patrick.net

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.

CL says

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.

So then you believe that every public statement by high-profile business executives is completely genuine and in no way calculated to derive political benefit?

Ha ha - tell me another one.

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.

I don't see the logic here. How does propping up inefficient mega-corporations with taxpayer dollars "boost demand"? A given person either needs a car or doesn't need a car. As I said, I've never heard of anyone saying, "If I can't get a GM car, I'm just not going to buy a car at all." Obviously the demand would shift sales to other companies. There is no shortage of automobiles for sale; a quick trip to any car lot will tell you that. If you want to BOOST demand, you should give more money to consumers, not take money AWAY from consumers and give it to GM execs.

Homeboy says

I don't see the logic here. How does propping up inefficient mega-corporations with taxpayer dollars "boost demand"?

Perhaps it would have been better stated--keeps demand from falling. When you're laid off, your demand for a new car is probably reduced. Wouldn't you agree?

tatupu70 says

Perhaps it would have been better stated--keeps demand from falling. When you're laid off, your demand for a new car is probably reduced. Wouldn't you agree?

So then you believe that no business, no matter how poorly run, should EVER be allowed to go bankrupt or be purchased by another company?

Homeboy says

So then you believe that no business, no matter how poorly run, should EVER be allowed to go bankrupt or be purchased by another company?

Nope. Try not to emulate Mr. Wong with his strawman arguments

tatupu70 says

Nope. Try not to emulate Mr. Wong with his strawman arguments

Not a strawman. It's the logical conclusion of your line of reasoning. You believe that GM had to be bailed out because of the risk that its employees would lose their jobs, and therefore decrease demand for cars, right? That IS what you said, isn't it? Therefore, if lost jobs hurts consumer demand, because, as you said "When you're laid off, demand is reduced", then that must be true of ALL lay offs, correct? Therefore, ALL companies must be prevented from laying anyone off, right? If that is not the inescapable conclusion from your line of reasoning, explain why not.

Homeboy says

Not a strawman. It's the logical conclusion of your line of reasoning. You believe that GM had to be bailed out because of the risk that its employees would lose their jobs, and therefore decrease demand for cars, right? That IS what you said, isn't it?

No--don't think so. Can you link where I said that? Because in this very thread I believe I've said the exact opposite. So it is most definitely a strawman.

In any event--all time periods aren't equal. A company going bankrupt when unemployment is low is not nearly the same as if the country is on the verge of a depression.

It also depends why the company has to declare bankruptcy. Every case is different. I'm only marginally familiar with the GM case and probably agree that it should have been allowed to go bankrupt. But I would also state that GM going bankrupt would have been (significantly) most costly to the US than the bailout.

http://finance.yahoo.com/echarts?s=SRS+Interactive#symbol=srs;range=1m;compare=iyr;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

I expect that RE downtrend to continue. IMO RE can only hold some if outperformed by another broad-based bull run which would lift all boats and that doesn't seem likely. Plant yams now!!

tatupu70 says

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.

How wrong you are!

There is only one answer, one figure, you can come up with when pricing a share of stock, bond or option. Its basic finance question any finance/accounting major know. Its not subjective and to think it is pure stupidity.

APOCALYPSEFUCKisShostikovitch says

Who comes up with these show concepts? This is obscenely bad. Let's get people to guess on the price of crap that no sane person would want near them. Duh.

How else does the public view 'the right price" when buying a home.

It's a possibility - the numbers look ugly.

the landlord of the house we used to rent had bought in and around 1988-89' and told me about how much value the house lost afterwards. Bubbles are a part of the Bay Area's DNA. Usually expect to see bubbles inflate and deflate in 5-7 year cycles. That's how its been forever here.

thomaswong.1986 says

There is only one answer, one figure, you can come up with when pricing a share of stock, bond or option. Its basic finance question any finance/accounting major know. Its not subjective and to think it is pure stupidity.

You've got to be kidding me. You've obviously never done a valuation of a stock, bond, or option. It is basic finance--I can't believe you are so ill informed.

In order to do a proper valuation you must ESTIMATE future cash flows. And discount rate. Five people that do a valuation will almost certainly come up with five different answers.

Is it coming back now Thomas?

tatupu70 says

Homeboy says

Not a strawman. It's the logical conclusion of your line of reasoning. You believe that GM had to be bailed out because of the risk that its employees would lose their jobs, and therefore decrease demand for cars, right? That IS what you said, isn't it?

