Portuguese for Spanish Speakers

Katie has a Ronaldo Brazil jersey. So, during today's Brazil/Chile match I took it upon myself to tell her about other Brazilian legends. In particular, Tostao. He's always had a fond spot in my heart because his nickname means "toast". Not just a name (like Rivaldo, Ronaldo, etc) nor scatological (ahem, Kaka).

I don't actually speak Portuguese (as I discovered in Portugal). I am a fair hand at Spanish, though, and operate under the assumption that written Spanish and written Portuguese abound with cognates and so I can parse useful things out of written Portuguese. Tostao is no exception. Clearly it is a cognate of "tostado".

In a fit of hubris I decided to check my facts. Shockingly, I was wrong. Babelfish won't tell me what tostao means but Wikipedia says it means "little coin". This seems wrong, but I assume that little coin is closer to the truth than toast.

I've learned my lesson and won't go and look up the translation of my favorite Brazilian player's name. I don't need to, anyways; it is an obvious cognate. I speak, of course, of Elano, a cognate of enano.

Heroes of Quantum Mechanics

Back when I was in the salt mines at Princeton, I had the pleasure of taking a statistical mechanics class with Pablo Debenedetti. One of Pablo's pedagogical quirks was taking breaks to regale us with stories of "The Heroes of Thermodynamics." It was a mid-afternoon class, post-lunch and 90 minutes long. The Heroes made their appearance when we were nodding off, mostly.

An example Hero is Gibbs who led an extraordinarily bland life, at least geographically. His father was a Yale professor. He did his undergraduate and graduate work at Yale. Then he became a Yale professor. Yay for New Haven. Another Hero was Boltzmann who led an extraordinarily sad life. He suffered from depression and his work was not widely/readily accepted. He ended up hanging himself. Very sad, especially when Pablo tells it.

So, aside from learning to stop worrying and love the Ising model I left stat mech with an appreciation for the Heroes (and also an appreciation for the Heroes as a pedagogical device). Given my field of study it was natural to wonder about the Heroes of Quantum Mechanics. Were there any? By that I mean were there any with extraordinary lives?

The closest I had was Wolfgang Pauli (as in Pauli exclusion principle). He had a reputation for causing experiments to fail through his mere presence. At its extreme, he is credited with ruining some experiment by passing through the town on a train. As you can see, this speculative Hero falls short of Gibbs and Boltzmann.

Then, today, something amazing happened. I found a Hero of Quantum Mechanics: Erwin Schrodinger. So says the hero,

It has never happened that a woman has slept with me and did not wish, as a consequence, to live with me all her life.

Erwin Schrodinger, Hero of Quantum Mechanics, led an extraordinarily interesting life.

Tishman Speyer, ethics and homeownership

Tishman Speyer is a building/real estate management company. They bought a big chunk of Manhattan called Stuyvesant Town in 2006. The plan was to renovate the apartments, crank up the rents and rake in the dough. In 2006 that sounded like a good plan. To further parallel the piggyback loans/negative amortizations/complete lack of anything resembling a down payment in the residential market, Tishman Speyer only invested $56 million of their own money in the total price of $5400 million. Just north of 1%. Then everything went to hell.

Fast forward to 2010 and Tishman Speyer abandoned their colossal failure of an investment in Stuyvesant Town. Just make sure you remember that homeowners in similar situations have a moral obligation not to walk away and "contribute to the destabilization of their neighborhood and community."

Food for thought (a meaty snack?) from the Economist

Two things from the Economist caught my eye. The first is an article about Ghana's dubious boon of finding oil. On the one hand you have the potential for the revenue to aid a lot of Ghanaians. On the other hand, there are many opposite-of-success stories featuring African nations and natural resource wealth. The quote that caught my eye:

“We must decide how many of these eggs to eat today and how many to keep and hatch into chickens. But we are a poor country and we are hungry. The temptation is to eat now.”

I don't have anything else to add so I'll tell you to read The Bottom Billion by (my cousin) Paul Collier.

The second one discusses how the 2010 census will officially show that there are more Hispanics in the US than blacks, which is to say that Hispanics are now the largest minority. This is not a surprise nor is it terribly interesting. What is interesting is that the title of the article is "Reshaping Politics." Says the article, Hispanic voter turnout is increasing; Hispanics have already featured as swing votes in several elections; Hispanics vote solidly Democratic but their underlying values may line up better with Republicans if only the Republicans could court them properly; high immigration and birth rates mean that these trends will become more pronounced and important, etc, etc.
That all seems plausible but I have a problem with it: Joe Arpaio. He is the sheriff of Maricopa County (where Phoenix is). That's an elected position. He was elected in 1992, 1996, 2000, 2004, and 2008 by wide margins. Maricopa County is 30% Hispanic. Putting those two together, you'd think Arpaio must be popular with Hispanics. The problem is, according to an eminent Phoenix-area Hispanic, that Arpaio is a "racist motherfucker." If a 30% Hispanic population isn't enough to keep a guy like that out of office (or even prevent him from being re-elected by double-digit margins) a 13% national proportion doesn't seem like anything to get excited about.

