patrick.net

Troy says

Tenouncetrout says

What did he say his qualifications were when he was running, again?

No (R) on the ballot after his name is good enough for me. After 8 years of active neo-conservative and corporatocratic “creative destruction” it’s going to take a lot of time just to figure out what the hell to do going forward. “I don’t have any solution but I certainly admire the problem.”

You failed to mention that arch-conservatives liked him simply because he was willing to invade Iraq, Afghanistan.

4X says

Name one public policy sponsored by Republicans over the past 50 years that has been aimed at improving our lives?

The clean air and clean water acts. Although that's getting pretty close to your 50 year window and way before what could be called (in polite company at least) the modern Republican party.

The sponsor of the Clean Air Act was Ed Muskie, a Democrat from Maine. It did pass Congress with 100% support from both parties.

On occassion, Republicans will vote for social changes but does that make them pro-citizen?......I am starting to feel that Republicans truly have no concern for social welfare and only want to focus on business intiatives.

Your thoughts?

4X says

Republicans truly have no concern for social welfare and only want to focus on business intiatives

you say this like it's a bad thing. To the conservative, business creates the wealth and owns the table and all the money on it. Labor is entitled to what it can negotiate from Capital, and not a drop more.

I am somewhat sympathetic to this, as it is generally aligned to how the world works. I see a role for government to break and redistribute the economic power of the few to the benefit of the masses, but as the Soviets demonstrated one cannot liquidate the capitalists wholesale and expect to run an efficient ship. The Russians repeated and indeed compounded the error in the 90s by giving away all the previously collectivized natural wealth to private entities, impoverishing the masses to the great benefit of essentially mob bosses and the connected.

Name one public policy sponsored by Republicans over the past 50 years that has been aimed at improving our lives?

Well, Nixon did end our Biowar programs in '69, including testing on US citizens and the dissemination of BW agents over the states of California, Texas and Florida.

Love him or hate him, this qualifies as an improvement.

wish i was lucky says

We aren’t used to the poverty that they have in other countries - so when the hard times really hit there’s going to be one huge pissed off mass of people.

We can live for decades on all the crap we've bought since 1995. Seriously. 1998 wasn't so bad, and anyone can buy a 1998 car, a 1998 TV, a playstation, etc. for pennies now.

All that remains is food, energy, housing, health care. Food can be subsidized (hello gov't cheese), energy too, that just leaves housing, there are like 20 million vacant properties right now, most with minimal costs involved in bringing them back into use. Obamacare for all.

E-man says

If we want to control our government and have them work for us, we have to split up our votes

? I'm a leftist -- I'm what everyone who calls Obama a socialist is thinking of.

I fail to see how voting for theocrats is going to result in more liberalism, other than through some aikido-like realization of the inherent contradictions of capitalism that the Republicans have a demonstrated talent for creating. Hoover 1929, Eisenhower in 1958, Nixon during the oil shock, Ford with Whip-Inflation-Now, Reagan with the S&L Crisis, Bush with the 1991 recession (my first as an adult), another Bush with the 2001 recession (we can agree that this is Clinton's doing insofar as recessions can be blamed on Presidents) and the follow-on Mother of All Bubbles 2002-2007.

Perhaps McCain winning last year would have worked out for the best. Funny thing is, I'm old enough now that it doesn't really matters who presides over the decline, my children aren't going to have English as a first language anyway.

If McCain had won it would have been pretty much the same stuff Obama has done without the health care mania.

Pray for gridlock in government, our only hope they cannot pass anything.

propitup1 says

Wow it is interesting to see the politics injected into a blog about real estate.
To everyone reading this:

You must be new here - that's half the threads now days. Driven by a few, I mostly just ignore.

pkowen says

propitup1 says

Wow it is interesting to see the politics injected into a blog about real estate.
To everyone reading this:

You must be new here - that’s half the threads now days. Driven by a few, I mostly just ignore.

Yea, every thread is political after the first few comments.

