patrick.net

HARM and SP,

Okay already! Next, Jack is gonna come back and tell me about all the positive intangibles I'm ignoring.

FWIW on gold, metals, energy and commodities in general, from the industry-insider folks. This is just one of the things that comes through my news feed aggregator on a daily basis, and I don't specifically track commodities.

This is from a bit from industry captains complaining about hedge funds causing bubbles:

Last week Lord Browne warned the continuing rise in the oil price was due to trading by hedge funds. "There has been no shortage and inventories of crude oil have continue to rise. The increase in prices has not been driven by supply and demand."

Soaring prices have intensified worries that the markets are due for a sharp correction. Mr Clemmon said: "The only certainty is that this is going to come to a catastrophic end. The question is when?"

I don't know enough about the mining or energy industries to tell you if these guys are wrong, right, or just spinning; or if the HFs are really causing any real damage or perhaps actually helping. But I do know that I don't know enough to bet my family's wealth on gold beyond a tiny portion etched out into a diversified portfolio.

I had an interesting evening this weekend that threw some light into my mind concerning the total opposite side of the spectrum most homeowners seem to be in. The neighbor had a BBQ and invited a lot of friends. Of the people there, only I and the neighbor rented. Most had droven in from far away places like Dublin and Pleasanton.
I tend to stay away from housing discussions with people. It is sort of taboo. Anyhow, the issue did come up, and what's more, every single one of the owners seemed to be on the opposite side of the issue that people accept on this forum. There was a sense that things had slowed, but that it was ok because in their mind, prices were up and here to stay, more people were surely clammering to get into the market, and with the massive plans for new residential construction in the works out in their neighborhoods, they were absolute certain that things were just going to get better and better.
So naturally after a few beers I spoke up. I spewed the basics: Inventory was up, foreclosures are up, sales were down, more people were moving out of the state than moving in, wages were down, and of the top 20 places to work and live in Forbe's this year, none were in California. I mentioned the 40% of the new businesses in CA being tied to RE, and that the construction business was tied heavily to this. I went on and on.
I was surely surprised when some of these people had NEVER heard of any of these facts. It was also offensive to them at the same time. They had this sort of Smug attitude that thank god- they were in, and had a house... in California for that matter. I don't think I've ever put smug and housing together, but it seems to me that many who I've met who have bought simply did so that they could say that they have a house- even if it is in a crappy part of the state- in california, of which they truly believed was the creator of mana from the heavens.
I'm reading a book from the library called " snobbery" and the author mentions California has a major case of it, that they seem to think that they have the key to understanding true happiness, that the 60 hr weeks the slug away for their modest homes with high mortgages is all worth it despite basic economic fundemental flaws. perhaps the secret to CA's high prices is the fervent belief that everything is better here, that the people are better, and subsequently, the risks are worth it.

Hey TOluker, San Francisco lots vary tremendously in size.

Here in Noe Valley, average lot size is 25X110 or 2750. I live at the outer edge, where the lots are a bit bigger and mine is 25X125 or 3125. Almost anyplace in the "core" part of San Francisco that was built pre-automobile is going to have a lot around that size. Even in the "prime" Marina area lots range from 3000-3500. I have seen lots as small as 2000 sq feet, probably even smaller, though this is rare.

In the west side of the city, lots are considerably larger, depending on the neighborhood. The wealthiest areas, with the detached homes, have lots of 5000-6000 sq feet.

In Pacific Heights, you can get 10000 sq ft lots, but these are on the site of double digit million dollar homes. There is even one home on the market right now for $65M! It sits on a 11,000 sq foot lot.

I know most people on this blog prefer large lots, but I do not like the resulting suburban feel. There is a produce store half a block away, along with a transit hub, where three major bus lines meet, a butcher store and a liquor store one and a half block away, Safeway and Rite-Aid three blocks away, a hardware store four blocks away and probably twenty restaurants within six blocks. It is really nice to have all this within walking distance. This is only possible because of the high density of the housing.

On the other hand, if I could get all that and still have a 7000 sq foot lot to myself, I wouldn't complain. It would be nice to have a bigger yard. Ever once in a while, I fantasize about buying one of the 1 acre lots that come up for sale near twin peaks. You wouldn't really be able to walk to things from there, but it would be nice to have some land smack dab in the middle of The City. I would be too poor to put anything but a trailer house on it though.. wouldn't that be hoot!?!

