patrick.net

Brand,

Darn, you beat me to the Kia recommendation! I had heard good things about Kia too and wanted to do more research before recommending it to SQT.

My wish about cheap homes stands.

Hiding,

(Yeah, I'm quite horrible. I really am the queen of OT, I once threadjacked half a post to yak on about Japanese chef's knives)

No problem. I'm not one to disregard precedent (economics provides reasons for sticking to even bad precedent and bad laws). I think the problem with the 19th century formulation of natural law was that it looked in places where value was variable and difficult to quantify. Also, it was based on psuedo-science rather than observable and repeatable human behavior. I know the social sciences are considered "soft" sciences today, but they're still far more evidence driven than head shape measurements.

Furthermore, the basis of contracts and tort law is property, which is intrinsically connected with the foundations of economics. Economics certainly helps understand the interests of the parties and of the State. This is even more striking when we move to legislative laws that directly governs economic life, e.g. the UCC or taxation or antitrust. The legislative law and even the courts do occasionally take notice of the changes in economic reality, so knowledge of economics can be a useful tool of persuasion and decisionmaking.

At least that's what my profs tell me...

Hiding,

Really! Does that mean American made Bimmers and Benzes are actually better than German made ones?

As far as “poor quality”, I think Germans just have a different code (re: reptilian brain) on quality.

Well, there's that - and there's also the fact that they just haven't mastered electronics as well as the Japanese have. Software glitches in sunroofs (I had that). It's also the suppliers' fault: Bosch comes to mind - in certain Audis and Mercedes, the pax mirror will drift slightly due to a bug.

Also, Mercedes really has let quality slip in the last few years - BMW not as much.

I loved the train system when I went to school in Japan. I’d gladly give up driving if we had as good a mass transit system here in the states.

NY comes pretty close. Well, the New New York. Not the old 1980's NY when I was growing up.

A few weeks back I mentioned there was going to be a luxury condo auction in downtown Boston (near the waterfront). Well, there was, and the price drops were significant. For those who care about the Boston market, or who may see it as a bellwether, the link is below:

http://www.boston.com/news/local/articles/2006/10/08/sold_auction_reflects_downturn/

"By Kimberly Blanton, Globe Staff | October 8, 2006

Kevin Starr jumped into the fray as bidding for the third-floor Boston condominium kicked off at $825,000 and surged to $835,000, then to $837,000.

Hoping to elicit an $838,000 bid, the auctioneer, Ken Cullum, shouted, ``You won't be sorry tomorrow!" No one took the bait. ``Sold for 837!" he said, pointing to Starr, who had snared for $837,000 a condo that had been on the market for $1.2 million a month ago.

``I thought it was the deal of the auction," Starr said.

``I had no idea he was going to bid," said his wife, Daire Starr. ``Oh my god!" she screamed with joy..."

Those Boston bid winners are going to be very very sorry losers soon enough. Fundamentals in Boston are among the worse. You can never run out of suckers, I guess.

"Bryan Rich's hands shook as he signed an agreement to follow through on his $1.14 million winning bid for a 14th-floor penthouse with a terrace.

Five minutes later, he won another contest with a $1.09 million bid for a terraced unit next door with water views.

``My wife's going to kill me," joked Rich, former business owner who recently moved from the Boston suburbs to Miami. He plans to rent the units."

I did the research and found out the Ford Windstar had a pretty good safety rating, got one 1 year old for $13,000 (plus taxes and tags) two years ago, got a few problems fixed free under the warranty and it runs great so far. It was what I could afford and was much younger and nicer than the secondhand toyotas etc that were available. I am happy with it, my husband doesn't like it, but it does me just fine!

As for aquaplaning, there are some special tyres that you can buy that help to prevent it, I love them!

Randy H Says:

"...Your friend could look into the emerging field of Financial Engineering. U.C. Berkeley has a leading program. It’s a relatively new official degree, so there’s some risk in the degree being misunderstood or unrecognized..."
_____

I've had it with "high-tech." I'm considering chucking the whole idea of business and becoming a Short-order Pastry Chef. Does Berkeley offer a degree in Culinary Engineering with a minor in short-order pastries?

Just in case anyone is interested, the UC Berkeley, Haas MFE Program:

http://haas.berkeley.edu/MFE/

**Disclaimer: I am not a MFE, though I did audit one MFE course while in B-School. I've heard great things about this program, but it is very new. There's always a risk with new programs/degrees, so do your research before jumping in with your money and time. Depending upon what you want to do as a career in this general area, you may be better served with a specialized MBA, or a Masters in Economics; or maybe just the right track record of experience without even needing an advanced degree.

Greenspan Says `Worst May Well Be Over’ in U.S. Housing Slump

Cool. Now they can hike interest rate without worries.

....but surely not before the election??

Robert Cote'

Your argument vis-a-vis NYC mass transit appears to be an example of the Fixed Cost Fallacy.

From Pindyck et. al. (emphasis added)

The Fixed-Cost Fallacy. This fallacy asserts that short-run competitive
prices (marginal-cost prices) will prevent producers from recovering their fixed costs. These are covered not because short-run competitive forces set price equal to marginal cost, but because, if they were not covered, investors would stop building production while demand continued to grow. This would cause shortages and result in an overall lower total profit.

You can apply this argument to infrastructure. If you don't build it, then you'll perhaps have a higher short-run "profitability", but a lower long-run overall "absolute profit".

RE: Greenspan saying the "worst is over" for the housing slowdown, remember, this is the same charlatan who went out and told everyone that ARM's were a good idea in 2005. Sure, we believe you Mr. G.

@Boston Transplant,
Yeah, I've been keeping up with that story. There are so many interesting reprecussions. It looks like units sold from 20% to over 30% below original asking. Seems pretty good, but how much of this will look like catching a falling knife a year or two down the road? This would presumably do quite a number on the comps in the area. And the truly screwed are the 65 owners who bought preconstruction and paid original asking price. Sucks to be them!

Goober brings up an interesting point. What if Greenspan was really right, this isn't a bubble, etc.? It looks like people here have previously discussed the "what if we're wrong" possibility, but it seemed to focus on whether or not people had interpreted the indicators correctly.

I would be curious to see a future picture for California, assuming rising interest rates and continued home appreciation above the rate of inflation and wage increases. How long would it take before almost no one could afford a house or even a fixed-rate loan? Would Prop 13 become a permanent barrier to people entering the state? How long before rent prices exceeded Average Joe's ability to pay on the low end? Right now a lot of middle class Californian boomers are retiring to cheaper states. Could we ever see an exodus of the basic non-tech working class?

If a moron (?) like Karr can have dream of making money telling his story, why not Casey?

Huh? I thought it was all about getting a free business-class upgrade flying from Thailand.

The Federal Reserve cares about housing quite a bit for some very good reasons, many already pointed out.

Most basic, the Fed needs to know if housing is going to deflate significantly, especially if it is nationally, because houses constitute by far the largest portion of American individual wealth. In fact, houses are really (to the Fed) just big savings accounts. If those accounts start shrinking, then the entire monetary base changes.

This doesn't mean there aren't any conspiracies. It just means that a conspiracy isn't necessary to explain why the Fed cares.

HonestHunk,

I'm a girl who is into guys, but I'm definitely not into Casey. Casey looks like a dumb slacker and talks like a dumbass. Complete turn off! You and his prison bunkmates can fight for his ass.

Neo Con Conspiracy,

I doubt Casey Serin = MarinaPrime. This Casey Serin doesn't trigger my BS detector and he plays his hapless role with aplumb. If Casey is a fake out, he deserves real kudos for doing such a convincing job.

HonestHunk Says:

any girls here? dont you think Casey is hot? he makes me wet. oooh

WTF?? Are you demented? Casey looks like a Michael Jackson Neverland ranch reject.

Ha Ha:

I think you're right about paying interest only. This turns everyone into a renter. That would be heaven for the FED & the banks - maxamizing the amount of money lent. Everone will be a slave to the banks and working on the plantation with nothing to show for it.

Paul

he makes me w**

This is borderline indecency. Please be warned.

Skibum,

I agree, in a couple years even these new buyers may look like chumps. But I still think the auction has done Boston a nice service by highlighting the fact that the market clearing price is far below what people are asking in the rest of the market. It reinforces the thought that if one buys in the next couple years it should be from a (rational) developer rather than an (emotional) individual...

Randy,

Thanks. I understand that there will always be risks as well as opportunities with relatively new fields. I think I'd strong recommend against a plain vanilla finance program for my cousin. My dad mentioned that there's a huge concentration (in the neighborhood of 80%) of Chinese students doing finance degrees in England.

I'll talk to my cousin about her personal strengths and preferences before steering her towards either a more traditional accounting program or towards something more exotic. My mom says my cousin is quite good in math and physics, so I don't think American finance math would faze her.

The nice thing about an accounting degree is like you mentioned, she can always go back for an MBA with a special focus on an area of special interest. I definitely think she's too young to fully take advantage of an MBA program.

Peter P,

Good point. I think this HonestHunk person is joking, but I'll edit the comment slightly just in case.

Do you think my gigolo comment is okay? Maybe I shouldn't have wrote that either.

SFGuy,

Thanks for the feedback. I think prostitution for both sexes is okay in Nevada, but you and Peter P are right. I'll erase my comments and edit HonestHunk's comment slightly.

do you have a guess as to what is significant to the FED? How much yoy deflation in this asset you call a “savings account as far as the FED is concerned”, can they tolerate and for how long?

Fast answer: No.

I'm not a Fed expert; some others here know a lot more about how exactly short and long rates relate to bonds, credit lending, liquidity and ultimately Fed policy.

I am a student of Neoclassic economics and Monetarist theory. Using those theories, the Fed should only be able to tolerate a very small amount of sustained housing deflation.

Say 5% per year or less. If there's more than that for long enough then the multiplier effect starts to work in reverse, and there will be widespread deflation. The Fed will not allow this under any circumstances (with their current philosophical mindset).

