The one lesson of real estate development

Build houses that people want to live in. If instead you build housing for investment demand, you are going to get burned:

Median household income hasn’t grown over the last decade, but average house size has. The average square footage of a new single-family home in the U.S. has gone from 1,660 square feet in 1973 to 2,215 square feet in 2008.

Kraft's Proposed Acquisition of Cadbury

Last week, Kraft announced a $16 billion offer to acquire British confectionary company, Cadbury. Potential benefits include providing Kraft access to new distribution channels, especially foreign markets, where Cadbury is particularly strong.

Cadbury rejected the offer saying that the 31% premium to its stock price at the time “fundamentally fails to reflect the current value of Cadbury as a standalone business.” Kraft shareholders appear to be skeptical that the synergies from the potential acquisition will exceed the premium Kraft would eventually have to pay - Kraft's stock fell around 7% following announcement of the offer.

What can we learn from Chile, Sweden, and Hungary?

How to control government spending:

One way to bolster trust would be to put fiscal policy on the same footing as monetary policy, by outsourcing budgetary decisions to independent councils with a mandate to preserve fiscal solvency.
...
A fiscal council could monitor compliance with a budget-balance target, consistent with a stable or falling debt burden, leaving politicians to make tax and spending decisions within those limits. That sort of set-up has been adopted in Chile and Sweden.

Another convert is Hungary. George Kopits, the head of its fiscal council, says a good fiscal-stability framework has four main features. The first is a numerical policy rule, such as a target for the debt ratio or, as in Chile, a pledge to run a budget surplus of 1% of GDP over the business cycle. The second is a set of “procedural” rules, such as a cap on public-sector pay growth or—as in Hungary now and America until 2002—a “pay-go” rule that says new spending schemes have to be funded by tax increases or cuts in other programmes.

Labor Unions vs. consumers

President Obama has until Sept. 17 to rule on a U.S. International Trade Commission recommendation that the White House put a 55% tariff on low-grade car tires imported from China. The  Steelworkers Union charges that a flood of cheap Chinese tires in recent years had cost more than 5,000 union jobs.

The president's decision -- he is under no obligation to follow the ITC -- is due just days before he hosts Chinese President Hu Jintao and others world leaders at a G-20 summit in Pittsburgh.
Mr. Obama's call is fraught with political risk. If he sides with the steelworkers, he invites accusations of protectionism. Siding with China risks disappointing a key constituency that he is relying on to support his domestic agenda

UPDATE: Consumers lose

Do we want more NASA disasters?

If you have never been late for a plane, then you are not optimizing.  Is NASA making a similar mistake?

...NASA's costly and extreme aversion to it ever since Apollo. Recall the famous words of Gene Kranz ...  from the movie Apollo 13: "Failure is not an option."

The problem with that is, as some have responded, that success gets very expensive. This is the cost of risk aversion.

Cash for Clunkers blip

The sharp spike in demand suggests that the Cash for Clunkers car buying subsidy had only a very short lived effect on demand. 

Note the seasonal troughs in December.  Seems to validate my ex-girlfriend's father's practice of buying cars on Christmas eve.  If there is no one else around, the opportunity cost of selling a car to you is almost zero (The alternatives to agreement determine the terms of agreement.)

HT: Calculated Risk

Shirking Made Easier

Want to get out of work some afternoon just like your coworkers with kids' sporting events do? You can by "inventing" your very own kid, now made easy with a kit from "The Office Kid."


Hat tip: Marginal Revolution

Stossel film fest: Nick Gillespie channels Stossel: Booze vs. Healthcare

Stossel film fest: Canada vs US Health care

Stossel film fest: Other peoples' money

John Stossel identifies the problem with health insurance.  Watch for the cameo of Vanderbilt's own The Honorable Jim Cooper.