patrick.net

without thinking of the fact they could then be terminated at any time without reason with no redundancy benefits, that they had no sick leave or personal leave entitlements, etc — so they had really thrown themselves at the mercy of their employer by trying to be too clever…

At least in California, as in most other states, employment is "at will". I have been an employer in the state on and off for over a decade. I can terminate people without cause and without reason, so long as it's not provably discrimination against a statutorily protected class. Independent contractors, especially since the mid 90s after the revisions to pre-existing condition/group plan regulations, can usually provide themselves with benefits comparable or greater than available from most California employers. They can't get the best of the best, as in Fortune 100 type benes, but they far exceed the average in cost per value of coverage. I alternate between being an employer and an independently, self incorporated consultant. While self-employed I have always had greater benes, including SEPs et. al. than when an employee of a real company.

I find that people often hold many misconceptions about the limits and practicality of their rights as employees. In California an independent contractor can contest intellectual property invention ownership, an employee may not. The list goes on.

At least in California, as in most other states, employment is “at will”. I have been an employer in the state on and off for over a decade. I can terminate people without cause and without reason, so long as it’s not provably discrimination against a statutorily protected class.

etc

Yes, that's where the Oz guru probably indiscriminately stole his material from -- US gurus. (Gurus are not known to be strong on practical detail.) Over here, you have more employee rights, including the national 'Unfair Dismissal Act', which pretty much requires that you have given 3 written warnings to an employee on an issue before you can terminate, or else suffer repercussions when they sue you.

Futher, the Ralph reforms to taxation came up with the '80:20 rule', that you had to be doing at least 20% of your work for a 2nd party before you could be classed as a contractor for tax purposes -- you couldn't work for someone 100% and claim contractor tax breaks.

However, here you get free national health care regardless of who you work for, I have never heard of an employer offering health insurance as a perk ever, and it's a lot easier just to use your employer's pension plan, altho that's just changed under 'super choice'... The unfair dismissal thing just changed for workplaces less than 100 also, to great agitation -- nobody knows how that will play out yet...

You do know Mental Accounting was Richard H. Thaler, right? As in the groundwork which lead to Behavioral Finance as a science.

aren't i in agreement? jeez, thin skin... :P

Religions need not be involved in marriages.

hmm, yes, there is the religious ceremony and the civil marriage. most of the time religious celebrants are authorised to do the bookwork for the state as well. if you don't do the bookwork for the state, you are not counted as legally married - it's a conditio sine qua non... however, you can just do the bookwork for the state (a 'registry marriage') without bothering with some other rite or ritual of public recognition of allowable sexual relations, heh. i wouldn't bother with a church wedding and all the hooplah, cos i don't believe in it - unless the in-laws made me do it... and i guess such marriages are recognised internationally too - if i got married in germany, that still applies in the US - i can't commit bigamy (unfortunately :cry: )

The amount of propaganda piled on by the media on hurricanes and global warming is staggering.

Katrina hit as a Category 4 hurricane (not a 5) - like 25 percent of all hurricanes. Had one of them hit New Orleans head-on when Teddy Roosevelt was president it would have been just as big a disaster - probably bigger.

maybe there wasn't as much methane and CO2 around when Teddy was president...

But hurricanes are having a large impact on mind share now aren’t they? It’s like getting hit by a wild pitch.

Yes, California has earthquakes. But they don’t name them and have 24 of them a year.

So the weather's turning to shit, climactic patterns are changing latitude, the glaciers are retreating, the snowfields are disappearing and the ice caps are noticeably melting, but global warming is still propaganda? curse that sensationalist lefty latte limousine 10,000 sq ft house-owning liberal press that happens to be owned and run almost exclusively by Repugnants...

here's something by Sir Crispin Tickell:
http://www.crispintickell.com/page92.html

i can’t commit bigamy (unfortunately :cry: )

Huh? Do you even want to?

maybe there wasn’t as much methane and CO2 around when Teddy was president…

DS, have you read Crichton's State of Fear?

SQT, make sure you have a sufficient life insurance policy for your children too.

i can’t commit bigamy (unfortunately )

Huh? Do you even want to?

sometimes... it's the natural state of man...

