patrick.net

See Randy! You are even more clever than you thought!

Does anybody know why there are no "HOUSING STORIES"for Fri.???
I do so look forward to them!

sorry
from going out the backdoor
It's Friday...I'm drinking Cotes Du Rhone...

The Economy: Consumer Fatigue
The consumer is finally fatigued.
The surge in housing prices over the last five years has largely been fueled by low mortgage rates, looser lending standards and an increase in speculative real estate investing.

Absolutely. It's a dog-eat-cat world (because we let it be).

lower housing prices could whittle away at consumer confidence and spending.

I'm not so sure about this one - consumer confidence is down right now because young people have a bigger % of their income going into passive bricks and mortar (or frame and weatherboard, depending), thus reducing discretionary spending in retail. In other words, empty land is soaking up their $$$, hurting the retail sector.

Am I the only one that noticed that Linda said backdoor?

hymie Says:
Don’t know how long you have been reading/posting, but for some reason MarinaPrime comes to mind.

Yes. I've been reading for a while. :-)

Wouldn’t the lower real income that most middle income people have been earning the past few years exacerbate this?

I don't know many people doing the house/ATM thing unless they've just about paid off their home, or have gone a considerable way towards it. They often bought it relatively cheaply 20-30 years ago, well before any booms... There are also the 'reverse equity' loans for retirees who draw down from the house ATM in retirement, meaning less of an inheritance, but they can then live comfortably. Who knows, the bank may own the entire house by the time they pass on... But if they bought it for $100K in the 70s, own it free and clear, and it's now valued at $600K, and they borrowed $100K against it, there would have to be a lot of devaluation before they got into trouble...

Estimates of 'lowering real income' are always a little shaky, you have to factor in a lot of variables, e.g. cost of consumer electrical goods has come down dramatically, remember when VCRs were $1,000 with no features? And all the cheap consumer goods we were discussing coming out of China means your dollar actually goes further (although your whole job might go overseas in the process, in the global manufacturing 'race to the bottom'...)

But, clearly, sudden housing booms where young people pay increasingly more in desperation in order to establish ownership, without concomitant rises in pay, which is what has happened, lead to lowered discretionary income after mortgage costs are taken out. ('mortgage' means 'dead wage' in Old English from Norman French, by the way). That boom, in the 'Juglar business cycle' has only been going for 8-10 years, exacerbated by 9/11, liberalised credit and instability in the stock market.

Glaciers and ice sheets on opposite ends of the Earth are melting faster than previously thought and could cause sea levels around the world to rise as much as 13 to 20 feet by the end of the century, scientists are reporting today.

That 120 m2 $3 million dollar hole in Bondi Beach might be underwater soon, then... might lead to some devaluation - talk about buying at the top of the market...

More Republicans Satisfied With Sex Lives Than Democrats

naah, not possible - or did they take bill clinton's data out as an outlier first?

look at the difference in the people who showed up to the democrat vs the republican conventions - the republicans were all wearing blue blazers and couldn't dance... sad gits...

tho, on a serious note, a recent survey showed the working poor have a worse sex life than avg because they have less time and energy after working multiple, exhausting, menial, manual jobs... that's nothing for the reps to be proud of... 'we have a better sex life because we're slackers who've worked out how to get others to do the hard work for us, and become slick, useless corporate lawyers instead'

wait a sec, republicans could be more satisfied with their sex lives even if they have no sex at all, by that measure! they might prefer to sit around counting their money, and whipping people... a democrat could be having 18 times more sex, and yet be less satisfied... besides, they have to crosstab political party by gender, earnings, etc to get meaningful results - the survey points out reps are more likely to be men, so it's skewed straight away. plus they need to do a few t-tests to prove significant difference...

to keep the new designs from going out the backdoor.

Linda, Your incisive post, brilliant in its conception and daring in its studied opacity, leaves me almost speechless save for a "you must be HOT!" I wonder if SFWoman, even with her army of mitochondrial nanobots, is any match for you now.

hmm, yes, there was a consonant shift from 'w' to 'g' in French (e.g. warranty to guarantee, war and guerre), and it was explained to me that it was 'dead' money from wages that a feudal tenant owed to the lord to kepe the house, but:

The great jurist Sir Edward Coke, who lived from 1552 to 1634, has explained why the term mortgage comes from the Old French words mort, “dead,” and gage, “pledge.” It seemed to him that it had to do with the doubtfulness of whether or not the mortgagor will pay the debt. If the mortgagor does not, then the land pledged to the mortgagee as security for the debt “is taken from him for ever, and so dead to him upon condition, &c. And if he doth pay the money, then the pledge is dead as to the [mortgagee].”

