patrick.net

What I didn't like was the TurboTax just whisked me through, I had a W2 and a 1099. It filed them separately, which I ended up doing the the W2 first. I can't help but think a tax professional, I could have talked to him and discussed the order in which we filed. With the successful war on families and women, I would have liked to explored filing single, head of household, or jointly. My wife never worked, we always filed jointly, and it was always a no brainer.

The IRS hates families and people who are trying to get ahead, there's just new rules, it's not cut and dry anymore. You use one of those software apps, and sure it will present questions but it will never have insight to your scenario, when you don't have any guidance to chose the areas that it presents.

If this was 6 years ago, using any software would have been fine, as the rules were pretty static when Bush was in office. It wasn't a new surprise every tax season, while he lied and said taxes never went up. The only surprises was sending people out even more money they didn't ask for nor need.

I imagine it's like traffic court. You pay the ticket clinic $80 bucks and you never hear a word about that ticket ever again. You go to court your self, and you'll be fined $150.00 court cost.

I'll just pay the tax pros $300 but they'll save you more than you'll pay.

Reality says

There will be a Reaganesque figure emerging after Obama leaves office in 2016.

God I hope not, Reagan/Bush I presided over more than tripling of the national debt both in real numbers and as a percentage of GDP. Reagan made Bush II and Obama look like misers. Thanks but no thanks to that.

Considering the debt rung up by republican presidents in 20 of the last 34 years, I want to know what small government conservatism formula are we talking about?

bob2356 says

Reality says

There will be a Reaganesque figure emerging after Obama leaves office in 2016.

God I hope not, Reagan/Bush I presided over more than tripling of the national debt both in real numbers and as a percentage of GDP. Reagan made Bush II and Obama look like misers. Thanks but no thanks to that.

Considering the debt rung up by republican presidents in 20 of the last 34 years, I want to know what small government conservatism formula are we talking about?

In only 5 years of presidency, Obama has already run up more national debt than all previous presidents combined. Neither Republican nor Democrat presidents reign in national debt. Government spending and appropriation bills have to originate in the House of Representatives. During Reagan years, Democrats controlled the House, whereas nowadays Republicans do.

My reference to the Reaganesque figure was not so much about Reagan or his policies per se, but the "Morning Again America" social dynamics recovering from the previous "malaise" in the 1970's, which was similar to what we have now.

Japans population is decreasing.

tatupu70 says

You'd be wrong

I'm not going to do this anymore. But I'll say it again for anyone who cares or even knows what correlation means.

FACTS: On a horizontal axis put interest rates increasing from right to left.

On a vertical axis put RE price data, with higher prices higher.

Take every one of the data points that occur from 1983 to 2006 and plot them, time is irrelevant on the graph you get, (all the data points come from that time interval - but the graph doesn't tell you when.)

The pattern will not be a perfect descending line. But there will be a very clear tendency for the higher interest rate values to be associated with lower prices, and the lower interest rates to be associated with higher prices.

MY guess would be r = -.6 to -.7

You don't think that 2007 on is anomolous ? What the fuck man. You're arguing for the sake of arguing.

Sure prices being lower wasn't an anomoly, but the actual drop in prices ? That was due to a massive deleveraging financial event. Several reasons that I think we all understand.

In any case okay. You don't get it, and you like to win arguments. That's all I've learned in this debate.

Reality says

In only 5 years of presidency, Obama has already run up more national debt than all previous presidents combined

The national debt was 11 trillion (all debt from previous presidents) when Obama took office. It is now 16 trillion. Please explain to me how 5 trillion is more than 11 trillion. A mind (even an am radio mind) is a terrible thing to waste.

marcus says

I'm not going to do this anymore. But I'll say it again for anyone who cares or even knows what correlation means.

http://www.bankrate.com/finance/mortgages/rising-rates-lower-house-prices.aspx

http://www.forbes.com/sites/billconerly/2012/12/18/when-mortgage-rates-rise-will-home-prices-fall/

http://www.calculatedriskblog.com/2013/06/house-prices-and-mortgage-rates.html

... I'll stop there, but you can read the first couple paragraphs of each and they all say: No correlation exists between interest rates and home prices, though would by homebuyers are comforted to think they might be.

Meaning that the author, like Tat, concludes that since interest rates sometimes have a positive correlation to RE price, and other protracted periods they have a negative correlation, that therefore these cancel eachother out, and we can not therefore say there is a correlation. (Actually, like Tat, the authors may not understand this.)

I consider this a legitimate view.

I guess if it helps you, think of me as making a different point, rather than a contradictory one. And that is that over some fairly long periods interest rates have a positive correlation to interest rates. Over other significant periods there is a negative correlation.

I understand why some hold that there is no correlation.

