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Jimbo says: I bet 1/3 of the population is functionally math illiterate.
Sadly, I think that 1/3 is awfully optimistic. My circle of friends is mostly college educated, and I would consider probably 25% or more of them to be financial innumerate. I don't know any people in the inner city, the boonies or the "other" parts of town.
To Headset's point on greed, even some of my mathematically inclined friends talk smugly about using "OPM" (Other People's Money) to increase their net worth. For example, an engineer friend of mine used the tried-and-true example of 10% down, with 10% price appreciation is doubling your money. I pointed out that the leverage had a cost of approximately $1000 a month in that case (we were talking about a particular house in his subdivision), and he proudly went on about how the interest was tax deductible. I pointed out that in the best scenario you only get about 30% of that money back, and generally it's much less because you had other deductions anyway. I offered to let him give me $650/month for three years and then return $20,000 to him at the end (of course, this argument is equally lopsided because he did have the utility function of a house for that period of time).
The wheels fell off the wagon when he defaulted to "you have to live somewhere" and then chided me repeatedly for "paying someone else's mortgage" by renting and "giving the government too much of your money". But come hell or high water, he wasn't going to concede that the leverage using OPM was actually costing him something. There was only upside.
Maybe while we're out educating the masses on basic American financial situations, we can we could outlaw Robert Kiyosaki just for completeness.
Germans and Japanese had their share of the housing bubble back in 1990, after the Berlin wall came down and the whole Germany was rejoiced in Wiedervereinigung. A German Bay Aryan on this blog talked about how he got trapped in the bubble before. I don't think those Germans who bought at the peak of the last bubble are able to come out even nominally in 2006.
Germans and Japanese are very much alike in many aspects, even in their bubble cycle. Perhaps it is about their turn to shine for the next decade. Germany and Japan are probably the countries with the smallest housing bubble, if at all, in the world right now.
Middle of the U.S. never experienced a bubble. We bought new homes in Oklahoma for about $160,000 each about 2 years ago. If energy problems continue, these homes should do well.
I wrote:
> I don’t understand why a gold digger can marry a guy
> for a few years and after to agreeing to stay with him
> “until death do us part†break the contract (to move in
> with her personal trainer) and take half the guys assets…
Jimbo Says:
> This is just not how it works FAB and you know it. She
> does not get half the guys assets, just half his increase in net
> worth during the time they were married, which seems
> perfectly reasonable to me.
My main point was that I don’t see why a person who breaks a marriage contract does not have to “pay damages†like the people that break other contracts.
If I sign a contract to coach the San Francisco 49ers for 5 years and the value of the team goes up in three years after I take the team to the Super Bowl I don’t get paid any of the increase in the team’s value if I break the contract and will have to pay them if I wanted to leave and coach the Dallas Cowboys.
I know that if you marry an aging pop star worth over half a Billion you will only get about $50 million if you dump him after a few years. Most of the divorced guys I know who got married when they were still paying off student loans and working long hours have lost close to half of everything when they got dumped for “someone more excitingâ€â€¦
P.S. To any women reading this and thinking about getting married to a guy with a Masters in Electrical Engineering and a MBA who is working at a top 5 VC firm. The guy will probably never be “excitingâ€â€¦
Middle of the U.S. never experienced a bubble.
Plenty of places inland from the coasts experienced a bubble. You're lucky if your town was excluded, but plenty of cities saw credit-leveraged overbuilding, rampant speculation, mortgage resets--the whole list of damages. The news tends to focus on metro areas, but the downturn has hit nearly everywhere.
Perhaps one difference might be: coastal areas think they're too strong for the bubble to collapse, while some heartland areas consider themselves too stable for the bubble to ever hit. From the data I've seen, the downturn is generally nationwide.
My main point was that I don’t see why a person who breaks a marriage contract does not have to “pay damages†like the people that break other contracts.
The person who breaks a marriage should pay a 150% tax on the proceeds.
# HeadSet Says:
Yahoo gives low six figure salaries to interns?
I don't know - seems unlikely - I hired a couple of stellar interns in my group (not yahoo, though) last year, who were paid a lot less. Her linkedIn profile said "intern". The newspaper article said "low six-figure salary". One of those is inaccurate.
I do not understand why Greenspan is so defnesive. He seemed to largely ignore the praise when he was lauded as the greatest Fed chief ever. So why now blog about the current problem not being of his deisgn? Let it go Alan. You played hero, now play goat. Its just media.
Fo my part, and I am guessing I am unique here, I have no problem with Greenspan from a monetary side. However, his lax view of regulation and his hyper-belief in 'effecient-markets' was sadly out of tune with the reality of man. To me its almost a classic case of one who sees the world as it ought to be versus one who sees the world as it is. Somehow I think he just cannot understand that given little or no oversight, people will game any system to maximize profit while performing as little work as possible - no matter the destruction it casues.