DS, have you read Crichton’s State of Fear?

crichton's a rotten right-wing apologist for the status quo, probably unintentionally representing vested US industrial interests and the fact that the US with 5% of the world's popn produces 20% of its greenhouse gases. pretty obvious.

especially when you look at recent exceptional hurricanes and cyclones in the southern US, northern australia, floods in central europe, and the possibility of the entire warming Gulf Stream Atlantic currents disappearing... banks in Europe will no longer finance ski resorts under 1500 m altitude... and they're selling off the skifields here asap...

that's the link i was looking for:

http://www.knowthecandidates.org/ktc/BushAnalysis.htm

the little bush jr kiddy's environmental record in texas...

IMO, It is not whether hurricanes are stronger or more frequent

hmm, i think they are changing latitudes too though -- going further north and south in their respective hemispheres... and they're supposed to be more intense as well... could just be due to natural decadal oscillation...

they won't be densely populated areas for long if they keep rollin' in...

"The number of major hurricanes has more than doubled in the last six years. The increase is part of a long-term climate shift that is likely to persist for several decades, said Chris Landsea, a meteorological researcher with the U.S. National Atmospheric and Oceanic Administration (NOAA) Hurricane Research Division and co-author of a study on the findings in the July 20 issue of the journal Science. "

national grographic wouldn't lie -
http://news.nationalgeographic.com/news/2001/07/0719_hurricanes.html

"During the American Revolution, [Benjamin] Franklin is reputed to have proposed the impractical but scientifically tenable idea of diverting the flow of the Gulf Stream to freeze the British."

The strategy's finally worked, 230 years later...

"“During the American Revolution, [Benjamin] Franklin is reputed to have proposed the impractical but scientifically tenable idea of diverting the flow of the Gulf Stream to freeze the British.”"

Ah, Day After Tomorrow scenarios, can I hijack this thread for another Jack Gyllenhaal non sequitur?

"“During the American Revolution, [Benjamin] Franklin is reputed to have proposed the impractical but scientifically tenable idea of diverting the flow of the Gulf Stream to freeze the British.”"

Ah, Day After Tomorrow scenarios, can I hijack this thread for another Jake Gyllenhaal non sequitur?

The Chinese have a saying: If you want one day of unrest, throw a party. If you want a year of unrest, remodel your house. If you want a lifetime of unrest, marry a concubine.

Paying Hamptons or Hawaiian prices for Florida RE always seemed kind of silly to me. Every awake person knows about the constant hurricane threat, the humidity, and the lack of things to do (other than Disney World).

It's kind of like paying full Westside prices to colonize Watts...Or paying house prices for condos...Oh wait, those Miami condos are in bad neighborhoods!

I appreciate all the estate planning wisdom from everyone here. Sadly, we've done just about nothing aside from financial planning. My wife and I are pretty much the first and only from our families to have anything worth planning, so we tend to probably be way to humble about it. Something about the way I grew up tells me that planning my estate means I must be full of hubris. The very word 'estate' doesn't even feel right.

Nonetheless, I'll call my lawyer Monday and get this taken care of. Now if only I can figure out a way to finagle into a Prop 13 legacy property.

Randy,

Don't feel so bad. My wife and I have holographic wills. Probably adequate for where we are today, but embarassing nonetheless. The cobblers kids go barefoot.

-hominmem
+hominy

I think for the most part, there will be more downward pressure on prices due to the more freely flowing distribution of information on the internet. However, there are still some realthors trying there best to brainwash the public into believing the market is going to get better and some sheeple will believe it too as in the very bottom of this article quotes.

"It's a much more attractive time to buy now," said Dettor, 33. "Prices aren't so ridiculous."

"There is a fear of buying at the top of the market," Hunter said. "Once people satisfy themselves that the market is not going into a tailspin, they'll go ahead and buy."

Do these realthors really believe this themselves?????? I think this guy hunter should really be the hunted!

BS said,

hmm, i think they are changing latitudes too though — going further north and south in their respective hemispheres… and they’re supposed to be more intense as well… could just be due to natural decadal oscillation…

they won’t be densely populated areas for long if they keep rollin’ in…

Now you're a climato-sociologist?

Mike,

Shouldn't you be out trying to sell a house?

Randy,

If you have a life insurance agent or a financial planner already, I'd recommend you talk to them first. They should be just as experienced on the basic stuff and a lot cheaper than talking to someone at $200/hr.