For further understanding of the obvious, you might want to explore the ways in which future income streams are valued by the financial world. They are valued almost entirely as a function of current interest rates. Plug in a higher rate, you get a lower value. This is finance 101.

Real estate price is a multi-variable function, with at least the following input variables:

Expected rental revenue (or owner equivalent rent);
Interest rate (real interest rate discounting future cash flow);
Other costs of carry (taxes, maintenance, insurance, etc.);
Price movement momentum (e.g. mass hysteria);
particular circumstances of the property, buyer and seller.

When all else is equal, the price is of course negatively correlated to interest rate (real interest rate, having accounted for expected inflation). In real life statistics however all else are not usually equal when comparing different time periods. So its a folly to expect scientific A/B test on data that is of historical nature and not repeatable in a lab for proper isolation of variables.

Austrians are actually better mathematicians than the Keynesian idiots who are often failures at pursuing math careers.

marcus says

Meaning that the author, like Tat, concludes that since interest rates sometimes have a positive correlation to RE price, and other protracted periods they have a negative correlation, that therefore these cancel eachother out, and we can not therefore say there is a correlation.

They don't cancel each other out, they show that there is no correlation. I'm thinking maybe you don't understand what the term means:

correlation /cor·re·la·tion/ (kor″ĕ-la´shun) in statistics, the degree and direction of association of variable phenomena; how well one can be predicted from the other.

The key is the 2nd sentence. How well can one be predicted from the other. As you say, sometimes there is a positive relationship, sometimes negative. No predictive power.

marcus says

The pattern will not be a perfect descending line. But there will be a very clear tendency for the higher interest rate values to be associated with lower prices, and the lower interest rates to be associated with higher prices.

MY guess would be r = -.6 to -.7

And I'll tell you that you can't do that because inflation will overwhelm your signal. You'd get a much better correlation between time and price.

You should look at price change % vs. interest rate. When I did that, it came out at r = +0.015 or so.

marcus says

For further understanding of the obvious, you might want to explore the ways in which future income streams are valued by the financial world. They are valued almost entirely as a function of current interest rates. Plug in a higher rate, you get a lower value. This is finance 101.

Why do you keep bringing this up? Houses aren't like stocks and bonds--that's the point here.

marcus says

Meaning that the author, like Tat, concludes that since interest rates sometimes have a positive correlation to RE price, and other protracted periods they have a negative correlation, that therefore these cancel eachother out, and we can not therefore say there is a correlation. (Actually, like Tat, the authors may not understand this.)

Like Tat says, there is no long term correlation. There is only noise, and random fluctuations that you are trying to assign meaning to. You are failing to see the forest for the trees.
marcus says

I guess if it helps you, think of me as making a different point, rather than a contradictory one. And that is that over some fairly long periods interest rates have a positive correlation to interest rates. Over other significant periods there is a negative correlation.

No one is denying that you can find time periods where there are positive and negative correlations. The price changes in these periods were not driven by the interest rates. They are just noise. If they were driven by interest rates, they would all be correlated in the same direction. We are stating that on the whole, historical data do not in any way back up your claim that an increase in interest rates will cause prices to decline.

marcus says

For further understanding of the obvious, you might want to explore the ways in which future income streams are valued by the financial world. They are valued almost entirely as a function of current interest rates. Plug in a higher rate, you get a lower value. This is finance 101.

So, a net present value calculation uses a discount rate to discount the value of future cash streams. The expected cash flow is in the numerator and the discount rate is in the denominator. No one is arguing these basic facts. Most are arguing that the discount rate never changes independently from the cash flow. In fact, there are other forces that make the expected future income stream correlated with the discount rate. Things are a little different for a cash investor, where the discount rate is tied to the expected rate of other investments (opportunity cost) and the leveraged buyer, where most of the discount rate is tied to a mortgage cost.
The net effect of all of this over long enough time periods is apparently that there is no significant correlation between mortgage rates and house prices.

YesYNot says

Maybe the question is, why do people on Patnet expect that we will have high interest rates in the absence of any inflationary pressure?

So, I ask again, why do you think that we will have high interest rates in the absence of inflationary pressure? I'm using the term interest rates generally to include mortgage rates and expected returns on investments. The inflationary pressure would cause expected cash flow to increase in the future. You keep acting like we need to understand a net present value calculation, but you ignore the relevant questions about how it works.

YesYNot says

No one is denying that you can find time periods where there are positive and negative correlations. The price changes in these periods were not driven by the interest rates.

I didn't say they were. What's that saying about correlation and causation ? IF anything (and quite obviously), the positive correlation occurring in the seventies with inflation actually driving interest rates, is something I'm pretty sure even idiots don't deny.

YesYNot says

So, I ask again, why do you think that we will have high interest rates in the absence of inflationary pressure?

I didn't say I think we will. And in fact I'm not predicting that.

YesYNot says

You keep acting like we need to understand a net present value calculation, but you ignore the relevant questions about how it works.

