patrick.net

Strategist says

They all have to live somewhere.

And work, unless they are independently wealthy.

bgamall4 says

Reality says

Just like the mushrooming of Americans on disability (not actually disabled) due to government policies

Prove it. You can't assume that statement is true. Maybe more of the disabled are applying for the benefits than in the past.

http://www.cbsnews.com/videos/disability-usa/

bgamall4 says

Strategist says

I personally believe our standard of living will keep getting better over the decades, and the average consumer will have a much higher purchasing power, benefiting real estate the most.

That assessment is fundamentally flawed. Wages will decline for years to even the playing field internationally. And if property does not fall in the same way at the same rate, most people will be royally screwed.

That assessment may not be correct. The "leveling" may have already taken place, and is about to flow backwards. The very high real estate prices in India and China make it highly unlikely that their wages can stay low for long, and they have been experiencing double-digit annual wage increases in recent years. There is transportation cost and management overhead associated with outsourcing.

Mark D says

boomers have to live some where. they aren't going to move out of their big houses and live in their cars.

prices for small homes will go up. rents will go up and drive prices for small homes to go up even more.

btw, they like warm weather so buy in CA, FL, and AZ.

Prices for retirement villages, group homes, and assisted living will go up, way up.Most people retire to protected gated communities with amenities and services, not ordinary houses in towns. Look at south jersey or south florida (pre insanity and crash). The retirees barely affect the house prices outside the gates. Invest big in companies providing for seniors.

You forgot Texas, one of the larger retiree states.

Reality says

That assessment may not be correct. The "leveling" may have already taken place, and is about to flow backwards. The very high real estate prices in India and China make it highly unlikely that their wages can stay low for long, and they have been experiencing double-digit annual wage increases in recent years. There is transportation cost and management overhead associated with outsourcing.

The leveling will continue. The huge multinational corporations will be arbitraging the cost of labor forever. China and India will simply lose out to the next place that provides the lowest cost Tons of manufacturing is moving to Vietnam right now. Watch for Burma to be next if the government there truly stabilizes with parts of Africa in the on deck circle. There's always someone poorer and more desperate.

No predictions about teachers unions? You are slipping.

I'm also predicting a homophobic FortWayne comment.

Wealth disparity is a symptom of the corporate takeover of our systems of governance.
The coup d'etat is a done thing. The future is plain if you just use other countries, more advanced in this process, to understand how existing trends extend and accelerate.
Gated Communities…..now with armed guards and armed private patrols.
Armed security at all public shopping venues geared to the economic elites.
Separate, and privatized, EVERYTHING for the elites, security, transportation, schools, food sourcing.
The service class resides in a buffering ring around elite enclaves.
The entire rest of the country is abandoned, to blame themselves and do-the-best-you-can-while-you-starve in urban and rural slums. Quietly please, losers.

All this is current day in Sao Palo or Lagos

The American Favelas will first be abandoned and then reoccupied, for profit, using technology, drones and urban warfare tactics honed in the illegal resource wars of the last decade. (happening right now in the Camden Test Area http://www.rollingstone.com/culture/news/apocalypse-new-jersey-a-dispatch-from-americas-most-desperate-town-20131211)

As the empire collapses, due to the Senatorial Classes increasingly frenzied depredations,, the might of the US Armed Forces (and of course their corporate partners) will be brought home to fight at our our borders and to contain social unrest . The mechanisms are already in place with the creation of NORTHCOM (we did without a North American continental battle group for 200 years, well we have one now) NDAA indefinite detention and the tragic degradation of Posse Comitatus under the pretense of the hideously corrupt War on Drugs.
The American people are being acclimated now for intrusive search and destruction of personal sanctity. Young people today take for granted body search at the airport and stadium.

Roberto was a Cornucopian Fabulist. Robots! Thorium! Elon is going to build me a groovy car and Google is going to drive it for me!
The future is plain to see, if you can see past your normalcy bias and fears.

edvard2 says

Everything you just described is basically the system that has been in place of auto manufacturing since its inception. Its been long-established that auto manufactures will often use components that in many cases are used across their entire lineup of vehicles. We can dilly-dally about this all day long, but "modular engineering" in auto manufacturing is nothing that suddenly came about. As I mentioned before, the textbook definition of modular engineering is simply about the production of different components by separate entities to be used in a finished product. That's it!

Sorry, but you're still looking at the wrong end of the horse. The long established practice is to produce a component and engineer the platform around the component. The ford windsor engine you named is an example. The engineers drew up an engine then millions of cars were designed to take it. In today's world the engine space for the platform would be defined and new engines designed to fit in. Paradigm shift.