Or something. Whole thing's a bit of a mess, really...

http://en.wikipedia.org/wiki/Mortgage#History

because back in the day if you could not pay your land loan they would kill you.

P.S. they wouldn't actually kill you. they 'conveyed' the land to you (hence the concept of conveyance), and you had to pay a fixed amount back whether you could afford to or not and was not conditional on how much the land had produced. i think that was why it was a 'dead' pledge, rather than a variable one. or something. if you couldn't meet the repayment, they could just kick you off the land and resume it, as the lender was still the absolute owner in that day until the mortgage was fully paid off.

Increasingly the courts of equity began to protect the borrower's interests, so that a borrower came to have an absolute right to insist on reconveyance on redemption. This right of the borrower is known as the "equity of redemption". Mortgage lending has now been reformed so that title is passed to the mortgagor, and the bank is simply lending with the property as security. good old common law...

yes, Latin -> Old French -> Norman French -> English. The Romans went through Gaul and got as far as Scotland, in fact... But a 'mortgage' is a feudal concept...

and fired: The v. sense of "sack, dismiss" is first recorded 1885 in American English, probably from a play on the two meanings of 'discharge': "to dismiss from a position," and "to fire a gun".

There's so many disputed etymologies and alternative explanations tho, there's whole websites devoted to it...

I'd like patrick to lash out and start a proper threaded set of forums with a chat room etc so we can indulge all our hobbies - don't know if you can get that sort of capability for free...

Troll-b-gone please.

SFWoman,

I probably know the person that you had tea with (your friend's friend). I know many Chinese IB/VC/Hedge fund types etc. ethnically Chinese, which I am, and knowing people from the same circle.

This guy is fine, at least he sends his kids to American School in Shanghai, there are numerous examples of Chinese officials or businessmen coming to the US to drop babies only to bring them back to be brought up in the commie system going through the local brainwash programs. See, the thing is, most Chinese covet the American lifestyle and wealth, but sneer at our system. They believe that America's wealth is built on economic and military colonialism on third world countries (partial truth), alone. So they believe as long as China smartens up (meaning knowing how to play the international games of deceit), and militarize itself to the teeth going forward, then China can rise up to challenege America. For some reasons, lots of these elite kids have an obsession to "conquer the world", because that is a part of the chauvinistic culture. Worse still, when they come out, and become upset by the language and cultural barrier, they naturally seek comfort in excuses like racial discrimination, and become even more obsessed with the idea of "beating America". It is a love-hate relationship, they love America for what it stands for, but hate America for not being the ones controlling America and stepping on top of the world.

During 911, the Chinese websites were swamped, I repeat, swamped with cheering sound and anti-American slogans, like America deserves this and much more. Now, I don't like Bush's admin, and I think he has personally squandered most of the sympathy we had right after the tragic accident. I can understanad why an Arab will hate us 3 years after the Iraq war, but cheering right after 911? People who could manage to go online from China, especially back then, were still a fairly educated and financially better-off crowd, and almost all of them desire to become America citizens if given the chance, but they still harbor this kind of jealousy-inspired-hatred towards us, I personally find it alarming and sad.

Now back to the business environment in China, which I did have the pleasure to experience through my own personal dealings and friend's word of mouth. Among our two debtors, Japan and China, I trust Japan much more than China, and China's USD savings will surpass Japan this year. The reason is not because China tries to screw us, it won't because the communist government is probably the most fundamentalist capitalist government you will ever see, and its only interest in the country is to stay in power, and let its party members profit personally, so Chinese government has no incentive to screw us. The issue, however, is, how long can Chinese government stay in power?? How long can it distorts basics of economics and keep hoarding greenbacks, essentially subsidizing our consumption? It obviously cannot go on forever, for us, the price to pay is a lowered standard of living, for them, the price to pay is social stability.

