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Article Artículo

Haiti’s Increasingly Hidden Displacement Disaster

Over the next month, Haiti Relief and Reconstruction Watch blogger and CEPR International Research Associate, Jake Johnston will be in Haiti following up, on the ground, many of the issues this blog has covered since the earthquake nearly three years ago.

Port-au-Prince – In the last thirteen months, the “official” total of displaced persons in Haiti has decreased by 35 percent and over 300 camps have been closed. One could be forgiven for thinking the decrease was even larger. The sprawling tent camp near the airport, for everyone entering Haiti to see, as well as the Champ de Mars camp, are no longer. With their closure, some of the most visible signs of the stalled reconstruction effort have been erased.  As the three-year commemoration of the earthquake approaches, the reduction in the IDP population will undoubtedly be touted as one of the great successes of the relief and reconstruction effort. And yet an estimated 360,000 Haitians remain in official tent camps.

Those who remain may not be as visible; many are tucked behind high walls and off main streets but their situation remains just as dire and continues to deteriorate. The most recent OCHA Humanitarian Bulletin notes that those who remain in the camps “face worsening living conditions, as humanitarian partners pull out as a result of lack of funding.” It is estimated that at least 230,000 will still be in the camps at this time next year.

For those that have left the camps, little is known about their current status. According to OCHA, over 250,000 have left the camps due to resettlement programs, yet there has been no systematic tracking of what has happened to them. The government’s flagship relocation program, “16/6”, began over a year ago, meaning the one-year rental subsidies offered to camp residents have already run out, or will in the next few months. One former resident of the Champ de Mars camp said that his subsidy will run out next month, and with no steady employment, he expects to be back on the street soon. If so, he, and others in similar situations, would likely fall outside of the “official” camp population.

Jake Johnston / January 07, 2013

Article Artículo

The Blame the Community Reinvestment Act Industry

One of the major occupations for economists these days is blaming efforts to help poor people for the housing bubble and bust. The main villains in this story are Fannie Mae, Freddie Mac, the Federal Housing Authority (FHA) and the Community Reinvestment Act (CRA). A reader recently sent me another work in this proud tradition.

I just did a quick reading of the paper, but it seems that the smoking gun in this one is that banks subject to the CRA appeared to do more lending in CRA tracts in the periods where their lending behavior was being scrutinized by regulators. Just to remind folks, the CRA requires banks to make loans in the areas from which they were taking deposits, in particular focusing on areas that are disproportionately African American or Hispanic. The authors take this timing result, which is especially pronounced in the peak bubble years of 2004-2006, as evidence that the CRA played a major role in the pushing of bad loans on moderate income people. As they note, the loans issued in these tracts in these periods had a much higher default rate than other loans.

It's not clear that this gun is smoking quite as much the paper implies. First, it is important to remember that the biggest peddlers of subprime loans were mortgage lenders like Ameriquest and Countrywide. These lenders were for the most part not subject to the CRA since they were not banks (they raised money through the capital markets, not by taking deposits). Therefore the CRA was not a gun to the head of these lenders forcing them to make bad loans.

However even for the banks to whom the CRA did apply the evidence in this paper is less compelling than it may seem. Let's assume that banks do care about their CRA ratings for the reasons mentioned in the paper. (The CRA rating would likely be a factor that would come up when a bank was interested in a buyout or merger.) Let's also imagine that banks time their loans to CRA tracts so that they can show more loans in the periods where their compliance is being reviewed. Let's also hypothesize that in total the CRA doesn't get banks to make any more loans to CRA tracts than they would otherwise.

In this case, we would get exactly the sort of pattern of lending found in this study. Banks that are subject to the CRA would refrain from focusing on CRA tracts when they know no one is looking. Then when the light is on, they would make a stronger effort to make loans in the neighborhoods covered by the CRA. If banks engaged in this sort of timing of loans to CRA tracts, we would find that loans during CRA review periods were higher than in other times, even if there was no net increase in loans as a result of the CRA.

