Missing in my estimate of a flat-to-down housing market from 2010 on out was
a) the power of the California economy
(tech is on fire again, Southern California is doing OK too)
shows how the state population is up 2M and real GDP is up concomitantly
The market caps of just AAPL, FB, and GOOG are up $900B since 2010 (AAPL has $500B of that rise)
Supply is just too tight for the south bay to support AAPL's demand, let alone everyone else
A twenty-unit development is big news in a 30 mile radius of Cupertino, same story for GOOG.
Few people in quality nabes in the S Bay / Peninsula want to move, either.
b) Gen Y hitting their late 20s
shows how the boomer echo is just starting to peak, and California has it worse thanks to all the immigration, both internal and from the south, and China too I guess.
c) Rents have supported all
rents are up 10% nationally since 2010, more like 10% per year for California.
d) The Bush Boom fizzled after a few short years, but we're in year 6 of the recovery now.
Very fushigi, as the Japanese say. Well, not really -- the Bush Recovery was driven by trillions thrown off by the housing bubble serial fraud complex.
Not sure what's underpinning the current growth -- could just be flim-flam finance at the global level, as evidenced in our colossal negative NIIP:
shows how it has gone down from -$2.5T in 2010 to $7T in the hole for 4Q14. This is the same scale as the passed mortgage finance bubble:
but different dynamics of course.
The 'Philanthropist' label is kinda funny, yes.
Grift for $10B, kick back 1% to charity and you're a world-class 'philanthropist'.
What a racket.
Bill Gates is the poster boy for this of course, though giving back his ill-gotten gains is better than what the Kochs are doing with their billions at least.
If having a BART station nearby raises property values, why the hell not, LOL
California has a use-it-or-lose-it riparian water rights allocation system, too.
Archaic, but property rights are of course the high-voltage rails of politics.
"where's the liberal outrage?"
Are solar roofs being installed thanks to the tax credit?
Yes: Well, OK then.
I think so much is rotten in the conservatives' house they have to look for outrage where none exists.
My list of outrages would be:
Lack of affordable housing public policy
shows how housing starts are about half what they need to be
The immense waste of our ~$700B/yr defense expense
Transferring $300B/yr of that into housing construction would build 1.5M new housing units at $200,000 apiece and put about another 10 million people to work here (accounting for the resulting job losses in our military forces, which would be substantial)
Top 1% of the economy -- one out of 100 -- is collecting one out of five income dollars
This is driven by the high rents in housing and healthcare, and the conglomeration of American business, related to:
Since 1990 corporate profits have risen 6X while the average wage has risen only 2X
The War on Gainful Employment, 1980 - now
shows how employment in manufacturing, construction, and information is basically flat (actually down 6M since its peak in 1999) while the population has been booming.
This drives so much civil unrest, which conservatives love to blame the victim about since doing that is an avoidance mechanism wrt addressing the fact that their own public policy initiatives are driving the employment losses in the first place.
"Got Mine Fuck You" works great on the individual level, but we can't have a functioning society with it, contrary to conservative ideology.
Speaking of ideology, Conservativism is also the ideology and outlook of the timid fool. We could be doing so, so much more than we are now, now that we are off the gold standard and now even Bretton Woods artificial capital constraints.
We've got tens of millions of people here needing productive work, and government sitting around with both thumbs up their ass, thanks to GOP obstructionism and unwillingness for anything good to happen while a Democrat is in the White House. "It's Obama's Watch!" is their catcall and thought-terminating cliche
They ran this same playbook in 1995-2000, but since people are generally stupid nobody understands this, and the corporate press isn't going to inform them of course.
>Who endeavors to make minimum wage their whole life
raising the minimum wage raises all wages.
This is obvious, yes?
yeah, 'upvaluing' the dollar would lower rates, not raise them.
A strengthening dollar regime results in the USD being a good store of value for foreign buyers, increasing the attractiveness of USTs, lowering the interest rate.
So much of what the conservative message machine puts out is pure BS, but so many people are bamboozled by it all.
Looks like the crooked Pearson people capitalized on the sexiness of the iPad platform to get their graft in.
^ collect, not earn
Oughtta slap a 20% rent tax on renters, LOL
Be a great way to sidestep Prop 13.
Nobody understands that LLs are just price-takers though, so this can't fly, politically.
Not to mention the people who *do* understand how it would work -- LLs aka the Howard Jarvis people -- would oppose it the most, and best.
