Birthrate Collapse

One statistic I have been waiting to see was what the recession did to the birthrate. Some of the lowest birthrates we had in the United States were in the Great Depression. Surprisingly this happened before the invention of the birth control pill and abortions were not nearly as common.

So I have been expecting a huge drop.

Sure enough, birthrates have dropped to the lowest levels in the past century. There were about 200, 000 less babies in 2009 than in 2007.

Quite interestingly, from the perspective of the person being born, it really would be better to be born now than in 2007. The number of positions in colleges for people born in 2009 will be the same as for those born in 2009. The same is true of entry level employment opportunities. However there are 200, 000 less people competing for these same spots. Sure the recession means your parents will be poor while you are a baby, but on the twenty year scale it is unlikely things will be bad.

Another thing to note, is that lifetime fertility rates just dropped below 2.1. Meaning that the population is theoretically in decline unless high birth rates in the future make up for it. However when you look at the actual report, you see that the total number of deaths a year is about 2.5 million. While the total number of births is 4 million. So population is increasing by 1.5 million a year. This is because our population is still skewed towards younger people.

Following my expectations

The real estate market in Riverside County appears to really have come close to hitting bottom. I anticipate that bottom means inflation adjusted 2000 prices. To get inflation adjusted 2010 dollars based on 2000 dollars this calculator claims that the conversion factor is 1.28.

According to Zillow, In September 2000, Riverside home prices were averaging 153k, and in Corona they were 204k. So if they tracked inflation, I would predict current prices would be 196k, and 261k respectively.

The actual prices Zillow gives are 207k, and 299k, down from a peak of 421k and 527k. So really, I would feel safe buying a home in Riverside county. The bubble is over... In reality, I expect that they will overshoot a little because of a combination of low expectations, strict lending requirements, and student loans limiting the willingness of buyers to enter the market. This is still a pretty safe place to put your money though.

Orange county is another matter. It probably has another 150-200k to fall. In 2000 median home prices in Orange were 290k, and in Huntington beach they were 330k. So if they tracked inflation today they would be 371k, and 422k. The actual numbers are 500k and 595k.

Here comes the rest of the fall...

I have been predicting for years that home prices would hit at least 2000 inflation adjusted price levels. Median incomes have not increased since then, while spending on health care and education have dramatically increased leaving less money for housing. I just don't see how we can support prices above 2000 levels.

For a few months though I was really starting to wonder if I was right. The government had been propping up home prices through tax credits. Today I am feeling a whole lot more confident though. Home sales have fallen to numbers that have not been seen in a decade, while the amount of time it would take to sell all of the homes on the market is the longest it has been in my lifetime. Still, I better get to saving, within five years we will have a great opportunity to buy.

Japanese Stock Market

This graph is almost scary enough to make me give up on stocks as entirely speculative. It really is remarkable just how far stocks can drop after a bubble. Twenty years later, and they still are worth a third of what they were at the peak.

Health Care Costs

During July the price of medical care fell for the first time in 35 years! Hard to say if Obama had anything at all to do with that, but a combination of the weak economy and so many people focusing attention on the dramatic increase in the cost of health care seems to have done at least something.

This is a really big deal because the cost of medical insurance has the potential of eating the entire increase in income that workers have been getting:

In reality health care costs will almost certainly level off, but if present trends continued than it really would be an issue.

Military research is not a corporate subsidy.

This statistic bugs me:

From 1943 to 1999 the U.S. government paid nearly $151 billion, in 1999 dollars, in subsidies for wind, solar and nuclear power, Marshall Goldberg of the Renewable Energy Policy Project, a research organization in Washington, wrote in a July 2000 report. Of this total, 96.3 percent went to nuclear power, the report said.

Note the starting date of that statistic. 1943. The subsidy they are claiming we gave the nuclear industry was clearly the Manhattan project. It was not until 1957 that we built our first civilian nuclear reactor. That whole period until then was almost entirely military research. Even in the time since then much of this subsidy was military research that happened to be relevant to civilian applications. This research more than payed for itself. The United States Navy operates more nuclear reactors than any other organization in the world. You are not going to power an aircraft carrier on solar and wind, so this is a damn good use of money. Also, a lot of the remaining subsidy is entirely payed for by taxes on nuclear power plants! This was particularly true of the work at Yucca mountain. You can't seriously call money taken from an industry to pay for related infrastructure a subsidy.

Even if this statistic was accurate, it is still meaningless. There are about 100 civilian nuclear reactors in America. This, clearly grossly inflated, subsidy number only works out to about a billion and a half dollars per reactor. With a mere 150 Billion dollars in government subsidies we manage to produce a fifth of our electricity. The several billion we have spent on solar still only produces four hundredths of a percent of our electricity. With a payoff as low as that it is no wonder that the government chose to support nuclear instead of solar...

I don't buy into the case that nuclear energy is uneconomical. It rests entirely on the assumption that new reactors will be many times more expensive than the old reactors. The reactors we built in the fifties through eighties have managed to not kill a single member of the public with radiation poisoning while costing a small fraction of the 10 Billion that people are projecting new nuclear will cost. We could just build duplicates of these reactors at similar prices to what was payed back then and do just fine.

This discrepancy is magnified by the fact they project the cost of the first new reactor we build. Yes the first reactor we build might be 10 Billion dollars because we have to reinvent the wheel. However all that design work can pretty much be copied exactly for dozens of future reactors. Any reasonable projection of cost for the tenth, hundredth, or thousandth reactor is significantly lower than what costs were for the existing reactors we operate. Standardized designs alone would be enough to ensure that is true.

Tricking Conservatives

This may be the funniest attempt I have ever seen to try and manipulate conservatives into believing in global warming:

Climate change linked to possible mass Mexican migration to U.S.

Of course it is complete BS. Even if we could predict the effect of global warming with sufficient accuracy to make such a prediction, demographics would kill it. This is almost certainly the end for mass Mexican immigration to America. While I am sure people will always want to come here, there has been a huge demographic shift in Mexico:

The population's annual growth rate has been reduced from a 3.5% peak, in 1965 to 0.99% in 2005. While Mexico is now transitioning to the third phase of demographic transition, close to 50% of the population in 2009 was 25 and younger. Fertility rates have also decreased from 5.7 children per woman in 1976 to 2.2 in 2006.

With a population that is no longer growing it is unlikely Mexicans will be trying as hard to get out of the country as they do now. Even if they do, there will simply be less Mexicans which leads to less immigration.