That's what is new and revolutionary, the components are engineered around a common set of platform standards that exist through the entire line. VW is probably the furthest along with this, but everyone is moving toward it. Again it's like plugging a computer card into a bus instead of designing a computer around a set of chips, which is how computers were built for many years. You really don't see the difference do you?

So all programming is about 0's and 1's. All cars run down an assembly line. Would you say the ford's original river rouge line pumping out model t's is the same thing as hyuda's incredible birmingham factory which is probably the most advanced in the world? Computers, robots, just in time, cad/cam, cnc milling, ,computerized metal forming, etc. etc. don't change the game it's all the same to you? Batch processing tapes with cobol (I actually did that) is the same as providing sophisticated online ecommerce like amazon for millions of people across the world? Sorry, I don't agree.

APOCALYPSEFUCKisShostikovitch says

sed 's/ti/ta/g'

New Renter says

Strategist says

They all have to live somewhere.

And work, unless they are independently wealthy.

Most people come to California for the same reason they always came for.....economic opportunities.

Why is land so expensive in Japan:

http://www.thejapanfaq.com/FAQ-Prices.html

Ask any Japanese why homes cost so much and you'll get the Standard Party Line: "Yes, Japan is a small country with very little land, blah, blah, blah." This of course is true. At 127 million people Japan has almost half the U.S. population in a land space that's a bit smaller than California. But that does not explain why a QUARTER of the Japanese population lives in or around Tokyo, or why the Shimane Prefectural government gave away land for free if you agreed to live there at least 6 mos. a year. The real reasons are found a bit deeper. In fact, most Japanese themselves, being completely apolitcal, are clueless on how their government or System functions. One of the biggest reasons why Tokyo is insanely expensive is because the government is based there. And Big Business is in bed with the politicians and bureaucrats. So if Big Business is based there, that's where all the best jobs are and where everyone wants to live. But there's more. Japan is one of the few nations in the industrialized world that has extremely light property taxes, but if you sell a home the tax is a killer 50%!!. This chokes off the supply of land and for the average Japanese worker owning a home will only be a dream. Some companies in fact have issued loans to buy a home where your children and then grandchildren, as of yet unborn, will finish paying off the mortgage. Land is also very expensive because floor space per square meter of land is artificially restricted by government regulations. Inheiritance taxes in Japan are even more devastating, so dying is a terrible thing to do to your family. Things got still worse in the "Bubble Era" of the late 80s to early '90s, which was a rampant speculative boom. Since then land prices and rents have fallen dramatically but the real causes have not been dealt with so the problem will not go away.

thomaswong.1986 says

GM is spending more and more of its taxpayer-enhanced cash pile to shore up its faltering foreign divisions. In fact, according to an analysis of GM’s SEC filings, the company is likely to incur over $6.5 billion in losses and expenditures overseas in the 2011-2014 period, not counting over $1.6b in foreign potential legal liabilities or several other incalculable expenses that could add up to billions more. Not only are these expenses a challenge to GM’s overall financial health at a time when it also faces billion-dollar expenditures on pensions in the US, it shows the basic problem with national bailouts of global companies.

While GM isn't doing as well in Europe, they're doing gangbusters in China, South America, and the middle east. They now sell more cars in China than in the US.
bob2356 says

That's what is new and revolutionary, the components are engineered around a common set of platform standards that exist through the entire line. VW is probably the furthest along with this, but everyone is moving toward it. Again it's like plugging a computer card into a bus instead of designing a computer around a set of chips, which is how computers were built for many years. You really don't see the difference do you?

Because there isn't really a difference here. Components designed for platform standards is nothing new. For example, if you flip open the hood of pretty much any Ford car, you're likely going to find the exact same overflow tank, washer fluid tank, AC compressor, and oodles of fasteners and hardware also used on the remainder of their model lineup. To delve back even further, well I have a classic myself. Its a big 55' Mercury four door. Despite its age it turns out Ford made basically the SAME brake drums for most of their full sized cars for decades. I was able to replace the original 1955 era drums on my car with drums from a 80's Lincoln town car.
The definition I'm referring to is the classic definition of modular design. It simply states that components are independently made in mass quantities to fit a final product and even though those individual components independently function, they together with the others collectively perform a task or set of tasks.

But I assume you and I will beg to differ, which is fine.
bob2356 says

Would you say the ford's original river rouge line pumping out model t's is the same thing as hyuda's incredible birmingham factory which is probably the most advanced in the world? Computers, robots, just in time, cad/cam, cnc milling, ,computerized metal forming, etc. etc. don't change the game it's all the same to you?

