Definition of classy

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http://www.bayarea.com/mld/mercurynews/sports/5739079.htm

Posted on Tue, Apr. 29, 2003
Shining moment for Cheeks and 13-year-old girl made us proud
BY BILL LYON
Knight Ridder Newspapers

PHILADELPHIA -(KRT) – There she stood at center court, this little girl with the big, big voice, poised for the moment of a lifetime, the house lights dimmed, 20,000 people waiting expectantly for her, 20,000 people ready to hear her sing . . .

. . . and the words wouldn't come.

They lodged in her throat and couldn't be budged, no matter how mightily she strained. It was the song she knew by heart, the one she had heard a million times, the one she had sung over and over and over, the very one that she had rehearsed in a dressing room perfectly – every single run-through dead solid perfect – only minutes before, for heaven's sake. But now the words all tumbled over each other, crazy-quilted in a jumbling, confusing mish-mash:

“rocket's last gleaming … twilight's red glare … flag's not there … oh say can you see … yet wave . . .

She wanted to disappear, of course. She wanted the floor to open up and swallow her. Or a spaceship to beam her up and carry her off. Natalie Gilbert, a 13-year-old eighth grader, was living the nightmare each of us, in moments of morbid, fearful imagining, has conjured.

And then, suddenly, silent as a shadow, he was there, standing beside her, his left arm protectively, comfortingly around her, and he was whispering the forgotten words and she began to nod her head – “yes, yes, I remember now – and she began to mouth the words, and then he started to sing them, softly, and she joined in, hesitantly at first, but with a growing confidence, and soon they were a duet, and he was urging the crowd on with his right hand, and soon the duet had 20,000 back-ups, 20,000 people singing partly out of relief, partly out of compassion, partly out of pride, and rarely has the national anthem of the United States of America been rendered with such heartfelt gusto.

It was a glorious, redemptive moment.

Surely, you thought, sport has never been grander.

In fact, it says here that, for all the acrobatic, aeronautic, pyrotechnic, cruise-o-matic moments that the NBA playoffs have presented to us thus far this spring, all pale in comparison to the night of April 25, in the Rose Garden in Portland, Ore., shortly before the Trail Blazers met the Dallas Mavericks in the third game of their series.

That is when Maurice Cheeks, once the quintessential point guard, selfless and without ego and pretense, for many meritorious seasons a 76er, and most recently the coach of the Blazers, came to the rescue of Natalie Gilbert.

“I don't know why I did it,” he said. “It wasn't something I thought about. It's one of those things you just do.”

Except, of course, no one else thought to do it.

Everybody else did precisely what most of us would do in such a situation – study the ceiling, develop a sudden interest in our shoes, shift from side to side, paralyzed, frozen to the spot, embarrassed for the little girl, empathizing furiously, wishing desperately it would all end: “Please, let her remember the words. Please. Somebody do something.''

Maurice Cheeks, himself a father, did what all fathers, and grandfathers, too, in moments of heroic reverie, dream they would do. He tried to make the world go away.

Seeing as how his team was one loss away from elimination, he might have been expected to have other things on his mind than a junior high school girl who had won a contest to sing “The Star-Spangled Banner” before tip-off of the most crucial game of the year.

And yet, there he was, not sure how exactly, walking to center court. And once there, this thought stabbed him:

“I wasn't sure whether I knew the words myself,” he said, laughing.

“I just didn't want her to be out there all alone.”

For those of us who chronicled Maurice Cheeks during his tenure in Philadelphia, what he did was totally in character. The man was never the self-absorbed prima donna so many have become. He played a spare, bare-bones, beautifully economical game, and wanted very much to disappear as soon as the game was over. He had no more a desire for the spotlight than he did for flamboyance on the court.

The best point guards are sharers and protectors and soothers. The best of them understand how to get the ball to the right people in the right place at the right time. The best of them watch out for everybody else.

Maurice Cheeks is still a point guard at heart.

The Trail Blazers haven't given Portland much to be proud of. It is a dysfunctional team, full of head cases and temperamental malcontents. But in one impromptu moment, Maurice Cheeks gave everyone a reason to be proud.

It has become a touchstone, this act of compassion. There isn't a TV network that hasn't played snippets of the coach coaching the little girl singing the anthem.

There is a reason so many want to show it, to write of it, to celebrate it. Because it resonates so, because it strums one of our most emotional chords, because it reminds us of the stirring capabilities of the human spirit.

“I guess,” Maurice Cheeks said, a bit uncomfortable at the thought, “it has become a moment.”

Oh, yes. Yes, it has.

One shining moment.

Of grace.

© 2003, The Philadelphia Inquirer.

Visit Philadelphia Online, the Inquirer's World Wide Web site, at http://www.philly.com

Distributed by Knight Ridder/Tribune Information Services.

Codd, relational database inventor, dead at 79

From JerryKindall.com:

“…Although you may not realize it, you use technology based on the theories of Edgar F. “Ted” Codd every day. Codd developed the theoretical underpinnings of the relational database in a series of papers published by IBM (his employer at the time) in the 1970s. IBM, however, was not interested in a radical departure from what they were already doing with databases, and it took a guy named Larry Ellison to turn Codd's theories into a product, which eventually was called Oracle.

In 1981, Codd received the Turing Award for his work.

Born in Portland, England, Codd spent most of his professional life in the United States. He died April 18 at the age of 79…”

Princess Navina Visits Malvolia

Books for capitalist tots:

Princess Navina Visits Malvolia

The first book of the series describes a country (Mal=evil, volio=wish) where the rulers seek “the greatest misery for the greatest number.” To this end, they have adopted policies to undermine economic incentives, destroy families, weaken character, and increase social tension. The crowning achievement of the politicos is a “prosperity fine,” a punishment levied on citizens for earning money. And–you guessed it–the fine is proportional: the more you earn, the higher the fine. The whole idea is to discourage people from working, saving, investing–an excellent foundation for misery. Readers will thank their lucky stars that they live in a country where politicians seek to help, not hurt, citizens!

Endorsed by Gordon Tullock!

Legal question?

A good friend of mine worked as an architect at a firm in upstate New York. She recently submitted her resignation to go work for another firm in the area. According to her…

“…I had a shit-load of trouble resigning at work. A week after I resigned they fired me and are refusing to pay me claiming that I still have office supplies and files. They can search my house, car there's nothing. I have nothing of theirs. Its been a really rough 3 days. They've threatened to arrest me, they even called a police officer to talk to me the day they fired me. Basically they don't want to pay me my weeks vacation and they are trying to scare me….”

I told her she should keep a diary of events, write down names, times, locations, etc. to document any of her interactions with her former employers. What would you recommend that she do beyond this?

Bill Waterson's only interview

Bill Waterson, creator of Calvin and Hobbes, is a very private person. Calvin and Hobbes at Martijn's, a website devoted to the strip, could only find one known interview he gave:

n interview from “Honk” magazine #2, January 1987, with Bill Watterson, the creator of Calvin and Hobbes on cartooning, syndicates, Garfield, Charles Schulz, and editors.