It is not that wages are too low, it's that rents are too high.
see the frog in the pot of water?
entire TARP bailout being paid back with interest
that's kinda the problem, yes?
where on God's Green Earth did the banks get that $2T+???
Anyhoo, the Fed is not like any other bank, given its power to monkey with its balance sheet as it sees fit.
The "liabilities" line item has no meaning to it.
prison should be such that if you're a good person, you would like it
and a bad person, they should not like it
meh, a rising market hides all lending sins.
borrowing to buy a house was truly a 'no brainer' 1997-2005, 2011-now (?)
just don't buy at the top, LOL
their father’s business cycle model was premised on a “clean balance sheet” world driven by main street borrowing.
this is largely true, but the business cycles of the past were also partially driven by poor data processing and poor inventory control
we have now passed through the “peak debt” horizon and are in a bubble finance world driven by Wall Street speculation
"Wall Street" here is just a calculated appeal to populism. While I agree about the debt problem, this is largely a consumer issue, Wall Street is just selling what the people want to buy -- debt bondage.
is real (2009 dollars) per-capita (age 25 to 54) debt. Blue is total non-financial, red is household, green is federal debt.
The story of the 1970s and early 80s was one of repression as the Nixon and Carter Feds attempted to fight inflation repeatedly (Carter faced a rising Fed rate throughout his term, culminating in Volcker's all-out assault on inflation in 1980 during his reelection campaign).
Reagan's crew got rid of Volcker and put easy-Al in charge, and he let the system blossom like it wanted in the mid-80s. The median boomer was age 30 in 1985, and the boomers needed and wanted to borrow like no tomorrow. This was immensely stimulative of course, and Reagan's massive deficits didn't hurt either.
The 1990s featured mild household debt expansion coupled with federal austerity, but the 2000s saw massive expansion of household (largely mortgage) and a mild reversal of the 1990s austerity, thanks to the Bush tax cuts and unrestrained war spending, doubling over the Bush years.
When the Bush era bubble collapsed in 2008, government stepped in as households deleveraged, and that's where we are now.
After all, the business cycle itself is essentially a product of central banking.
The 1800s was a long series of booms and panics. No "central banking" then!
(skating over stuff I agree with)
By contrast, for 80% of today’s debt saturated household balance sheets, spending is essentially constrained to current wages and income regardless of the price of credit.
And this 'saturation' comes from over-investment in land valuations! The mortgage is everyone's largest line-item expense. People go into debt for half a lifetime to acquire the most basic capital necessity of life -- shelter -- now. Then they use this capital asset as an ATM to "pull money out" via refinancing, monetizing inflationary valuation rises but increasing their debt position. Housing is where our game is rigged most, and is doing the most damage to the macro picture!
These profound differences have caused the Fed-influenced business cycle to play out far differently.
The current system is not of the Fed's creation and its influence is marginal. It has evolved due to political preference -- laissez-faire -- not 7 guys sitting in a room.
So eventually, the Fed had to throw on the brakes in order to extinguish the very wage-price spiral it had triggered in the first place.
Over stressing the Fed here. We had an entire generation of baby boomers turning 20 and 30 in the 1970s, and a massive expansion of the labor pool as the female participation rate skyrocketed along with the boomers entering the workforce -- TWENTY MILLION jobs were created in the 70s.
And as this was before China's integration into our economy, this meant INFLATION. Repeated oil price shocks, with the nominal cost of gasoline tripling in the 1970s, didn't help anything either.
The problem was not a shortage of oil but a flood of money and inflated demand.
Mostly bullshit -- both factors were at work. What the author doesn't know or isn't saying is the US/UK majors lost control of the mideast oilfields in the 1960s, and after nationalizing their respective national plant, OPEC took control of production and pricing. Right when the postwar baby boom was turning 20 en masse (1975)!
Also, North Sea and North Shore oil peak production was still 10-15 years out, they were just ramping up in the 1970s. Alaskan oil totally crushed West coast oil prices in the mid-1980s -- they had nobody else to sell to, and they just pumped out their fields like no tomorrow!
For if the problem had been just the putative rigging of prices by the oil cartel, there is no way to explain the dozens of parallel commodity booms during the same two- to three-year time frame
FFS. The economy runs on diesel.
Shows how the two supply shocks affected prices in the 1970s. Plus a wage-price spiral is going to affect everything with significant labor inputs.
is the US price of oil, 2014 dollars. Oil was a screaming deal for consumers in the early 70s, and OPEC wanted more for it. As did domestic producers of course!
