Tuesday, February 14, 2006

Flotsam and Jetsam

Upon hearing of Vice President Cheney's shooting skills, and Mary Matalin's assertion that the Veep "didn't do anything he wasn't supposed to do", George Washington jumped out of his grave to assert, "I cannot tell a lie. The Cherry Tree jump'd in the path of my axe whilst I was chopping wood."

I wonder what might have happened had the Veep been shot by Mr. Whittington.


Are bankruptcies or perhaps more accurately mortgage defaults deflationary? As fears of an impending housing crash rise, this seems a useful question to ponder.

The history of the Great Depression and the experience of the late 80s early 90s real estate market decline informs common sense that bankruptcies are deflationary. Yet, I am not so sure, perhaps "it depends" is my best response to the question.

If my neighbor goes bankrupt and defaults on his mortgage the total level of credit declines and one additional house for sale enters the market. If someone else borrows an equal or greater amount than the defaulted mortgage to buy the house, total credit is constant or rises.

Thus I could imagine a dramatic rise in mortgage defaults which did not lead to deflation of the housing market in terms of either price or credit. The Department of Housing and Urban Development which cut its teeth, in a sense, during the S&L bailout, might be one of the means by which the housing market could be stabilized.

Obviously, the proof of the pudding is in the eating, but don't be surprised if a rise in mortgage delinquencies and defaults doesn't lead to large price declines.


Money, according to this survey, is positively correlated with happiness. Perhaps Thomas Jefferson had no need to alter John Locke's "life, liberty and estate" when listing the rights of man in the Declaration of Independence. The pursuit of property, measured in terms of income, at least in the minds of those surveyed, is synonymous with the pursuit of happiness.

One, by which is meant me, wonders how those surveyed might define happiness. This reminds me of those surveys which ask if people believe in God, to which most Americans reportedly reply, "yes." I'd love to ask the follow up, how would you distinguish believing from not believing in God, besides the simple assertion?

Running with this meme, what is happiness? Is it a state of mind we call "feeling good?" Is it that mental state characterized by greater than normal levels of serotonin? If so, happiness comes in a bottle.

I think though that Jefferson was leaning more on Aristotle than Locke when he made the change. Perhaps constrained by the English language, he couldn't use the word he meant, eudaemonia. To the ancient Greek philosophers eudaemonia wasn't a state but a process, perhaps better expressed by "flourishing" than "happiness" as Carolyn Ray argues here.

I've known quite a few people (and been one myself) who are money happy but hardly flourishing.