerp with delusions of grandeur”, there’s absolutely no reason he should not… unless, of course, he’s afraid he can’t present a sufficiently convincing case for Darwin’s dangerous idea.

UPDATE: Wow, the Pharyngulans are already hurling metaphorical feces, providing excuses for PZ to run away, and trying to change the subject to religion. I find their lack of faith… amusing.