Your personal lawyer will probably suffice for a simple form will, advanced medical directives, etc. Chances are, they'll be straight out of a form book with few minor changes. You can probably DIY with a little research and a friendly notary public.

You can get ready by getting as much financial information together as possible. You're pretty happily married to your first wife, so your primary concerns should be (1) caring for your son in case you and your wife are both out of action (2) probate avoidance (3) dealing with long term illness/disability problems.

For meaty tax planning stuff, I'd recommend you look for someone who specialize in the area. Your lawyer or financial planner or life insurance agent should have someone good on their rolodex. You want to look for someone who spends the majority of his/her time on estate planning and related areas, has at least 5 years of experience, and frequently deals with relatively complicated estates.

disclaimer - just suggestions, always do your own homework before acting

astrid,

Thanks for the advice. We have a crack tax acct and tax attorney already due to my having been a C/S/LLC/LLP owner and my wife having had various stock options and such (not to mention her status as a Section 16 insider). I think our tax planning is well in line, except for probate avoidance. I'm more worried about legal stuff. I don't trust insurance agents as a general rule and I do the financial component of our wealth management myself. What I need is someone to ensure that we have the right legal structures in place to prevent subversion of our intent should we become dead prematurely, or other calamities and such. Both having extended families that are in quite different economic positions than we, there is a huge potential for moral hazard should something happen to us.

Otherwise it's pretty simple. First marriage, 1 child, shared intent to provide financial security to our child in a reasonable manner consistent with our values, maximize tax avoidance, minimize threat of external opportunists laying claim to a single copper plated cent that we sacrificed much of our lives to earn. Isn't this what everyone wants pretty much?

especially when you look at recent exceptional hurricanes and cyclones in the southern US, northern australia, floods in central europe, and the possibility of the entire warming Gulf Stream Atlantic currents disappearing… banks in Europe will no longer finance ski resorts under 1500 m altitude… and they’re selling off the skifields here asap…

But how can one ascertain that the "warming" be "global"? How can one attribute such "warming" to "greenhouse gases"?

testing

newsfreak,

Vegas works because losses are spread out into a series of smaller losses, whereas wins are infrequent but larger. This supports what RLA is claiming which is actually just straightforward mental accounting. To generalize, an average person will equate approximately twice as much significance to a loss than to a gain, in some circumstances much more. So Vegas works because losing lots of $2 bets doesn't hurt so bad, and you occasionally win $25. So you feel one $25 high in between a series of $4 perceived lows, all carefully engineered to cause you to pretty much always lose money but don't really feel it.

Randy,

There are bankrupt's estates, indigent's estates, etc. The word itself is just a legal jargon. With such a high federal estate tax exemption, most estate planning is a form of insurance to protect your family and avoid unneccessary legal costs.

Garth,

You can admit or deny global warming all you'd like. But I'd really appreciate it if you can bring back all the high altitude glaciers.

Astrid
Randy H is brilliant and I think he knows what 'estate' means.

I realize a lot of people in this thread disagreed with the mental accounting thing. The problem is that I've yet to see evidence of it _not_ occuring. People regularly take lump-sum payments in favor of annuities, hold losing stocks too long while selling winners too fast, eschew flat-rate plans in favor of ala carte plans, all of which are almost always de-optimizing, bad decisions. They do it because of the way they _think_ about money.

There's an old cliche that goes along with this: why can't you find a cab on a rainy day in Manhattan? The answer turns out to be that cab drivers make more money on rainy days. It's counter intuitive, until you realize that each cab driver _could_ earn more money on his shift but he instead will go home early because he thinks of it more that he's _earned his day's money already_. Those few who do stay on and rake in the profits will almost assuredly blow that windfall at the track, because it's "house money" to them, somehow different than the other money they earned an hour before.

Communication won't change things, irrational behavior is a part of being human. We all selectively listen to messages that are more pleasing to our ears, sometimes reading around is just a way of confirming what we already believe in.

However, communication will amplify the trend both upwards or downwards. I don't know the amplification factor, but it will definitely be higher than without the blogs and widely available data beyond the mainstream media. My hypothesis is, the bubble grew bigger because of internet, and will pop harder.