The multiplier effect, briefly, is just how far each dollar put into the system goes. It is great than 1 because each dollar put in to banks by the Fed is lent out, and then can be invested, recycled, and lent out again a few times. But this can work in reverse too, which would happen as equity is drained from Americans' homes over a long enough period of time.

The Fed shouldn't care too much about short-term corrections, even if they are fairly steep. 10-15% each year for 2-3 years won't directly panic the Fed. What would, though, is recession that could occur because of indirect effects of slowing housing.

Did we determine that FaceReality is really Marina Prime? I don't know about MP, but FR is definitely NOT Casey. I'm 90% sure FR used to be an Investment Banker, probably 2nd, 3rd year Analyst. This is *not* Casey as Mr. Serin has demonstrated that he couldn't work a Speak & Spell let alone an HP12C.

Do you think my gigolo comment is okay? Maybe I shouldn’t have wrote that either.

Don't worry. ;)

Did we determine that FaceReality is really Marina Prime? I don’t know about MP, but FR is definitely NOT Casey. I’m 90% sure FR used to be an Investment Banker, probably 2nd, 3rd year Analyst. This is *not* Casey as Mr. Serin has demonstrated that he couldn’t work a Speak & Spell let alone an HP12C.

Huh? FP is MP? Casey uses HP?

Blame it on the Boomers

http://cbs4boston.com/consumer/local_story_281093415.html

"So why is the Boston condo market declining? Blame it on the baby boomers.

Developers built the condos for empty nesters looking to downsize, but now the boomers are having trouble selling their suburban homes - creating decreased demand and an increase supply of condos."

Mrs. Burnside,

Please! Stay with the spirit of this thread - hatred of Big Boomer and/or Casey Serin. Let's not go into the nitty gritties of who did what when. If you can't think of something bad to say about Big Boomer, surely you can say something nasty about Casey Serin...just look at his hair!

(More seriously, the Gen-Xer dislike of boomers is not merely a form of pointless rebellion. Most Gen-Xers here, with some notable exceptions, get on quite well with their parents. We have more problems with where the Baby Boomer's ignorance and hypocrisy is taking this country. Boomer debts will seriously damage the economic stability of this country and we Gen-Xers rightfully feel our futures are being threatened by the boomers' blind self indulgence today.)

eddiamond,

First of all, I vote and I've been steadfastly against Bush II budgets and the Iraquagmire, so don't talk this false consciousness stuff with me. It's overwhelmingly the boomers and silent generation who vote and who voted for the worst presidency since at least Warren G. Harding.

No way in hell!

I say rebuild the Democratic party for the 21st century or take over the Green Party and rebuild from the ground up. Nader made his pact with the devil (and the RNC), and anyone who votes for him is either blind or a Republican.

"If it is the boomers and silent generation who vote “overwhelmingly”, isn’t the lack of participation by everyone leftover part of the problem?"

Except that the Boomers dwarf the Gen-Xers and Gen-Yers numbers wise, and they're more likely to live in "battleground" states like Florida and Ohio. Plus, it's not as if the Boomers really voted in high numbers to oust Lyndon Johnson and effectively support Eugene McCarthy. Nixon won in 1968.

Stop assigning blame to people younger than you and who had less time to do damage for Newtie and BushCo. We're bitching and strategizing here because we think you created such a hopeless situation that we have to strategize to save ourselves first.

eddiamond says: "Don’t fall victim to their divide and conquer strategy. We have a common enemy and it is not each other."

To quote Robot Chicken's emperor... "Who's they?!? What the h-ll is an Aluminum Falcon?!?"

Ed, if anyone is smart enough to implement a nation-wide divide and conquer strategy, they are probably way smarter than the common populace and therefore deserve to be in control. People are divisive on their own, without any guidance from fictional super forces like the media or political parties.

I personally have no desire to fight The Man, I just want to be one of The Man's hired thugs. By the time the truth is known, it will be too late, and I will own most of the Bay Area for pennies on the dollar. What will the truth have gotten anyone else? Nothing.

Mrs. Burnside,

You're a friend. One of my biggest frustration, and one frequently repeated by other Gen-Xer on this blog, is that many baby boomers don't even recognize the challenges for people born after 1970.

I do recognize the challenges and I have a multi-prong approach in the hopes that something works - I don't spend more than I have (to the extent that my dad is constantly calling me "too conservative"), I'm keeping an eye out for opportunities abroad or creating my own business, I'm seriously considering forgoing kids because it's so financially stressful, and while I'm still in the US, I do vote and support progressive candidates (not the unimaginative old style Democrats and Lieberman style RINOs - I support people who can still tell the difference between compromise and capitulation).

I don't really *hate* Boomers collectively and certainly not all people born between 1946 and 1965. It's just their attitude and their numerical superiority is very intimidating for younger people, esp. younger people who do know better.

eddiamond,

The people boomers have been collectively voting in since the 1970s in haven't exactly inspiring, broad minded leadership. Reagan? Bush I and II? Newtie? Delay?