patrick.net

Oil didn’t go up in the last 2 weeks if you pay for oil in AUD, Euro or other stronger currencies.

Hmm...can you provide a source to support your statement? USD:EURO has fallen about 9% since Feb '08. Does that entirely explain the approx. 31% rise in crude prices (USD) over the same period? Surely the situation is more complex than that--whether or not our currency is "toilet paper". And, since speculation is rampant in other areas, I always question the trends...I'm expecting serial bubbles.

http://tinyurl.com/3a73f9

http://tinyurl.com/c4u59

I thought the census derived it's income data from tax filings which implies AGI. I could be wrong. It's been almost 2 years since I really dove deep on these data sets. But I recall determining the original data was AGI-based.

Otherwise the HSBC data is in direct contradiction with numerous other affordability data sets from matching periods. There is no way raw-gross-income supported people buying at 6x income for the past 40 years, not even in this gilded area. As much as the realtors would love to plug that into their economic drug pushing.

Here is a link to the Census Burea website. The data is survey based.

Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS)

Because of its detailed questionnaire, the CPS ASEC is the primary source of timely official national estimates of poverty levels and rates and of widely used estimates of household income and individual earnings, as well as the distribution of that income.

The CPS ASEC provides a consistent historical time series of many decades in length at the national level, and can also be used to look at state-level trends and differences (through multi-year averages). The relatively large sampling errors of state-level estimates for smaller states somewhat limit their usefulness.
My head hurts. I haven't had this much fun since the Randy/FAB price-to-rent debates.

Does this mean sushi will become even more expensive ? :-(

Does this mean sushi will become even more expensive ?

Don't worry... we will have more sashimi. :)

There is no way raw-gross-income supported people buying at 6x income for the past 40 years, not even in this gilded area.

Randy note that:
Three of the most widely used measures of household income are BEA’s measure of personal income, the Census Bureau’s measure of money income, and the Internal Revenue Service’s measure of adjusted gross income of individuals.
Money income seems to be what is used in the HSBC report . Personal income (aka raw-gross-income?) appears to be substantially more than money income used in the CPS ASEC reports. See this link.

Don’t worry… we will have more sashimi.

That sounds like a raw deal to me.

Whenever I caramelize onions, I throw in enough garlic so you don't smell the onions.

There are benefits to being a batchelor......

Peter, do you have a gas barbeque? You could always move smelly cooking outdoors.

Peter, do you have a gas barbeque? You could always move smelly cooking outdoors.

I only have a smallish balcony. But I do have a Y2K gas stove. :)

EBGuy and Randy

kindly get your act together will ya? You're confusing the idiot. Is it AGI and thus the 6x is explained, or is something else going on?

Costco is now rationing cooking oil and flour, not simply rice where there has been supply upheaval.

I'd speculate the primary shortage is being caused by hoarding. Inflation is really setting in and folks are stocking up before the price starts to really rise. But I don't know this for certain.

I find it very disconcerting. But maybe that is just me.

Hunger is already hitting the shores in the US. Food banks are empty and in crisis mode, many who rely on them are eating less. The fixed income crowd in downgrading food choices and also having issues.

@ Kurt,

www.itulip.com has a video on the homepage about Monsanto (owns more than 50% of the feed companies and reminds me of Soylent Green!)

Paul

In the south bay there are several "Barbeques Galore" stores, who sell mostly Australian design gas barbeques. Check them out. I have a 3-burner "classic turbo" which I purchased in 1991 - and it's still going strong. Plus they stock parts for all their old models. I compare their products to fancy-pants ranges like Wolf and Viking.

Their smaller units (like the 3 burner turbo) give you lots of cooking power in a small footprint.

feed = seed ?

Is it AGI and thus the 6x is explained, or is something else going on?
Not AGI, but money income, where:
AGI Bureau of Economic Analysis, AGI and money income are nearly equal (difference of $1-2k), but personal income is a lot more (nearly $8k per capita), so all is explained. At least in my universe...

northernvirginiarenter,

Driving by a soup line in downtown Chicago on a regular basis, my observation is that the line is about twice the length of a 2 years back.

Here is the info-

http://www.catholiccharities.net/about/administration/

The votes in PA are about 2/3 counted, and Ru Paul is in strong second place behind McCain.

McCain 300,676 72% 0
Paul 66,538 16% 0
Huckabee 50,097 12% 0

Oh yeah, some lady is up about 7% on that guy.

