In the past decade, since the release of the flawed 1998 study by Michael Mann, now known as MBH 98, the phrase “hockey stick” has been used to describe a certain shape of a graph. It has also become synonymous with poor data selection and bad statistical procedure.
Yet again and again we see climate studies pushing this hockey stick shape as a way of saying we are “living in the worst time period of the data”.
Here, without statistics, without bristlecone pines, inverted lake sediments, midge larvae carcasses, larch trees in Yamal, or convoluted never before seen statistical methods, I present a directly measured data set that produces a real “hockey stick” shape.
The data is directly measured and not a proxy, the plot is real. There’s no data adjustment or statistical manipulation. Care to know what it is?
From the website “Calculated Risk“
Here is the monthly Fannie Mae hockey stick graph …
Click on graph for larger image in new window.
Fannie Mae reported today that the rate of serious delinquencies – at least 90 days behind – for conventional loans in its single-family guarantee business increased to 4.45% in August, up from 4.17% in July – and up from 1.57% in August 2008.
“Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans. These rates are based on conventional single-family mortgage loans and exclude reverse mortgages and non-Fannie Mae mortgage securities held in our portfolio.”
Just more evidence of the growing delinquency problem, although these stats do include Home Affordable Modification Program (HAMP) loans in trial modifications.
Now that’s a hockey stick to be worried about.
It hardly is a surprise then that when we see that sort of graph of actual data in the American economy, we start to see graphs like this one depicting confidence in climate change as an important issue:
Source: Pew Poll, story here
(h/t to WUWT reader Michael)
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“”” gt (20:57:26) :
As a renter who has never taken out a mortgage, I am not too worried about your hockey stick. “””
Great thinking gt.
So what is your plan for when YOUR landlord goes belly up and they foreclose on the place you are renting, because he had it leveraged up the ying yang and now can’t pay HIS mortgage ?
Just asking; I bet you are glad you don’t pay property taxes either; do you ?
You have discovered the perfect way to sidestep the financial collapse.
Wait till the commerical real estate mortgage shoe drops !
“Wait till the commerical real estate mortgage shoe drops !”
That is not the ONLY shoe set to drop. There is another. When housing prices were rising quickly, people were put into short term (generally around 5-year) adjustable rate mortgages. When interest rates started to rise a bit in 2006 and 2007, these mortgages adjusted up and people who were on the edge of being able to pay at the initial rate defaulted at the adjusted rate. Ok, we have worked our way through most of that. Now there is a different problem. Most of those 5 year mortgage terms are due to expire and people will be forced to refinance. These are the people who COULD afford the higher interest rates back then and didn’t default. The problem is that they now hold a $500,000 mortgage for a home worth $300,000 and they have to refinance it or come up with the $500,000.
There are a ton of these mortgages that are due to expire (or “reset”) in 2010 and 2011. Who is going to finance a $20 bill for $50? There are going to be a LOT of people walking away from a lot of mortgages in the next year or so.
Well, I guessed wrong twice. I first thought it was the unemployment rate, and then the M1 money supply.
I’m starting to hate that shape…
Crosspatch says: “I also have a dear friend whose mother is in her 90’s. Her mother spent the summer in Santa Barbara. She said that before offshore drilling started, the beaches were foul with tar and the air smelled like kerosene. Her mother made the kids wash their feet in turpentine before they were allowed back in the house after going to the beach.”
When I was a kid in the ’70s, we would vacation in Carlsbad CA and we would get tar on our feet from the beach. My grandfather would use gasoline to get it off. You can actually see the black lines in the ancient sediment stratas of our eroded cliffs. Tar, or vast wildfires, something deposited black layers on top of the ancient sea floors.
How to lie with statistic charts. The graph actually shows a 4% change, but since the y-axis range of the graph is 5%, the up-tick spans 80% of the graphic range. A more representative graph would show it against a 100% range – possibly +/- 50%, against which the change would scarcely show at all. The parallel with the kind of charts churned out by the AGW models and IPCC is striking because they both induce similar misunderstandings of available information. My statistics professor used to come down very hard on anyone that proposed to use percentages where actual numbers were available. He also liked to ridicule poorly designed graphics.
Wow that money supply chart is not a mere hockey stick, It’s a tsunami.
Those curves are explained in this video… http://tr.im/DMbq
“The graph actually shows a 4% change”
Incorrect. That graph shows a nearly 900% change from about 0.5% of mortgages in default to about 4.5% of mortgages in default. That is nearly a 900% increase.
So if you have a million total mortgages, to go from 5,000 defaults to 45,000 defaults is quite a jump. And look how stable it was at 0.5% for so long.
Well, 800% but you lose count at 400% or so 🙂
Good hockey stick Anthony, but could have looked better if put in a ‘portrait’ syle box instead of landscape.
My own forecast on economic recovery is that by July next year we will be in Recession Part Two, which will be far worse than part one and could easily be another Great Depression. Should Copenhagen get signed, this will happen in December this year.
“20014 is a long time away.”
Yep.
JDougherty (00:04:19) wrote:
“How to lie with statistic charts. The graph actually shows a 4% change, but since the y-axis range of the graph is 5%, the up-tick spans 80% of the graphic range. A more representative graph would show it against a 100% range – possibly +/- 50%, against which the change would scarcely show at all.”
Nonsense. A chart should be scaled to show the range of possible movement made by the trendline, not its theoretical maximum. For instance, it would be absurd to show an earthly temperature graph with a maximum of 500 degrees, just because it gets that high on Venus. And it would be absurd to employ a chart with a delinquency rate of 50%, because it’s hasn’t approached that rate, remotely, in the post-war period. The current rate is a post-war high, by far. Until recently, a good upper bound for the chart would have been 2%.
“A more representative graph would show it against a 100% range – possibly +/- 50%, against which the change would scarcely show at all.”
If you want to conceal what’s going on–that the line has risen ninefold in the past two years, from about .5% to 4.5%–that’s the sort of chart to employ.
“My statistics professor used to come down very hard on anyone that proposed to use percentages where actual numbers were available.”
Nonsense–that implies that statisticians should abandon batting averages in favor of number of hits. The percentage is a better figure. Similarly, percentages are better to use here, because they’re what’s relevant: the percentage of mortgagees who are delinquent, not the number. The population of home-owners has grown significantly since WW2, so a chart that stuck to the raw numbers wouldn’t show us the relevant information.
“He also liked to ridicule poorly designed graphics.”
I’ll bet what he’ll ridicule is your argument. Why don’t you e-mail him a link to this thread and ask him to comment? (It’s easy to obtain the emails of faculty members by searching the sites of their institutions.)
I guessed wrong – I thought the hockey stick would be a measure of damage done to the lives of honest ordinary citizens by the antics of AGW eco-fascists and their scientifically illiterate political followers.
But perhaps I wasn’t too far adrift….
The end result of the shoes dropping is to facilitate a form of a land grab.
Once displaced from the land, the people are finished. So too is the power of the US.
Just one more piece of the puzzle: Where are the mortgages really held?
For the benefit of non-American’s, is this just more of the same or a (unintended) consequence of new rule making where default is a better option than carrying a now overvalued asset?
Thats not a trend, that is an outlier. It should be smoothed, modelled, compared with tree rings, or ice cores and then we will see that no-one is actually in any financial hardship at all.
There used to be tar on Cornish beaches when I was a child, and it’s very rare now. Ships used to clean out their oil-tanks at sea in those days, a practice that has been largely stopped. There are no off-shore oil wells in this area. Could ships have been the reason for dirty Californian beaches in the past?
We have a similar problem over the pond and a bunch of idiots in government who don’t have clue one what to do about it.
Before I expanded the article I thought this particular hockey stick was measuring the increase in warmist alarmism on the run-up to Copenhagen…
This thread underscores, rather emphatically, the problem most folks have with investing. You have heard or maybe even studied a great deal about the economy and recognize imbalances and/or bubbles. But market sentiment often runs opposite generally because the sentiment investment horizons are much shorter than economic trends. If you weight long term over sentiment you’ll likely lose. In this environment, hedging or straddles or such is likely to be a good thing along with placing emphasis on hard assests (commodities). There is no doubt we will have Fed induced inflation, it’s just a matter of when, how much and over what timeline.
It’s just a matter of time before someone brings out a paper with this conclusion: “It is now 95% certain that loan delinquencies are caused by global warming”.
Chris
Check out the graph here
http://news.bbc.co.uk/1/hi/business/8332861.stm
UK house prices
There seems to be a high inverse correlation between increasing global temps and lack of savings, and a direct correlation with foreclosures. Appears that global warming causes both. Facts to follow. Maybe.
Now can I have my Prize and more grant money please?
This way of scientific thinking would be more funny I guess if it weren’t so true.
Mark Steyn’s Sunday column: click
And Christopher Booker’s latest: click
There is another hockey stick but it is inverted.
it’s the price of carbon credits.
I hope it stays that way.
There is another hockey stick but it is inverted.
it’s the price of carbon credits.
I hope it stays that way.
BTW I love your blog!
Housing prices will continue to drop until the cost of ownership versus the cost of renting makes sense. Here is a tidbit for any future investors. The amount of gross monthly income you receive from an investment property should be about 1% of the purchase price. Straying too far from that is a recipe for foreclosure.