Yes- any newer car plant is going to be more advanced than the old Rouge plant in its model T days, but the original Rouge plant was in its day the most advanced manufacturing facility in the world. Yes- today we have robots, CNC machines, CAD design, and large quantities of automation. But at the end of the day both the more manual, less automated assemblyline of yore as well as today's most modern car plant still produces fully functioning cars, made out of many thousands of independently created components all assembled to work together.

So I suppose we will have to agree to disagree.

Strategist says

Most people come to California for the same reason they always came for.....economic opportunities.

Which means they will need to work putting downward pressure on wages.

Homeboy says

Giving handouts to GM does nothing to change the overall demand for cars. Therefore, if GM sells fewer cars, the other companies will sell MORE cars.

Why did Mulally ask for the credit lines, and state, “In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford’s top dealers also own GM and Chrysler franchises.”

In addition, Ford got the vast majority of the Green Car funding amounting to $6 billion or so there.

Contrary to popular belief, Ford was on life-support and happy for the entire industry to receive assistance.

New Renter says

How is that different from spending stupid amounts of money on art only the artist could love?

Or shacks.

CL says

Why did Mulally ask for the credit lines, and state, “In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford’s top dealers also own GM and Chrysler franchises.”

In addition, Ford got the vast majority of the Green Car funding amounting to $6 billion or so there.

Contrary to popular belief, Ford was on life-support and happy for the entire industry to receive assistance.

Fuck Ford. Why do I care what they have to say?

The thing about the US auto industry in general was that when the recession hit there was a perfect storm that hit at the wrong time. Starting in the 70's and working its way all the way up to the 2000's the Big three were losing market share in particular to the likes of Toyota, Honda, and Nissan. This happened because for almost 60 years prior to that the big three reigned supreme with little to no competition.

The US auto industry also perfected the term " planned obsolescence" where a car model might receive a drastic redesign every year. For example my 55' Mercury underwent major design changes: in 1955 the car was more rounded with mild fins and conventional glass. The next year the entire shape was changed to be more square with a backwards slanting rear window that rolled up and down. But while the cars were styled differently, the 'innards' barely changed. Even when the Mustang came out some in the press said it was a modern looking car with 1910 technology under the hood.

Japanese auto manufactures adopted a just in time, lean manufacturing approach that also focused on high levels of quality control. Most of their cars were front wheel drive too. When the fuel crisis hit, US automakers raced to puke out their own small, FWD cars and these were totally awful and unreliable. Meanwhile the likes of Toyota and Datsun came in with small, reliable, and fuel efficient cars using time-proven FWD platforms.

And it was a slow downhill slide for decades. the remainder of the 70's, 80's and 90's were filled with typically boring, at best mediocre American cars and their competition from Toyota and others winning the most reliable car awards year after year. As a kid and even now, all my family owned were Toyotas and once they passed the 200-250k mark we traded them in for another. They never had any issues.

So you had an entire generation that grew up with highly reliable Japanese cars and often crappy and unreliable American cars. That began to change in the 2000's. GM and Ford both hired new people and spent some real quality time redeveloping their entire lineups. Cars like the new Malibu, Cadillac CTS, Ford Fusion, Fiesta, Focus, and Taurus were all miles ahead of their previous generation and as good or maybe better than the models from Toyota. But the recession hit just when these efforts started to take hold and it was impossible to avoid bankruptcy.

A great many of the new American cars today on the road were developed prior to the recession. As of now many are selling so well that for example, Ford had to open a second Factory in the US to build more Fusions due to demand. Had these cars been on the market sooner perhaps bankruptcy could have been avoided.

New Renter says

How is that different from spending stupid amounts of money on art only the artist could love?

http://www.artsumo.com/blog/post/4

The super wealthy have been spending huge amounts of money on otherwise worthless crap since forever.

If you look at how wealthy families in Europe preserved their wealth, it was through gold, fine art and real estate. This is nothing new; it's called preserving your wealth in a world awash with larger and larger amounts of paper currency.

Strategist says

Home builder stocks in my opinion will outperform home price increases.

Home builders (and health insurances) may see larger sales, lower margins.

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

Say hey! This was in the Wall Street Journal on March 30, 1999. Note "... how much it will buy."

