patrick.net

FuzzyMath Says:
What is everyone’s gut feel for the future of mortgage interest rates? Seems like their slipping upward even while the Fed is lowering.
...
Seems like alot of the price drops in housing could be moot for buyers sitting on the sidelines waiting for the bottom.

This is a favorite scare tactic of the realtwhore-troll crowd, and is probably an effective sales-tactic with those who suck at math.

Price-drops are the best for a buyer because they lower the true cost of ownership. Besides, a buyer can refinance into a lower rate but not into a lower price.

If someone buys now, they will end up paying today's price for a property that will be worth a lot less when interest rates are higher.

Do some real math instead of the fuzzy kind, it is pretty simple.

I know many on this board believe FDR was a hero. But I am still very angry every time I think of the prospect of gold confiscation.

EBGuy Says:
February 27th, 2008 at 4:26 pm
"The coin dealer who cashed out my gold
You actually went “physical” with your gold!? Did you go the “toilet tank” route or safety deposit box? Just curious as I may buy some Eagles with the gov’t rebate money if we are still under $1000/oz. I am a bit paranoid, though, about getting bonked on the head exiting the coin shop (keep the motor running honey!)."

Yes, I went physical, and yes at one time I had a 10oz bar which used to make me nervous. Probably not a good idea to publish my movements here but yes you do then have something tangible to worry about. Even though I paid a little more to cash out at the coin shop I don't like the idea of mailing the gold to someone in AZ and hoping a check will come back. I did that once and it went perfectly fine. I used to buy gold on Ebay. Sometimes I would get it right at spot including shipping.

I read your follow up post EB. Like anything in quantity you might buy some at a starting price and then continously try to buy it below. I really have to say that I'm concerned when everyone seems so sure something will move this or that way but I'm not a psychic.

This site offers some "comfort" :) :

Finally, gold and silver today don't represent the huge pool of wealth they represented in 1933. Why risk wide-spread disobedience to steal such a tiny plum? If the government wants to steal a big pool of wealth, they'll snatch your pension funds and IRAs, not your gold. Tyrants always shoot for the biggest target.

http://www.garynorth.com/public/268.cfm

A friend at my old office (6 years ago) was buying silver coins (like morgans) on ebay at below the spot price of $4.50.

Peter,

I have read that while it was law, no gold was ever in practice confiscated.

It is funny how we (me included) feel more nervous about having a coin or bar in our possesion than giving our money to perfect strangers to manage it or invest it in Enrons, New Centuries, etc.. and perfectly fine about it (no nervousness).

Why is that?

In the end, I got nothing for my Enron shares - kinda like being clunked on the head walking out of the coin shop!

In the end, I got nothing for my Enron shares - kinda like being clunked on the head walking out of the coin shop!

True, but you still own those Enron shares. :)

Property right is the foundation of our modern society. It is as important as human rights and civil liberties. Without the respect for property right, our existence means nothing.

how about I give you a worthless piece of paper that says you own gold? It's pointless - Enron is gone, done, over!

"Property right is the foundation of our modern society. It is as important as human rights and civil liberties. Without the respect for property right, our existence means nothing."

Exactly - that is why everyone is getting so pissed off when they see what the FRB is doing to us!

@SP

"This is a favorite scare tactic of the realtwhore-troll crowd, and is probably an effective sales-tactic with those who suck at math."

True, I've heard that before.

While in general it is true that expensive money/lower price is better for a buyer than the opposite, the true "math" depends on the situation.

Speaking of "math"... the term seems to be thrown around quite flippantly here. Whereas the math of certain situations might be quite easy, there are always economic factors at work which are always unknown. Those variables are the ones that can determine whether a financial decision was wise or not. If it was only math that made that determination, there would be alot of filthy rich calculus teachers.

That's why most scientists and engineers don't become filthy rich even when they have decent earnings. They just can't grasp the concept of emotional irrational variables in the equation.

They just can’t grasp the concept of emotional irrational variables in the equation.

Exactly.

The truth is over-rated. It will not make you rich. Perception of the "truth" is more important.

For a while, I was aspiring to be a logician. How naive was I!

There was a blogger on here "Randy H" who argued against gold at $600 and $700 per ounce before he stopped posting.

Malcolm

That sounds like another way saying that most of us "cannot relate", cannot make a connection to the mainstream, are nerds, geeks, dweebs or whatever.

Just another way of saying it.

"They just can’t grasp the concept of emotional irrational variables in the equation."

True... personally, I'm a physicist. And although I pull good income off of my work, I typically make bad overall financial decisions. Whereas I "get" the presence of the emotional variables, the fact that they are irrational makes any attempt at figuring them out a guess.