Thanks a lot to Alex from Germany for sending me additional info regarding this interview, and sending the coverscan displayed on the right of this page. Click the image to view the large version.

When Calvin and Hobbes hit the nations funny pages in late 1985, it took everybody by surprise. A literate comic strip? By a guy who can draw? About a kid who acts like a real kid? And it's funny? And it's from a major syndicate!? The cognoscenti of the graphic narrative form thought they'd died and gone to comic strip heaven.

But its true. Against heavy odds, one man with a lot of determination and a fierce sense of his craft may have single-handedly given the strips a new lease on their artistic life. It's been a struggle, but Bill Watterson, like his creation, is the real thing at last.

Andrew Christie: Let's start with the basics: when, where, why, and how?
Bill Watterson: Well, I don't know how far back you want to go; I've been interested in cartooning all my life. I read the comics as a kid, and I did cartoons for high school publications — the newspaper and yearbook and so on. In college, I got interested in political cartooning and did political cartoons every week for four years at Kenyon College in Gambier, Ohio, and majored in political science there.
Christie: All in Ohio?
Watterson: Yes. I grew up in Chagrin Falls, Ohio.
Christie: What kind of time frame are we talking about?
Watterson: I was born in 1958; we moved to Chagrin when I was 6, so from the first grade on, really. My whole childhood was in Chagrin Falls. Right after I graduated from Kenyon, I was offered a job at the Cincinnati Post as their editorial cartoonist in a trial six month arrangement. The agreement was that they could fire me or I could quit with no questions asked if things didn't work out during the first few months. Sure enough, things didn't work out, and they fired me, no questions asked.
Christie: What was the problem?
Watterson: To this day, I'm not completely sure. My guess is that the editor wanted his own Jeff MacNelly (a Pulitzer winner at 24), and I didn't live up to his expectations. My Cincinnati days were pretty Kafkaesque. I had lived there all of two weeks, and the editor insisted that most of my work be about local, as opposed to national, issues. Cincinnati has a weird, three-party, city manager-government, and by the time I figured it out, I was standing in the unemployment lines. I didn't hit the ground running. Cincinnati at that time was also beginning to realize it had major cartooning talent in Jim Borgman, at the city's other paper, and I didn't benefit from the comparison.
Christie: I'm not familiar…
Watterson: He's syndicated through King Features, and had been for a couple years by the time I arrived in Cincinnati. This is an odd story. Borgman graduated from Kenyon Collage the year before I went there, and it was his example that inspired me to pursue political cartooning. He had drawn cartoons at Kenyon, and landed his job at the Cincinnati Enquirer right after graduation. His footsteps seemed like good ones to follow, so I cultivated an interest in politics, and Borgman helped me a lot in learning how to construct an editorial cartoon. Neither of us dreamed I'd end up in the same town on the opposite paper. I don't know to what extent the comparison played a role in my editor's not liking my work, but I was very intimidated by working on a major city paper and I didn't feel free to experiment, really, or to travel down my own path. I very early caught on that the editor had something specific in mind that he was looking for, and I tried to accommodate him in order to get published. His idea was that he was going to publish only my very best work so that I wouldn't embarress the newspaper while I learned the ropes. As sound as that idea may be from the management standpoint, it was disastrous for me because I was only getting a couple cartoons a week printed. I would turn out rough idea after rough idea, and he would veto eighty percent of them. As a result I lost all my self-confidence, and his intervention was really unhealthy, i think, as far as letting me experiment and make mistakes, and become a stronger cartoonist for it. Obviously, if he wanted a more experienced cartoonist, he shouldn't have hired a kid just out of college. I pretty much prostituted myself for six months but I couldn't please him, so he sent me packing.
Christie: Well, it was mercifully brief, then.
Watterson: Yeah, in a way it was; and actually, I think the experience — now, in hindsight — was probably a good thing. It forced me to consider how interested I was in political cartooning. After I was fired, I applied to other papers but political cartooning, like all cartooning, is a very tough field to break into. Newspapers are very reluctant to hire their own cartoonists when they can get Oliphant or MacNelly through syndication for a twentieth of the price.
So I wasn't having any luck getting accepted anyway and it forced me to re-examine what it was that I really wanted to do. In my experience in political cartooning, I was never one of those people who read the headlines and foams at the mouth with rabid opinion that I've just got to get down on paper. I'm interested in the issues but…I don't know…I guess I just don't have the killer instinct that I think makes a great political cartoonist. I'd always enjoyed the comics more, and felt that as long as I was unemployed it would be a good chance to pursue that and see what response I could get from a syndicate, as I didn't have anything to lose at that point. So I drew up a comic strip — this was in 1980 — and sent it off and got rejected. I continued that for five years with different comic strip examples 'til finally Calvin and Hobbes came together. But it's been a long road.
Christie: Were you submitting different strips to different syndicates, or did you go after one syndicate?
Watterson: I didn't know a lot then — and don't know a lot now — as to what the best way to do this is, but my procedure was I would draw up the submission — a month's worth of strips, made to look as professional as I could, and send copies to the five major syndicates, and then just sit around and wait for their rejection letters. I would then try to see if I could second guess them or imagine what they were looking for that I could put in my next say, I'm not convinced that that's the best way to go about it. Trying to please the syndicates was pretty much the same as what I had ended up doing at the Cincinnati Post, and I don't think that's the way to draw your best material. You should stick with what you enjoy, what you find funny — that's the humor that will be the strongest, and that will transmit itself. Rather then trying to find out what the latest trend is, you should draw what is personally interesting.
Christie: So after five years you just quit doing what you'd been doing and did what you wanted to do?
Watterson: It was a slow process, and actually what happened is another odd coincidence. One of the strips I'd sent had Calvin and Hobbes as minor characters. Calvin was the little brother of the strip's main character, and Hobbes was like he is now, a stuffed tiger that came to life in Calvin's imagination. One of the syndicates suggested that these two characters were the strongest and why didn't I develop a strip around them? I had thought they were the funniest characters myself, but I was unsure as to whether they could hold their own strip. I was afraid that maybe the key to their wackiness was the contrast between them and the more normal characters in the rest of the strip. I wasn't sure Calvin and Hobbes would be able to maintain that intensity on their own. But I tried it, and almost immediately it clicked in my mind; it became much easier to write material. Their personalities expanded easily, and that takes a good 75 percent of the work out of it. If you have the personalities down, you understand them and identify with them; you can stick them in any situation and have a pretty good idea of how they're going to respond. Then it's just a matter of sanding and polishing up the jokes. But if you've got more ambiguous characters or stock stereotypes, the plastic comes through and they don't work as well. These two characters clicked for me almost immediately and I feel very comfortable working with them. That syndicate, oddly enough, declined my strip, so I started sending it around. Universal expressed an interest in it and wanted to see more work, so I drew another month's worth of art, sent that to them, and they decided to take it.
Christie:That's rather ironic: The syndicate that suggested you bring out those two characters rejected the strip?
Watterson: Yeah.
Christie: Who was this?