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Friday, December 13, 2013 __ Level is 100.8

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes! This was in the New York Times on August 27, 2006:

And up to date (by me) is here:
http://patrick.net/?p=1219038&c=999083#comment-999083

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

And http://patrick.net/?p=1230886

Homeboy says

CL says

Why did Mulally ask for the credit lines, and state, “In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford’s top dealers also own GM and Chrysler franchises.”

In addition, Ford got the vast majority of the Green Car funding amounting to $6 billion or so there.

Contrary to popular belief, Ford was on life-support and happy for the entire industry to receive assistance.

Fuck Ford. Why do I care what they have to say?

Because nobody who manufactures cars believes what you or Reality believe. There was nobody in the business that bemoaned the bailouts due to not being able to scoop up this demand you referred to.

Instead, like the others are saying, it would have been devastating to the entire chain and would have brought down millions of jobs.

For the record, I thought it was a good idea even when Bush started it. There were no buyers for a giant auto manufacturer. We could barely sell Chrysler.

Refin shows anemic inventory rises for Alameda and Contra Costa Counties and slightly few homes sold (year-to-year for November). Certainly nothing to get excited about at this point. PPSF is holding steady (at highs) in Alameda, slightly down from Sept. highs in Contra Costa.

CL says

Because nobody who manufactures cars believes what you or Reality believe. There was nobody in the business that bemoaned the bailouts due to not being able to scoop up this demand you referred to.

So your only argument here is that because ONE auto exec said he was glad GM got a bailout, that demand for cars would instantly drop off by the exact amount that GMs production dropped off, and that no other auto maker would be able to sell cars to the consumers who stopped buying GM cars?

Your logic is flawed. I have never heard ANYONE, in my entire life, say "Gosh, if I can't get a car from GM, I'm just not gonna buy one at all. So please explain how there would have been a vacuum of supply that couldn't in any way be met by other manufacturers. Propping up bloated businesses with bad business models is not good pubic policy.

Homeboy says

I have never heard ANYONE, in my entire life, say "Gosh, if I can't get a car from GM, I'm just not gonna buy one at all.

Well, each of the employees are also consumers, and that goes for each of the employees of companies up and down the supply chain. As far as I know, none of those suppliers had anything to do with causing the economic crisis.

I think if you know that we were trying to boost demand and cut unemployment, it would have been a terrible time to let the manufacturers go under. There would have been so many secondary and tertiary businesses that would have been unduly affected as well. The system didn't react well to Lehman and other shocks either.

If Big Auto were to find a buyer a year or two later, there would have already been a loss of talent, suppliers, etc that would have been extremely difficult to recreate.

I think this is why large manufacturers and mills would rather have a slowed factory than a completely idled one, right? It's hard to get the wheels moving again.

And can you imagine if they had sold even part of GM off to Fisker? The Republicans would still be talking about it--even worse than Solyndra!

If your theory rests on the idea that other manufacturers would have stepped in, then why didn't Ford jump at the chance to watch GM die, rather than weighing in in favor of the bailout? They would have been a beneficiary under your logic.

Reality says

And Big Business is in bed with the politicians and bureaucrats.

its not that Business, Govt and Unions are in bed and one is screwing the other..

they ALL pretty much figured it out and have instituted a plan to work together, collaborate , an make japan a economic power. Its all about NATIONALISM !

I witnessed home prices drop off a cliff from 90 to 95 and watched numerous amounts of my parents neigbors and friends walk away from homes that lost 40% of their value ...it was like a long slow bleed

A bubble means things pop, which means it will never inflate again.

Things inflated in 1987-1990, deflated in 1991-1995 and went on the create an even bigger balloon. That part is proven. There was no bubble in the 1990's because as you know, house price was already doubled by 2001.

If anything, it is a careful reminder to buy on the backdrop of a declining market becuase the 5 years thereafter will be the most amazing. 2011 anyone?

When a bubble bursts there is supposed to be a total repudiation and revulsion of the asset. This is what I have not understood about the "recovery" from the recent undeniable bubble in RE.
It SHOULD BE like the retail equities market from the 30's through the 50's.
People would punch you if you tried to sell them stocks.

Robert Sproul says

When a bubble bursts there is supposed to be a total repudiation and revulsion of the asset.

Aparently there is too much wealth out there looking to be invested, and since interest rates are SO low, the money goes into equities, real estate, metals, anything where people (and importantly money managers) think they can do better than 2 or 3 %.

So what happens if interest rates were to go up ? That is real interest rates
(the difference between inflation and interest rates) ?

It would seem, it's taken as an axiom that that will not and can not happen.

Certainly many defaults but no bail outs...

And you cant blame wall street, bankers,
basel II or de-regulation ( Glass-Steagall ).

did matter back in early 2000- 2005, everyone
was in denial. RE only goes up...

