patrick.net

This is OT but has been discussed much of late. Local CPA just got back from Vegas where they had the IRS Seminar and it IS as we suspected!

Outsourced collection agents will not be going after Tyco and GE! (duh)

They however will not be calling on you b/c you miscalculated your add'l child care tax credit either! So let's all take a chill pill here, o.k?

So what are these thugs going after? SCHEDULE C!

The obvious stuff. Guy claims 36K in income (after expenses) and his mortgage is 35K!? Oh, and 5 dependents? Toast.

Primarily it's folks that have already been hauled out on the carpet and are simply no longer responding to correspondence in any form. This could actually be fun.

Why don’t people like carpetting anymore?

Too difficult to clean and maintain. Hardwood can be used with a sound-absorbing layer to reduce noise.

I do like berber carpet for bedrooms. Carpet does feel warmer.

eburbed Says:

Why don’t people like carpetting anymore?

Not necessarily stupid...What lies beneath depends. You can usually lift up the corner of the carpet to see what's underneath. Some homes (often older ones) will have old hardwood underneath, while some will reveal that the owners cheaped out and just laid carpet over concrete or wood (stairs, for example). The hardwood underneath would then need to be stained and finished.

Carpeting wears out, is hard to clean, and with everyone's allergy concerns these days, it's just a vat for germs and allergens. May be some issue of fads of the times, too. I personally much prefer hardwood.

astrid,

That's my point. We're cannabalizing everything we can get our hands on. When a stockbroker blows up your account and you have no more money, you're broke, but that's it.

After realt-whores and mortgage brokers are done with the American consumer he's tapped out for life. And all these "industry professionals" are wondering where all the buyers went? Same with Lowe's and HD. Gosh, and things were going so well.

Robert Coté Says:

Don’t get me started.

Too late! Hit a raw nerve, did we?

Free parking is evil and must be stopped.

I am not against being charged for parking. However, I would prefer not having to wait in line to pay. How about an integrated electronic tracking system that monitors speeding, road usage, and parking?

Just like they have in London.

Robert,

I just love your anti-NURB/TODler rants, but it's a whole lot more readable when you use paragraph breaks (see reformatted rant above for example). Otherwise, keep up the good work and give those FOAMers hell!

DinOR,

I certainly do agree with you about the state of consumption today. I wrote that comment as a response to Randy H's equation.

I'm not opposed to paying for parking directly, but only if the fee collect was instanteous and continuous (eg cash card swipe at the parking meter that automatically deducts based on time spent). Most of my pay parking experiences were highly negative, you're always waiting to get in or out, or worried that your meter just ran out.

Eburbed:

On the carpeting vs. hardwood topic; we pulled carpets at my old house to reveal hardwood beneath. Newer places may have just a layer of padding over concrete.

Personally, I prefer hardwood with rugs as needed. It's easiest to clean, and you can always refinish it in the worst case. (Of course, this modern stuff that passes for hardwood is fairly wimpy. Bamboo flooring looks nice, but you wouldn't want anyone to wear heels on it.) Also, for those who entertain, hardwood makes a much better dance floor.

Based on my fairly narrow observation, you'd be very lucky to get concrete or hardwood base floor. Every McMansion in construction I've been to, up to multi-million dollar places, had OSB board floors nailed to some softwood beams.

If you change flooring in one of these places, take the time to drill in a couple pounds of screws to the boards. That would really help quiet floor squeaks. I know people whose floors started squeaking after only one or two years of habitation.

I think all homes should be built with steel-reinforced concrete.

Well, I like to over-engineer. You can ignore me now.

"Well, I like to over-engineer. You can ignore me now."

Maybe not. You may want to read Slate's current series on surviving catastrophes.

"Perhaps the most vulnerable place in the nation right now is New York City, which turns out to be the third-most seismically active region east of the Mississippi. Geologists estimate a 20 percent to 40 percent chance of a significant earthquake in the next 50 years in New York, and they make a special point to say that a major quake is also a real possibility."

http://www.slate.com/id/2148772/entry/0/

Maybe not. You may want to read Slate’s current series on surviving catastrophes.

I would rather have an off-grid capable solar power system and an auxillary natural-gas generator instead of a boat or an RV.

Huh? Sorry if I wasn't clear. I meant more "over-engineering" might be a good idea for much of the country. Earthquakes are rarer in the East, but could be even more devastating because they affect larger areas.

C is fine, unless it cannibalizes S and I and decrease future C. The current American economy is consuming at the expense of saving and investing.

Of course this is true. But keep in mind that only businesses, not people can I, and only people, not businesses can S. Both T.

The feedback is that:

People save S by putting it into banks
Banks use that to provide capital for businesses to invest I
But businesses produce goods and services that are consumed C
and the dreaded T is a drag on the entire system

in reality some T re-enters as Gs, the real equation is NI = C + S + I + (G - T)*w where w is the gov't waste rate.

But if there's too much S, you get deflation ala Japan. If there's negative S, then there is either inflation or not enough business I.

"But keep in mind that only businesses, not people can I, and only people, not businesses can S."

That's true in a strict sense.

Also, in cases of small businesses, partnerships, sole proprieterships, D corporations and even lots of C corporations, the owners (real people) are deciding between business investment, consumption for themselves, or saving via an outside vehicle. There's a lot of fluidity there.

Even for openly traded C corporations, they can decide between re-investing their earnings, retaining their earnings in cash and distributing the earnings to shareholders. If the businesses retain the earnings in cash, that allows them to defer the income for future I or future C or S for their shareholders. Similarly, shareholder or bondholders response will affect business I decisions.