While I am attempting to learn enough to just keep what I have, I don't see a life spent flipping things (whether it be houses, stocks, gold) as a satisfying endeavor, nor do I see it's value to society. In fact, quite the opposite, I see it's detriment. It turns the economic landscape into a minefield for people who don't have enough time to become experts on emotional variables.

Physicist:

Investing on one's grasp of emotional irrational variables is another way of saying speculating on a bubble,

whether it is investing money on what asset bubble is hot, or it is investing your time on what fashion bubble is "in", or investing your libido on what babe-ilicious bubble is hot.

If you invest your capital, your time, your intimacy based on your values than even if you lose you win, (as long as you have decent values).

Malcolm,

Aptera is neat, but it is no replacement for a real car. The Aptera is 850lbs, fits 2 passengers and very little luggage, and is likely no good at going uphill.

In my estimation, the key to saving oil is not these we-went-all-out-with-futurism vehicles. The key is rather to get everyone out of their gas-guzzling V6 and V8 cars and into a moderately sized 4-cylinder engine of 2L or less. Oh, and it should be a diesel-electric hybrid. Then we will keep improving the technology, using ultracapacitors instead of batteries, reduce the engine size further, and so on.

Most people do not realize, but the key reason that hybrid works well is that the *average power* (as in, Watts) needed to propel a car is quite low. The problem is that the engine has to be dimensioned for peak power needs, which makes the whole package terribly inefficient. Gasoline engines (instead of diesel) add to the problem.

This is what hybrids do well: You take a small engine that provides enough power on the average, and combine it with an electric motor that handles the peaks (and also the very low speeds, but that is actually less important). The battery (and later ultracaps) provides the extra oomph when you accelerate. Regenerative breaking is a bonus, but it really does not work all that well with batteries as the energy storage medium. A good ultracap solution would be much more effective.

Aptera is a good example of what hybrid technology can do, but it is too radical for general use.

If everybody would just switch to a car that gets 50mpg this year or next, we would already be well on our way to energy independence.

I'm thinking about getting the new 2L VW Jetta TDI Diesel myself. It will be "california clean" and available later this year. It can get 48-50mpg if driven wisely. Next step would be a 1.2-1.5L 3-cyl diesel-electric hybrid. That would be even more efficient. I'm hoping Toyota can provide one soon.

By the way, Jetta is a pretty roomy car with a big trunk. You're not sacrificing much by driving it.

Different people are good at different things. I skated by in differential calculus, definitely not my strength and I respect people who are good at it and chemistry as well. I don't insult people, nor do I ever try to offend anyone who hasn't offended me. When technical people drop the atitude that they know everything and are superior because they shine in their field, and there are a very few who have listened, have either made a lot of money by following my lead or saved a lot of money by heeding my caution that it wasn't a good time to buy in 2004 despite what their peers were saying. I can cite specific examples of very credit worthy coworkers who were engineers and they had to listen to the condescending statements from their coworkers who thought because they weren't buying, they somehow must have been unable to buy. I had two friends in Phoenix, one of them arrogantly told me there was no way houses in Phoenix were going to drop, and another at Intel who had his colleagues say "That's OK man Intel will eventually give you a bonus you can put down on a house." That individual had over $300K in a semi liquid investment account. So as usual I have to disclaim that it is merely a recurring observation I have personally made. My statement is merely an observation and not intended to be degrading.

Does it make sense that an older couple retired and living on Social Security in Sonoma County would pay higher taxes than a NBA player making $5mm a year renting in Mahhattan?

If the older couple is living on several million dollars worth of land, yes, they should pay more.

The best idea I heard for the land value tax amount is just to let people pay what they want, but with each tax payment being a legally binding offer to sell at the implied valuation. So if the land value tax is 4% per year, then a payment of $4,000 implies you are willing to sell that land for $100,000. So if someone offers you $100K, you either have to accept it, or pay more tax right away.

Seems perfectly fair, but you can't be sure of living in any one spot forever.

sybrib,

I agree that it might be fulfilling to the individual. That does not make it good for society.

To me trading is just another casino rigged to transfer money to those who control the game.

"Aptera is a good example of what hybrid technology can do, but it is too radical for general use."