No--don't think so. Can you link where I said that? Because in this very thread I believe I've said the exact opposite. So it is most definitely a strawman.

Can I link to where you said that? Sure - right here:

tatupu70 says

Perhaps it would have been better stated--keeps demand from falling. When you're laid off, your demand for a new car is probably reduced. Wouldn't you agree?

So you are claiming that your statement that GM laying off employees reduces demand, is the "opposite" of saying that GM laying off employees would reduce demand? Um, yeah - that makes sense. LOL. Did you get confused as to what the word "opposite" means?

NR said: So what about Stockton and Sacramento?
Inventory is up by 25% in Sacramento (according to Redfin, year to year for Nov) with a slight decline in homes sold. PPSF is holding steady.

OK--let me get this straight. Stating the obvious fact that:

People losing their jobs decreases demand

is the same as saying:

GM had to be bailed out because of the risk that employees would lose their jobs??

Where in the hell do you get that???

Homeboy says

So you are claiming that your statement that GM laying off employees reduces demand, is the "opposite" of saying that GM laying off employees would reduce demand? Um, yeah - that makes sense. LOL. Did you get confused as to what the word "opposite" means?

No, I'm saying--stating an obvious fact that people wihtout jobs are less likely to buy new cars than people with jobs, is not the same as my opinion as to whether GM should have been bailed out or not.

The effect that GM ceasing to operate would have on unemployment is one factor in the bailout decision (or my opinion of the decision at least), but it's not the only one. As I said earlier, most likely other factors are more important.

Do you see now?

tatupu70 says

In any event--all time periods aren't equal. A company going bankrupt when unemployment is low is not nearly the same as if the country is on the verge of a depression.

It also depends why the company has to declare bankruptcy. Every case is different.

Exactly. It would have been different if market forces had necessitated their bankruptcy, but it was the spiral of the financial system at the heart of it.

In any case, the Obama administration did gently guide them into bankruptcy, as opposed to allowing the entire system to go into a death spiral.

If the economy had been healthier, I wouldn't doubt they would have been allowed to fail. We could have absorbed that, and more importantly, there would have been willing buyers. I don't recall anyone being eager to buy an automotive megacorp in '09, as many investors wouldn't even buy shares at $1...even the famed Ford stock was worthless.

CL says

Exactly. It would have been different if market forces had necessitated their bankruptcy, but it was the spiral of the financial system at the heart of it.

Those were market forces necessitating the leveraged into bankruptcy. In fact tightening credit is a poster boy of a market force example.

CL says

In any case, the Obama administration did gently guide them into bankruptcy, as opposed to allowing the entire system to go into a death spiral.

Lots of other companies went belly up, GM was not in special in any case. Usually bailouts and crony subsidies like this happen in backdoor negotiations out of fear of stirring up a political scandal, and they are illegal. What this did is setting a precedent for the president to come in openly like a fascist/corporatist dictator and pick winners and losers, blatantly disregarding the rule of law and fucking over people who thought they had a contract while turning the whole affair into a PR stunt. This alone was grounds for impeachment (and yes, Bush gave plenty of reasons for impeachment as well).

edvard2 says

Medians mean everything, sorry. After actually buying a house and working
with an experienced realtor I can tell you that medians are used not only
locally, but even on a neighborhood by neighborhood basis: recent home sales are
combined to come up with current market values for a particular home for sale in
that era. When combining recent home sales, that means their median prices are
used as a benchmark. With that system this is how values rise in lockstep.

I don't think the medians were that relevant for the past few years when investors, speculation, and the proliferation of being priced out of the market were running rampant.

Analyzer says

I don't think the medians were that relevant for the past few years when investors, speculation, and the proliferation of being priced out of the market were running rampant.

They were because knowing the medians ( average house price) is what contributed mightily to the psychological elements of the bubble. Basically knowing what these averages were what caused people to either get greedy, or panic by the fear of being priced out forever. They heard reports on the radio- that "prices had risen xxx% last month" and so on.

edvard2 says

And yes- we are very much in a bubble.

I think the cost of living regarding shelter is high in bay area whether it's renting or owning. Back during "official" bubble days of mid 2000s however, the annual rents ratio was higher. Nowadays, the ratios are more reasonable but it's only because the rents are so much higher compared to back then.

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 Monday, December 16, 2013 __ Level is 101.6

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

Looking at how strong the real estate market came back, it seems we didn't have a bubble.

