patrick.net

HARM says: F*ck the Jones’s. “Rich” is a state of mind.

A belated "right on", Brother HARM.

For all our wealth compared to the third world, Americans are impoverished for joy and fulfilment. Our true goal should be to provision well for ourselves (food, medical care, retirement) and then spend our lives attaining a minimum of possessions and a wealth of love, joy and kindness. We live in an age where wireless connections have replaced human connections, and where pursuit of finished square footage has been confused with the pursuit of happiness.

Dick and Jane can keep their McCrapshack. A 4000 sq.ft. lot is best used as a 3000 sq.ft. garden. :)

Holy *&^$%#$. Just watched the Monsanto documentary. What an eye opener. We belong to a great CSA in San Jose....Live Earth Farm. It is $30 a week and for us, it is well worth the cost. We get a ton of food for that price....all organic.

sbg,

I am on the waiting list of Live Earth, looks like I need to wait till 2009.

I was on the waiting list as well. It often opens up mid season. It is worth the wait :-)

Here is an interesting graph from CalculatedRisk, which maps declines in new-home sales with an overlay of past recessions. CR's point is that new home sales were falling prior to every recession (except one).

However, I am looking at this graph and trying to figure out if there is a different correlation as well. It looks to my eye that the depth of the fall also is somewhat indicative of the duration of the recession. Of course, this is just _one_ metric (new home sales), and without looking at the raw numbers it is hard to draw any sort of conclusion, but just eyeballing the chart looked that way to me.

Here is the link to the graphic:
http://tinyurl.com/4gdddl

And I forgot to add: if that correlation I observed is true, then all I can say about the current plunge in new home sales is YIKEY! Looks like a multi-year recession to dig out of this one...

Our true goal should be to provision well for ourselves (food, medical care, retirement) and then spend our lives attaining a minimum of possessions and a wealth of love, joy and kindness.

I believe you will see more fellow travelers in the coming contraction. When the loss of house ATM proceeds cause people to cut back, they will find they are just as happy with the less prestigeous home and the more sensible auto. People will find that less time driving or driving alone does not kill quality of life, that neighborhood hangouts are just as fun as crosstown tony clubs, and that rediscovering walking, bicycling, and knowing the neighbors can actually add to qualty of life.

@Brand & Headset: "Amen"

Pssst... I've got a 20lb bag of pure Basmati... not the crap they sell at Sam's Club, but the good stuff. I'm selling dimebags at $20 a pop. Any takers?

Gold is still being killed.

Forget about the rice crisis, this thing is worse. Much worse!

http://www.reuters.com/article/newsOne/idUSN2319603620080423

I have another dumb question. Reposessed real estate owned by the banks and whoever bought their MBSs is called "REO". What do they call reposessed real estate owned by the government or GSEs? Government-owned-real-estate (GORE)?

Anyway I have been thinking about an alternative plan to the present bail-out proposals. The present bail-out proposals all propose to keep the homedebtor in his present house. Yet this present house is exactly why he is in such straights - he really can't afford a house that nice.

There are hundreds of thousands of REO and GORE houses, but they are not all alike in terms of affordability. They range from McMansions down to humble shacks. It would be possible for the bankers and government to arrange these REOs and GOREs into tranches of actual affordability, say on a scale from "A" (big McMansion) down to "Z" (squalid shack).

My bail-out plan would be for the bankers/government to facilitate downsizing the homedebtors into a house they could really afford. Say homedebtor Joe is facing foreclosure in a "D" tranch house, but upon investigation it is determined Joe could actually afford a "H" tranch house. Since there would be numerous "H" tranch houses in Joes area, he would be offered to pick one, move in, and assume the loan. Joe's old "D" tranch house would then go onto the pile of REOs/GOREs.

Meanwhile, Sally who owns a "B" tranch home but could only really afford a "D" tranch home could be offered a selection of "D" tranch homes - perhaps Joe's old place.

In this manner, all but the highest tranches of REOs and GOREs could be recycled by "pushing down" the homedebtors into more modest and affordable homes - where they should have been from the beginning. It would be possible to structure the agreements so that Joe and Sally wouldn't get black marks on their credit histories if they accepted a voluntary "push down" and voluntarily relinquished the home they couldn't afford. Only homedebtors in the lowest tranches would get pushed back into the rental market.

Thanks, Peter P. Note to self: never vacation in Congo!

Note to self: never vacation in Congo!

Yeah. In most other places, you can at most have your kidney stolen. But Congo is different.

Forget about the rice crisis, this thing is worse. Much worse!

Gee Peter, you sound like you are talking from experience. Do you believe you are a victim of penis-shrinking witchcraft? Or just looking for an excuse/explanation :)

Please unmoderate my joke at Perter P's expense

Approved!

What a good sport!

Busted quoted a recent Robert Shiller speech that I would like to discuss.

It has been Shiller's view that, net of inflation, housing price do not increase. Or the more common way this is stated, housng prices inccrease, over the long term, at the rate of inlfation.

I feel Shiller has certainly debunked the 'not making any more land' myth. Quite simply, as housing prices rise, companies can relocate to cheaper areas and restart the cycle. Witness aerospace move from New York to California to Colorado over the last 70 years.

But what about govenrment intervention? With new zoning, we see that government can always limit growth to prop up prices. Government can also regulate. As positive examples think: fire-retardant roofs, superior insulation, quality electrical and plumbing, are appropriate engineering (wind/earthquake). These things tax a cities requrces less.

