From Master and Commander:

Capt. Jack Aubrey: Do you see those two weevils doctor?
Dr. Stephen Maturin: I do.
Capt. Jack Aubrey: Which would you choose?
Dr. Stephen Maturin: [sighs annoyed] Neither; there is not a scrap a difference between them. They are the same species of Curculio.
Capt. Jack Aubrey: If you had to choose. If you were forced to make a choice. If there was no other response…
Dr. Stephen Maturin: [Exasperated] Well then if you are going to *push* me…
[the doctor studies the weevils briefly]
Dr. Stephen Maturin: …I would choose the right hand weevil; it has… significant advantage in both length and breadth.
[the captain thumps his fist in the table]
Capt. Jack Aubrey: There, I have you! You’re completely dished! Do you not know that in the service…
[pauses]
Capt. Jack Aubrey: …one must always choose the lesser of two weevils.

The thing most likely to cause me to vote for Gery Chico in the Chicago mayoral primary has happened:

U.S. Rep. Danny Davis ended his bid for Chicago mayor tonight, endorsing former U.S. Sen. Carol Moseley Braun.

Davis said he is endorsing Braun in the name of unity.

“I’m proud that I will be here when Carol Moseley Braun becomes the next mayor,” Davis said. “I come here tonight…to help prove unity is more than just a concept.”

Braun said she is emboldened by the endorsements from both Davis and state Sen. James Meeks, the other major African-American candidate who dropped out of the contest last week. Braun called it a “great way to start the new year.”

In deciding for whom to vote in the primary I must determine which is the lesser weevil. Increasingly, that’s sounding like Gery Chico.

The Watcher’s Council has announced its winners for last week. First place in the Council category was my own submission, Domestic Sitrep. Fasten your seatbelts, we’re in for a bumpy ride.

First place in the non-Council category was Discriminations with Journalistic History Lessons (Or Not), an examination of Civil War history with special attention to a column by E. J. Dionne.

Also worth mentioning is that my nomination in the non-Council category, Glenn Greenwald’s The worsening journalistic disgrace at Wired came in second. What are the responsibilities of an independent journalism in a free society? I think we can differ in our answers to that question but that’s it’s an important question worthy of consideration.

You can see the full results here.

I’d wanted to comment on this. This year the National Film Registry of the Library of Congress added 25 films:

1. AIRPLANE! (1980)
2. ALL THE PRESIDENT’S MEN (1976)
3. BARGAIN, THE (1914)
4. CRY OF JAZZ (1959)
5. ELECTRONIC LABYRINTH: THX 1138 4EB (1967)
6. EMPIRE STRIKES BACK, THE (1980)
7. EXORCIST, THE (1973)
8. FRONT PAGE, THE (1931)
9. GREY GARDENS (1976)
10. I AM JOAQUIN (1969)
11. IT’S A GIFT (1934)
12. LET THERE BE LIGHT (1946)
13. LONESOME (1928)
14. MAKE WAY FOR TOMORROW (1937)
15. MALCOLM X (1992)
16. MCCABE AND MRS. MILLER (1971)
17. NEWARK ATHLETE (1891)
18. OUR LADY OF THE SPHERE (1969)
19. THE PINK PANTHER (1964)
20. PRESERVATION OF THE SIGN LANGUAGE (1913)
21. SATURDAY NIGHT FEVER (1977)
22. STUDY OF A RIVER (1996)
23. TARANTELLA (1940)
24. TREE GROWS IN BROOKLYN, A (1945)
25. TRIP DOWN MARKET STREET, A (1906)

The one’s I’ve tagged in green are those on the list that I haven’t seen. I’m somewhat embarrassed to say that I’ve seen all of the rest. Some of them, e.g. Make Way For Tomorrow, A Tree Grows in Brooklyn, I found affecting in the extreme, shocking in the case of Let There Be Light. Make Way for Tomorrow would make a stone cry. Some of them, e.g. Grey Gardens, I’m glad to have seen (especially before seeing the feature film based on it) but I wouldn’t care to see again. Some of them, e.g. It’s a Gift, I could see over and over again.

The list does bring one thing to mind: how hard it is to make a really important feature film about truly important real events.

I’d be interested in the comments of anyone who’s seen any of the highlighted pictures. I suspect that the older ones are documentaries, probably very short. Actually, I’d be interested in comments on any of the pictures in the list.

I suspect that most of you haven’t seen The Bargain. What can I say? I love silents and I’m a William S. Hart fan.

Today is a good opportunity to engage in my annual exercise in humility, evaluating how well my predictions for 2010 fared.