Conor,

Yeah, O.K I'm on board with you here. It's just that the seller had in mind not only be able to move it at the 600K level you mentioned, this way they can cash in their chips and buy a place in OR cash money and still have the bubble bucks to take the trip around the world they so richly deserve! I can hear the spousal arguments already. The "Bubble Blame Game" if you will. "If you didn't spend every Sunday watching the Niner's on TV we'd have that pergraniteteel installed by now!"

WWII,

I quite resent your description of the TriValley area as far away or crappy. It is neither. Pleasanton has a much higher median income than Alameda. It also has good access to Oakland and SF via BART and hwys. It is very NIMBY and snobby, but that's an entirely different problem

What's with all the damned Oil Shale adds now? Is it because I hit some keyword in my earlier post about hedge funds & energy?

LOL, now there's a speculative bubble starting in oil-shale extraction.

Conor,
7 years for me as well. Indeed, people everywhere, regardless of where they live have fears of the unknown. I'll be fair and say that people from where I came from think of californians as nutty and a bunch of crazy hippies. They also have a dislike of New Yorkers, who they fear are going to "East-Coast" the entire south. At the same time, I've been in conversations with fairly intelligent people from California that staunchly believe that everyone in the south, midwest, and even far north above them in Oregon are crazy conservatives out to turn them into god-fearing republicans. Sometimes I ask them if they truly believe what they just told me. I get some rather flushed faces at that point.Oh well- I'm glad I've been to both places so I can make a more accurate assumption. People in Boston, SF, LA, and TN all act basically the same. The cocktail conversation is a tad diffrent, but to me the only major turn off from for California is the prices, and that's it.

Astrid,
Not meant to offend. Pleasanton just isn't my thing. I go there for car shows and that's about it. Kind of has too much of that strip mall thing going on.Maybe if I lived there I would feel diffrent.

WWII,

You and I have found the quickest way to the "un-invited list". Yep, but with me it's not the beer though that I've had belly full of! It's the endless fawning and drooling over this neighborhood and that and have seen how much those places are going up? I usually get the gal/guy that's been in the mortgage business for years! (two years to be exact) telling me about how it's just going insane!

You can tell them their dog looks scruffy, you can tell them you've never cared much for corn-on-the-cob and you actually prefer beer made in Milwaukee but DON'T YOU DARE tell them their house isn't going to continue to do anything but appreciate!

WWII,

It's okay. I was joking. I feel the same way about Walnut Creek, but then my boyfriend pointed out the avg income and housing prices there were quite high, and I was like, "people pay that much to live there?"

Pleasanton does have a generic office park look to it. I actually like stripmalls, I always feel that's the heart of America, not the faux downtown areas with antique shops and overpriced coffee shops.

I usually get the gal/guy that’s been in the mortgage business for years! (two years to be exact) telling me about how it’s just going insane!

They're kind of like neighborhood Avon sales reps, only with solar calculators and a little table of rates.

Conor,

Housing snobbishness is everywhere. I lived a good chunk of my life in Shanghai and Norman, Oklahoma. So I pretty much know its everywhere.

Shanghai is 100F and humid for 3 months out of the year and 35F and humid for 3 months out of the year. The pollution is bad, the housing prices are astronomical, and traffic is terribly gridlocked for 18 hours a day. But would any of my relatives consider a retirement to a nice warm place like Haikou or Foshan? Hell no!

Also, just hear out WWII. He's convinced his own portion of Appalachia is the best thing since baked dough. :)

Conor,

"the finger gets pointed at Hedge Funds"

Is it just me or have issues that are normally quite docile (low beta utilities and such) have all of a sudden become volatile? A friend back east told me his firm uses some kind of "proprietary technology" to get what he described as "dividend capture". Once captured they sell off the position and move on to the next pay-out. While there's certainly nothing new about "buying the dividend" the application of a black box or trading program seems to be upping the stakes here. Anybody?

WW2,

Yes, that endearing smug, elitist "California = Promised Land" attitude. Right up there with "I got mine mine, so F--- you." Gotta love the 'tude, dude! Must be one of those charming CA "intangibles" I'm reminded of so often.

Btw, just curious --why did you change your screen moniker from nomadtoons2 to willywhopper2?

1.

The number of times anyone has defended strip malls.

Conor,

Agreed. It's been tough for fixed income investors b/c it seems like every dividend above a certain threshold (the 10 yr. just for instance) gets exploited. It's a whole different game. I fear we're confusing income for growth.

DinOR,

I can't wait til there's a bubble in used refrigerators and BBQ grills!

Randy,

I wish google could have more variety of ads. Still, I suppose it's good we're not getting the breast enhancement, she-male, and herbal V ads...

DinOR & Conor,

HFs probably deserve at least some of the complaints lodged against them. They do increase volatility, which they then exploit. They also know how to amplify reflectivity in ways that can move markets.

All that said, HFs are still relatively short-term goal beasts. Even the big macro HFs may follow a very long-term macro model, but they are seeking to maximize shorter-term profit goals within that context.

I think what HFs do, in this regard, is the same thing that professional traders have always done: punish retail speculators. It's just that HFs have figured out how to extract profits from market volatility in a very efficient and often (semi)automated manner. Long-term retail investors or institutional funds really can ignore the day-to-day musings of HFs.

This is why CEOs of concerns like mining companies or large banks get agitated by HFs when they start to really impact their strategic business decisions. HFs love to pressure management and punish "bad" decisions, which means decisions that reduce their returns. But again, I'm not convinced that this isn't what shareholders should be doing anyway; maybe HFs are just the way it's getting done.

Does HF volatility raise the stakes or increase the risk of catastrophe? This is probably a religious debate centering around what one thinks the purpose and domain of the market is. Me, being that I operate from a free-market bias with considerate strategic regulation, I believe that HFs are just part of the market, and if volatility didn't come from them it would rear its head elsewhere, perhaps in a less controlled and even more catastrophic manner.

Randy H,

It wasn't that long ago that CALPERS was pressuring for changes at Disney. I feel it is their right to do so as they have a fiduciary responsibility to the state workers. I have no problem there. Where I can see it getting sticky is when HF's swoop in and pluck the dividend then turn around and dump it en masse after payable date. Utilities are typically appropriate for older investors seeking a reasonable return on their investment, not looking to get churned in the volatility. Then the stock price starts to ramp up until the final day of being a "shareholder of record" and then we start the whole process all over again. It just seems so exaggerated these days?

Maybe I should change that to "Utilities WERE typically appropriate"

Harm-
I typed this one from the paper, but here's the entirety from their site:
tinyurl.com/zxpk7

SFWoman,

I may have to revise my support of stripmalls as to not agree with Robert Cote. I don't think stripmalls are necessarily a good thing. They've just been in the landscape for so long that many of them have accumulated interesting shops and restaurants. The availability of parking is a major plus. Parking in strip malls is a lot easier than trying to find a parking space in the Emeryville IKEA on Saturday.

Anyways, that garage certainly doesn't look like it could fit two cars.

Of course, none of this would happen if we had a gold standard

Until a nice big gold asteroid strikes the earth...

Money is just a mind game to get people to give you stuff or do stuff for you. The Fed's game the past 5 years has been to torture savers to spend their cash to put people to work.

Imagine if the hypothetical gold asteroid hit the earth and everyone went and mined 1,000 ounces of gold. If everyone felt wealthy and stopped working, we'd have mass starvation.

With a fiat currency and taxes, the government can grab some of your loot every year, making you feel poorer and making you work. It sucks on tax day or when you fill up your gas tank, but at least everyone can eat.

It's a pretty weird society when you look at the big picture, but the net result isn't so bad.

I stand corrected:

2.

The number of times anyone has defended strip malls.

SFWoman,

GMAFB! Do they seriously think they can get $1.7M for a 750sqft dumper in Cow Hollow? And that "2-car" garage appears to be assuming that you define a "car" as a SMART-car.

For $1.7M you can actually buy a decent place in South Marin with a flat yard for cryin out loud.

One thing I have been doing to entertain myself while I stay home and watch Ava is to compare recently sold homes with their Zestimate.

Zillow is off by as much as +/- 20% but doesn't seem to have an extreme bias either direction.

At least in my neighborhood.

SFWoman,

Nice lsiting! Did you notice how they seem to photograph it with some kind of "fish eye" lens so the rooms look big enough to play tennis in?

Volley for serve!

FRIFY,

Except that this particular government is very good at taxing productive work and much less good at taxing unproductive work and assets. We have the whole thing ass backwards.

The solution to the astroid driven inflation is to turn gold back into lead, duh!

That place honestly doesn't look that bad, just really overpriced. I'd be happy to pick it up, for $60K, which is probably what it sold for 25 or 30 years ago.

Except that this particular government is very good at taxing productive work and much less good at taxing unproductive work and assets. We have the whole thing ass backwards.

Well, I'm definitely in favor of a more progressive tax structure. Capitalism appears inherently unstable - once you get enough loot, you and your decendents appear to have it made. Still, targeting assets is tricky - cap gains and dividend tax cuts are pretty good at getting $$$ back into the productive economy. Nixing Prop 13 would certainly help boot Great Aunt Wanda from her 1700 square foot house to a condo, increasing the overall productivity of the BA.

I wouldn't call it ass backward. I'll still take the US over any other country, including my native European nation...

The secret to the asteroid problem is to superheat it so it sinks to the earth's core to join the majority of the gold on this planet...

Randy H,

That is a 2200 sq ft, 3 bedroom, 3 bath house. In the Marina no less, which is, as we all know, prime.

That house is bigger and nicer than anyplace I have ever lived. I guess it is all a matter of perspective...

HARM,
I changed my handle because the old one, nomadtoons is the name of my site. I get all my business from there, so I figured it might be good to keep a low profile as far as my political ambitions go, being that I rarely mix business with pleasure.

Astrid,
What's funny is that sometimes I feel nostalgic for the old strip malls near my home when I was a kid. 1960's and 70's grocery stores, buzzing flourescent lights, those giant ceiling vents shaped like huge jet engines, worn linoleum floors with 50 layers of wax, etc. Alameda was like that a few years ago. An old boxy Safeway, Albertsons, and random shoe stores and stuff in an old mall complex. I liked it. Then they decided to revamp it, tear down the Safeway, and build this monster-size safeway that looks all ritzy and upscale inside. I actually find myself wanting to shop as quick as I can and get out of there. I get the same feeling going to some overpriced place like Andronico's.
If history serves us right, then there will be nothing left for the future to look back on. New stores are simple concrete shells that have a life of about 10-15 years before they get torn down and replaced with something bigger, fancier, and more audacious than the last. Strip malls aren't my favorite thing, but then again, I'm sure people at one point thought that main streets with small shops were ugly too.

Jimbo,

I stand corrected on the interior size; it is indeed 2250sqft.

Maybe that makes up of the bars on the windows and doors that seemingly are required in "prime" Marina.

LOL. For less than that price ($1.7M) you can get 2-for-1 in Mill Valley. And the rental will pay for your Fastrack and gas to drive 12 minutes to the Marina.

http://www.greathomes.org/property.asp?PropID=20615532&cat=1#

We have Edward Barnes and his 1950's IBM building- one of the first minumalist skyscrapers that was essentially an all-glass skyscraper to thank for starting the whole featureless architecture phase that's still going strong. Why architecture strayed away from the appearance of actual crafstmanship is a mystery to me.

SFWoman,

The "Bomber" on Mclaughlin Blvd is a B-17 Liberator (I believe). It was a landmark for years especially with advertisers as a reference. Now it's being disassembled and it looks like the gas station has gone out of business as well. It's almost solid auto dealers now. Oh and wall to wall strip malls.

Yeah, I agree that it is probably overpriced, but not as much as some seem to think. That is really an outstanding spot: one block from the Presidio and one block from Lombard. The lot alone is worth $1M.

The house is unexceptional, but perfectly nice in my book. In fact, there are probably thousands those tunnel entrance homes with two bedrooms over the garage in San Francisco. The Outer Sunset is full of them.

But I can't imagine paying $1.7M for one, I agree.

Kurt,

Thanks for the Marinij.com link. I guess calling it "IJ" is as obvious and automatic to you folks as calling the L.A. Times the "English-language La Opinion" is to me ;-) .