Kill Countrywide while pocketing hundreds of millions. Sure.
Make hundreds of millions with MBS then take a governement job to lock in those profits, Paulson, sure.
In truth, counterparty sruveilance no longer works becuase all financial roads lead, rather quickly, back to the Fed. This means the Fed IS the counterparty and it better start acting like it.
And as long as I am making demands, the rest of the Central Banks better start helping the Fed wth the heavy lifting or the world GDP contraction will be sharper, deeper, and longer lasting than they think.
It appears that WaMu is getting bailed out, but NOT by Well Fargo.
www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/04/07/financial/f042734D60.DTL
Washington Mutual is close to landing a $5 billion cash infusion from private-equity firm TPG and other investors...
Who the heck is TPG?
"Who the heck is TPG?"
Texas Pacific Group, at least I'd guess. They bought out the Ducati that designed the 916, and replaced it with an entity capable of the 998 and 999. Resale values of "pre-TPG" bikes tell the story nicely. MotoGP is perhaps their only feather, and I'm not really convinced it's their feather.
Duke at 6:18am
I don't have the expertise to judge Greenspan on what you call the "monetary side". As to the rest of your post re: regulation etc: You are spot on in my opinion!
Google turns up half a dozen companies called "TPG".
Thomas Products Group
The Provo Group
etc.
Hey if an idea finally gets written up in the NY Times, is that idea now mainstream?
www.nytimes.com/2008/04/06/fashion/06survival.html?_r=1&ref=fashion&oref=slogin
It is not that of Barton M. Biggs, the former chief global strategist at Morgan Stanley. Yet in Mr. Biggs’s new book, “Wealth, War and Wisdom,†he says people should “assume the possibility of a breakdown of the civilized infrastructure.â€
“Your safe haven must be self-sufficient and capable of growing some kind of food,†Mr. Biggs writes. “It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson. Even in America and Europe there could be moments of riot and rebellion when law and order temporarily completely breaks down.â€
DennisN-
Same guys: TPG Capital
Expect good things from WaMu, at least from a shareholder standpoint. TPG seems to be very good at wringing out profit potential, and what else matters right?
Brent,
Yeah, AP now reports it as "TPG (formerly Texas Pacific Group)".
Mish has an excellent piece on the Spanish housing bubble. Apparently, we share the view that EU will not survive in its form. Cracks are forming.
People speaking differently languages should NOT share a currency.
I'm working on a book whose thesis is that the UK should pull right out of the EU and enter the Union as a half-dozen odd states. It might be timely if I can get it out in another year.
My take is that the EU is little more than a cynical ponzi scheme of the French and Germans to suck up funds from the other countries to support their otherwise unsustainable social welfare states.
Watching Spain and the UK's housing bust unfold makes it all that much more difficult to listen to 'former' housing bulls. All throughout the "good times" they couldn't be bothered with the fact this was ramping up on a global basis. Any of those even remotely aware of what was taking place abroad only cited it as further evidence this thing was for real. This thing was here to stay.
So now all of a sudden they've begun to show in interest in... well, REALITY frankly. The cover of Money mag. has it's lead article on "How to deal with the "mean" economy! Mean, as in any time you can't tap your home for a little well deserved MEW it's just plain mean?
I was at a party Saturday night and a few perma-perma-bulls were really freaking out. They refused to be cheered up in any way. Before I was avoiding the whole bubble topic b/c it was frustrating. Now I avoid it b/c it's depressing.
Hopefully, the British Columbia housing bubble will deflate before I retire. :)
My take is that the EU is little more than a cynical ponzi scheme of the French and Germans to suck up funds from the other countries to support their otherwise unsustainable social welfare states.
I thought the entire Europe is one big unsustainable social welfare state.
Switzerland is one of the few countries in Europe with a sensible tax system.
Something is wrong if individual income tax rate is higher than 15-20%.
Switzerland and many other places in the world have proven that high tax is NOT a prerequisite to social stability. Higher tax simply means inefficient government, misplaced sense of entitlement, and pure stupidity.
Switzerland was smart that it never joined the EU.
And this is ridiculous:
http://news.bbc.co.uk/2/hi/europe/6313671.stm
But Brussels' quarrel is not with Switzerland's quality of life but with its tax system, and there the EU has made it clear it expects some compromise.
EU basically wants to export its welfare state and draconian tax system.
"Hey your system is too good, it makes us look bad. We should all collapse."