Things I Got Right

• Iran will not test a nuclear weapon.
• Nouri al Maliki’s government will be re-elected in Iraq.
• The Chinese will report at least 8% growth for 2010. They’re actually reporting over 9% growth.
• Pat Quinn will be elected governor of Illinois.
• Rod Blagojevich will be convicted of at least one charge.
• Housing prices as measured by the national Case-Shiller index will remain pretty flat, between -10% and 10% for the year. The actual change in the 20-city index was a decline of .8% year-on-year.
• Real GDP growth as measured by the BEA will be less than 3%.
• There will have been a substantial correction (between 1,000 and 2,000 points) in the DJIA but it will have clawed its way back to 10,000 by year’s end. There was a 1,600 point correction between May and July. I underestimated how high its recovery would be.,
• The Congress will pass a healthcare reform bill.
• The Congress will pass another stimulus package.
• The winter of 2010 will be a cold and hard one in the United States. Proponents of the idea of anthropogenic climate change will take this as proof of their views; opponents of the idea of anthropogenic climate change will take it as proof of theirs.
• 2010 will see a heightened level of at least nominally covert U. S. military activity in Pakistan, Somalia, and Yemen. One of my predictions that was too right.
• The current Iranian regime will not be overthrown.

Things I Got Wrong

• The U. S. will have more troops in Iraq and Afghanistan combined at the end of 2010 then we did at the end of 2008. It’s a little hard to ferret out these numbers but my best calculation is that we had a total of about 200,000 troops in Iraq and Afghanistan combined at the end of 2008 and we currently have about 150,000 troops in Iraq and Afghanistan combined. I’m glad to see I was wrong here. Unfortunately, we can’t take too much solace from this development. Afghanistan was always more dangerous than Iraq, i.e. greater mortality per 100,000 troops and it’s always been more expensive to maintain troops there. My back-of-the-envelope calculation suggests that the new troop levels probably mean that we’re spending about 25% more now than we were in 2008.
• No major Chicago sports team will win a championship in 2010. I really should stop making sports predictions. It’s not something I’m particularly interested in. Congratulations, Chicago Blackhawks on winning the Stanley Cup!
• The United Nations Security Council will not impose additional meaningful sanctions on Iran. I could quibble with this one on the basis of what constitutes “meaningful” but I’ll count this one as wrong. I underestimated the UNSC. I wouldn’t have thought such a thing was possible.

Things I Got Part Right

• At the end of 2010 there will be at least 60,000 U. S. soldiers in Iraq. We currently have about 50,000 U. S. soldiers in Iraq. We haven’t withdrawn completely (or even ahead of schedule) but we don’t have over 100,000 soldiers there, either. I’m giving myself partial credit for this one.
• At the end of 2010 the U. S. national unemployment rate will be at least 10%. The unemployment rate currently being reported is 9.8%. Either I underestimated the BLS’s ability to finagle the numbers with the birth/death ratio or I underestimated how quickly people would become “discouraged workers”. Close enough to claim partial credit.
• Speaking of Somalia, at least 3 oil tankers will be captured and held for ransom by pirates in that area in 2010. By my count it was two. Plus some other major non-oil tankers so I’m giving myself partial credit.

The final tally is 13-3-3. Once again that’s roughly the same as last year. However, also once again I missed some of the biggest stories of the year which are the rise of the Tea Parties and the Republicans taking control of the House.

The Case-Shiller index of housing prices released yesterday showed further declines. Interesting to note is that all twenty of the major city markets tracked show month-over-month declines in the non-seasonally adjusted figures and all but two (Denver and Washington, DC) show month-over-month declines in the seasonally adjusted figures. Calculated Risk adds:

Prices in Las Vegas are off 57.8% from the peak, and prices in Dallas only off 8.6% from the peak.

Prices are now falling – and falling just about everywhere. As S&P noted “six markets – Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to fall in 2006 and 2007”. More cities will join them soon.

The decline in housing prices is now a national phenomenon but some regions are suffering significantly more seriously than other and the reasons for the declines differ among the most-affected regions. This is not a problem amenable to a one-size-fits-all solution.

Gary Shilling makes a compelling and chilling case that we should expect an additional 20% decline overall in housing prices. I expect that most of those will prove to be regional as well with those areas that enjoyed the largest gains during the housing bubble suffering the largest declines now. Felix Salmon remarks:

No one wants to buy a house if they don’t feel secure in their job, and people don’t feel secure in their jobs if unemployment is over 9%, where it’s likely to stay for the foreseeable future. And these graphs just speak for themselves:

but points to demographic reasons to expect an eventual recovery in prices:

As for the reasons for future gains in house prices, there’s a bit of basic demographics, in that the number of households in the US is going to rise over time, and is going to outpace the amount of new homebuilding. That’s reasonable.

I think he’s misreading the demographics a bit. As I have documented here today’s 20 to 35 year-olds have lower incomes, lower levels of educational attainment, and lower income prospects than 20 to 35 year-old did 30 years ago. It takes more than numbers of hypothetical buyers to make a market. There’s got to be willingness on the part of buyers to pay a price at which sellers are willing to sell and, as I have said before, I think that the great story in housing in coming years will be a reversion to prior trend. That’s essentially what Mr. Shilling is predicting. See, particularly, this chart.