Because only a total fool would deny this. It affects valuations of income streams and it also affects the monthly payment a family can afford to make.

During a protracted period when inflation was bound to a range of 2 to 4% and yet LT interest rates were dropping further and further, especially the part of the drop that was from say 9% to 5%, in the absence of deflation with steady low inflation, this was extremely highly correlated with rising RE prices, for this period, for incredibly obvious reasons I have described more than once.

The other long period when interest rates were rising (pre 1980), I think you'll find many who say that this correlates with increasing inflation, and since most even define interest rates as having an inflation premium this in no surprise. Need I argue why inflation and rising house prices are correlated over significant periods of time ?

This argument is so stupid.

Some might argue that there is no single trend in interest rates during last 60 years. They wouldn't be wrong. Some will argue it's a random walk.

Another person might say, that the way they look at it, there was 30 year period or so of an up trend, and a clear 30 year period of down trend.

Housing prices were trending up most of the entire time.

SO anyone that wants to argue that there isn't a positive correlation between interest rates and RE prices during the first period, and a negative correlation during the second period, is either a total idiot, or they don't understand what correlation means.

(again - I'm not saying the people who claim no correlation are wrong. They are no more wrong than the people who say there is no single trend in interest rates the past 60 years)

Yes, I've drifted off in to talking about both 30 year periods being understandable, (especially key parts of each period) but that was not my primary argument.

I'm done with this.

marcus says

Housing prices were trending up most of the entire time.

Housing prices have been trending up for all times. Clearly it's NOT correlated with interest rates. I really don't think you know what correlation means.

marcus says

This argument is so stupid.

Hey - we agree :).

Who was the winning tail pinner?

Call it Crazy says

BTW, Snopes has been proven over and over to be a partisan site, just like Mother Jones...

Still waiting for the proof.

Call it Crazy says

Chris Matthews

He is the quintessential horses ass, somebody had to pin the tail on him?

The Professor says

Don't they write their name on all of our currency?

The Federal Reserve tatupu70 says

Call it Crazy says

BTW, Snopes has been proven over and over to be a partisan site, just like Mother Jones...

Still waiting for the proof.

It's easy: Snopes sometimes makes statements which are at odds with received conservative orthodoxy. Therefore they are biased, since only conservatism is true.

For example:

1) Nobody ever trimmed his hedge with a lawn mower, then sued the manufacturer when he injured himself.

2) NASA did not spend millions developing a space pen, while the Russians just used a pencil.

These statements contradict foundational truths upon which the e-mail forwards of elderly conservative loudmouths are based. They are therefore biased.

bob2356 says

Originate is originate

The Senate took an airport funding bill (Airport and Airway Extension Act of 2010) and turned it into the 2010 fiscal bargain (Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) that extended unemployment benefits and extended the Bush tax cuts for most people.

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.4853:

So the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" was in fact originated in the Senate even though the bill has an HR numbering.

"In only 5 years of presidency, Obama has already run up more national debt than all previous presidents combined"

While it's true deficit spending increased in 2010-2014,

http://research.stlouisfed.org/fred2/graph/?g=zB6

this was largely the result of the collapse of the flimflam Bush Economy in 2008-2009.

http://research.stlouisfed.org/fred2/graph/?g=zB8

shows how households were borrowing $100B+ a month during the peak of the Bush Bubble.

Only recently has this flow been positive again.

http://research.stlouisfed.org/fred2/graph/?g=zBa

shows personal income tax receipts fell $400B/yr when the economy blew up.

I guess conservatives would want the government, sorry, Obama, to reduce spending $400B/yr when that happened. They're not known for perspicacity, the ability to see the consequences of possible actions.

Corporate income taxes are red in the above chart, showing they declined by 50% to $200B.

Funny how little corporations pay in income taxes, compared to their incomes:

http://research.stlouisfed.org/fred2/series/CP/

It's almost like they've written the tax code or something, but you'll never see a conservative rail about that.

What a fraudulent ideology, top to bottom.

Call it Crazy says

At least 100 of the 603 freed Guantanamo Bay prisoners have returned to terrorism, U.S. intelligence report reveals.

Who could ever imagine that some Afghan shepherd boy whisked away by rival clans and sold to the CIA for $$$, shipped all the way around the world, and then tortured for years would become an enemy of the government who did it to him?

That's simply against all human nature.

bgamall4 says

Sarah Palin was bankrolled by Lady Lynn Rothschild.

Great, lesbo videos really turn me on. Was that a vibrating bankroll?

