#1 Blogger Calculated Risk smacks down Barry Ritholtz' stupidity

here.

But of course, CR is a happytalking corporate shill that nobody needs to pay attention to.

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whoa

NDD I think this is getting just a little too personal when it should not. A margin of error is a margin of error. A window of a moving average to be statistically valid is a window. Data points are data points.

People like Kudlow and so on who spew out junk with no basis in economic reality are corporate shrills, people like Thomas Friedman, who "write" books literally dictated by corporate lobbyists and their agendas are shrills.

Then, CR has a nice post about confusing housing prices with housing starts.

But we don't want to bring the flame machine to EP. I just was over to DK today and I suspect that's the leak over.

Also, the original post housing starts fall 46%, besides some insults being directed at the financial MSM, I don't see anywhere from reading the report itself, where Ritzholtz is wrong. I mean I'm reading the same report and the statistical limitations are listed in the fine print. Way it is.

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Ritholtz responds on CR

He still disagrees, but notes CR is highly analytic, he respects these other bloggers, says so in the post, so he wasn't putting down CR, but the MSM.

7 reasaons why housing isn't bottoming.

But I don't think he's quite separated out housing starts from prices.

I also don't get why housing starts would be a drag on GDP as CR claims. It would not add to GDP but to see housing overall be > 3% of GDP means we won't be seeing real estate contributing much anytime soon. I think that was a wording issue, trying to imply housing won't add to the dramatic GDP decline.

But Ritholtz points on unemployment, wages, foreclosures is one of my own. 3.2M properties on the market due to foreclosure, I don't see how a bottom could be called with that level of additional inventory.

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One issue is the residential investment multiplier

If the multiplier effect is huge than that is where the "drag" will occur. Residential investment won't help with the "recovery" because it is extremely weak.

I think CR has been saying that when residential investment improves then growth will improve which implies that residential investment multiplier is large.

Housing starts is an indication of residential investment.

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got link?

so you're saying that somehow this factor is playing into a host of additional sectors? i.e. a host of secondary industries that may have imploded, say concrete mixers or heavy machinery for construction or say coyotes bringing across cheap labor (oops! just kidding, not!)

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Yes.

Here is a non-CR link

GDP Picture, January 31, 2007. It discusses the negative impact of residential investment on GDP.

I was thinking about a simple residential house and all of its components: concrete, lumber, drywall (non-China made), plumbing, insulation, siding, windows and doors, paint, electrical. That is a lot of stuff not to mention the labor that goes into producing the components and the labor that goes into installing it.

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thanks, this is a math head thing then

When I see "drag" I see something else, i.e. a negative value absolute, not slope, rate of change so just a terminology thing. What they are saying is valid to me.

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