patrick.net

thomhall, my point was that the Fed is the wrong target. If you're pissed about the rich getting richer, it's misguided to blame the Fed. I was suggesting that it might be more appropriate to blame capitalism. Or maybe the tax code. Or GW's tax cuts on capital gains. Any of those would be more appropriate than blaming the Fed for income distribution. I personally have no problem with capitalism.

"However, I know for a fact you are a cool person."

Careful! Internet can cause objects to look 50% more cool than in reality.

14 year old 5th graders

Huh? Oh, I see. It is like a 14 years old college freshman, just much dumber.

I also live in San Francisco, though I live South of Market, unlike my illustrious cohorts.

Message of the picture:

Refinance can help you lose 125 lbs, give you a mouthful of brite whites and bask your life in perpetual soft warm late afternoon sun.

Back in the day "dollar bill changers" weren't as high tech as they are today. At our local car wash I can't even get a freshly minted bill to be accepted. Back to "back in the day" when we held a "collection" to buy really neat-o looking play money and tapped out every laundromat on ____ Avenue!

Man! Running from "da cops". It doesn't get any better than that! Have any of you ran from "da cops" with a gym bag from _____ Jr. High filled to the brim w/quarters? C'mon you know! The huffing and puffing and throwing it over "da fence" and stashing it until "the sh!t" cools down?

Ahh. Water ballooning squad cars! That really p!sses "da cops" off. Ever seen a greying 40-ish alcoholic chase kids that can do a 4.4 40? :)

PAR, the rich will always get richer. It is NOT a new paradigm.

This means that no matter how you redistribute wealth, the same group will become rich in no time.

Even with the huge wealth gap the poor in this country have better lives their counterparts in underdeveloped countries.

Forcing equality in a 300M-population-country would be disastrous.

RE: picture

Is she sitting in a convertible WITHOUT wearing a seatbelt? That tends to free a soul in an accident.

www.creditsolutions.com

??

My bad.

Wind in your hair, warm breezes, face looks like... hamburger... :(

astrid says: I assumed eburbed was being facetious. Also, I dispute the characterization of German food as “tasty” though I like Germans overall.

If eburbed was kidding, then he has my apologies. I do know a lot of parents who teach their kids to be "competitive at all costs". Typically their parents were introverts as kids who have since gained a lot of money, and are trying to recreate a "winning" Type-A childhood for their own gratification.

Or maybe it's just that the Type-A people mostly calm down later in life, where the Type-B people are just starting to come into their own.

German food is rather bland. If they could figure out how to put gravy on soup, they would. But many Germans I know cook Italian, Spanish and French cuisine at home. And those folks elevate cooking to a science.

Sorry guys, I always get a little "punchy" in the home stretch of the tax season. I never did any of that stuff. I just made it up. :( :)

DinOR says: Wind in your hair, warm breezes, face looks like… hamburger… :(

That's why I opted for T-tops instead of a full convertible. That steel crossbar absorbs a lot more force than the windshield frame alone.

Okay, I agree that in the abscence of deflationary pressures from China and Moore's Law, there is nothing inherent in the Fed policy to cause asset inflation. But here is what I think is going on:

The Fed targets the money supply as the GDP growth (which is population growth plus productivity growth) plus the inflation component. Let's say that is 2.5% + 2.5% = 5%.

There is also deflationary pressure from goods from China and the computer revolution, so prices in manufactured goods and computers keep going down. The Fed is trying to keep the price of rent and food at 2.5%, so the price of other things has to go up faster to compensate for the deflation. These "other things" are mostly hard assets, causing the prices of homes and stocks to go up. The people who own these things already don't mind of course, the poor don't care but the rest of us are screwed.

There is more to this idea, but I have to run, since my wife wants to go get some Pho in Little Saigon. I'll finish it up later if anyone is interested.

Brand,

LOL! I heard that Germans will try to measure out "a pinch" on a kitchen scale. They're a very exactly bunch.

That’s why I opted for T-tops instead of a full convertible. That steel crossbar absorbs a lot more force than the windshield frame alone.

I prefer conventional cars. I need more steel for protection. I don't think I will ever get any type of convertibles. :(

Jimbo,

Hope you have a good pho meal :)

astrid says: LOL! I heard that Germans will try to measure out “a pinch” on a kitchen scale. They’re a very exactly bunch.

Definitely. There are rules, astrid. And the rules MUST be followed. Recipies are specific instructions; only a maniac would put something like "season to taste".

Doh!