Watterson: Well, if you want to rub their noses in it, it was United Features. I was sort of mystified when they rejected the strip. They had given me a development contract, which meant I was to work exclusively with them and rather than completing everything on my own and turning it in to them and having it rejected or accepted, I was working much more directly with the syndicate, turning in smaller batches much more frequently, and getting comments on them. The idea was that they would help me develop the strip and then, assuming that they liked it, it would flow into a normal contract for syndication. I'm not sure exactly what happened; I gather that the sales staff didn't have much enthusiasm for it, I don't know–but apparently they couldn't convince enough people there in high places.
Christie: I would guess, and I don't know if you share this opinion, but there is probably considerable resistance to a strip that doesn't have a lot of immediate, apparent marketing potential.
Watterson: I think United really looks for the marketing more than some of the other syndicates, and they saw Hobbes as having marketing potential, so I don't think that was it. I was later offered the chance to incorporate Robotman into my strip. There they had envisioned a character as a product–toy lines, television show, everything–and they wanted a strip written around the character. They thought that maybe I could stick it in my strip, working with Calvin's imagination or something. They didn't really care too how much I did it, just so long as the character remained intact and would be a very major character…And I turned them down. It really went against my idea of what a comic strip should be.
I'm not interested in slamming United Features here. Keep in mind that at the time, it was the only syndicate that had expressed any interest in my work. I remain grateful for their early attention. But there's a professional issue here. They told me that if I was to insert Robotman into my strip, they would reconsider it, and because the licensing was already in production, my strip would stand a better chance of being accepted. Not knowing if Calvin and Hobbes would ever go anywhere, it was difficult to turn down another chance at syndication. But I really recoiled at the idea of drawing somebody else's character. It's cartooning by committee, and I have a moral problem with that. It's not art then.
Christie: I've never heard of anything like that before.
Watterson: Yea, well, I think it's really a crass way to go about it–the Saturday morning cartoons do that now, where they develop the toy and then draw the cartoon around it, and the result is the cartoon is a commercial for the toy and the toy is a commercial for the cartoon. The same thing's happening now in comic strips; it's just another way to get the competitive edge. You saturate all the different markets and allow each other to advertise the other, and it's the best of all possible worlds. You can see the financial incentive to work that way. I just think it's to the detriment of integrity in comic strip art.
Christie: It may be good business but it would be unfortunate to see that catch on.
Watterson: Yeah, I don't have a lot of respect for that.
Christie: Well, enough of this depressing stuff; let's talk about Calvin and Hobbes.
Watterson: Okay.
Christie: Is there a Calvin?
Watterson: A real one? No.
Christie: Is he in some way autobiographical?
Watterson: Not really. Hobbes might be a little closer to me in terms of personality, with Calvin being more energetic, brash, always looking for life on the edge. He lives entirely in the present, and whatever he can do to make that moment more exciting he'll just let fly…and I'm really not like that at all.
Christie: You manage a lot of complex shifts between fantasy and reality; between Hobbes as a stuffed tiger and a real-life playmate. He's frequently involved in what is apparently the real world, doing real things together with Calvin that he couldn't possibly be doing. Do you think that kind of thing out in advance or does it just come to you when the gag calls for it?
Watterson: Could you name something specifically? I'm not sure I follow.
Christie: Well, when they're driving down the mountain in their wagon and flying all over the place. You think, after reading the first few strips, that you've got the idea; that this is a stuffed tiger and when he and Calvin are alone he becomes real–to Calvin–but then, obviously, when they're doing things like that in the real world, he has to be more than fantasy.
Watterson: Yeah, it's a strange metamorphosis. I hate to subject it to too much analysis, but one thing I have fun with is the rarity of things being shown from an adult's perspective. When Hobbes is a stuffed toy in one panel and alive in the next, I'm juxtaposing the “grown-up” version of reality with Calvin's version, and inviting the reader to decide which is truer. Most of the time, the strip is drawn simply from Calvin's perspective, and Hobbes is as real as anyone. So when Calvin is careening down the hillside, I don't feel compelled to insert reminders that Hobbes is a stuffed toy. I try to get the reader completely swept up into Calvin's world by ignoring adult perspective. Hobbes, therefore, isn't just a cute gimmick. I'm not making the strip revolve around the transformation. The viewpoint of the strip fluctuates, and this allows Hobbes to be a “real” character.
Christie: It has a lunatic internal consistency.
Watterson: Yeah, I guess that's the best way of putting it.
Christie: Are you familiar with Krazy Kat?
Watterson: Yes! I love it; I wish I thought that that kind of work were possible today.
Christie: Well, it sounds like it is. George Herriman didn't need to justify his reality, either.
Watterson: Yeah, I agree on that point. I mean the bizarre dialect, the constantly changing backgrounds…In the first place, I don't know who would put enough energy into their work anymore to do something like that; secondly, and probably more importantly, comic strips are being printed at such a ridiculous size that elimination of dialogue and linework is almost a necessity and you just can't get that kind of depth. I think of Pogo, another strip that had tremendous dialogue and fantastic backgrounds…Those strips were just complete worlds that the reader would be sucked into. For a few moments a day we could live in Coconino County; the whole thing was entirely there. The dialogue was part of it, the backgrounds were part of it, the characters were off-beat…and you need a little space and time to develop that sort of thing. I know for a fact that nobody's doing it now and I don't know that anybody will do it. Garry Trudeau is the only cartoonist with the clout to get his strip published large enough to accomodate extended dialogue. It's a shame.
Christie: Well, let's talk about your peers for a bit.
Watterson: You're gonna get me in trouble.
Christie: No, no; you can say anything you want.
Watterson: Yeah, that's what's going to get me into trouble.
Christie: What about Gary Larson?
Watterson: I really like the lunacy of The Far Side. It's a one-panel strip so it's a slightly different animal than a four-panel strip like mine. I don't really compare one-panel strips to four-panels strips because there are different opportunities with each. Larson's working with one picture and a handful of words, and given that, I think he's one of the most inventive guys in comics. The four-panel strip has more potential for storyline and character involvement than just a single panel. But I do enjoy his stuff a lot.
Christie: What about Jim Davis?
Watterson: Uh…Garfield is…(long pause)…consistent.
Christie: Ooo-kay…
Watterson: U.S. Acres I think is an abomination.
Christie: Never seen it.
Watterson: Lucky you. Jim Davis has his factory in Indiana cranking out this strip about a pig on a farm. I find it an insult to the intelligence, though it's very successful.
Christie: Most insults to the intelligence are. Well, how about the old school, are they holding up their end at all? Johnny Hart? Charles Schulz…?
Watterson: That's an interesting question. I have a tremendous amount of respect for Peanuts. Every now and then I hear that Peanuts isn't as funny as it was or it's gotten old or something like that. I think what's really happened is that Schulz, in Peanuts, changed the entire face of comic strips, and everybody has now caught up to him. I don't think he's five years ahead of everybody else like he used to be, so that's taken some of the edge off it. I think it's still a wonderful strip in terms of solid construction, character development, the fantasy element…Things that we now take for granted–reading the thoughts of an animal for example–there's not a cartoonist who's done anything since 1960 who doesn't owe Schulz a tremendous debt.