The road salt racket

It is supposed to snow a lot this weekend. Last night ma paresseuse said "I should have bought some de-icer." "What's de-icer?", I asked. "Salt." Ahh, "salt."

We have salt in the kitchen (sodium chloride, NaCl) but don't have salt for roads (sodium chloride, magnesium chloride, MgCl2, or calcium chloride, CaCl2). What does it matter though? The salt melts the ice/snow by lowering the freezing point of water. Pure water is solid at 20 degrees F but salt water is liquid. But freezing point depression is a colligative property; it depends on the number of things dissolved in the water, not the type. One million sodium ions will do the same job as one million calcium ions. So why do I buy CaCl2 or MgCl2 instead of NaCl? NaCl must be cheaper.

When CaCl2 and MgCl2 dissolve in water you get 3 ions. With NaCl you get just 2. That makes calcium and magnesium more potent per "molecule" but you don't pay per molecule, you pay per gram and calcium and magnesium chloride molecules weigh more.

• 1 kilogram of NaCl gives you 34.2 mol of ions in solution.
• 1 kilogram of MgCl2 gives you 31.5 mol of ions in solution.
• 1 kilogram of CaCl2 gives you 27.0 mol of ions in solution.

Remember, the more ions the better seems to be both cheaper and more effective.

I've left out some interesting points: solubility, heat of solution, the existence of hydrates and environmental effects. Briefly,

• CaCl2 and MgCl2 are more soluble than NaCl, both in grams/mL terms and mol/mL terms. This doesn't seem to be a limiting factor to me since NaCl is quite soluble in water already A piece of NaCl will dissolve in about 6 times the volume of water; for MgCl2, the most soluble of the three, the ratio is 4.5:1. Not a big difference.
  I don't know how that solubility changes with temperature, though. If one of these is insoluble in water at, say, -5 or -10 degrees C it would obviously be of limited utility.
• Apparently CaCl2 has a high heat of solution. This means that when CaCl2 dissolves in water it gives off heat. This is nice when melting ice since that heat would melt ice nearby. This seems pretty uninteresting though since the newly melted water will just, you know, freeze again (since it's not salty).
• I don't know about CaCl2 but MgCl2 is usually hydrated. That means that you don't just get Mg ions and Cl ions in an MgCl2 molecule, you get H2Os as well. This means you get even fewer mols of ions per kilogram (since some of the weight you buy is water).
• All three are probably pretty corrosive and most plants don't like salt. Beyond that I don't know which is best.

So, with what I think are minor caveats you should buy NaCl over CaCl2 over MgCl2.

Should you get a flu shot?

If you are like me you are near hysterical about the swine flu pandemic. In my sparse moments of lucidity I wonder if I should be vaccinated. Not leaving such an important decision up to chance, I asked the Center for Disease Control. The CDC recommended to me that the following groups be vaccinated (in no order of importance):

• Pregnant women.
• Healthcare workers.
• People between 6 months and 24 years of age.
• Household contacts and caregivers for children younger than 6 months.
• People between 25 and 64 with health conditions that put them at high risk.

The only category that might include me is the last one. How do I (and you) know if you are in it? Well, the CDC says that those 5 groups (with no attempt to avoid double counting) amount to 159 million people. Let's put numbers on each one:

• Pregnant women. 4 million. US birth rate is 14 per 1000 people. If 1 baby equals one pregnant woman, you get 4 million pregnant women.
• Healthcare workers. 14 million. The Bureau of Labor Statistics tells me so.
• People between 6 months and 24 years of age. 99 million. From this population pyramid.
• Household contacts and caregivers. 8 million. 4 million babies divided by 2 (since 6 months). Times 4 people per family. Seems reasonable.
• People between 25 and 64 who are sickly. Some percentage of 147 million.

And that all adds up to 159 million. So what is the percentage? About 20%. So, if you are healthier than 20% of the people between the age of 25 and 64 you don't need a flu shot, according to the CDC.

A couple of interesting things,

1. Notice that the CDC doesn't recommend a vaccine for anyone over 65? About this they say "Current studies indicate that the risk for infection among persons age 65 or older is less than the risk for younger age groups. However, once vaccine demand among younger age groups has been met, programs and providers should offer vaccination to people 65 or older."
2. If you read jibber-jabber like this,

   "Pregnant women are urged to take special care, as they are always at heightened risk from flu and especially H1N1. More than 100 pregnant women have been admitted to intensive care with H1N1 in the United States this year and 28 have died." (link)

   you can process it intelligently. We found out that there are 4 million pregnant women. Say the 28 deaths are for the first 3 quarters of the year. So we have 40 deaths annually out of a population of 4 million. That is 1 death from swine flu per 100,000 pregnant women. To put this in perspective, 420 pregnant women will commit suicide each year, 160 will drown and 240 will die in fires.