Thahks for the link Peter P
By the way and totally off-topic, have you seen this? Although I have no great sympathy for China, I strongly object to anyone using the GG Bridge to play politics. Or the Olympics for that matter but I don't pay taxes for that.
12:43 PDT SAN FRANCISCO -- Three demonstrators scaled the south tower of the Golden Gate Bridge today and unfurled a banner intended to draw attention to Chinese human rights violations in Tibet.
The protest by Students for a Free Tibet comes two days before the Olympic Torch makes its only North American stop in San Francisco before the games this summer in Beijing.
The protesters scaled the bridge tower around 10:30 a.m., carrying a banner reading, "One World, One Dream, Free Tibet 08." They unfurled the banner - a play on the official slogan of this year's Olympic Games, "One World, One Dream" - at 11:20 a.m., facing the bay.
The activists began to rappel down around 12:30 p.m., leaving the banner hanging on the tower. Iron workers will cut it down, said Mary Currie, a spokeswoman for the Golden Gate Bridge district.
I have a hunch it's gonna be wild (and possibly embarrassing for SF) on Wednesday.
I always find it odd that people care about human rights "violations" in faraway countries.
I could not care less. These protesters should be arrested for disruptions.
These protesters should be arrested for disruptions
But it would've been more useful if they were shot down as they were trying to unfurl their stupid banner...isn't the bridge supposedly "protected"? WTF?!
ok maybe not shot with lethal weapons, but definitely tazered...like that UCLA idiot a while back :-)
I just don't understand their motivations. Who pays them to waste their time?
Huh?
If those protesters really want to free People of the World, they should support Free Market.
The freer the market, the freer the people.
Switzerland and many other places in the world have proven that high tax is NOT a prerequisite to social stability.
I would say that Switzerland is in a bit of a unique situation due to the amount of foreign money residing there. I seem to recall they have some generous social programs in unemployment benefits and (inefficient) agricultural subsidies that likely wouldn't exist without the enormous amount of cash parked there. If Norway had their banking system and cash flow, I'm sure they could afford to cut less into citizens incomes!
Don't hold Switzerland too high on a pedestal. I lived off/on in the 80s-90s, and there is plenty of corruption, social problems, etc. combined with a somewhat inflexible national identity where real change grinds painfully and slowly. I like their direct referendum and overall pragmatism, but there are also entrenched/darker aspects to their society.
SQT, I thought your parents were Silents.
My mom technically is, she falls a year outside the Boomer category, but my dad (who is younger) falls squarely in the Boomer years.
I also think they have a very strong Boomer mindset.
@ Protesters in BA.
Those people irritate me to no end. I seriously doubt any of those people have done anything of substance to end the abuses they so vehemently protest. Does China really care about some idiot hanging a sign off of a bridge?
Does China really care about some idiot hanging a sign off of a bridge
no but the media does...isn't that all that matters? :-)
idiots indeed!
I wonder what would have happened to those protestors had they attempted to hang a sign on a bridge in China?
If those protesters really want to free People of the World, they should support Free Market.
Actually they should join the Army or Navy.
DennisN Says:
I wonder what would have happened to those protestors had they attempted to hang a sign on a bridge in China?
Dennis, I believe _that_ is exactly their point too.
SQT said:
Does China really care about some idiot hanging a sign off of a bridge?
Not really - but China does care about the world _not_ being aware of the genocide in Tibet. Especially with the Olympic wank-fest coming up soon.
Peter P Says:
I just don’t understand their motivations. Who pays them to waste their time?
I don't think they were paid. Here is some context to the issue that motivated some refugees to put up that banner on the bridge today:
http://tibet.com/resolution/icj59.html
It is therefore the considered view of the International Commission of Jurists that the evidence points to:
(a) a prima facie case of acts contrary to Article 2(a) and (e) of the Genocide Convention.
(b) a prima facie case of a systematic intention by such acts and other acts to destroy in whole or in part the Tibetans as a separate nation
Pretty heady stuff...
Peter P, I can only guess you're being light, LOL.
In any case, Switzerland looks nice from afar, but "Uusländer" (outsiders, ie non-Swiss) are unwelcome, and careers opportunities for Swiss are very restricted: get a job at a bank, get stuck at a bank forever. Guess it's different if you're a billionaire seeking a tax haven and can bribe the right Swiss officials to live in Zug. Ok, I'm done with that.
Tibet is a little like Switzerland...Insular, conservative, and don't like their way of life being interfered with. Of course, Tibet also tried to export their culture/influence to Bhutan for years...they're not totally innocent here.
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From a reader:
This is pretty amazing. After the biggest runup in prices ever, owners managed to blow all of that equity, and then some. And now they've got rapidly declining prices on top of that.
Patrick