Johnny Hart; I admire the simplicity, the way he's gotten that strip down to the bare essentials; there's nothing extraneous in the drawing, and the humor is very spartan. It doesn't grab me, though, because I look for real involvement with characters, and the characters in B.C> are pretty much interchangeable; they're props for humor. I think his style of humor is mostly in words, not in the characters. I look to strips like Peanuts, where you're really involved with the characters, you feel that you know them. I guess that's why I don't enjoy B.C. quite as much. It's better than many, though.
Christie: A lot of golf jokes.
Watterson: Yeah, yeah. I don't know, it's hard to knock a strip that bangs out a solid joke every day, but I'd like to think more comic strips could be pushing the boundaries. A lot of comic characters are flat and predictable, and a lot of jokes are no more than stupid puns. For most readers, sure, that passes the mustard, but it certainly doesn't take full advantage of a remarkably versatile medium. I'd like to see cartoonists measuring their work by higher standards than how many papers their strips are in and how much money they make. With four panels, the cartoonist has the opportunity to develop characters and storylines. It can be like writing a novel in daily installments. That's where the potential of the medium is, and I see very few cartoonists taking advantage of it. Peanuts does it. Bloom County, Doonesbury, and For Better Or For Worse and others, and that's more or less it. These strips have heart, and an involvement with the characters, so that they're more than just props to relate a gag. We read about them and sort of through the life with them. I think that's taking the strip to a deeper and more significant level. The strips I admire go farther than a gag a day, and take us into a special world.
Christie: Would it be the accurate to call Charles Schulz the major influence on you?
Watterson: Oh yeah. As a child, especially, Peanuts and Pogo were my two biggest influences.
Christie: Did you ever see any of Percy Crosby's Skippy?
Watterson: No, never did.
Christie: There are some interesting similarities.
Watterson: I've had a couple of people write in comparing my work to Barnaby by Crockett Johnson, and that's another strip I've never seen. Or rather, with both of those I think I've seen one or two strips in anthologies, but I've never seen the work at any length.
Christie: I believe Dover is reprinting two books worth of Barnaby in the next few months. That would be worth your picking up. Also Harold and the Magic Crayon.
Watterson: I remember that. The drawings don't interest me a great deal, but I should look it up just to see what the fuss is about.
Christie: Do you see yourself doing this forever?
Watterson: I'd like to, yeah, if the market will bear it.
Christie: Calvin and Hobbes exclusively?
Watterson: Yeah, I'm really enjoying the work. I feel that the characters have a lot of potential. I'd like to have the opportunity to draw this strip for years and see where it goes. It's sort of a scary thing now to imagine; these cartoonists who've been drawing a strip for twenty years. I can't imagine coming up with that much material. If I just take it day by day, though, it's a lot of fun, and I do think I have a long way to go before I've exhausted the possibilities.
Christie: Do you think you'll ever need a ghost?
Watterson: No, that's against what I believe about comic strips. In fact, I'd go even further and say I don't think a strip should ever be continued after the death or retirement of a cartoonist.
Christie: Well, you know, a lot of the very good ones used assistants.
Watterson: Yeah, Pogo did. Schulz has a good comment on that: “It's like Arnold Palmer having someone to hit his chip shots.” I spent five years trying to get this stupid job and now that I have it I'm not going to hire it out to somebody else. The whole pleasure for me is having the opportunity to do a comic strip for a living, and now that I've finally got that I'm not going to give it away. It also gives me complete creative control. Any time somebody else has their hand in the ink it's changing the product, and I enjoy the responsibility for this product. I'm willing to take the blame if the strip goes down the drain, and I want the credit if it succeeds. So long as it has my name on it, I want it to be mine. I don't know, if you don't have that kind of investment in it…I guess that's the difference between looking at it as an art and looking at it as a job. I'm not interested in setting up an assembly line to produce this thing more efficiently. There are certainly people who could letter the strip better than I do; I don't enjoy lettering very much, but that's the way I write and that belongs in the strip because the strip is a reflection of me. If cartoonists would look at this more as an art than as a part time job or a get-rich-quick scheme, I think comics overall would be better. I think there's a tremendous potential to be tapped.
Christie: Speaking of creative control, do you ever have a problem with an editor or the syndicate sending a strip back and saying you're using big words, or you're getting political…?
Watterson: Universal is really good about that. I send in roughs to the syndicate, which they okay or veto. If the rough is okayed, I ink it up. I understand this arrangement will continue for the first year or two while I get on my feet. Unlike the other places I've worked, though, Universal seems to have some basic respect for what I'm trying to do. Sometimes they'll axe a strip idea I kind of liked–that's inevitable when you judge something as subjective as humor–but they're not altering things, or telling me what to do instead. Either a joke is okay as I have it, or it's rejected, and I've never argued about a decision yet. At the other syndicate, I'd hear, “this is funny, but it's too wordy,” or “simplify the drawings.” That's interfering with the craft. And if you give a little credit to the concept of the artist, I think you ought to indulge excesses a bit, because that reflects the personality of the writer. Now if a joke is in bad taste or it's not funny, okay, that's a whole different thing, but how you craft a joke is really what the writer's job is, and I don't think that technique should be subject to any editorial constraints, and Universal has been tremendous about that.
Christie: So you actually have to draw up more than seven strips a week?
Watterson: Yeah…unless they're all really great.
Christie: How much time do you put in?
Watterson: I've never really measured it out. Obviously the great thing about this job is the complete freedom of the schedule. So long as I meet the deadline, they don't care when I work or how I work. Sometimes I work all day if I'm under a crunch; I take a day off here and there if I have something else pressing or if I'm just tired of what I'm doing…so I don't know, I've never sat down to quantify how many hours I actually spend on the strip. I use the deadlines to estimate my progress; each month I know that I have to produce so many strips, and by the end of the month I'll make sure that I have.
Christie: When you sit down at the drawing table, though, do you do one at a time or just keep going–?
Watterson: I write separately from the inking up. I'm sure this varies from cartoonist to cartoonist; I find that the writing is the hard part and the drawing is the fun part. I like to separate the two so I can give my full attention to one or the other. Writing it, I'll sit down and stare into space for an hour and sometimes not come up with a single decent idea, or sometimes no idea at all, and it's very tempting to go do something else or just draw up a strip, but I find that if I make myself stick to it for another hour I can sometimes come up with several good ideas. And when I get to the drawing, I really enjoy taking a big chunk of time and working on the drawing and nothing else. That allows me to make sure that I'm really challenging the art, making each picture as interesting as I can…stick in a close-up or an odd perspective. This way, the writing doesn't distract me while I'm drawing and vice versa. I can devote my full attention to each.
Christie: Is that original artwork available to your admirers? Say, people who interview you for prestigious national magazines?
Watterson: No, I've decided not to sell or give any of it out. Don't feel slighted.
Christie: No, no. I would only make such a request because in my opinion, and in the opinion of just about everybody I know, what you're doing is the best stuff in the papers.
Watterson: Thank you very much; it's gratifying to hear that from people who care about comic art. I never know what to make of it when someone writes to say, “Calvin and Hobbes is the best strip in the paper. I like it even more than Nancy.” Ugh.
Christie: That's Andy Warhol's favorite strip.
Watterson: Oh, well, that would figure. Maybe he's the nut writing me.