Effectively, the Greenspan-Bernanke era of massive financial repression
Bullshit gobbledegook. Greenspan and Bernanke were passengers on this ride, just like everyone else. The true blame for where we are now lies in the lack of leadership in DC -- the administrations and failing that, Congress itself, 1980-now.
After 2008, households stopped borrowing because they had exhausted their capacity to carry any more debt relative to income.
Not quite. Home prices simply made no sense compared to renting, and there were thus TRILLIONS of bad loans on the books.
And the falling home prices shut off the home ATM that was driving the Bush Boom of 2002-2006. Once the ATM was cut off, so went the post dotcom-expansion:
shows how in 2009 corporations were at a 25% firing rate (if they continued that weekly rate of firing, 25% of the workforce would be gone after one year)
Anyhow, the author of this piece is twisting fact to form his own flawed narrative.
If the system really wants inflation here, it can get it. All it has to do is start sending spending money to everyone, not just EBT people.
shows population is up only 10% since 1980, so there shouldn't be too much demand on housing at least.
haha they're fucked too now I see
time to join the rest of the first world and get your mortgage payments going!
Doctors & Surgeons:
Number of Jobs, 2012 691,400
Employment Change, 2012-22 +123,300
Number of Jobs, 2012 1,018,000
Employment Change, 2012-22 +222,600
(There's also web developers and computer programmers, for another 60,000 new jobs by 2012, plus CNA, DB peeps, security, etc)
1.7M OTR truckers.
It's funny, but it's criminal how underused the nation's railroad right of ways are. We should just nationalize them and improve multimodal. Robot drivers would really excel running on rails!
neither here nor there. One month of job growth would replace all of them.
at $11/hr, these jobs are going to be gone
1.2M delivery truck drivers
There's still efficiencies to be gained here, the driver might just be a passenger, preparing the next delivery.
is what Tokyo's major landfill islands would look like in the South Bay mud flats.
is what those islands look like from Tokyo.
is the birds eye view in Bing.
TBH they didn't do all that great a job developing this new real estate. Kinda tough I guess, since it's kinda like Siberia in the scheme of things, just out of the way.
funny, I was just thinking that a floating city sim might be an interesting project.
better than my "SimMaui" idea anyway!
The Japanese put in a new 10km2 island in Osaka Bay for ~$20B (including the airport), we should be able to put in a 10 sq mile island for half that, given how shallow so much of the bay is.
So $1B per square mile is around $40 sq foot. 2000' lot then for $80,000 . . . the numbers actually pencil out fine.
Libertarianism is the celebration, establishment, and defense of privilege -- "private" + "law" aka 'he who has the gold makes the rules'.
If we didn't live on a real-life Monopoly board it might work -- but we do, so it won't.
"But China is still saving a lot."
And China will continue to "save" because that is not exactly what is going on. Coming from the abject poverty of their disastrous Maoist period, Chinese have an economy structured to function at about 1/10th the price level of that of the first world still.
The trade surplus they run up as a result of this cost advantage is "savings" of a sort, but what it really is neomercantilism on speed.
shows on a per-capita basis this is just a $1400 per capita "savings". Assuming 90% of the population doesn't actually count, that's still substantially below Japan's per-capita NIIP.
"More retired people will sell assets now, compared to younger people saving"
I think we're on the same page here but the boomers do not outnumber Gen X + Gen Y so I expect the transition to be orderly.
Plus since capital is concentrated in the 1%'s hands, much of this wealth is going to be transferred directly without any liquidation of portfolios at all.
The top 10% own 90% of the financial assets of this country, so the boomers having to sell off their portfolios this decade and next is a bit overblown.
The 1% can live off the interest of the interest . . .
for some reason I started reading up on Stalin's terror over the past year (ah, found a book on it) . . . the troikas were 3-person tribunals that were central to the machinery of the party-controlled purges.
Stalin's system processed about 1M people this way, executing about half of them (the other half going into the GULAG). Often eating itself, one years's troika would be the next year's accused.
Nasty business, Stalin's Russia. Between Stalin, Mao, the Stasi, and Pol Pot, "Communism" didn't do too well last century.
North Korea, too. And North Vietnam for that matter, no workers' paradise there, either, just more of the same.
united states is far away from that
not as far as I would like though; you're stuck paying a mortgage or paying someone else's mortgage in our current system.
It doesn't have to be this way.
Well, it does actually, I guess:
You'd think after a century or two we'd have our mortgages paid off, but the opposite seems to be the case. Swedes, Danes, Norwegians, and the British are much further down the rabbit hole on mortgage debt than we are, believe it or not.