I was always taught (years of study in economics and federal reserve policy) that generally we haven't had a depression since the Great Depression because lessons were learned, and government policy wouldn't make the same mistakes again. Currently we have the illusion of safety in banking in particular (the government guarantee on deposits, etc), zirp, monetary stimulus, etc. It seems like buying stocks on "margin" during the Great Depression was replaced with buying houses on "margin" (i.e. mortgages) during the latest crash. Another thing to remember is that it was really WWII that ended the Great Depression, and behold I see things heating up with Russia and Ukraine. Let's hope it doesn't take a war to really get the economy back on it's feet again.

Bullshit says

Let's hope it doesn't take a war to really get the economy back on it's feet again.

We spent more on war 2001-2010 than we did on WW2, in constant dollars.

~$1T/yr, 1941-45 (2008 dollars)

http://www.history.navy.mil/library/online/costs_of_major_us_wars.htm

Expansion of DOD spending since 2000:

http://research.stlouisfed.org/fred2/graph/?g=zEr

$2T in additional spending, 2000-2010 on top of a $4T base expense.

What a fucking waste. Thanks, Nader.

Bellingham Bill says

We spent more on war 2001-2010 than we did on WW2, in constant dollars.

~$1T/yr, 1941-45 (2008 dollars)

"Spreading freedom" has its price!

It is the FED.

In your research also look into the effects of mercantilism an international trade on the 1920s.

Reality says

Is it effective at either? of course not. In fact, Austrians contend that the FED actions over the long run exacerbate the swings.

And that is another reason why nobody can take Austrians seriously. Do you really contend that the time since the Fed is worse for boom/busts than the time before the Fed?

tatupu70 says

Reality says

Is it effective at either? of course not. In fact, Austrians contend that the FED actions over the long run exacerbate the swings.

And that is another reason why nobody can take Austrians seriously. Do you really contend that the time since the Fed is worse for boom/busts than the time before the Fed?

Of course more severe boom/busts compared to times without central bank influence (there were two previous instances of central banking in US history, plus the British central banking manipulation that eventually led to the American Revolution). The Great Depression was the first major achievement of the 3rd US central bank, the FED.

bgamall4 says

Just FYI, prize money for Kentucky Derby win was 1.4 million, and the trainer was 77 years old, oldest trainer for Derby winner ever.

Impressive.

The unfortunate dangers of the FED today is they give all of the Corruption in the banking industry a central point in which they can legally collude.

Take the FED out of the picture, and replay the actions of the bank industry for the last 14 years, only with Bank CEOs taking place of the FED meetings, and it's the same shit brought the Sherman act ahead. It's fucking fraud in plain sight.

I can't believe I was stupid enough to not agree with Ron Paul 100% in 2008. I still believed in the FED.

But I tell ya this, we still need regulators, oversight and laws. It probably would be easier to enforce those rules, if we didn't have the FED, acting like a derelict parent enabling bad behavior, making excuses, cover and defense of all of the corruption and fraud.

CaptainShuddup says

Take the FED out of the picture, and replay the actions of the bank industry for the last 14 years, only with Bank CEOs taking place of the FED meetings, and it's the same shit brought the Sherman act ahead. It's fucking fraud in plain sight.

Bullshit, if you rip the power away from these charlatans there is no Sherman charade. Fuck Teddy Roosevelt, he was batshit crazy.

bgamall4 says

Strategist says

Impressive.

Glad you are still talking to me. :))

You know, I disagree with my wife on everything, but I still sleep with her.
Not saying I want to sleep with you, just that disagreements don't bother me.
You are cool. :)

Thanks.

Facebooksux says

She-Man cannot claim to have 5.5 million in assets. That's horseshit

Look, You don't have to believe whatever is said on this forum, or simply you can counter punch by saying you have 5.5 mil in liquid assets.

The Professor says

I think he likes to argue.

Really I hadn't noticed (8^(l)

I've never heard it referred to as a "rule." You're referring to sentiment indicators, which aren't always right (that is wrong). But yes, sentiment is very bearish at the bottom and bullish at the top.

But that's trivially obvious, because a lot of people have to be selling to get it to a market price (down) bottom, and after the bottom is in, you can look back at all the short covering and the decreasing bearishness of sentiment and say see ?

Considering the Catholic churches record with Galileo best practices should be implemented sometime around 2315. Don't want to rush into these things.

The NY post had a front page article once about "Beauty and the Priest". Some Long Island priest got filmed coming out of a motel room with his secretary. He claimed they got too tired to drive, on the 2 hour trip from NYC to LI, and stopped to rest. The post interviewed people in the priests town about it. One guy said "I'm just happy he was with with a women over 18".

clambo says

What contributed most to the depression after the 1929 stock bubble popping was bank failures led to a very low level of banking activities which really depressed economic activities in the USA.

That is the conventional Milton Friedman take on it. But it really is not true, the damage was caused long before that.

This is pretty good description of what really happened starting at page 175:

http://mises.org/books/dollarcrisis.pdf

Call it Crazy says

So true....

Look who's talking CIC. Shall I repost all the comments you deleted of mine?