Thomas--

Just curious--what's your definition of bubble? Any time prices rise then fall?

bgamall4 says

Lol. Remember the movie office space? They robbed the company a penny at a time? That was similar to LIBOR robbing everyone on the planet a penny at a time.

LOL! when was the last time you went to your local gas station....

did you ask the attendant ..who changes the prices ? and what method

does the station manager/owner use ?... and look across the street to see the

other guys prices are also off by a cent or two....

bgamall4 says

Libor Lies Revealed in Rigging of $300 Trillion Benchmark

no one pays just libor.. its always libor + points... in this low rate global economy

its all way way too low, well below the norm cost of lending ...

have you seen these lower rates anytime before in your or anyones lifetime...

Its all noise level at the end of the day...

tatupu70 says

Just curious--what's your definition of bubble? Any time prices rise then fall?

whats your definition of "fair valuations" ?

at least on "the price is right" one learns

if you go over the right price, you lose anyway.

http://www.youtube.com/embed/BMCFRElyaCc

Thanks for playing anyway...

It's the thing forming out my ass after I gorge myself on the ten dollar vat of guacamole...

tatupu70 says

Thomas--

Just curious--what's your definition of bubble?

bdrasin says

That's not what the claim was. Don't change the subject. The working poor pay lots of taxes, and because they don't pay much into one particular kind of tax people like you are lying and saying they don't pay any taxes at all. End of story.

You were the one trying to change subject. Either that or you didn't know how to read. Mish's article clearly stated that the numbers were based on all taxes paid, not just income tax or any other "one particular kind of tax."

Yes, I agree, "the working poor" is also being ripped off by the non-working poor, assuming the particular "working poor" is not getting more back in EIC, food stamps, Medicaid, Section-8 etc. etc. than his/her payroll tax.
%0

thomaswong.1986 says

whats your definition of "fair valuations" ?

Fair valuation is a very subjective term. Each person has a different answer. A 5BR house probably has only slightly more value than a 3BR house to a family of 3, but to a family of 5 or 6, it has a great deal more value.

Or a stock--someone who believes that AAPL will double earnings next year will value the stock much more than someone who thinks earnings will stay flat.

There is no "right" answer for intrinsic value.

thomaswong.1986 says

at least on "the price is right" one learns

if you go over the right price, you lose anyway.

So, I ask a very simple question and you post a video of The Price is Right? Are you incapable of answering the simplest of questions?

The Chinese should have purchased GM. Then taxpayers would not be out $10B. But then it's only paper (or bits and bytes).

CL says

Well, each of the employees are also consumers, and that goes for each of the employees of companies up and down the supply chain. As far as I know, none of those suppliers had anything to do with causing the economic crisis.

So, your brilliant idea is that no company can ever lay off any worker regardless the worker's performance (or lack thereof)? No bad business can ever go under either, apparently.

CL says

I think if you know that we were trying to boost demand and cut unemployment, it would have been a terrible time to let the manufacturers go under. There would have been so many secondary and tertiary businesses that would have been unduly affected as well. The system didn't react well to Lehman and other shocks either.

Propping up inefficient businesses by taxing efficient ones is what's causing high unemployment and sluggish economic performance. Secondary and tertiary businesses should be affected due to their association with failed businesses. That would provide incentive for businesses to choose partners according to market performance not government bailout potential. The final liquidation of Lehman's derivative books didn't cause any disruption in the financial market. The round trip down and up in the stock market was sheer speculative move, and would/did expose the highly leveraged players.

CL says

If Big Auto were to find a buyer a year or two later, there would have already been a loss of talent, suppliers, etc that would have been extremely difficult to recreate.

I think this is why large manufacturers and mills would rather have a slowed factory than a completely idled one, right? It's hard to get the wheels moving again.

Why the stoppage? Someone would have bought the liquidating assets without the debt obligations. Production would have continued except for perhaps union sabotage.

CL says

And can you imagine if they had sold even part of GM off to Fisker? The Republicans would still be talking about it--even worse than Solyndra!

That's why GM should have been bought by a market agent with its own resources, not some government subsidized entity like Fisker, or "new GM."

If your theory rests on the idea that other manufacturers would have stepped in, then why didn't Ford jump at the chance to watch GM die, rather than weighing in in favor of the bailout? They would have been a beneficiary under your logic.

That's why Ford was given its own wad of government subsidy money. All those wads of money given to other carmakers all around the world were all part and parcel of the cost of keeping UAW alive.