God loves lesbians

Eugene Volokh in his post titled SO WHAT'S THE PROBLEM WITH LESBIANISM? notes:

“…As someone once put it, if AIDS shows that God believes homosexuality deserves punishment, then the lower incidence of AIDS among lesbians shows that God must really love lesbian…”

Nifty Marketocracy feature

Hey, I just discovered a nifty new Marketocracy feature. (As some of you may know, I work for Marketocracy.com We run a stock market simulation in which our members can create virtual mutual funds. The trades and holdings of the top 100 members on the site are mirrored by the real money mutual fund, MOFQX.)

If you create a fund on the site, you can cut and paste the graph of the fund into a message board, like so:

Note that this is a dynamic graph–as your fund ages, the chart will be automatically updated. The red line is Nasdaq, the orange line is the Dow, the green line is the S&P500, and heavy purple line is my fund, the Iron Books Value Fund. Sigh. Note to self: next time, be more careful about investing in a bankrupt company.

The Nation of San Francisco

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/04/20/IN296671.DTL

Secession!
Why stick around? The Bay Area is already a nation unto itself

G. Pascal Zachary Sunday, April 20, 2003

The German computer scientists were talking heatedly about the war in the lobby of a University of California research lab where I was a visitor. I listened to them with curiosity because the government of Germany has condemned the U.S. campaign against Iraq, earning it the enmity of official Washington.

The German geeks casually told one another (in English) how friends back home kept phoning them, nervously asking about their safety, as if they expected a German to be lynched every day on Main Street for disloyalty to the American cause.

“I tell my friends I'm safe in the Bay Area,” one German said. “People here even apologize to me for what Americans are doing in Iraq. They say they are sorry.”

“Berkeley isn't America, and neither is San Francisco or Oakland,” a second German added. A third interjected, “I don't think I would live anywhere else.”

Listening to the conversation, I felt glad to be a resident of the Bay Area,

a place I've called home for 25 years. I told the geeks that in Omaha, Cleveland, Dallas, Los Angeles or even my native New York City they might be assailed by Americans who now view Germans as an enemy because of the German government's opposition to the war. But in much of the Bay Area, I said, Germans are moral heroes, standing up in favor of enlightened cosmopolitanism and against U.S. militarism in a manner that exposes the shallowness of President Bush's simple maxim, “You are either for us or against us.”

The views of these Germans — and my own views of official American power –

are heretical in America, highlighting the wide gulf between the iconoclastic Bay Area and the rest of the United States. This gulf, always present, seems more intensely felt now. There are no American flags waving on my street, or any of the streets I pass each morning when I bring my children to school.

A recent Field Poll notwithstanding, the people of the Bay Area seem more deeply opposed to the war on Iraq than anywhere else in the United States. Elsewhere in the country — say, in New York City or Washington, D.C. — critics of our government strive to be viewed as “responsible.” In the Bay Area, dissenters are idealistic, stubborn, unpredictable — and often seem irresponsible to the rest of the nation. Remember the vomit protest earlier this month? In Bay Area terms, it was an example of inspired street theater, but the rest of the country saw it as completely weird.

Of course, San Francisco, Oakland and Berkeley are cities full of weirdos –

misfits who relish turning respectable behavior upside down. Not surprisingly,

the anti-war movement is fractious in the Bay Area. Rather than presenting a “responsible” alternative to Bush's war — say, for instance, by calling for hard sanctions, but no invasion of Iraq — dissenters here are more likely to question the entire project of decapitating Saddam Hussein, pointing out that some of our closest allies (Pakistan, Israel) already have secretly acquired nuclear weapons and that the United States helped build Iraq's military arsenal in the 1980s when the country went to war against our archenemy Iran.

Bay Area people are more willing to accuse Bush of rank disloyalty, for selfishly trying to improve his re-election chances by going to war with Iraq in order to distract attention from the government's failure to smash al Qaeda.

Dissenters here see the illogic of capitalism at play in the world, the drive for oil and profits coloring the government's behavior rather than Bush's self- professed obsession with bringing freedom and democracy to the Arab world.

By raising uncomfortable questions about the “American empire,” Bay Area people guarantee their marginalization in what passes for the national conversation. Being ignored hurts. One of my closest friends, a veteran Democratic activist, badly wants to engage the body politic on the issue of Bush's failed diplomacy, but he gets nowhere. “I've never felt more out of step with the rest of America,” he tells me.

Join the club. No one is listening to people in the Bay Area. No one ever listens, actually. The Bay Area is out of sync with the United States on every political metric. Indeed, the people of the Bay have more in common politically and culturally with the geeks from Germany. Bay Area politicos would fit comfortably under the rubric of European “social democrats,” favoring a humane welfare state, multilateralism and a ban on offensive military force. Yet in the skewed political structure of America — where minority political parties are effectively silenced at the national level by the country's winner-take-all system — the distinctive voice of the Bay Area vanishes into thin air.

Unlike Germany, where the minority Green Party has a stake in the ruling administration, there is no left-liberal party on the national scene. Ralph Nader may have grabbed enough votes to tilt the last presidential election in Bush's favor, yet he has no role in national government — not in Congress, the administration or even in a federal agency.

The Nader saga illustrates the dilemma of Bay Area “social democrats.” We are, like children in an English novel, not to be seen nor heard.

I wish to propose an immodest remedy for this sorry situation: We, the people of the Bay Area, need to leave the United States. We are held prisoner by a foreign power, colonized by an alien civilization. We require cultural and social self-determination. We demand, in short, a declaration of independence — and our own nation.

I realize that my suggestion is a delicious fantasy. Americans since Jefferson have been attracted to the myth of the sturdy individual, the self- reliant small town. For alternative thinkers, “small is beautiful” remains a rallying cry. While American pluralism allows for experimentation on the state and local level, for some more radical autonomy is desirable. The historian Arthur Schlesinger bemoaned in the 1990s “the disuniting of America,” but radicals see the United States as too big, too unified, too homogeneous. Independence is a rational response to a loss of identity.

In the 1970s, the social thinker Ernest Callenbach posited a unique Northern California identity in his popular notion of “Ecotopia,” a futuristic nation formed out of Northern California, Washington and Oregon. The ecotopian ideal inspired, if not an independence movement, an alternative culture and sensibility that thrives to this day.

Of course, hard-headed “realists” scoff at independence movements, saying they would create unsustainable small nations. Yet look around the world; there are many prosperous small nations: Singapore, the sophisticated city- state, in Asia. Finland, the home of Nokia, the cell-phone juggernaut. Slovenia, the tiniest and most prosperous of the former pieces of ill-fated Yugoslavia.