But to me, this relationship is secondary to the worrisome nature of the American addiction on credit. Many people are borrowing so much to C now that it's almost certain to affect their ability to C and S later. Many businesses have depended on cheap credit to sell their stuff and will also be in trouble.

what's pergo? is it that 4 mm wood veneer on craft wood floating floorboard stuff, or plastic laminate designed to look like wood? beloved of concrete slab construction dwellers...

Rug burns.

especially nylon :(

So you're in fact concerned with conspicuous C. In fact, most C is not conspicuous, but sustinance at the established standard of living. I'm ignoring cultural equivalency arguments--it's not really relevant that other peoples are living with more or less relative standards in other nations, in this context.

What we likely agree upon is that the small portion of marginal conspicuous C is a disproportionate component of future growth. That is the bigger problem, in my opinion. Not that there is conspicuous C; such goes along with living in a free market capitalism.

Actual events, names changed to protect the guilty parties.

Sherry,

Sherry

Ummmmm…. Hello…. how come i wasnt invited?
Er, no offense, but who are you?

I don't care -- the important question is: how would you look in a bikini calendar??

So house prices are dropping what do you think the likelyhood will be that people decide to trash their houses rather than let people have them for half the price they paid for them? Or will they go meekly out the door no damage done?

Now all this housing talk is all fun and games, lets not go losing our heads over it.

tinyurl.com/gorow

What's discretionary/conspicuous consumption and what's sustainance can start looking awfully similar if a person just lost a hard to replace job and has a big mortgage, a asthmatic middle schooler, a dyslexic high schooler, and a college student to support. What appears permanent and inelastic expenditures can certainly change with a little time, if the times become hard enough. I'm worried that due to high credit card debt, expensive mortgages, high fuel prices and high inflation in "essentials" like healthcare, a longish recession will force a lot of people out of the middle class permanently.

(I'm also not a fan of consumption driven economies. I think it's in humanity's long term interest to reduce our numbers and our consumption of natural resources. I'm all for the continual creation of more entertainment, more useful gadgets and more cheap fuel efficient trips to Bhutan, but I don't want more consumption as it is usually defined in the US. Quantitatively more stuff doesn't make people happier or healthier in rich countries, and there's much to be done on the qualitative side like greater job security, universal healthcare, and shorter work commutes.)

Claire.

If the banks were smart, they'd start making examples of people who trash their homes by going after them into bankruptcy court and make them suffer and going easier on people who left their homes in a neat condition.

Speaking of housing fun and games, did anyone else catch this bizarre bubble-related story on KGO (Channel 7, BA)?

http://abclocal.go.com/kgo/story?section=state&id=4536326

A SD reporter gets attacked by a couple allegedly running a real estate

astrid,

I think you are arbitrarily segmenting "good consumption" from "bad consumption". Entertainment is as much consumption as plastic Walmart dohickies. I'd be interested to hear which societies of greater than 1M people are not "consumption based". Even centrally planned economies of yesteryear were consumption based, just the state decided what you got to consume.

As to the depth and severity of economic strife triggered by a falling housing market, I read today in the FT that on average Americans have 63% equity in their homes inclusively of all debts secured against housing assets. That number tells me that there won't be anything north of a few percent foreclosures, in the worst likely case.

New thread :

There is no real estate bubble !

If you weren’t invited you were supposed to fuck off. That’s what surfer x said.

Huh? Only Trolls need to fornicate with themselves.

Hydro-geologist? I thought that went out with the cowboys.

I was checking our credit scores the other day to see how they were doing and making sure no one had been up to anything with our credit and decided to pay extra to see how we compared to others, Equifax reckons the average mortgage and credit card/car loan was $154,000 or so for California, this seems way out of wack, shouldn't it be much more?

How accurate do you think this credit score malarky is?

Sorry, it's $136,000 total debt for CA and $154,000 for zip code 94040

Robert,

I agree that banks have been way too loose with loans lately and they're going to have to beef up their collections department (with ex-mortgage brokers?). But even the best designed lending system will have some defaults and foreclosures, and banks cushion themselfs by charging extra points to cover the risk.

Besides, those loans are already given out and there's no point crying over spilt milk. Even bank legal departments of medium intelligence ought to now focus on maximizing collections.

Randy,

Sorry, I was doing a bit of late night wishful thinking last night. I know moving away from free market brings up a whole different set of problems. But I'm still troubled by stories of seemingly intelligent and able people going tens of thousands of dollars into credit card debt, whether the debt was from an eBay Beanie Baby buying spree or because they lost their job and lived on credit cards. I also don't like America's wasteful Madison Avenue driven consumption habits. It's a bit of personal snobbishness. (My boyfriend would say hypocrisy, since I buy a lot of kitchenware for him and his cooking never goes beyond cooking spagetti and using the microwave).

As for C driven economies. I agree in the short run, consumption plays a part. But in the long run, those consumption habits are constrained by production, determined by natural resources and S & I. While short term consumption habits are relatively inelastic, people are capable of consuming much more or much less if they are forced to do so.

As for the FT numbers. Most people still had jobs during the Great Depression. All we need is 20% of houses underwater in places like CA and DC, and for the owners to default, and we'll be in a world of hurt.

BTW I've gone back and read the Japan stickiness article more close. You're right, that would be a scary prospect. I think the US would be more volatile and faster moving.