-mine
+mein

Randy H Says:

> My first bike was a garage sale Schwinn. It wasn’t much
> fun to ride being that it weighed more than my father’s
> Pinto. But I did pedal it on my paper route for 2 years until
> I got enough money to buy a newer used Huffy…

My old Schwinn was also very heavy so I did whatever I could to make it lighter including taking off the chain guard and then cutting off the tabs and for the chain guard and any excess metal I could find. I remember an old motorcycle racer told me “if you find 16 places to take off an ounce you will save a pound”…

It blows my mind how light the new carbon bikes are today, but I don’t see the point in spending so much to save a few pounds. I have not bought a new bike in about 10 years and unless there is some major technological breakthrough I may never buy another bike since I’m as happy with my (Moots/XTR/Mavic) Mountain bike and (Lightspeed/Dura Ace/Mavic) Road bike today as the day I bought them…

I had a very deprived childhood. My parents neglected to teach me how to ride a bicycle until I was well into my teens and then I just couldn't balance myself properly.

And it wasn't a lack of money. My dad was just a very inattentive parent and my mom wasn't around much.

Pls, someone tell me they live in the city?
Cupertino been in BA since early 70's

No its not Doom and Gloom but rather the nonsense
I see from many cheerleaders who dont understand
our economy. So label me Anti-Cheerleaders!

On the question of Globalization and China -
Some of you kids are showing your age... Long Before
China we have been outsourcing production of HT goods and now
services to Korea, Taiwan, Thialand, Singapore, Korea, Japan
Philippines and many other "Asian Tiger Nations" for several decades now.
India China and Russia are just new kids on the block! LOL!

As for products being cheaper.. well Moors Law never mentioned that the cost would decline. Infact he never forsaw Japan or Other nations productions below the cost of US labor. Otherwise they would have scaled their operations accordingly instead of tripping up in the 80's and 90's.
I see we all forgot this!

As for products being cheaper... well Moore's Law never mentioned that the cost would decline.

Why is deflation seen as such a disaster? I have never understood the implication of a threat from deflation. It's been described as the Fed's worst nightmare. How so?

That picture really says it all. Hands off the wheel, throwing care to the wind along with all her debt, responsibility, conscience...

Gen X, Gen Y, whatever. It's been my observation that most on this blog are 'old school'. We still believe that spending beyond one's means is somehow wrong, that amassing debt to a factor of double-digits one's net worth is insane, and that responsibility for one's financial decisions is utlimately their own. Such a quaint notion accountability has become. Bail outs, refi-ATMS, foreclosure and other creative means of shirking debt just don't cut it with Gen P (Patrick.netters?).

As for 2007, I don't think it will match my 2006 earnings. I did very well last year (a little too well as I see from TurboTax ). I'm looking for other opportunities, but the Silicon Valley is all gaga over Web 2.0 and Google and click-through-ads, which all pale in comparison to the glory days when at least *some* startups actually had a real product to sell.

My own personal career interests aside, I do wonder what will replace the RE frenzy that has kept CA's economy afloat. Buying and selling of homes between current homedebtors is no better a business model than amassing Linden dollars in Second Life. At some point, the realization that the new 'wealth' is all pretend will hit home (pun intended). I have some dark hope that it will happen in 2007.

Thanks for letting me cathart all over the place.

FAB:

I always thought the NSX was kinda fun...

Bruce: I'm sure Randy H could give a better explanation of deflation dangers. In my imperfect understanding, deflation encourages people to hoard their money instead of investing it. This in turn starves businesses, kills growth and leads to prolonged unemployment issues. Plus paying for your mortgage and fixed costs gets much more expensive, because the house/goods would require fewer deflated dollars to buy in the future.

Small inflation (from growth) is easier for the FED to control with interest rates. Adjusting the rate upwards draws capital out of the stock markets and businesses and into bank-style investments. But in a deflationary environment, the FED can charge 0% interest and still not spur economic growth. And if the economy isn't growing, new jobs aren't being created, and people feel the pain. The Bank of Japan ZIRP is such an example.

Bruce says: I see that, though it makes me question if a dose of deflation might be a useful corrective at times - if only it were possible to end it at will.

Actually, that used to be the way things went for our first 100-150 years. Inflation would typically happen during wars as the government took on debt to finance the war and printed more money, and thus devalued the dollar compared to the gold standard. Then the economy would undergo deflation as the government repaid its debts with tax money, until it reached approximately the pre-war equilibrium point.

The stock market crash of 1929 was accelerated by rampant speculation, followed by a lot of paper wealth getting vaporized. The stalled economy led to deflation, probably not the other way around.

If you consider the tech bubble pop, and the pending real estate bubble pop, it's possible that we are in for a period of deflation. Although it's more likely that the FED would move us towards stagflation, because you can eventually grow your way out of that. It's probably anybody's bet, since we're not on a gold standard that provides a stable reference point. It is additionally interesting that the U.S. dollar is fiat for much of the civilized world's currency, meaning that if our economy drags down the U.S. dollar's value, major Treasury holders like China and Japan will get dragged down as well. So strangely enough, much of the world is indeed relative compared to our reference point.

