Consumer Confidence Rises, Jim Dement Blocks, Housing Flatlines

Sometimes bad news is good news. The Case-Shiller index, which tracks home prices in major metropolitan areas, was largely flat from September to October. The index had been rising for several months. While rising prices for a widely owned asset is generally good, much of our housing stock is probably at slightly more than fair value. To the extent that home prices stabilize at or below current prices levels, we are that much closer to wringing out the excess in expectations. People seem to expect some reversion to an inflated mean, when in fact we should expect prices to revert to a pre-boom norm. At this stage we want neither the stock market or the housing market to be floating above reality. People need to recognize their losses, and take them.  When the senior economist at Wells Fargo says "What may happen is that prices will plow along the bottom for a year or two," we say nonsense to that. That bottom should be considered the norm (meaning, some economically rational midpoint with prices drifting slight below it, and slightly above).

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In other happy economic news, consumer confidence is up for the second strait month, according to the Conference Board.  If we combine that with Mastercard's estimate of a 3.6% rise in holiday spending, (an excluding autos), we can find some measure of satisfaction in all of these numbers. This does not bode well for Republicans, who may be forced to re-frame the entire election picture in 2010 around terrorism (as they have done in the past).

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Other News:

• Ladies get your ya ya's out. Karl Rove, mastermind of Republican politics (and politics that included a distinctly family values message), is divorced and free to really get his rove on. Perhaps this personal situation will compel Rove to be more expansive in the types of issues advice he gives to those who hire him. While the Bible can be a great tool for helping create family values, quality policy that eases family burdens can also support family values. 

• South Carolina Senator Jim Dement blocks new TSA chief for no reason other than the nominee's undefined position on allowing TSA agents to unionize. Thankfully this does not come at a time when strangers from Africa are trying to blow up U.S. planes. Ha ha. Oh wait, yes it does.