Deutsche Bank's Outlook for U.S. Home Prices

Unlike any other asset class, people (or Americans at least) have a culturally ingrained preference to own a home. The deck is stacked for over-investing. We can't say the same about owning a share of "XYZ Company."

That's from a very interesting research note on "The Outlook for U.S. Home Prices" from Deutsche Bank. Basically "since there is no shortage of bigger fools home prices don't have to be rational." I am not 100% sure that I should post the note, so I am not going to (yet). I am going to post quotes and charts, as well as last quarter's (Q1 2009) note since those can be found on the web already. The reports look long but you don't need to read the appendices so they are quite bearable. I think they are interesting and that you should take a look. I'll go over some highlights.

For starters, the report is quite pessimistic, especially so in light of what you usually hear (e.g., "U.S. housing starts, permits touch 9 month high" from Reuters). What constitutes pessimistic?

So, is the housing crisis over? Only if the technicals (i.e. a little momentum and glimmer of change in psychology) can outrun the fundamentals. But the technicals are fragile and may be fleeting, while the fundamentals remain very challenging and entrenched. Serious delinquencies are still rising rapidly in mortgages, unemployment reached a new cycle high, inventory in most parts of the country is elevated, and in some areas affordability is backtracking.

Okay, pointed words, but what constitutes pessimistic quantitatively? The New York-White Plains-Wayne, NY-NJ MSAD* (from here on out NYC) is projected to drop a further 39.0% from its Q2 2009 values, or 53.6% from its Q2 2007 peak of $552k median home price. NYC from $552k to $256k. Steep fall, especially from now forward, but that's kind of cherry picking. NYC happens to have the worst forecast drop of any MSA*. Also the Manhattan real estate market is a special case because of the complete lack of single-family, detached homes (this makes it tough to measure, relative to traditional suburbia). Still, saying that an area with 11 million people living in it has an additional 40% to drop is pretty pessimistic (editor's note: I will avoid the word "bearish" as a synonym for pessimistic. I will also avoid "short" for the same. I will, however, allow myself to describe a Danny DeVito/Robin Williams hybrid as "short and bearish.") Some other geographies of interest:
*MSA is "metropolitan statistical area", MSAD is "metropolitan statistical area division". MSADs are subsets of MSAs. The other NYC divisions are Edison, NJ (Northeast Corridor); Nassau-Suffolk, NY (Long Island); and Newark-Union, NJ (don't be out after night). None of this, or what a CBSA (core based statistical area) really matters.

• NYC -39.0% from now, -53.6% from peak; already covered this one.
• Edison, NJ -27.0% from now, -40.6% from peak; where I live, for this and other reasons I am not that sad to rent.
• Newark-Union, NJ -0.2% from now, -16.8% from peak; this is the area in between the above two, about the same fall to date but obviously a much smaller bubble, it's all local.
• San Francisco, CA 5.0% from now, -25.0% from peak; I think SF is the best urban density analog to NYC yet they have had all their pain already, totally different from NYC, not sure what a positive current-to-trough change means.
• Merced, CA -8.7% from now, -73.5% from peak; worst of the worst, unreal from-peak drop, a $200k house is now worth $53k.
• Oklahoma City, OK 6.1% from now, 0.4% from peak; OKC had no housing bubble at all (still no idea what a positive to-trough change means).
  

The report says that home affordability (for which plummeting prices and record-low mortgage rates had been a boon) is decreasing again after bursting bubble gains:

In Q1 2009, based on our affordability analysis, 74 of the 100 MSAs in our universe were affordable (i.e. housing was at its all-time affordable point for the given MSA). By Q2 2009, due to price increases during the quarter, just 39 MSAs are considered affordable.

They measure affordability by what percentage of median family income would be taken up by mortgage payments on a median priced home. 40% is affordable in a high cost area (like San Diego or L.A.); 28% in normal places. They fix mortgage rates at 5.0% so it seems like the drop in affordability is mostly due to income drop, not home price rise.

A couple of charts caught my eye and it is always good to have pictures. The NAR (National Association of Realtors) HPI is *not* a repeat sale index like the Case-Shiller HPI (Case-Shiller is what gets reported). It's just the median sales price*.
Still, take a look at why these housing numbers are usually presented "seasonally adjusted":
*again this doesn't really matter. If and when it does, that's another post. Suffice it to say that repeat sales indices and median sales price can be disconnected. Imagine that the 10% most expensive houses are the only ones to sell in a quarter. Median sales price would skyrocket even though the homes may or may not have appreciated (which is what a repeat sales index would tell you).


Like I wrote about a few posts ago, excess supply is bad. Bubble bursting leads to negative equity. Negative equity leads to foreclosures. Foreclosures lead to the dark side:


Finally, the report ends on a cheery note, or at least attempts at cheeriness:

After years of warning "if we are wrong, it will have been because we were too optimistic," we'd now say, "if we are wrong, it will have been because we were too pessimistic."

You can read the Q1 report here.
You can read a related report on negative equity here.
I'll put the Q2 report up when I can.