Also, how about economics? As a smaller and smaller portion of our pay-check go into basic needs, we can direct more of our disposable income into housing - thus asigning more value to construction labor and builder risk.

In my view, the days of zero-net-inflation return on housing are over. In my opinion, Shiller should make projections based on data no older than the mid-70s when talking about long-term trends.

All of that said, barring a massive exodus of employers in the Bay Area (which has happened at least once before) we will retrace roughly 35% from peak in inflation adjusted dollars. This means year 2000 prices in 2011. However, inflation is high and getting higher. In non-inflation adjusted dollars we are likely to see prices like 2003 in 2011 with those extra 3 years representing 7% annual inflation.

I would say something like, "If oil massively spikes all bets are off", except that long before OPEC and Russia force a world Depression, they will come under economic attack (how fast can we build nuclear power plants?) and perhaps, even, actual attack.

So my final thought is this. To those on this site wishing to bound the likely decrease in housing prices. At one end we have people saying we are done; especially with congress chucking money at the problem. At the other end we have Shiller stating it could be as much as the full 85% gain from 1997-2006. For me, I think it will be 35%+/-5% by late 2010/2011 baring huge news like mass job exodus and/or large oil-price hikes.

Now I am swamped by email inquiries from friends around the world about our "rice shortage" problem. One email from Beijing says, "OO, are you ok? We are deeply concerned about your rice situation, is there anything we can help?"

NVR, you are responsible for this! Next time, please be more discerning when you post food scare news, especially if it hits home. Or I will have to report you to homeland security :-)

I don't eat white rice, I only eat brown rice, and that stuff is hard to hoard, because micro rice bugs start to proliferate if you leave it untouched for a few months.

OK, just to get back at the white guys who are hoarding our staple food, I am going to Trader Joe's to hoard a case of multi-grain pasta.

Multi-grain pasta is yucky. Please don't hoard squid-ink pasta!

Now I am swamped by email inquiries from friends around the world about our “rice shortage” problem.
Does "warehouse discount club" translate easily? :-)

It's Thursday, so time to crunch the Fed H.4.1 numbers. Relatively quite -- maybe, dare I say, things are stabilizing? Non-depositories gave back around $2 billion at their discount window and depositories took out about the same amount. The only major change was another $26 billion of Treasuries was swapped out at the TSLF. According to Bloomberg, the bid to ask on the last TSLF auction ($75 billion) was 0.79.
Also H3 is showing non-borrowed required reserves increased (which is a good thing) about 10% to -$90.9 billion.

My wife loves crunchy nature bars.

(In Nature, food is never in the form of crunchy bars... hmm...)

Re Rice

Now that it has been widely covered by the media - there will be a scarcity as everyone will rush out and buy some while they can. Worsening the situation in the short term.

Something happened like this in England 50's;60's or 70's - not sure as it was before my time, but I remember my mother telling me that when her aunt died in the 90's - they found suitcases full of bags of sugar in the attic that had to be throw away. I guess hording does not always pay off.

Clarie, the same psychology also drives the housing bubble.

Rice cannot last 30 years. I think 5 years is the max.

It is amazing that your aunt's house was not infested with ants. I have to be very careful with where I put my sugar, the ants always have a way of finding it.

OK, just to get back at the white guys who are hoarding our staple food, I am going to Trader Joe’s to hoard a case of multi-grain pasta.

Well just so long as you don't mess with us white guys' ammo supply. As you may have been told by one of the candidates, we are BITTER and CLINGING to our guns, god, and dislike of swarthy foreigners..... ;)

Apparently, Pennsylvania did not agree with that candidate.

They prefered the tough broad who could toss back a shot.

This is outrageous:

http://sweetness-light.com/archive/only-one-teen-gets-jail-for-bus-beating

No comments on my "push-down" bailout plan?

I feel brain dead... too many words for a Thursday afternoon...

I will comment tonight.

DennisN,

I misread that as "...BITTER and CLINGING to our guns, GOLD, and dislike of swarthy foreigners"

Swarthy foreigners, hmm, you mean southern Italians?

And if wheat crop failures due to drought in Australia aren't bad enough....

www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/24/MN9B10AM8Q.DTL

We had three days of overnight frost here in Boise last weekend - the end of April - and it is feared the cherry and apricot crops are ruined. We shall see. The buds on my apricot tree are questionable right now, and I think I lost one of my ornamental grasses.

Oh my goodness, Obama just lost the Italian vote.

We had three days of overnight frost here in Boise last weekend - the end of April - and it is feared the cherry and apricot crops are ruined.

Frost? Must be "global warming."

In a few years, they will be talking about Ice Age again. I can already visualize them propagandizing with photographs of polar bears freezing to death on newly-created ice sheets.

Dennis, were you serious on your suggestion about repossession tranches?

Local government around here is strapped, and it got itself addicted to the inflated assessments of recent years.

Do the tranches pay property taxes on the foreclosed houses? If the owners of the tranches don't pay it, then how does the government get the money? Does the government take the house away from the tranch and then auction it?

Dennis,

This week a local news station reported millions of dollars worth of crops were ruined in the wine country because of the April frost there.

Dennis, your idea makes a lot of sense. I like it. :)

(Unfortunately, it makes too much sense because it forces people to face reality. Moreover, many home-"owners" cannot even afford Z-grade housing and they rightfully belong to the jealous bitter renters group.)