None of these nations is home to more than 5 million people. Some successful nations are even smaller. Ireland, which boasted Europe's fastest growing economy during the 1990s, has fewer than 4 million people. The island nation of Iceland, with a mere 300,000 people, regularly posts the lowest unemployment of any country in the world.

Indeed, small countries are increasingly economically secure because of the power of world trade. Does anyone doubt that the Bay Area, if an independent nation, would be economically viable? On its own, the Bay Area would have a diversified economy, strong universities and the kind of scenic beauty that assures a steady stream of tourists. Of course, an independent Bay Area would have to reach some kind of military treaty with the United States, which would not want a Bay Nation to pose a security threat. But we wouldn't mind. We would be like Switzerland, a neutral country that tries to help people. We, the Bay Nation, would try to prevent conflicts, not make promoting conflicts an aim of national policy.

To those who say that an independence drive would be fruitless, even wacko, I reply that the people of the Bay Area have a better shot at withdrawing from the United States than winning over the political mainstream. Look at the evidence. Nancy Pelosi may be the second-most powerful Democratic member of the House of Representatives, but what influence does she — or even the House — have over a national government bent on war, the gutting of civil liberties and destructive tax cuts? Opponents of the war can wave flags and express sympathy for the soldiers in Iraq, but the powers that be control the symbolism of patriotism. Rather than out-wave the flag wavers, radicals in the Bay Area — and I mean most of us — would do better to seek self- determination for our region.

Think of the advantages of having our own country. We wouldn't have to apologize to people of conscience for being Americans any more. We wouldn't go to war against Arab dictators (or anyone else). We wouldn't suffer through any more rogue national elections. We would finally have a government that shared the concerns of its people.

The question isn't why leave the United States, but why stay?

Few in others parts of America would mourn the loss of the Bay Area. The Republicans might even cheer, realizing that winning the state of California in the next election might be possible — without the voters of San Francisco and the East Bay. It is easy to imagine Karl Rove, Bush's domestic guru, gleefully calculating his boss' chance for victory in a Golden State minus the Bay Area — and then cheering its departure from the United States.

In U.S. history, preservation of “the Union” has long been presented as virtually a religious necessity. Our greatest national myth remains the inevitable rightness of the Northern victory in the Civil War. We are taught again and again about the greatness of Abraham Lincoln, who held our nation together. Yet at what price? Lincoln freed the African American slaves, but they fell victim to “Jim Crow,” the peculiar institution, to paraphrase historian Kenneth Stampp, that maintained racial separation in the South (and sanctioned violence against blacks) well into the 1960s. With the South in tow following the Civil War, the United States subdued the Native Americans in the West in the most brutal fashion, seized Cuba and the Philippines from Spain in 1898, thus ushering in an era of imperialism. American hegemony in the second half of the 20th century might have been impossible without a Northern victory in the Civil War.

Maybe Lincoln would have been an even greater president if he had let the South leave the Union in 1861. In the absence of Southern racists in Congress, the North would have become an industrial democracy of the European sort. American global power would have been moderated, humanized and democratized — because urban voters in the industrial cities of Pittsburgh, Chicago and New York would have insisted on solidarity with workers of the world. Our roster of presidents would have included the populist William Jennings Bryan, the Socialist Eugene Debs and the one-worlder Henry Wallace. A more compact, social-democratic America would have still struggled mightily with the legacy of slavery and discrimination against African Americans, but a movement for racial equality would have begun decades earlier.

Might the liberation of the Bay Area unlock similar positive change? Think of the model social legislation that a Bay Nation could enact: bans on guns altogether, full legalization of same-sex unions, an expansion of public television and radio, complete decriminalization of marijuana, basic health care for all, environmental protections that would be the envy of North America.

The possibilities for positive change are indeed tantalizing, yet how to bring them about might vex leaders of a Bay Nation. Keep the dollar, launch a new currency or take the euro? Join Canada or the European Union in a federation, or go it alone? Control immigration or let the market determine who lives among us?

The stickiest question might come over setting the boundaries of our new nation. The core surely must include the cities of San Francisco, Berkeley and Oakland and most likely the counties of Marin, Sonoma, Mendocino and Humboldt. But what of Silicon Valley (probably too Republican to exit the United States),

Contra Costa County (better left behind because of its suburban sprawl) or San Mateo County (worth grabbing?).

Inevitably, some people inside the new Bay Nation would want to remain U.S. citizens. Let them do so and continue living there. “Foreign-born” people already number about one-quarter to one-third of San Francisco's residents — so who would care if Americans swell our local population? By the same token, undocumented Americans (a.k.a. “illegal aliens”) could gain immediate citizenship in the Bay Nation. Bye-bye INS, hello multicultural justice.

Then there is the matter of national security. The United States would surely insist on a demilitarized Bay Nation, but such a condition would gladly be accepted by our people. The United States would probably insist on fobbing onto us some of the federal debt, but at least we would avoid incurring the truly horrific debts likely to be incurred under future Republican governments.

And while the Bush administration would insist that the nation desist from harboring any terrorists, we would never do so — if only to avoid antagonizing the giant on our borders.

After the battle at Gettysburg, Lincoln famously consecrated the war dead, offering them as sacrifices to the ideal of national unity. “The world will little note, nor long remember what we say here, but it can never forget what they did here,” Lincoln declared. In consecrating the dead in our current war, the world will longer remember not what we say but what we do. Actions speak louder than words — and perhaps never so loudly as in an America that swallows dissident voices without a trace, leaving dissenters only the option of hollow gestures. There is an alternative. It is time for the unthinkable to become the debatable.

G. Pascal Zachary is international director for the Toronto-based media advocacy group, Journalists for Human Rights. A former senior writer for The Wall Street Journal, his book, “The Diversity Advantage: Multicultural Identity and the New World Economy,” has recently been published in paperback.

Warning: Important News To All Guys Who Go Out To Clubs Or Bars:

I'm not normally one to spread baseless rumors, but this one's important.

Men need to be more alert and cautious when getting a drink offer from a woman. A powerful drug, almost always administered in liquid form, is now being used by female sex predators at parties and bars to induce male victims to have sex with them. Police efforts to interdict the drug have largely been ineffectual, and it's readily available on almost every street corner.

It goes by a variety of street names–”beer”, “suds”, “brewski”–but the active ingredient in all of them is “ethyl alcohol”.

All women have to do is buy a “beer” or two for almost any guy and then simply ask the guy home for no-strings-attached sex. Men are rendered literally helpless against such tactics. Some men are so sensitive to the drug's effects, that actual consumption is not required.

Please forward this to everyone you know immediately! This alert has been brought to you courtesty of Snopes.com.

Yes. It's a housing bubble.

http://www.itulip.com/qc082002.htm

Yes. It's a housing bubble.

