Homeownership Woes Continue As Ownership Rates Reach 13 Year Low

Homeownership fell to 65.9%, according to a recent US Census Bureau report (pdf). This number marks a 13 year low for US homeownership rates.

The chart below represents inflation-adjusted house prices, using data from the Federal Housing Finance Agency house price index.

Housing prices still haven’t stabilized and there is much debate about when that will happen. However, more interesting to me is the discussion surrounding the merits of homeownership and whether or not it has lost its allure.

One of the most notable voices in this discussion is hedge fund manager and author James Altucher. His post “Why I Am Never Going to Own a Home Again” is worth reading.

Of all of Mr. Altucher’s reasons against homeownership it’s diversification that strikes a chord with me.

No diversification. For most people, a house is by far the largest part of their portfolio and greatly exceeds the 10% of net worth that any other investment should be.

Long periods of growth in the real estate market (as with any asset class) can make someone immune to the risks they’re taking by over weighting their portfolio. Sometimes it takes a great crisis for people to sober up to this risk.

Homeownership Rate vs. FHFA Price Index via The Enterprise Blog

Chart Credit: The Homeownership Bubble is Still Deflating (CARPE DIEM)

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Chart Showing Owners of US Treasury Debt

Though unlikely, it’s still interesting to see who would need to be paid first in order to avoid a technical default on US debt.

The Big Picture blog has this great chart from Société Générale showing who holds US Treasury debt (see chart below).

Chart from Société Générale showing who holds US Treasury debt

Additionally, here is another source of debt breakdown by total amount held and percentage of total U.S. debt, according to Business Insider:

Hong Kong: $121.9 billion (0.9 percent)
Caribbean banking centers: $148.3 (1 percent)
Taiwan: $153.4 billion (1.1 percent)
Brazil: $211.4 billion (1.5 percent)
Oil exporting countries: $229.8 billion (1.6 percent)
Mutual funds: $300.5 billion (2 percent)
Commercial banks: $301.8 billion (2.1 percent)
State, local and federal retirement funds: $320.9 billion (2.2 percent)
Money market mutual funds: $337.7 billion (2.4 percent)
United Kingdom: $346.5 billion (2.4 percent)
Private pension funds: $504.7 billion (3.5 percent)
State and local governments: $506.1 billion (3.5 percent)
Japan: $912.4 billion (6.4 percent)
U.S. households: $959.4 billion (6.6 percent)
China: $1.16 trillion (8 percent)
The U.S. Treasury: $1.63 trillion (11.3 percent)
Social Security trust fund: $2.67 trillion (19 percent)

Chart Source: Who Owns Treasury Debt?

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Space Shuttle Pulls Into Port for the Last Time

The second most important part of the shuttle landing this morning (first being a safe reentry and landing) was the dialogue between the shuttle commander and mission control.

Here’s an excerpt of their final exchange:

“Mission complete, Houston,” said STS-135 commander Chris Ferguson after Atlantis came to wheel stop. “After serving the world for over 30 years, the space shuttle has earned its place in history. It’s come to a final stop.”

“We’ll take this opportunity to congratulate you, Atlantis,” replied capcom Barry “Butch” Wilmore in mission control in Houston, “as well as the thousands of passionate individuals across this great, space faring nation who truly empower this incredible spacecraft, which for three decades has inspired millions around the globe. Job well done, America.”

“Hey thanks, Butch, great words, great words,” Ferguson said. “You know, the space shuttle has changed the way we view the world and it’s changed the way we view our universe. There are a lot of emotions today, but one thing is indisputable: America’s not going to stop exploring. Thank you Columbia, Challenger, Discovery, Endeavour and our ship, Atlantis. Thank you for protecting us and bringing this program to such a fitting end. God bless all of you, God bless the United States of America.”

Also, as the shuttle was landing, NASA Public Affairs Officer George Diller had these eloquent final words:

Having fired the imagination of a generation, a ship like no other, its place in history secured, the space shuttle pulls into port for the last time, its voyage at an end.

Video Note: The final exchange begins at 10 minutes and 05 seconds.

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Do you know a threshold earner?

Here’s just a small excerpt from a thought-provoking Economist article:

In an American Interest essay on income inequality, Tyler Cowen broached the subject of the “threshold earner”:

A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.

Source: Work for post-materialists (The Economist)

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Presenting Vesta the Asteroid

NASA’s Dawn spacecraft entered orbit around asteroid Vesta on July 16, 2011.

Interesting facts:

1) Photo is taken from the spacecraft Dawn 9,900 miles (16,000km) away.

2) We’re uncertain of Vesta’s mass so we played it safe and took a high orbit.

3) Over the next 3 weeks we’ll lower the orbit and get a much more accurate calculation of her mass and even higher resolution images.

Vesta the Asteroid

Image Credit: NASA/JPL-Caltech/UCLA/MPS/DLR/IDA

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What is the Higgs boson, and why do we want to find it?