I think people forget that these things take decades to play out. We're looking at a blip over the past couple years. The real estate boom of the past 5-10 years seems long enough to provide a historical reference point, but that's only because we have fruit fly lives compared to the country and the economy. In another 30 years, people might look back on this era the way we look back on stagflation or the Great Depression.

@FAB

My 10 year old Gary Fisher Sugar 4+ is a little heavy, but perfectly fine. The added weight actually helps me not kill myself on Mt Tam downhills. The only thing I'm considering is retrofitting discs, only because I burn through calipers on the sucky stock brakes seemingly every week.

I used to pull my son in a CTS trailer with this bike too, so I have a bit of sentimental attachment to it.

For frick's sake... the latest banner ad at the bottom of the page:

125% Home Equity Loan
Cash Out in Days - Instant Approval
Poor Credit Welcome

For frick’s sake…

Not to worry Advertising is prepaid and non-refundable at times and
I take the ads we see has yet to term..

On the other hand, I do still see exotic financing on TV ????

Look up deflation in history of the US and you will find we had mega more years of deflation than inflation. Inflation is a rather new event in US Economic History...

LowlySmartRenter-
Lets review 1989-90 as it relates to South Bay....
We had a tech implosion, many companies went under.
We saw well paid workers jobs leave to cheaper Asian Tiger labor.
We saw large layoffs due to global competition in HW and SW
We saw CA Natives move to Utah! Oregan, and Washington and
never come back...
We saw real estate prices decline +35%...

Sounds so familiar! Dont it !

economies are like bears on unicycles

For those old enough to have taken #2 pencil & paper SAT(AT)'s:

Bears are to Economies as __________ are to Governments.

Why does this feel like a MENSA moment?

I'll go for 'Patty Hearst', Randy.

libertarian syndicalists

(I know that's an oxymoron, but who even knows what syndicalism is anymore?)

justme, RE: Greenspan purposely turning us into landless peons

Per Voltaire, "If God did not exist, it would be necessary to invent him." *

People will invent vast conspiracies because they need structure to feel safe. It is more comfortable for many to believe that Alan Greenspan heads a secret new world order than to believe the obvious uncomfortable truth----that he was a man with little more insight into the future than other brilliant people, which is to say that he had none, in control of vast sums of money with which he could exert only marginal control over a huge economy that is at best imperfectly understood.

I seriously doubt that Greenspan was trying to create a real estate bubble. That is backwards-looking attribution on our part. The guy was trying to stop the economy from stalling after the tech bust, and the best way to spur investment is to inject liquidity. And to his credit, the economy did not go into a major recession. This real estate bubble is a secondary unintended consequence of the cheap money. Maybe Greenspan could foresee this result, probably not, but I would inject the liquidity no matter what, because I would take a housing bubble over a serious recession any day.

Sorry folks, we regret to inform you that there is no one flying this plane... :)

btw, I say this having had long conversations with upper managers in charge of divisions making hundreds of millions in revenue per year. Their visibility into the future is only marginally better than your own, mostly because they have some additional information. The truth is that you can steer the objectives, and sometimes you're right, sometimes wrong, but you can rarely control the secondary effects. And unfortunately at that level of power, the secondary effects can cause huge disruptions to the lives of your employees. In Greenspan's case, his span of control was so vast that he accidentally minted legions of millionaires and bankrupted tens of thousands on a monthly basis.

* I am indeed a Christian, but Voltaire's statement about human psychology still holds truth.

Bears are to Economies as __________ are to Governments.

I'm pretty sure that the Bulls would answer "Terrorists". :o

Yes indeed, sounds familiar Space Ace. Like the topic a few threads back "September 12, 2037", it frickin' blows me away. So eerie to see rhetoric repeating itself. So eerie I was thinking that post was a belated April Fool's joke.

Assuming you were in or around the South Bay then (I was not), was the mania as prevalent then leading up to '89? I mean, were people hocking their first born to get into a house, taking 103% loans? Did NINJA loans or HELOC's even exist then?

I believe back then interest on all debts was tax deductible, not just today's last bastion of mortgage interest. And from what I've read, that decline took about 6 years. I'm just trying to get an idea of what is different this time around. And not so much the economics of it, which is no small factor, but more the psychology and culture surrounding RE. I think that's the underlying theme in HARM's post anyway.

Extra points to any respondents who use the word of the day: frickin'

I mean, were people hocking their first born to get into a house, taking 103% loans? Did NINJA loans or HELOC’s even exist then?

yes... actually as little as 3%...would get you in....so 97% was typical
and so was specultion... where people sold a mega losses...
as well as "everyone wants to live here"... which they finally moved out
and well paid jobs which disappeared for both renters and homeowners
and "great weather"...
and "prices will go up because places like SF and SV are land locked"

and all the other nonsense we hear today...

I just laught and tell them the history...