Debate rages today about whether or not a housing bubble exists in the U.S. The fact that there is even any controversy about the bubble's existence testifies to the power of the forces of misinformation and proves that the long habit of wishful thinking among the millions of victims of the so-called New Economy has yet to start to dissipate. But we're used to that. We recall the debate that we endured in the late 1990s on the existence of a bubble in stocks when iTulip.com first opened shop. In those days, nearly everyone was in on the game of justifying the bubble. Alan Greenspan said in testimony before the U.S. Congress Joint Economic Committee June 1999, “But bubbles generally are perceptible only after the fact. To spot a bubble in advance requires a judgment that hundreds of thousands of informed investors have it all wrong.” At the time, we dug up a similarly evasive statement by Professor Lawrence of Princeton University in September 1929 when he said, “[T]he consensus of judgment of millions whose valuations function on that admirable market… is that stocks are not at present over-valued. Where is that group of men with the all-embracing wisdom which will entitle them to veto the judgment of this intelligent multitude?” Today, Greenspan is in the no-bubble camp again, this time defending historically anomalous housing price appreciation with statements that are reminiscent of his defenses of stock valuations during the stock market bubble. Who is the Fed to say that prices are too high? Markets know best.

Fact is, housing bubbles, like stock market bubbles, are not at all hard to spot. We grant that they are politically challenging to discuss in public, especially when they are needed to prevent the aftermath of a previous monetary disaster, the 1990s stock market bubble, from dragging the real economy into a deflationary depression. Putting aside New Economy obfuscation, the measure of a stock market bubble is simple: prices rise much faster than future earnings possibly can. A stock market bubble looks like this…

Hard to believe that anyone could have looked at a chart like the one above that was posted on iTulip.com March 2000, at the peak of the NASDAQ bubble, without seeing a bubble. But most did not. That's because when you are inside a bubble, pricing is normalized to bubble standards. Bubbles are driven by their own internal logic. Evidence that prices are reasonable are all around you. After all, are there not mobs of people who are willing to pay them? In today's housing market, do hundreds of thousands of informed investors have it all wrong?

In a word, yes. But how?

Bubbles often form out of legitimate bull markets. They catch unwitting participants unexpectedly. The U.S. stock market went from bull to bubble in 1995 without anyone ringing a bell alert investors that a change from investor's market to speculator's market had taken place. In fact, a lot of interesting things started happening at the same time in 1995.

Foreign debt balooned…

The current account deficit balooned with it…

The personal savings rate suddenly went negative for the first time on record…

The stock market bubbled (see top of page). Asset bubbles create economic and financial market imbalances, such as in the balance of trade, savings rates and household debt. It doesn't take a genius to see a bubble in the extraordinary pictures above. Nonetheless, it is apparently very hard to see a bubble if you are a central banker with an overpowering desire to be loved by Wall Street and Main Street and a religious belief in neo-liberal free-market theory. Guess Greenspan never really got over the Ayn Rand stuff.

A real estate bubble has on at least one other occasion been a secondary effect of a collapsing stock market. For example, the real estate bubble in Japan continued for about two years after the stock market crashed in 1990. One likely reason Charles Kindleberger points out in his book Manias, Panics and Crashes, “When the stock market collapses, shareholders, especially those on margin, know they are in trouble. Speculators in real estate initially feel no such compunction… They have real assets, not just paper claims.”

Our ex-Fed contact tells us there is no housing bubble. How does he know this? “High housing prices are only occurring in certain markets on the east and west coasts.” “You mean,” we responded, “where most people live?” It's true that housing bubbles are regional phenomena, owing to the fact that no wife ever tells her husband, “Let's buy a house in America” but instead says, “Let's buy a house in the western suburbs of Boston around Lincon near my new job.” The fact that more than one regional housing bubble is going on in more than one place in the U.S. is telling. Usually housing bubbles are concentrated in a single region of the country, such as northern California or Houson, Texas. Now you can find prices showing bubbliness in the U.S., and most of Western Europe for that matter, just about anywhere near a shoreline or a body of water.

The list of rationalizations of recent residential real estate price increases usually carted out are as follows.

Low interest rates. These have made homes seem more affordable, despite the increase in prices.

Tight supply. The number of new homes for sale now is lower than it was at the Nasdaq's peak in March 2000.

Aggressive mortgage lending. Lenders have loosened credit standards in recent years, allowing borrowers with relatively high levels of debt to get loans. Borrowers can also make much smaller down payments, in some cases as little as 3%, compared with the more customary 10% to 20% of years past.

Shift in investment strategies. Many Americans, spooked by the stock market over the past year, appear to be shifting money into residential real estate. One indication is that average down payments have actually increased in the past two years, suggesting that many of the buyers are people with large sums of money that they previously would have put into the stock market. In June, according to Economy.com, the average down payment was $34,700, up from $30,500 last June and $28,700 in June 1999.

These factors beg the question, are home prices too high? Phrased another way, are households purchasing homes they cannot afford? To asnwer that question, let's first consider our society's relaxed view of debt in general. Most home owners buy homes they cannot afford just as most car buyers now purchase cars that they cannot afford. What's the definition of “cannot afford” when buying a car?

Purchasing an asset with debt makes sense when the value of that asset is likely to be higher at the end of the term of the loan than it was when the loan was taken out, that is, when the asset tends to appreciate. This is the case with property, especially over the 15 to 30 year term of a mortgage. The capital gain realized from the appreciation in the price of the property over the term of the loan should more than pay for the interest cost of the loan. A car on the other hand is a depreciating asset because it is almost always worth less than the original purchase price when the time comes to sell it. In fact a car depreciates around 20% immediately after it is purchased new. Buying any depreciating asset with debt is simply a poor use of credit and bad household finance. As with any depreciating asset, a car you can afford is the one you can pay for with cash. But the practice of purchasing with debt a four wheeled depreciating asset or one with surround sound has become institutionalized. The Fed even encourages this kind of behavior. In a recent statement, Greenspan offered as a hopeful economic sign that households were using cash-out refis to pay down credit card debt. Are we really supposed to believe this is a good thing? If you use a credit card to buy a home entertainment system and then pay off the credit card with the cash you take out in a refi, you have in effect taken an asset that depreciates 80% in two years and put it on a 30 year mortgage. Never mind that statistics show that more than half of the households that do this wind up building up their credit card balances again anyway. In his next breath, Greenspan talks about the benefits of “financial literacy.” Hope he's not teaching the classes.

What's “cannot afford” mean when buying a home? The historical average for the cost of a mortgage is 25% of gross income. That's what the banks used to recommend, before they got desperate for households to sell mortgages to. In bubbly real estate market like Boston's today the average mortgage has reached 44% of income.

That's a housing bubble. Period.

Why is income growth rate versus price a valid measure of a housing bubble? The out-of-whack relationship between income and price reveals the disconnect between price and risk in a housing market bubble the way the out-of-whack relationship between P/Es and price do in equity market bubbles. An indication of the top of a bubble is a change in the tactics of sellers as they run out of buyers. In the case of the stock market bubble, we saw the marketing of equity product in more and more rarefied packages, a mutual fund marketed to women, for example. An example is Women's Equity Mutual Fund (FEMMX), a fund that's holding it's own well, by the way. In the case of the housing bubble, the sellers are banks and mortgage companies. When they start running out of mortgage buyers, they naturally start selling mortgages to more and more people who are less likely to pay them back.

