Recent behaviour of the Case Shiller index (or where are we now?)

One example of multistability I have used in the past few years is the reconstructed state space portrait of the Case Shiller index.

I have been studying state space of complex systems in the hope to better understand them. My original interest was in natural systems-I have gotten dragged into economic data sets because they are generally better.

Data for the Case Shiller index is found here (click the link labelled "US Home Prices 1890 to present"). The first two plots have been posted before, showing the index plotted against itself with a four-year lag.

The first plot shows the annual index to 2012, along with predictions of where in state space the system would plot in 2015, for declining house prices, constant house prices, or rising house prices (in inflation-adjusted terms). The major features are two very long-term islands of stability, at about the 70 level (from 1915 to 1945) and around the 110 level (until 1999); and the large crashing loop that has been traced out since 1999.

This plot shows the same information, but monthly from 1954. The area of stability occupied until 1999 is circled in yellow, and the large "cycle" is also visible, showing that the system was following the trajectory of rising house prices in 2014.

The last plot represents the most recently available data, projected monthly, but it shows the same thing--the long-term area of stability at lower left, and the big loop, now nearly closed. The last available point is reasonably close to the projected state for 2015 (which itself would be averaged over the year).

Is this a potential area of stability? Sadly, no. In this type of plot, long-term stability will have to occur along the y = x line shown on the second graph in this posting. Presently, we are far below or to the right of this line.

If house prices had been frozen at the levels of the end of 2011, we could have developed a region of stability. But the stable state would have been within the large area of stability that existed prior to 1999. Who the hell wants that (apart from young people hoping to buy a house)? So we are embarking on yet another price increase, once again into a market with no ability to support the higher prices. The long term prognosis is for another rise and collapse. Time will tell how big it gets.

Sea ice in the East Siberian Sea

Yesterday going almost over the pole . . .

The companion to this post.

Some multi-year ice. Looks like leads opened, later re-freezing, before the current pan formation. Some have had leads form and refreeze multiple times.

In any case, this is just a warm up before our annual posting on sea ice, at the end of next month.

USDX index vs gold, once more with isoquants

Both gold and the US dollar go up and down. If gold really were just the anti-dollar, then its rise would be mirrored by a fall in the USD and vice versa. The locus of points traced out on a graph of the US dollar index vs gold should be an hyperbola, and we often observe this relationship.

In the past year, the US dollar has risen quite sharply. For the first several months, gold also rose, apparently continuing the nearly linear trend we last observed in the first half of 2010. The last several months, gold and the US dollar seem to be acting in their somewhat inverse relationship, mostly at about the 1100 isoquant.

The 1000 isoquant seems to have been the key support since 2010, and I would be very surprised if that "level" were breached except transiently. Currently we are at about 1050 (you can calculate it by multiplying the USD price of gold per ounce by the USDX index value, dividing the result by 100).

Copper, silver, gold

Dendritic forms.

From the Smithsonian Museum of Natural History.

Lost in translation 2

It seems China isn't the only country where the locals have difficulty translating the local language into English.

In Maryland.

What if you're wearing the only thong available?

Life looks different . . .

. . . from the other side of the street.

In Maryland tonight, meeting in Washington tomorrow.

Just saw a J Street Education ad urging the acceptance of the Iranian nuclear deal. This is nice--all I seemed to hear in Canada from the US were Senators explaining why they were going to fight it.

Here's dinner.