The business environment there can be summarized in one phrase, think Gang of New York. It is corrupt for sure, but the government is also perfectly intertwined with mafia acitivities. Recently, a Chinese billionaire was executed along with his 2 brothers for some phony accusations, 10 minutes after the verdict was reached. Of course he was not killed for what they said he did, instead, he was long known within the circle to be the money-laundry guy for quite a few very high-level officials. When he grew to know too much, he simply needed to be taken out, along with his brothers who knew these affairs. Things like this happen on all levels, it is surely a lawless society with almost no moral values. The lack of moral value and the strikingly widening gap between the rich and the poor will be the biggest unsettling factor for China going forward. Well, if it hasn't hoarded so much USD, that won't concern us, because industries are already starting to flee China to be relocated to Vietnam and India for lower costs. The reason why China's stability should concern us is, what will happen to our exchange rate?

We all know USD is over-valued given our situation. But nobody, even including the haters of America, would like to see it collapse, that will create too big of a ripple effect across all sectors, all countries. So what the world is hoping for is an orderly, gradual adjustment in the medium to long term for USD to depreciate, so the impact can be absorbed over time. For that, we are counting on China to remain stable for a few more years.

Schmend,

that article is such a bullshit. If anything, Asians are discriminated against in school admission, we are never the part of the Affirmative Action program, it only includes Latinos, Blacks, because Asians are way over represented in schools. I remember a few years back the UC system even put a cap on how many Asians they can accept, or else the campus will be full of Asians, not that it was not already the case.

Senor the HARM, please delete the troll. There are blogs out there for it.

Shmend,

there won't be any civil revolt in China led by Muslim faction, that is just entirely absurd. The Muslim population in China accounts for less than 0.2%. I don't know what kind weird articles you are reading, it cannot be further away from truth. Religion was never an issue in China, and never will be, because it is predominantly ONE people, the Han race, one religion - money.

I don't know about your accusations about other races, but if affirmative action was taken away, rest assured that most prestigious US college campuses will be flooded with Asians based on fair competition alone. As an Asian, I am all for abolishing affirmative action, because that can only benefit us. Especially in the Silicon Valley, it is soooooo hard NOT to hire an Asian employee, just based on the quality and quantity of job applicants alone, you will have overwhelmed your AA quota by far.

My obseravation is, recently (note beyond 2000), the American government is acting a lot alike the Chinese government. Not that I am accusing that our government is the same, no, but the Bush admin seems to be emulating a lot from the Chinese.

Fabricated truth, corrupt government officials, brainwashing programs, promoting GDP growth at all costs (like Dol "tampering with" core CPI numbers, letting housing bubble go outta hand), the widening gap between the haves and havenots (the homewoners vs. renters) etc.. Of course we can't blame everything on this admin, because it also inherits problems from the past. But the acuteness of problems and cover-ups, and the division of the nation are all getting more and more noticeable.

It is like the American government is trying to learn from the Chinese admin on how to deceive its people.

Yeah. Life is too short to get locked into a mortgage....especially at the prices at the peak of the bubble.

Rather wait till prices correct.

"Americans believe they can get rich by spending someone else’s money. They believe that foreign countries actually want to be invaded and taken over. They believe they can run up debt forever and that their debt-laden houses are as good as money in the bank."

"That is what makes the study of contemporary economics so entertaining. We sit at our telescopes and laugh like a divorce lawyer looking at photos of rich man in flagrante delicto, we know there is money to be made." - Empire of Debt, a New York Times Bestseller

If one wants to live the life now, spend about $2,500-3,500 renting a $1M- $1.5M home is certainly living it up. There are plenty of rentals like that, in a great school district, nicely remodeled, some even with amazing view.

The house would sell for $1.5M in the current market, PITI + property tax + insurance, you go figure. But all you need to pay is $3,500 a month while the landlord bites the negative cashflow. Morever, if you have a great credit record, you can even negotiate it down, because renters with good record have all jumped on the housing bubble bandwagon so they are hard to come by. The landlord would rather take a $300-500 haircut on rent than leaving their biggest investment in life to careless hands.

Even if you have 10Hahas in cash, put it in the bank, 5% gives you $75K pretax every year, more than enough to rent a nice home while it depreciates. When you grow tired of the home, just pack and leave for another.

Spring is a good season for a fall.

THUD!

Owneroccupier Says:
March 23rd, 2006 at 11:50 pm
Unlike the US, ALL land is owned by the state and you can only lease it for 50 years (commercial and retail) and 70 years (residential). How does the government obtain occupied land in the center of the city for re-development? Well, pretty much whenever and whatever the government wants, the resident need to hand over, sometimes receiving very little compensation.