Unlike Internet stocks, you don't own your house. The bank owns your house until you pay off the mortgage. While you're buying your house from the bank by paying off the loan, you get to live in the house. Alternatively you can earn income from the house by renting it for a higher rate than the bank charges you to rent it from them, plus property management costs, to someone who isn't in a position to rent a house from a bank themselves. Either way, it's not your house. This fact is often lost on so-called “home owners” until one of three events happens. The most rare of events is that they pay off the mortgage. Then they truly become Home Owners. A more frequent event occurs when they have to move for some reason — for a new job, for example. Let's say they have to do this after the real estate market has fallen. Assume the resale price of “their” house is now 20% below the price they paid, a typical modest decline in a housing market downturn. Now they're out part of their deposit and maybe some equity too and they're bummed out. But they're not half as bummed out as the owners of homes purchased with 10% or less down, representing nearly 60% of all homes purchased in the past three years. These folks will have to pay the bank another 10% or more than they got from selling the house just to pay off the mortgage. In the past when groups of home owners with limited equity were faced with this situation they did not sell their homes at a loss and pay the bank off, too. They dropped their keys off at the bank and said, Adios.

“…if the reason that the (housing) price is high today is only that the price will be high tomorrow – when “fundamental” factors do not seem to justify the price – then a bubble exists.” (Stiglitz, Joseph – Syposium on Bubbles 1990, 13)

Fannie Mae Foundation 1996 – Journal of Housing Research – Volume 7, Issue 2

Another event that occurs to remind “home owners” that they do not own their home happens when they lose their job and can't pay rent to the bank anymore. They can try to reschedule the loan or they can default and lose their home and all their equity. Now we finally get to why income to mortgage cost ratio is a measure of a housing bubble. Typically banks try to minimize the risk of default by requiring that purchasers not buy a home that consumes more than 25% of gross income in mortgage payments and by requiring sufficient down payment, say 20%, to give the buyer an incentive to not walk away from the loan if the going gets tough. But a couple of years ago banks ran out of people to sell loans to who met these obvious credit quality criteria. The banks started to sell loans to people with next to no equity to offer and who had to pay so much of their gross income on a mortgage that the average rose to 44% of income from an historical average of 25%. Both the “home owner” who is putting his or her credit and future income at risk and the bank that's putting its capital at risk don't apparently see much risk. Instead the buyer sees a future of ever rising home prices and the bank sees a low risk, high profit loan.

They are both wrong, at least in the short term.

iTulip.com market bubble definition: A market is in a bubble when participants foresee ever rising prices even though prices are well above historic peak levels while at the same time foreseeing either minimal or declining risk even though risk is exploding.

The measure of a residential real estate market bubble then is simple: property prices rise much faster than incomes possibly can. A real estate bubble looks like this:

This is a housing market bubble

Here are four residential real estate markets where property prices are rising between four and six times faster than incomes over the past year. In Washington D.C., for example, property prices increased 20% while incomes increased 5%. Housing prices rose in line with incomes until a few years ago but now are rising faster than incomes because the monthly payment on the average mortgage is falling because of mortgage rates are artificially low. Just as artificially low interest rates fueled the stock market bubble, artificially low interest rates are fueling a real estate bubble. The market went from an investors' market to a speculators' market and no one rang a bell this time, either. We agree that rising residential real estate prices are caused by scarcity, but not the scarcity of housing relative to demand. Housing prices are rising because of the scarcity of housing relative of the money supply. Cheap credit is creating a housing bubble.

We're not alone blaming the Fed again, but among holders of this opinion we don't have much company in the U.S. The Australian Financial Review said recently: “…critics of Dr. Alan Greenspan's Federal Reserve say it may be repeating its mistake of the late 1990s. They blame the Fed for creating the speculative frenzy in tech stocks of 1996-2000 by keeping interest rates too low for too long, creating the stock market bubble that burst disastrously last year. Now they fret that even as the economy recovers from the last bubble, another is forming in the price of housing – which has defied recession to grow by a national average of 20 per cent in two years.”

“DEFLATION is a disquieting word and has been bandied about rather recklessly of late until in the process of constant reiteration it has assumed the form of a threatening bogey.”

Financial World (June 26, 1929)

Will home prices collapse like dot com stocks once the era of cheap credit and low unemployment ends? According to David Berson of Fannie Mae, “You have to go back to the Great Depression to find the last time that house prices in the US actually fell.” The Great Depression was the last deflationary event in U.S. history that caused a sustained loss in home prices nationally. Home prices fell on average more than 80%. Mr. Berson's statement offers little reassurance when you consider that in Japan residential real estate sells for around 40% of peak prices ten years after the real estate market collapsed there. While the residential real estate market is essentially different in Japan, a recent statement by Bill Gross suggests that such a decline could happen here. Gross runs what is now the largest actively managed mutual fund as of last week, succeeding Bob Stansky and his Fidelity Magellan. Pimco Total Return, a fixed-income fund, reached $61.2 billion in assets under management. In an interview for the Boston Globe August 18, 2002, Gross said, ''The overarching force today is this potential for deflation, not only in the US but the global economy,'' he says. ''That's the danger.''

We have reason to believe the deflationary collapse Bill Gross fears will not come to pass. What the Fed and Treasury seem to lack in common sense they make up for with a seemingly endless bag of tricks. Recall the discontinuation of the 30 year bond a couple years ago, designed to limit the availability of long term government bonds in order to raise prices and supress yields to get mortgage rates down and a housing bubble going. Clever.

What if that's the last great trick in the bag? We may be in for a housing market collapse on a par with previous real estate bubble collapses, such as in Houston Texas when one million men, women, and children lost homes throughout Texas between 1985 and 1990. Such a deflation of the residential real estate will mark the beginning of the second deflationary stage predicted by iTulip.com Ka-Poom Theory as competitive asset liquidation moves from businesses to households. The high technology industry is already familiar with deflationary processes. Assets of high tech start-up companies that sold for several billion dollars two years ago now sell for several million. Commercial real estate that rented for $60 per square foot now rents for less than $10. Where once prices reflected the expectation of unlimited future demand, now they reflect expected future demand near zero. If you don't think this can happen to home prices, ask yourself this: In 1998 when iTulip.com predicted an average 87% decline in Internet stock prices, that forecast seemed utterly unintuitive to most readers. We even though it was extreme. Think back to that time and recall how it felt to be in it. The market had been rising for so many years, a reasonable person might conclude that the prevailing conditions must be normal. Then ask yourself, if iTulip.com is right that the housing market is a bubble about to collapse, what can the Fed do about it when short term interest rates are already at 30 year lows? U.S. households aren't sitting on a few trillion dollars in savings like their counterparts were in Japan when their housing bubble popped, in fact they are sitting on piles of short term debt.

Here's where we plug for our favorite commission-free investment…

Treasury Direct

If you want to learn more about the housing bubble and the likely effects of the aftermath of its eventual collapse, see Center for Economic and Policy Research paper The Run-Up in Home Prices: Is It Real or Is It Another Bubble?, August 5, 2002.