Memories are apparently short. People seem to be forgetting that from 2003-2007, the bubble was ALL anyone talked about at dinner parties. I'm starting to hear some of that same talk now. We might be towards the earlier side of a new bubble, but its here for sure and it like all the others will run its course.

edvard2 says

Memories are apparently short.

LOL! and that is the most remarkable part about bubbles... any bubble !

The amount of denial is so blatant..

tatupu70 says

You've got to be kidding me. You've obviously never done a valuation of a stock, bond, or option. It is basic finance--I can't believe you are so ill informed.

In order to do a proper valuation you must ESTIMATE future cash flows. And discount rate. Five people that do a valuation will almost certainly come up with five different answers.

Is it coming back now Thomas?

I just have to laugh when I read this.. to even flunk a simple bond valuation is unthinkable... there are no 5 different answers!

Its remarkable to really see the people here, neck deep in RE, they banked

everything on it..

It goes down... it goes down really bad for these folks... why they are deep in denial !

thomaswong.1986 says

I just have to laugh when I read this.. to even flunk a simple bond valuation is unthinkable... there are no 5 different answers!

Again-there is absolutely no way you are a controller. None. You lack the most basic accounting and finance skills.

Rew says

I'll play!

You add all the total home sale prices up and divide by the total number of sales. This gives you a median home price.

Why they are meaningless: because if you sell a few very expensive houses, or many many more affordable houses, the median will be about the same. So, the median itself doesn't tell us what the market is doing or made up of at all.

You're simplifying this to make a point. Yes- there are indeed overall medians for overall housing markets on a national, state, regional, metro, city,and neighborhood. Likewise there are also median statistics for upper, lower and medium levels of housing: for example, what the average 3 bedroom, 2 bath home sells for in a given neighborhood.

It is the statistical collection of these medians that determine current value of any given area. If that wasn't true then someone could say: " Well, my neighbor's house sold for $250,000... so I'm going to put mine on sale for a Million!" Of course you wouldn't do that: You would price based on studying your local market-aka- what is the MEDIAN that the homes in your area are selling at.

Again- this is super, super basic fundamental economics.

Its important to understand how mathematics and economics go hand in hand.

tatupu70 says

I just have to laugh when I read this.. to even flunk a simple bond valuation is unthinkable... there are no 5 different answers!

Again-there is absolutely no way you are a controller. None. You lack the most basic accounting and finance skills.

Thats OK...I will have a good laugh and continue with my prosperous career...

But I will know YOU couldnt pass the CPA or CFA exam because you cant do a simple Bond valuation problem and you come up with 5 different answers.

thomaswong.1986 says

But I will know YOU couldnt pass the CPA or CFA exam because you cant do a simple Bond valuation problem and you come up with 5 different answers.

I explained how the bond valuation is done and also why different people will get different answers (in the real world). On an exam, there is one answer because all the variables are provided for you. In the real world, when you have to estimate, different people will get different answers.

If you think I'm wrong, please explain why. Otherwise, I'll assume you don't know...

tatupu70 says

I explained how the bond valuation is done and also why different people will get different answers (in the real world). On an exam, there is one answer because all the variables are provided for you. In the real world, when you have to estimate, different people will get different answers.

If you think I'm wrong, please explain why. Otherwise, I'll assume you don't know...

Im not going to explain jack fucking shit cause you dont know how to do a simple valuation of Future cash flow...... your neck deep in RE and like many in denial...

You made your own noose, now hang from it.

tatupu70 says

OK--let me get this straight. Stating the obvious fact that:

People losing their jobs decreases demand

is the same as saying:

GM had to be bailed out because of the risk that employees would lose their jobs??

Where in the hell do you get that???

Um, because that's the subject of this thread. If CL argues that the bailout was necessary to preserve demand, and you chime in and ALSO say that saving jobs preserves demand, then yeah, it sounds a bit like you're arguing in favor of the bailout.

But I guess you aren't; you're just being a disingenuous troll arguing only for the sake of argument.

CL says

In any case, the Obama administration did gently guide them into bankruptcy, as opposed to allowing the entire system to go into a death spiral.

Tell that to the Bondholders about "Gently"... whats that supposed to mean anyway
vs a "Reorganization Bankruptcy"..... how is that a death spiral ?

What death spiral did PG&E go through.. why are they still around ?

http://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization