patrick.net

I've also found this 1938 art deco house quite fascinating, but it has nowhere near the appeal of the foursquare.

Nice post, OP. Goes right to the absurdity of the situation.

Randy H: "You don’t understand what 'interest' is. It is not a penalty. It is a forward prediction about the time value of money in the context of risks and inflation."

Codswollop. It's profiteering without producing anything. It's sitting behind a mahogany desk rubbing two dollars together and making twenty. That's what it is today, in this world, with the organized criminal activity (considered "business as usual") known as "fractional banking."

Anything resembling reasonable interest for the hoi polloi was left behind long ago, when it once was actually associated with tangible wealth--not endlessly creating debt out of debt out of debt out of debt, like some lounge-lizard magician pulling multicolored dime-store silks out of his nose. Or out of some cavity.

Debt in today's world is slavery to a system utterly corrupt and baseless at its core. That's why the Fed's printing presses are using ink measured by the ton.

TOB,

That *is* cool. I wonder these are landlord rent numbers or renter rent numbers :)

denriddy

Thanks for the morning chuckle. I'm heartened to see that the extremist element on the other side is alive and well. As is always the case, the truth lies in the moderate middle.

Brand Says:

> FAB, Jimbo, BAI, et al: Colorado State University is
> at the center of Fort Collins. The Old Town (1900-1935)
> extends primarily to the east and north of the university.
> Old Town is a really eclectic mix of homes and businesses,
> which is one reason why I like it.

I was on the ski team in college so I spent more time in CO than most kids from CA and I’ve always liked Fort Collins (but Boulder would be my first choice for a CO “College Town” investment).

I was close to Fort Collins when I drove from Denver to a friend’s ranch outside Greeley last summer and the bubble homes popping up in both Loveland and Greeley reminded me of the CA Central Valley bubble towns (and I predict big drops in value).

> I’ve also seen significant foreclosures on “permanent
> rentals”, leading me to believe that the noveau landlords
> with shallow pockets were speculating on appreciation
> or just didn’t understand the operating costs of a rental
> property.

Unless you make a big down payment “and” manage the home yourself “and” are able to make most repairs yourself you will most likely have a huge negative cash flow every year on a rental home (if you are local and want to spend a lot of time learning about management, maintenance and tax laws you should be able to get some after tax cash flow with a decent size down payment).

The key to making money in college area real estate is to buy a nice looking well located property that the kids of rich parents want to rent. You then get the parents to co-sign on all the leases (you can get money out of rich parents, but will not see a penny if the three young people with no jobs just move out some night or thrash the place at the end of the lease)…

denriddy Says:

> That’s what it is today, in this world, with the
> organized criminal activity (considered “business
> as usual”) known as “fractional banking.”

Do these criminals fly around in black helicopters?

Brand thanks for the insights on Ft Collins. I can't help but notice that what you consider crazy price (rightly so I'm sure) is starter home pricing here. I could never wrap my mind around that big a differential (of course I am an idiot).

I know people in the Bay Area make a bit more than people in Ft Collins, but not that much more. WTF?

@Brand, Word.

@TOB, thanks! Hope Zilpy catches on.

BAI,
It really is a shock when you get out of the fortress. When I bought my house here, I just wrote a check. Try getting your mind wrapped around that.

Hey renters,

Today must not be a good day for you guys. Home sales and home prices here in the north east are both UP!!!! And there are bidding wars breaking out in San Francisco. The link is below, so feel free to copy and paste it onto your blog Peter.

http://www.marketwatch.com/tvradio/player.asp?guid={E65FBA62-92FA-477B-9378-5AC8DEFA497B}

If the above link did not work, try here. It is a video:

http://www.marketwatch.com/

wow, 22 offers on a single house. I almost fell out of my chair when I heard that! Obvivously those 22 buyers do not read patrick.net

Watched the local news and Nightline yesterday -- you would think its the Great Depression. The local news led with a story on higher commodity prices which included: gas, "voluntary" rice rationing at Costco, and a small restuarant/bakery business trying to get by as less people are buying and the cost of ingredients continues to rise. Not to mention Vallejo about to go belly up... Next, Nightline did a spread on a national pawnbroker/cash advance chain in Austin, Texas. Somewhere in the story they threw in 'people selling gold (jewelry) to buy gas'. I had to resist the urge to buy a shotgun and bar the door.

Nonsense EBGuy, I watched Fox News and Fox Business and they said everyhting is fine... Couldn't be better :-)

Debt did not really “enable” you (or me) to go to college, it just enabled us to overpay for it.

Regarding college costs, here's an observational truth based on working years in university-level publishing. The big publishing houses rely on forced adoptions at high prices because their developmental/business model is incredibly top-heavy and inefficient; their goal is to persuade the professor to pass the costs onto the student--who had no other options. So what does that have to do with credit and tuition? Simply this: it is generally understood in publishing that student credit is a much-needed enabler to their business model. Rather than question their own assumptions, their parasitic relationship with student credit has kept their business going. But, now that students are finding digital workarounds to this tuition overhead, the publishers are screaming bloody murder. Sound familiar? I see this pattern repeated elsewhere.

Based on what I've seen, a lot of business methods that should be otherwise defunct have been kept on "life support" by credit. They would rather hope the credit party continues than make objective plans for a sustainable future.

I know people in the Bay Area make a bit more than people in Ft Collins, but not that much more. WTF?

Not really, it's just that Bay Aryans are "poor" at the $200K income level.
www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/22/EDJK1097DC.DTL

A 200K salary cannot even comfortably afford a median-price house in the Bay Area (3x income). Enough said.

A salaried person is never rich.

In today's funny world of US Peso, even a billionaire American may not be considered rich.

Kurt, since the economy is a zero-sum game, the ability to privatize gains and socialize losses is the surest way to profits.

This guy has between $500k and $600k on credit cards at 0% or 1%. He told me last month that in 2007 he made over $50k from that alone.

So your buddy has not only found a way to pay only 0% or 1% beyond a teaser rate on credit cards, but a way to avoid the typical minimum payments,transfer fees, and credit limits. Not only that, he has can take that money and make a consistant low risk 10% return.

...the ability to privatize gains and socialize losses is the surest way to profits.

Well...if they can pull that off and students comply willingly forever. I would suggest it's not working well because obviously society (students) are resisting that degree of personal overhead. Textbook piracy via digital means is one result. I've seen this from the inside, which to me carries more weight than a clever aphorism wrapped in assumptions. Sorry--just being blunt here, but if businesses wants to survive in the coming economic climate, they're going to need to think outside the "smart" little box they've made for themselves.

Headset
obviously ptiemann's buddy is Bare (tm) Sterns and the credit cards are the Fed. The conversation he relates must've taken place before that little implosion thingy in March. It seems he was to shellshocked to come here and tell us the story earlier.
Sorry, could not resist either.

Sorry–just being blunt here, but if businesses wants to survive in the coming economic climate, they’re going to need to think outside the “smart” little box they’ve made for themselves.

Of course, adaptation is the only key to survival.

I would second the claim that the $200K couple are poor in BA, particularly if they are stupid enough to take up a $800K or $1M mortgage loan. If they don't commit themselves to a depreciating asset with fixed obligation, then they are doing quite ok.

But by no means are these people rich. Far from it. People who are rich make only passive income and get taxed at 15% max. If you HAVE TO get up in the morning to go to work, you are not rich. Rich people go to work by choice, not because they need to pay their bills.

If you HAVE TO get up in the morning to go to work, you are not rich.

If you have to fly airlines, you are not rich.

If you have to drive yourself, you are not rich.

If you have to live in one place, you are not rich.

Robert Shiller endorses taxpyer funded homeowner bailouts:

http://biz.yahoo.com/ap/080422/economy_shiller.html?.v=2&.pf=real-estate

And you renters thought that Shiller was on your side! HA HA HA HA.

Peter--
I'll apologize for being a bit of a hothead, lol. I thought the assumptions within that industry were incredibly short-sighted towards the end-user (no surprise, huh?). I have since consulted towards a leaner, more flexible approach and the continued resistance is wearing on me. That may be my problem, but at least my thinking is more forward. Anyway...just popped by for a rant, carry on...lol.

"If you have to drive yourself, you are not rich."

Not true. Paris Hilton, Britney Spears, and Lindsay Lohan all drive themselves. It is easy to know when the 3 of them are on the road since all you have to do is look for expesnive cars that are banged up after crashing into a tree.

Which Peter? :)

Not true. Paris Hilton, Britney Spears, and Lindsay Lohan all drive themselves.

Obviously they are NOT rich... although I am sure they can afford chauffeurs.

BAI,

LOL!

How about a guy in fly-over-land making $3,600/mo disability, is he rich?

He pays no income tax
Does not have to work
Can take a cab
Can live anywhere, job not an issue

Which private jet can he afford?

I lived in NYC and I NEVER dorve myself. I either took a cab or the subway. I guess I was rich, even though I lived on the Lower East Side :-)

Headset,

ok, I need to clarify, passive investment income, not just passive income.

If someone can get by with $30k expense a year and he made more than that through his passive investment income, he is richer than those who has a fixed expense obligation of $100K a year and have to get up early in the morning to earn that after-tax amount.

I don't think a disabled person can get by with $3600/mo, just think about the nursing cost alone. $3600 for a disabled person is very compromised lifestyle, especially if such disbursement doesn't catch up with inflation.

If he is not yet medicare age, can he even get his medical cost covered?

If the disabled person can't get medicare, then they can get medicaid.

I would second the claim that the $200K couple are poor in BA, particularly if they are stupid enough to take up a $800K or $1M mortgage loan.
Not to quibble, but historically the home price-to-income ratio in the Bay Area has been around 6x (source: HSBC report: A Froth Finding Mission, Jan. 2006) . Obviously, I do believe anyone who wants to buy in that range now could get more house for their money in a couple years.... and, yeah, it would be hard to consider them rich given the PITI on a loan that large (yikes!).

Rich people also don't *have to* get mortgages (though they may choose to). A 20M summer house to them is like a $200 iPod to us.

"Rich people also don’t *have to* get mortgages (though they may choose to)."

The $3.6 Million Mortgage

http://www.nytimes.com/2007/07/01/realestate/01cov.html?_r=1&fta=y&oref=slogin