Fair enough, although, interestingly, the US govt has the right of eminent domain - the state grants you freehold use of your land, which can be revoked, and further obligates you to pay various taxes on it, etc, under threat of seizure or forfeiture, I suppose... There's a hierarchy of title, with allodial title being the highest level of (sovereign or govt) ownership, free of taxes, etc, and fee simple being the 'owner-occupier' level of freehold...

http://en.wikipedia.org/wiki/Eminent_domain & Allodial_title & Fee_simple

Owneroccupier Says:

"Especially in the Silicon Valley, it is soooooo hard NOT to hire an Asian employee, just based on the quality and quantity of job applicants alone, you will have overwhelmed your AA quota by far."

Before you settle in on the superiority of the Asian student, not so fast cowboy.

I went to school in Cali and I think some Asian students are overrated.

I saw a lot of networking, notes floating around from prior semesters, cherry picking professors, student giving friends heads up about what was coming up on tests, etc.

They had the system down to almost a racket.

A lot of them couldn't write worth a shit either and relied on others.

Just my observation.

You can go back to your Asian supremacism now.

I/O ARM Beautiful mansion in the daytime that at night literally starts to ‘eat’ its new buyers after they move in and the financial difficulties start arising one after the other. Lots of feelings of the uncanny, and some outright frights.

Sounds more like an advertising executive's idea for a discount mortgage lender's campaign, doesn't it? 30 second commercial... they have a 'tame the mortgage monster' ad here...

Ha Ha Says:
March 25th, 2006 at 5:04 pm
http://www.jsonline.com/story/index.aspx?id=410329
New derivatives can hedge against falling housing prices
By JOHN SPENCE

There’s your answer, Peter P - how to make money in a falling market by the attempted management of uncertainty and risk…

On the management of risk, has anyone read The Politics of Uncertainty? by Peter Marris - political economy… definitely not a read for technocrats looking to design new instruments tho…

OwnerOccupier
But the acuteness of problems and cover-ups, and the division of the nation are all getting more and more noticeable.

It is like the American government is trying to learn from the Chinese admin on how to deceive its people.

more like learnign from orwell's 1984 - orwell actually worked in intelligence in WWII, which is where he got his ideas from...

It's happening here somewhat too, even under supposed 'Labor' govts, financial mismanagement and major costly screwups, lack of concern for costs of living for ordinary people - govt advisers and ministers are almost like psychopaths for putting burdens on ordinary voters without regard for what they can afford, etc. There's also a flow-on dishonesty effect in all those countries who dubya's team strong-armed into joining the 'coalition' - the leaders in UK and Oz have to keep spinning all the lies on behalf of dubya... some of the little countries outright said 'they were shamefully deceived' after the fact...

Ha Ha Says:
March 25th, 2006 at 10:23 pm
It won’t take a collapse in prices (and I don’t believe we’ll see that) to cause serious economic harm in the currently hottest housing markets around the nation.

It's probably all been done here before, formally and informally, but, if we accept that there's a housing bubble which is harmful to individuals, and both the micro- and macro-economies, then what have been the biggest human drivers in list form that cause this market dysfunction? (I also argue there are problems with the equitable distribution of housing in society right down to the homeless population, as a spectrum.)

My starting list is:
Institutional
- low interest rates - the 'sole lever' possessed by central banks to 'manage the economy'
- volatile or poorly performing stockmarket and other investment classes
- permeability of housing to other (failing) markets (cash, shares)
- tax breaks from govts
- laissez-faire and unregulated housing market as far as pricing goes

Market
- liberalised credit products from lenders
- realtors' lies
- developer greed
- lender greed
- spruikers/false gurus running 'boot camps' etc

Social
- realtors' lies again
- spruikers/false gurus again
- easy credit
- conditioning effects of price rises
- tulip boom/tech wreck effects (don't want to miss out!) + need to supplement kids college funds or pay for medical insurance in some countries
- greed-fear-greed-fear
- everyone else is doing it and making a motza
- irrational exuberance (influenced by all of above)
- perceptions of housing as a 'safe' and stable investment, both occupying and investing

needs a separate topic, which may have already been done... now it all looks too hard...

Back from Lake Como, and I see nothing has changed here.

Nope, still the same, cock sucking fucking maggots like you keep posting their tired fucking diatribe. Hey do your daughters still dress like those cum gobbling whores the Hilton sisters?

Did anyone see the CAR report getting any mention in San Jose Mercury News ? I did not see it. Neither in their print edition, nor online. They did mention the NAR report about 5% increase in nation wide sales. But forgot to mention an unconfortable news from their own state.