I don't agree that it is not a replacement for a regular car. My Boxster is also a 2 seater. For driving around San Diego it will suit me just fine. I am an incrementalist as well and look at it as stepping stone, but it is more than a Prius which showed us the way, it is the start of a new way of looking at cars. I disagree with your statement that the KWs to propel a car are low, that is why the car has to be so light. We are a two car family, we will probably keep the Prius for long trips but for me, I like the idea that I will basically be almost completely off of oil. The engine/generator comes on when the batteries drain, for the amount of driving I do I will almost never need it. My house is a net producer with solar so basically I will be living/demonstrating a fully renewable way to live without oil. On their FAQs they answer the question why they chose gasoline over diesel.

of course, If I had a cool million put away like Malcolm, then I would probably have the opposite opinion

That’s why most scientists and engineers don’t become filthy rich even when they have decent earnings. They just can’t grasp the concept of emotional irrational variables in the equation.

Economists fit the bill as well. Remember the Nobel laureates at LTCM that shook the financial system ten years ago.

I wish I'd ridden Buffett's picks more often. Crusty billionaires are sometimes worth listening to. Rode Freddie Mac up with his pick, basically during the '90s, for an 11-bagger. He dropped Freddie in 1999, which I took as a bad sign, and sold.

STCM

Malcolm,

Maybe you didn't mean it to be degrading, but I did, and I am one. It seems like some social forces are inter-related, like who (many) of the engineers are, and the topic that comes up here from time to time, about negatives expressed here by some about women.

And it's always someone else who has the problem.

About the hubris on the housing, I've heard all that crap too, but within the engineering community you have different castes. I've been working most of the decade with many who are of like minds on the housing bubble all through the decade, misfits all of us. Probably was part of the reason for the success we shared on some projects.

I do admit it is radical, but what a fun concept to be an innovator/early adopter for. I think it looks awesome too. I also think it is roomier inside than my Boxster, and the design will let me put a 7 foot surfboord in the trunk.

"I don’t see a life spent flipping things (whether it be houses, stocks, gold) as a satisfying endeavor, nor do I see it’s value to society. "

I don't either. I'm not a flipper, I bought with the intention of holding for the long term and building a retirement nestegg. This is sort of what I'm saying though, you have to be adaptable, I saw clear signs to sell when other johnnycomelatelys (many of them tech people who don't like their jobs and wanted a get rich quick system) jumped on while those in the know were jumping off.

"I’ve heard all that crap too, but within the engineering community you have different castes."

You're telling me I'm wrong and offensive and then adding your observations to support my statement?

Sorry if you misunderstood Malcolm. My comment was not directed at you... just a general distaste.

I think it was a fair comment. I personally hate flippers, and I don't like get rich schemes. I think it would be dumb to avoid an opportunity because it doesn't provide a social benefit in someone's opinion though.

I'm not looking for a pat on the back but my regular income comes from lending on commercial ventures. That does have a social benefit, because I've helped build everything from amusement parks to shopping centers causing the employment of literally hundreds of people as it multiplies through the value chain. To me that's how it's supposed to work.

I think it would be dumb to avoid an opportunity because it doesn’t provide a social benefit in someone’s opinion though.

Agreed. Unless it's actually detrimental... in which case, it might be dumb, but honorable.

I think it would be dumb to avoid an opportunity because it doesn’t provide a social benefit in someone’s opinion though.

Speculators provide liquidity in markets. That is a social benefit to me.

On the other hand, I prefer to keep value judgments out of profit pursuits.

human society is a ZERO-SUM game.

Bah! You know better!

There was a blogger on here “Randy H” who argued against gold at $600 and $700 per ounce before he stopped posting.

No. I argued that most people would lose money in gold. I also stated that I have gold in my portfolio, but it is properly weighted. People were coming on here recommending that people dump _everything_ for gold, which was ridiculous.

Some folks always did hate me though, for some odd reason.

Just got back from dinner and really I apologize if I offended anyone. I still don't know how since I wouldn't be offended if a scientist said people who studied business don't know scientific fields. I'm not going to tell a chemist their business so it is somewhat arrogant to take offense when someone who spent years and years learning advanced financial and marketing concepts as part of my field makes a factual statement that tech people don't understand certain fundamentals in determining the value for something. When you can't put a value on an asset you become a speculator shooting in the dark.

If anything I should be offended because that thinking is the same condescending atitude that I complained about earlier. God forbid an engineer actually has to admit they don't know everything about everything.

Because I like to keep it positive I will say that this is a hell of a good place to learn and people can be exposed to some very good real world experiences that they wouldn't normally have access to.

Randy H Says:

> Some folks always did hate me though,
> for some odd reason.

Most of us are glad to have you back...

I lurk often. I'm just much busier these days. I'm countercyclical, so there's a real whopper of a recession coming, lol...

Randy, would you go so far to use the D word, or is it still just an r?

Just an "r". But a nasty one is my guess. Perhaps lasting more than a couple years. "D" is a strong word.

Bah! You know better!

Ha! See, I got Randy to come back. :)