What would the implications of further declines in housing prices be? Four come immediately to mind: further declines in employment in housing construction, further declines in retail sales, further declines in total wealth (at least among those in the bottom 99% of income earners), and a higher proportion ratio of taxes to wealth (at least among the same group).

Judging by this graph courtesy of the St. Louis Federal Reserve, construction employment has fallen by two million since its peak in 2006. According to Builder a million of those were in residential construction. Further, total construction employment has fallen by a million relative to its number in 2000. About 5 million people continue to be employed in construction. How many will be affected by a further 20% decline in home prices?

There’s an intimate relationship between housing and retail sales. Not only do people who buy new houses buy more furniture, appliances, carpets, and so on than those who don’t but over the last ten years housing equity has been a substantial source of money that people used to support their lifestyle. They borrowed not only against the equity they had in their homes but against the expected future value of their homes. Lower expected future value means less money available for consumer spending.

For most people much of their total wealth is in their homes. See here for an examination of how the recession has affected wealth. A further decline of 20% would aggravate an already serious problem.

Recently, I posted some statistics that illustrated real estate taxes have risen even as property values have declined. For a further examination of this see here. Obviously, if property taxes rise and values fall the proportion of the wealth of ordinary people that’s being sucked away will rise, too.

For me the bottom line on all of this is that I simply don’t see where economic growth will come from in the coming year and I further think that people’s grouchy moods are likely to persist. And will be understandable.

While I’m on the subject of BP. In the aftermath of the Deep Horizon blowout BP’s CEO Tony Hayward left the company, i.e. was fired, with a severance package of more than $18 million.

Among the wealthy there is some level of earnings at which it’s no longer about the money, at least not about what the money can buy. Money becomes merely a way of keeping score.

Although he’s left BP, Mr. Hayward remains a director of the Corus Group and of Tata Steel.

Actions taken on his watch cost the company of which he had stewardship an estimated $40 billion. We won’t know what the final costs are for decades.

Was Mr. Hayward a winner or a loser? What would the appropriate penalty be for what happened on his watch? None? Is losing the CEO job at BP sufficient penalty?

You might want to take a look at Tim Harford of the Financial Times’s summary of 2010 in just eight slides (three columns per slide). One of the most astonishing to me had the following numbers on it: China emitted 6,921m tons of CO₂ over the last year (significantly more than in 2009); the U. S. emitted 5,648m tons (somewhat less than in 2009). China’s amount of increase far exceeds any amount by which we could reasonably be expected to cut back.

There’s also a column that illustrates in numbers how incredibly foolhardy BP was. Check it out.

While I’m on the subject of old bones, there’s another recent paleoanthropological find that could throw the prevailing theory of human origins into a cocked hat:

Teeth found near Rosh Ha’ayin, Israel, have been dated older than any other homo sapiens previously uncovered in Africa. Until now, remains of humans from only 200,000 years ago have been found in Africa, and the accepted approach has been that modern man originated on that continent.

The cave was uncovered in 2000 by Prof. Avi Gopher and Dr. Ran Barkai of Tel Aviv University (TAU) Institute of Archaeology. Later, Prof. Israel Hershkowitz of the Department of Anatomy and Anthropology at TAU’s Sackler School of Medicine and an international team of scientists performed a morphological analysis on the teeth found in the cave.

The Qesem Cave is dated between 400,000 and 200,000 years ago, and archaeologists working there believe that the findings indicate significant changes in the behaviour of ancient man. This period of time was crucial in the history of mankind from cultural and biological perspectives, and the fact that teeth of modern man were discovered indicates that these changes were apparently related to evolutionary changes taking place at that time, the researchers maintained.

The significance of these findings, as noted above, is that, if the dating on them holds, they predate the oldest anatomically modern human remains found in Africa. That in turns casts the theory that modern humans spread from Africa and spread from there into some doubt. A lack of evidence can do that.

However, Africa’s substantial human genetic diversity makes me wonder if older human remains aren’t lurking there somewhere, possibly buried somewhere in the forbidding Sahara.

A guest poster at naked capitalism puts forth the case that the present economic downturn is more severe than the Great Depression of the 1930s:

So even though the government’s spending on the “war” on the economic crisis dwarfs the amount spent on the New Deal, our economy is still stuck in the mud.

Given that the government has done so much, but we are still mired in a situation which in many ways is comparable to the Great Depression, it is not a very radical statement to say that the government is doing the wrong things to address the downturn.

I can’t honestly say whether the situation today is better, worse, or about the same as the Depression of the 1930s. I wasn’t there. Many of the things I’m seeing around me are eerily reminiscent of what I’ve heard about that period. For example, after graduating from law school my dad couldn’t get a job as a lawyer until several years after he’d passed the bar. Unpaid internships (which benefit the wealthy) were a commonplace way of getting your foot in the door.

I don’t think we can blame the actions of the last couple of years or even the last decade for the fix we’re in. We’ve been making this bed for the better part of the last forty years.

Read the whole thing. Pretty chilling stuff.