In 1993, the UK Science Minister (such a cool title), William Waldegrave, challenged physicists to produce an answer that would fit on one page to the question ‘What is the Higgs boson, and why do we want to find it?’

The following is my favorite of the five.

The Need to Understand Mass

By Roger Cashmore Department of Physics, University of Oxford, UK.

What determines the size of objects that we see around us or indeed even the size of ourselves? The answer is the size of the molecules and in turn the atoms that compose these molecules. But what determines the size of the atoms themselves? Quantum theory and atomic physics provide an answer. The size of the atom is determined by the paths of the electrons orbiting the nucleus. The size of those orbits, however, is determined by the mass of the electron. Were the electron’s mass smaller, the orbits (and hence all atoms) would be smaller, and consequently everything we see would be smaller. So understanding the mass of the electron is essential to understanding the size and dimensions of everything around us.

It might be hard to understand the origin of one quantity, that quantity being the mass of the electron. Fortunately nature has given us more than one elementary particle and they come with a wide variety of masses. The lightest particle is the electron and the heaviest particle is believed to be the particle called the top quark, which weighs at least 200,000 times as much as an electron. With this variety of particles and masses we should have a clue to the individual masses of the particles.

Unfortunately if you try and write down a theory of particles and their interactions then the simplest version requires all the masses of the particles to be zero. So on one hand we have a whole variety of masses and on the other a theory in which all masses should be zero. Such conundrums provide the excitement and the challenges of science.

There is, however, one very clever and very elegant solution to this problem, a solution first proposed by Peter Higgs. He proposed that the whole of space is permeated by a field, similar in some ways to the electromagnetic field. As particles move through space they travel through this field, and if they interact with it they acquire what appears to be mass. This is similar to the action of viscous forces felt by particles moving through any thick liquid. the larger the interaction of the particles with the field, the more mass they appear to have. Thus the existence of this field is essential in Higg’s hypothesis for the production of the mass of particles.

We know from quantum theory that fields have particles associated with them, the particle for the electromagnetic field being the photon. So there must be a particle associated with the Higg’s field, and this is the Higgs boson. Finding the Higgs boson is thus the key to discovering whether the Higgs field does exist and whether our best hypothesis for the origin of mass is indeed correct.

Source: The Higgs Boson – A one page explanation

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Hubble Telescope Captures Thin Galaxy

NGC 4452

NGC 4452 (Click image to enlarge)

Like a snapshot of coins tossed in the air, we see them at all angles, from face-on disks to nearly edge-on lines. And sometimes we catch them so precisely to the side that what we see is hard to believe is real.  – Bad Astronomy (Galaxy on Edge)

The NASA/ESA Hubble Space Telescope has imaged a striking galaxy called NGC 4452, which appears to lie exactly edge-on as seen from Earth. The result is an extraordinary picture of billions of stars observed from an unusual angle. – www.spacetelescope.org

Image Credit: ESA/Hubble & NASA

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Library of Economics and Liberty: EconTalk Podcast

I consume most of my information online through RSS feeders and podcast applications.

I try to allocate roughly 15% of my subscription lists for new content. I’ll often add new podcasts and RSS subscriptions in hopes of discovering a permanent staple.

During this discovery process I stumbled upon a wonderful economics resource called the Library of Economics and Liberty, or EconLib for short. The EconLib website is a treasure trove of economic material presented in a didactic format.

I discovered EconLib by adding their weekly podcast EconTalk to my podcast queue. EconTalk is a mix of one-on-one discussions using today’s news, books and topics to illustrate economic principles in practice.

It’s a real delight to hear important economic issues discussed by economists in the context of our current economic milieu.

The host Russ Roberts is a professor of economics and poses the perfect combination of challenging, insightful and clarifying questions.

It was their most recent podcast on income inequality that inspired me to write this post. Economics professor Robert Frank and Russ Roberts held an inquisitive discussion with both philosophical ideas and empirical evidence presented.

It’s these types of essential conversations that you’re hard pressed to find in today’s fast paced financial news echo chamber.

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Cupola’s View of Our Planet

Cupola View

Image Courtesy of NASA. Click to Enlarge.

Here’s a photograph of our gorgeous planet from the recently installed Cupola module on the International Space Station (ISS).

The ISS is an internationally developed research facility that is being developed in low-earth orbit. It’s scheduled for completion in 2011 and the Cupola module is one of the last remaining components of the ISS.

Cupola serves as a large windowed dome for crew members to use while operating the large robotic arms connected to the ISS. It also serves as a beautiful observation deck for viewing Earth, celestial objects and visiting spacecraft.

And as you would imagine, these beautiful vistas are popular with crew members. NASA has assembled a Twitter list of astronauts currently aboard the ISS, many of them tweet photos from the Cupola module.

Though most of us can’t visit the ISS to get these breathtaking views, we can see the ISS from our own backyards.

You can visit Satellite Flybys by Space Weather to submit your zip code and discover when the next ISS flyby will occur.

You can’t miss it. It’s the biggest, brightest man-made object orbiting Earth.

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