Thats because 4X loves the banter.

First, quick note on politics... I don't care if your left, right or center, most of us agree that housing prices in the areas we live in are too high. Most of us were not for the bailouts in the beginning, and are skeptical to the effect that it has had. Heck, even most of us are against the health care bill working its way through congress, even if we are for health care reform in principle. So, despite all of the bickering and banter back and forth, when you get down to brass tacks, most of us agree on far more than we realize.

That aside, back to the main point of the OP.

As far as what to expect in 2010, the biggest unanswered question as we entire this year is unemployment. Now I know that it's a lagging indicator, that they calculate it differently now than they did decades ago, and that there is debate as to which number best represents the true number of people out of work, but no matter how you measure it, there is no debate that unemployment has risen sharply as this crisis unfolded. If it continues to rise then we may be in for more trouble than we realize. If it abates, then perhaps the worst is in fact behind us.

http://www.fasttrackteaching.com/Charts7_Large_Unemployment.html

Well... here are my 2 cents. America will have to open up another war front in Yemen... the machines have already started rolling... Since America is already bankrupt and the Chinese have high stakes in Africa, this one will be a bit tricky for Obama. The question is, how long can Obama bail banks and people out if America has to open the Yemen front? With employment growth nowhere in sight, I fear it'll be a free fall.

wish i was lucky says

There isn’t enough money to pay for all the Welfare, Housing, MediCal, Schools, Unemployment Ins., Workers wages, Pensions etc.etc. and still run the Gov’t. We’re kind of at the point where you have to decide between food or toilet paper.

Funny thing is if they raised taxes -- I don't care on what, really -- California's high home prices and rents would eventually be pushed down in response and everyone would be happy. It'd be just like Sweden, but with a lot more Mexicans and Central Americans :)

is RE still "flat" if you factor in the Obama bux and other stemuli? It may be still actually flat, I just wondered if you factored that stuff into your thoughts. It is cool to look back. Good idea you had, hunting this down.

Reading this thread just goes to show that the handful of posters here on Patrick's page that post BS day in and day out weren't as smart as they think they are........most were terribly wrong last year and most of what they post in 2011 will be wrong as well.

inflection point says

Camping,
That term your looking for is inflation. The law of supply and demand.
Bernanke’s gamble is that the Fed can park trillions in the banks, buy mortgage back security’s and US bonds. They are fighting a rear guard action to prevent the collapse of the housing market. Unfortunately, the problem is too big. Those naughty MBA’s on wall street created a lot of debt.
The velocity of money has been low, not really moving in the economy (by design) which is what makes us different than Zimbabwe. He has been “successful” so far.
He will fail. Sooner or later people will figure out that the FED is the only buyer of government debt. The few other buyers will exit stage left.
Thats when the fun begins.
Just a note. I do not think any of this is really funny and I blame our government for letting it happen.

lurking says

Reading this thread just goes to show that the handful of posters here on Patrick’s page that post BS day in and day out weren’t as smart as they think they are……..most were terribly wrong last year and most of what they post in 2011 will be wrong as well.

When my kids were little, we used to buy the national enquirer prediction issue and tuck it in with our christmas ornaments. Then, when we were unwrapping them the next year we'd read what didn't happen. If you keep them year after year, you get to read the bogus statements of some who claim to have "successfully predicted" some event, and then refer to their actual prediction where they said no such thing.

It's fun.

Nomograph says

Looking back, overall the bad news bears lost. No hyperinflation, no new wars, no economic collapse, and RE was mostly flat.
Good thing I didn’t plant potatoes.

The further RE prices fall, the easier economic recoveries will occur. Otherwise it will continue to be sluggish for many many years.

thomaswong.1986 says

Nomograph says

Looking back, overall the bad news bears lost. No hyperinflation, no new wars, no economic collapse, and RE was mostly flat.
Good thing I didn’t plant potatoes.

The further RE prices fall, the easier economic recoveries will occur. Otherwise it will continue to be sluggish for many many years.

How do you figure that?

tatupu70 says

thomaswong.1986 says

Nomograph says

Looking back, overall the bad news bears lost. No hyperinflation, no new wars, no economic collapse, and RE was mostly flat.

Good thing I didn’t plant potatoes.

The further RE prices fall, the easier economic recoveries will occur. Otherwise it will continue to be sluggish for many many years.

How do you figure that?

People won't have to pay as much into housing and therefore will have more surplus income to stimulate our consumer economy. This should be obvious.

The housing bulls unfortunately are only looking out for their own best interest, at the expense of the rest of society. Shameful really.

Every person out there should want lower housing costs, as it enables people to work less (or have stay at home spouses) and the possibility of raising their own children and having more time to make contributions to society. Or heck, even some free time. How people can't see that is beyond me.

Oh wait, the vast majority of people are selfish and greedy. My bad.

CrazyMan says

People won’t have to pay as much into housing and therefore will have more surplus income to stimulate our consumer economy. This should be obvious

Think again. If you own your house, the payment doesn't change when the value of your house changes... All that changes is that you lose money when and if you sell. And the wealth effect will cut spending even if you don't sell.

CrazyMan says

Every person out there should want lower housing costs, as it enables people to work less (or have stay at home spouses) and the possibility of raising their own children and having more time to make contributions to society.

Every renter, you mean. Right?CrazyMan says

Oh wait, the vast majority of people are selfish and greedy. My bad.

And you're not? You just want to buy a house on the cheap. The previous owner be damned, right? Who cares if he lost money...

Nomograph says

No hyperinflation, no new wars, no economic collapse, and RE was mostly flat.

The ten year touched 4% but Fed intervention pushed it down to 2.4%.

But it's now sprung back to 3.4% in the face of a $600B further batch of printing coming next year.

I'm more in the Japan camp but I don't discount the threat of inflation. I don't know how they're going to do it, but they really need to get some wage inflation going around here.

And outside the fortress, RE was anything but flat this year. LA, DC, SD and SF saw 4-5% annual gains but the rest of the country has gone down.

http://blogs.wsj.com/economics/2010/11/30/a-look-at-case-shiller-by-metro-area-november-update-2/

The area I'm looking at in Colorado has been slaughtered this year:

http://www.zillow.com/homedetails/1262-Fremont-Dr-Larkspur-CO-80118/67449976_zpid/

The Federal Reserve says total asset value of owner-occupied real estate has declined from $17.0T to $16.5T through the first 3Q of 2010, down nearly 3%, and that's WITH interest rates at the floor (~4%).

http://www.federalreserve.gov/releases/z1/Current/z1r-5.pdf

I'll stick with my first comment above. The Republican takeover of the House promises a lot more friction and ugly surprises next year.

I am not particularly sanguine, though in the word's literal sense of "blood red", that may in fact describe the streets next year as the Keynesian stopgaps of 2010 start expiring and the Hooverites take over.

Half of this country has been propagandized to respond to "Keynesian" as an evil word. Gonna be a fun 2 years, wish I was in Japan already.

@ tatlol

I already own AND I rent.

You're clueless. It should be OBVIOUS when house purchase price OR rent are LOWER, people have more to spend (or more free time) therefore stimulating the economy. Our economy is what, 80% consumer?

Of course I'm far from perfect, but I'm more than happy to let the value of my SC home continue to fall. I have enough money (I'm not rich my any means) so it doesn't matter either way. A little bit of greed or even selfishness is probably OK, but our society takes it to the extreme.

Society be damned, gimme my pie.

CrazyMan says

You’re clueless. It should be OBVIOUS when house purchase price OR rent are LOWER, people have more to spend (or more free time) therefore stimulating the economy. Our economy is what, 80% consumer?

Again--how do you figure? My monthly payment won't change if the value of my house falls. All that will change is that I will feel less wealthy knowing that I've lost money. So I will be more likely to tighten my own purse strings. Falling home prices do the opposite of stimulating the economy--as the last few years have proven.

If they can afford their payment and it hasn't changed, why would their spending habits change? That makes no sense.

Look at the bigger picture instead of having tunnel vision. It, again, is obvious why our society would do much better in so many areas if housing was cheaper. More money to spend on other goods, more time to spend with family, more time to get involved with the community, etc. Putting 60% of your income into housing IS NOT GOOD. Why is this hard to understand?

All we have now is a bunch of workaholics who have their noses buried in the rat race to pay for that 1200 sq ft shitbox they call home. Well, when they actually have a chance to see it. Sad really.

tatupu70 says

Falling home prices do the opposite of stimulating the economy–as the last few years have proven

You've got your cause-effect turned around here.

Home values rise in response to rising disposable incomes and lower cost of money.

They fall in response to falling incomes and increasing cost of money.

Without understanding this one cannot understand anything about real estate.

Real estate is not like any other good on the market. It is, by its very definition (and immobile nature), unique.

any chance the public can force the RE sector to abandon their system of getting paid based on transacton amount, and force them to follow other service providers that work for a flat fee or by the hour?

CrazyMan says

If they can afford their payment and it hasn’t changed, why would their spending habits change? That makes no sense.

It's called the wealth effect.

CrazyMan says

Look at the bigger picture instead of having tunnel vision. It, again, is obvious why our society would do much better in so many areas if housing was cheaper

I agree that if someone could magically wave a wand and cause home costs to instantly be a smaller percentage of take home pay, then it would be good for the economy. But that's not what you're talking about. You are talking about making ~65% of the people in the US suddenly less wealthy. There is no way that can be good for the economy.

Troy says

You’ve got your cause-effect turn around here.
Home values rise in response to rising disposable incomes and lower cost of money.
They fall in response to falling incomes and increasing cost of money.
Without understanding this one cannot understand anything about real estate.

Yes, that is true, but consumer spending does also appear to vary in response to rising or falling home prices...

tatupu70 says

You are talking about making ~65% of the people in the US suddenly less wealthy. There is no way that can be good for the economy.

Housing wealth is not a productive asset in the sense of true capital. All housing wealth really is is the sum total of how much we are prepared to pay for an absolute necessity of life -- land and the housing good.

There could be a 100% tax on land instituted tomorrow and we as a nation would not be one penny less wealthy.

For every loser there would be a gainer. And given how much of housing is absolutely dominated by leechfuck rent-seekers, there would be a better economy that resulted from this alteration of economic realities.

tatupu70 says

but consumer spending does also appear to vary in response to rising or falling home prices…

This is one of my central annoyances with current economic thought. Brad DeLong wrote several dozen paragraphs about the housing crisis but missed the central fact that TRILLIONS of dollars of debt-money was distributed into the wider economy 2003-2007 via the housing bubble. This was entirely an ARTIFICIAL stimulus and not built on rising productivity or other forms of wealth. Just a goddamn asset bubble, of the sort that appears from time to time.

Troy says

Housing wealth is not a productive asset in the sense of true capital. All housing wealth really is is the sum total of how much we are prepared to pay for an absolute necessity of life — land and the housing good.

I don't disagree, but that's completely orthogonal to my point. If people lose their wealth, they will have to save more and spend less.

Troy says

This was entirely an ARTIFICIAL stimulus and not built on rising productivity or other forms of wealth.

Again--you're right. But whether it was artificial or not, when people lose $$, they tend to cut back on spending...

tatupu70 says

If people lose their wealth, they will have to save more and spend less.

And my point is that there IS no wealth embodied in houses. They do not produce any new wealth, other than the housing good itself which is simply an ephemeral service that is provided by the capital whether or not the house is even occupied.

Every dollar a homeowner gets from his house has to come from a lender, a buyer, or a renter.

US housing wealth has declined from $22.7T of 4Q06 to $16.5T 3Q10. This $6T+ was funny money going up, and it's funny money going down. VALUATION IS NOT WEALTH.

tatupu70 says

But whether it was artificial or not, when people lose $$, they tend to cut back on spending…

You referred to a "wealth effect" above. This certainly existed to some extent, but boosting consumption is not what we need now to fix our economy. We need to boost PRODUCTION.

(and take out the rent-seekers in this society and shoot them)

Troy says

And my point is that there IS no wealth embodied in houses

When I put $50K down and see that I have lost it based on comps in the area, I would say that is wealth lost. And, more importantly, people perceive it to be wealth lost, so they will spend less.

Troy says

We need to boost PRODUCTION.

I agree. But I don't see how making housing cheaper accomplishes that.

tatupu70 says

that I have lost it based on comps in the area, I would say that is wealth lost

The wealth was not lost, it just went to smarter hands.

people perceive it to be wealth lost, so they will spend less.

This is what a balance sheet recession is. People must spend less. The previous economy was a fake economy and it ain't coming back.

People spending money 2003-2007 while thinking their home valuation was money in the bank were spending their imagined future buyer's money today, just as if they were borrowing it themselves via a HELOC.

But I don’t see how making housing cheaper accomplishes that.

Every dollar we borrow to buy a home could have been a dollar lent to support actual productive enterprise or other forms of capital. So much of our high cost of living expresses itself as ground rents.

Like the Japanese in the 80s, we got ahead of ourselves in the previous decade. Whether or not we will succeed in inflating our way out of the liquidity trap remains to be seen. I think not, really, as inflation can hurt us -- via health, education, energy sectors -- more than help, afaict.

E-man's predictions. pretty scary in how accurate it was.

I was close but maybe 1-2 years early :)

Troy says

The wealth was not lost, it just went to smarter hands.

I disagree. The wealth, or perceived wealth, is lost. Whoever buys the house after me doesn't have the $50K that I put down. That money is gone. You can argue that it never really existed--fine. But my point still holds. People believed it to have existed and will adjust their spending accordingly.

Troy says

Every dollar we borrow to buy a home could have been a dollar lent to support actual productive enterprise or other forms of capital. So much of our high cost of living expresses itself as ground rents.

Yes, I get that. But making 65% of the people poorer isn't going to make things better.

CrazyMan says

tatupu70 says

thomaswong.1986 says

Nomograph says

Looking back, overall the bad news bears lost. No hyperinflation, no new wars, no economic collapse, and RE was mostly flat.
Good thing I didn’t plant potatoes.

The further RE prices fall, the easier economic recoveries will occur. Otherwise it will continue to be sluggish for many many years.

How do you figure that?

People won’t have to pay as much into housing and therefore will have more surplus income to stimulate our consumer economy. This should be obvious.
The housing bulls unfortunately are only looking out for their own best interest, at the expense of the rest of society. Shameful really.
Every person out there should want lower housing costs, as it enables people to work less (or have stay at home spouses) and the possibility of raising their own children and having more time to make contributions to society. Or heck, even some free time. How people can’t see that is beyond me.
Oh wait, the vast majority of people are selfish and greedy. My bad.

I dont think you understand the concept of a deflationary spiral. Prices keep going lower people will not buy because it'll be cheaper 6 months from now. If people aren't spending money due to this and the fact that their house is now worth half what it used to be then more businesses fail. More people lose jobs. rinse and repeat.

If it's selfish and greedy to not want to be in perpetual recession and actually want the economy moving again then call me greedy :)

Tenouncetrout says

Obama bitch slaps somebody before April.

Well I was off by a few months, he waited until June to put his Boot to the Throat of BP.

tatupu70 says

Whoever buys the house after me doesn’t have the $50K that I put down

you didn't "put it down" you PAID IT to someone. That's where the money went.

But making 65% of the people poorer isn’t going to make things better.

Nobody is any poorer. Home owners still have title to their houses, which still exist undamaged.

There has been no actual wealth destruction, unlike say an act of God or war.