Dean Baker / January 06, 2013

Article Artículo

Latin America and the Caribbean

Venezuela

World

Pundits Who Had Predicted a “Tight” Presidential Election in Venezuela Now Predict Doom and Gloom

As we have previously noted, many pundits and much of the international media predicted a close presidential election in Venezuela in October, if not an actual victory by opposition candidate Henrique Capriles Radonski. But in the end, the vote was not close, as we had predicted it would not be in a paper we released on October 4. Chávez won by 11 percentage points – just a little over the 10.7 point victory that poll averages had suggested. As we have also noted, the conventional wisdom on Venezuela in the U.S. media and the economics profession (including the IMF) has repeatedly predicted sharply more negative outcomes for the Venezuelan economy than have materialized.

Now, as speculation runs rampant over the state of Hugo Chávez’s health, many of the same voices that predicted a close election in October are again predicting doom and gloom for Venezuela.

For example, in an op-ed just before the October election, the Inter-American Dialogue’s Michael Shifter wrote that “the election appears to be very tight.” In the New York Times’ Room for Debate today, Shifter details a list of problems that he says Chávez’s successor will need to tackle, “gradually” and tactfully in order to avoid some kind of catastrophe:

By now, it is easy to recite the litany of problems facing Venezuela.

At the top of the list are a huge fiscal deficit (around 20 percent) and high inflation (just under 18 percent), decaying infrastructure, mismanaged petroleum sector, shortages of basic goods, periodic blackouts and widespread crime and insecurity. All of these derive in some measure from severe institutional weaknesses, a product of Hugo Chávez’s one-man, 14-year rule. Whether his successor comes from his camp or from the opposition, reform and improved governance will be essential.

In a quickly-dated October 5 op-ed titled “How Hugo Chávez Became Irrelevant,” blogger Francisco Toro wrote, “Mr. Chávez is facing a tight re-election race against Henrique Capriles Radonski, a 40-year-old progressive state governor who extols the virtues of the Brazilian model,” and a little over a week before that wrote “Two weeks out, though, two of Venezuela's three best-regarded pollsters show him in a statistical dead-heat with the president. By crafting a message to appeal to a truly nationwide audience, he's given himself a real fighting chance to pull off a stunning upset on Oct. 7th.”

CEPR / January 04, 2013

Article Artículo

Taking Stock Three Years Later: A Prelude
January 1 was the anniversary of Haiti’s independence, and another marker – the third year since the earthquake – is coming up at the end of next week. Media outlets are examining what has been achieved - and what hasn’t - over the past three years. The N

CEPR / January 03, 2013

Article Artículo

George Will Is Upset that the Public Prefers to Take Arithmetic Over His Assertions

If George Will's New Year's resolution was to get as many wrong assertions in his columns as possible, he is off to a good start. Today's piece presented readers with an avalanche of inaccuracies before pounding readers with the main point: George Will says we can't afford Social Security and Medicare. 

First let's take some choice items from the avalanche. Will tells us that America:

"has an energy surplus, the government-produced overhang of housing inventory is shrinking and the average age of Americans’ cars is an astonishing 10.8 years."

On the first point, we are exporting some oil based products and natural gas, but that does not offset the 10 million plus barrels of oil a day that we import. The government didn't produce the excess housing. Those were private companies that built the homes. The worst of the bubble financing came from folks like Ameriquest and Countrywide who issued junk mortgages because they were profitable. They then sold them to investment banks like Goldman Sachs and Citigroup who securitized them because it was profitable. Government regulators, first and foremost Alan Greenspan, deserve blame for not cracking down on the bubble, but it is more than a bit loose with reality to say the government "produced" the overhang.

As far as the average age of American cars, it is not clear whether we are supposed to think this is good or bad. (I hope my car will last at least 10.8 years.) 

But let's get to the fun stuff. Will tells us:

"Once, Japan bestrode the world, jauntily buying Rockefeller Center and Pebble Beach. Now Japanese buy more adult diapers than those for infants."

Yes, Japan has the longest life expectancy of any country in the world. If they adopted a health care system like the one in the United States perhaps the Japanese would die younger so that they would then buy relatively more diapers for infants. The Japanese may not opt to follow Will's recommendation here.

Dean Baker / January 03, 2013