When the bubble pops, the sellers are comprised of TWO groups.
1) People who have no other options than selling (laid off, run out of cash)
2) People who expect the real estate to go down further

At the first stage of the pop, aka, the next 12 months, 1) will be wiped out, and continually wiped out throughout the process. 2) are usually investors, because no owneroccupier will give up his primary residence unless he has absolutely no choice whatsover. So setting the expecation of 2) is very important. If the internet amplifies the perssimistic tone on the way down, you will see more 2), stepping over each other to set the new low comps. 1) will be there anyways, it will be the marginal 2)s that are dragging the market down further.

Linda,

I would never dream of calling any of you stupid. :) We even have above average trolls!

Mental accounting is one of the ways we account for money. Housing happens to be a very special category. People equate housing to prestige, sense of security, ultimate shelter etc. Money is not the most important things when it comes to an owner-occupied house, because it is called a home.

Some guys may end up with a very pissed-off wife who determines his frequency of corporal pleasure if they don't own a home together, how do you account for this in mental accounting model?

Owneroccupier,

But what about one of the groups most likely to sell - the retirees? I'm sure some of them are extremely savvy and will continue to exploit their prop 13 position, but many will probably take the profit and relocate elsewhere.

If this was 5 years ago, I'd agree with you. At the time, most people still treated a house as a durable good. So they bought only as much as they can reasonably afford to use.

But now, many people are buying houses as investments, and in anticipation of appreciation. This misguided belief has lead many to buy much more house than they really need or can afford. I know almost everyone in my generation and many who are ten or twenty years older have told me that they bought their current home in anticipation of a big pay day 3 or 5 years down the line.

Some guys may end up with a very pissed-off wife who determines his frequency of corporal pleasure if they don’t own a home together, how do you account for this in mental accounting model?

It would fit in quite well. Every night you are denied, err, companionship. The pain you feel from this is at least 2X as "much" in your mind as every one night you do share in physical delights; probably much more than 2X knowing the typical male. For me, perhaps about 34.5X, but I'm the overambitious sort. This would predict that I am willing to pay a higher premium for a home (overpay from a coldly rational, economist's viewpoint). My Bubblizer actually lets you put this number in as a guesstimate, put it in the annual Present Value of "intangibles" assumption cell. Seems a bit unseemly to put a $ value on things like this, but you can rationalize it away that you're willing to trade this pain to avoid that pain.

...and for my wife it's $0. Luckily I found a woman more logical and rational than I.

I know almost everyone in my generation

(as Peter P would say were he here today):

Huh?

Oops. Everyone = everyone I personally know who bought into the RE since 2002.

(Or maybe I'm the Lois Weisberg of my generation :) http://www.gladwell.com/1999/1999_01_11_a_weisberg.htm )

astrid,

your investor friends fall into the investor category.

I am only familiar with the retiree situation in the Bay Area, cannot comment on the other places. Somehow the retirees here are quite satisfied, and as long as they have a paid-off home, there is really little incentive for them to go elsewhere. Retirees care about weather, a LOT! I talked to the retirement community residents here, they are mainly from the Bay Area, plus some from the east coast, citing weather as the number 1 reason for their move, of course they are quite well-off to make such a move.

I was not aware of the prop 13 pass-down gimmick until I talked to my old-timer neighbor. I don't know how many of them are aware of this, but I certainly won't "misunderestimate" (bushism) the intelligence of old-timers here. It is these people who built Norcal to what it is known today, the Silicon Valley. So financially, I don't see the need for the retirees to piss away the prop 13 goodies when they pass away either.

Owneroccupier,

I'm not intending to misunderestimate anyone either. Mental accounting theory doesn't make value judgements about people. It's much like the "herding" instinct. People behave this way because it almost always works for them and is common sense. It's just that with financial and economic things, common sense often contradicts what logical reasoning would otherwise conclude.

If RE is to fall by say 50% (and I'm not saying it will in the BA), then a retiree who sells after 20% "paper loss" may be maximizing their own situation quite effectively, where if s/he held for 10 years to regain or exceed that 20% s/he may "pay" in other ways not nearly as acceptable as the pain they feel from that payment. All I'm saying is that they'd roughly need to earn 40%+ in this stylized scenario to overcome an otherwise balanced personal decision to sell or hold.