@Ha Ha, I have come to enjoy your posts and really dig the fact that a HaHa has become the defacto currency marker on patrick's.

Congress should enact a program of earned legalization for those law-abiding, hard-working, undocumented aliens currently present in the United States, for our economic well being as well as theirs.

We should definitely help law-abiding illegal aliens. They can take as much welfare as they want. On the other hand, it is perfectly patriotic to buy imported goods that are produced domestically.

Ha Ha Says:
March 26th, 2006 at 1:53 pm
I wonder why activist film makers such a Michael Moore does not do a film on Credit Bubble/Housing Price Absurdity…..

hmm, good question. too ephemeral, and off the radar of the 'big social issues'. he might focus on rampant homelessness. his latest thing is HMOs... interestingly, i think that welfare states with cheap, universal health care but over-priced housing are potentially no better off than the US system of potluck healthcare and oftentimes cheap housing...

quote from my blog:

"The main barrier to progress appears to be that housing continues to lie off-centre from the main economic, social and political concerns of governments at all levels. In part, this involves an inertial lag effect. For most of the post-War period, the vast majority of Australians have been well housed by historical and international standards. Housing, labour and financial markets worked together to ensure that housing standards were adequate or better for perhaps 85 per cent of the population. A similar proportion of the population became home owners at some time during their lives. The fact that this dominant housing career and expectation has broken down over the past 20 years appears to have eluded many policy makers, who still look to the housing market operating within conventional parameters to meet housing needs for all but a tiny residualised group in the population.

It is this dominant view—along with the tendency to uncritically celebrate house price inflation as a sign of a healthy economy and domestic world—that needs to be taken head on by people concerned with both Australia's long term economic sustainability and the immediate social problems of declining housing affordability for an increasing number of Australians."

Show me the money: financing more affordable housing - Mike Berry

i dunno, this blogsite has problems with posting a lot of the time, not to mention being cumbersome. i'm trying to get patrick to re-develop as a proper threaded forum with CHAT rooms!

Your friendly Indian allies:

NEW DELHI: Prime Minister Manmohan Singh has had to deal with the querulous left allies, without whose support his government cannot survive, for quite sometime now. Given their anti-US postures left protests were expected during the visit of US President George W Bush to India. However, it is the massive anti-Bush rallies in which Muslims participated that caught New Delhi unawares. It is perhaps the first instance of pan-Islamic sentiments so strongly expressed by the Muslims in India who number close to 150 million in the country, the largest population after Indonesia.

Hindu-Muslim riots broke out in Lucknow, the capital of UP, in which four people, including a 15-year-old girl, were killed and several injured. Elsewhere, across the nation, Muslims took to the streets in thousands chanting “death to enemies of Islam” and “down with US.” A mock funeral of Bush was staged at Hyderabad, a city that he visited.

http://militaryweek.com/southasiacalling.shtml

A memorandum submitted to Manmohan by Muslim leaders stated: "in the post cold-war era the American imperialism has posed a serious threat to the world order based on mutual respect for the sovereignty of every country. Unprovoked aggression against Afghanistan and Iraq and a threatening posture against Iran has proved beyond doubt that the new security doctrine of pre-emptive strikes to destroy all foci of potential resistance to American dictates of world order has blurred and finally erased the distinction between peace and war."

Indeed, India’s stand against Iran has been a sticking factor with the Muslims in India. New Delhi has been unhappy with Tehran repeatedly dragging India into its problems with Washington. On Sunday Iran trashed the US for its "double standards" in signing the nuclear deal with India. Iran's foreign ministry spokesman Hamid Reza Asefi said Washington was systematically trying to show Teheran in a bad light. "The United States' approach is a form of double standards. It signed a contract with a country that was not a member of the non-proliferation treaty. That is objectionable. On the other hand, it approaches Iran in such a (bad) way." India has not signed the NPT, which it says is discriminatory. Iran has voluntarily signed the agreement.

New Delhi has been trying to broker on behalf of Iran and has been instrumental in buying more time for Tehran at the International Atomic Energy Agency (IAEA) meet in September despite the anti-Iran vote. The November meet of the IAEA postponed action due to active behind the scene lobbying by New Delhi officials. Matters were relatively quiet on this front, until in January this year when Tehran removed UN seals from three nuclear facilities, ending a two-year suspension of uranium enrichment-related activities.