Ron Paul, Ron Paul, Ron Paul!!!!!

Oh, gosh, I'm sorry. I get names confused.

ptiemann Says:

> Anyone who thinks being free of debt to be the
> only right thing should listen to a business partner
> of mine. This guy has between $500k and $600k
> on credit cards at 0% or 1%. He told me last month
> that in 2007 he made over $50k from that alone.

Then HeadSet Says:

> So your buddy has not only found a way to pay only
> 0% or 1% beyond a teaser rate on credit cards, but a
> way to avoid the typical minimum payments, transfer
> fees, and credit limits. Not only that, he has can take
> that money and make a consistent low risk 10% return.

It sounds like ptiemann has a “business partner” that is full of sh*t… If it was possible to get anywhere near a half million at 1% hedge funds would be doing it (and saving a lot of money on expensive parties to raise money)…

Randy H Says:

> It’s been almost 2 years since I really dove deep on
> these data sets…

It has been even longer since I dug deep in to the census date…

> There is no way raw-gross-income supported people buying
> at 6x income for the past 40 years, not even in this gilded
> area. As much as the realtors would love to plug that into
> their economic drug pushing.

Most of the historic price to income data around 3x is “total household gross income” to “home price”. The number will get higher if you use “household AGI”. I have seen people look at the median home price divided by the median “individual” income and the number is a lot higher and it will be real high if you take the “per capita” ratio the number is even higher since about half of the people in America make almost no income…

KurtS,

I am just talking about most recent price movements which is primarily driven by USD depreciation than speculation.

If the Saudis are already admitting not adding capacity (for whatever reason they choose to disclose), there is NO speculation. Peak oil is real and it is already here. Unless all the oil consumed in transportation can be cut very substantially, we will continue to see oil breaking $150, 180, or even reaching $200.

I won't call it a speculation before you see the cover of all business magazines touting oil as the sure bet / can't lose investment of the year.

EBGuy
thanks! I think :-)

That *income* will have to be AGI, not gross.

Banks lent on gross income. I just checked with a retired neighbor who used to work for US bank. He said there was no way ever before this bubble that people could buy at 6x of their household income.

Interest rate aside, which made mortgage payment impossible, most banks had to carry the mortgage on their balance sheet in the 80s. ABS came out in mid-80s and was not gaining momentum until early 90s, so in the 80s the secondary mortgage market was non-existent, meaning there were no investor fools to offload to. When they had to carry their own loans, they tended to act much more conservatively. The rule of thumb was, one could borrow up to 4x of the household income on the house. Assuming 20% down, that would be a housing price at 5x household income.

The only possibility was higher dp. But there were fewer immigrants from overseas in the 80s, and interstate immigrants usually came from a state with lower housing cost, so it would be difficult to save that much dp particularly in a highly inflationary environment.

AGI or money income, whichever is fine, just not gross.

EBGuy

Thanks for the crack work. Money-income makes sense. I wasn't really aware of how that measure worked until now.

I was really hoping to get FAB's response to "ptiemann". I've had a few debates with Peter T on Zillow. He seems a reasonable enough fellow, but lately he's been making some unsupportable statements that don't hold up well to quantitative analysis. And then there's his new blog that Alpine linked earlier above. Upon reading it I immediately thought of FAB and how he'd be able to call bullshit on half that stuff.

FormerAptBroker tried to think and nothin' happened:

>denriddy Says:
>
>> That’s what it is today, in this world, with the
>> organized criminal activity (considered “business
>> as usual”) known as “fractional banking.”
>
>Do these criminals fly around in black helicopters?

I ain't their travel agent.

In an early period, they rode around in head baskets. Maybe you should look into one.

Peter T

Thanks for the explanation. Unless moderation rules have changed since I've been active, posting more than 1 link will trap you in mod, as will a number of verboten words, mostly spammy things or troll hot words.

I don't disagree that Patrick has bias, by definition, to the articles he selects. As you said, that is the purpose. He's not going to try to be "fair and balanced" and post 50% NAR approved ads. It's up to the intelligent reader to seek out and edit their own info.

But Patrick's blog has always been unique. A lot of deep, contemplative conversation has gone on here over the years. Zillow, as a perfect contrary example, everything degrades to cheap one liners and cutesy clever pictures, along with a who bunch of emotionally needy cat lovers.

I do appreciate your willingness to respond thoughtfully to debates, even if I disagree with you time to time (though more of late, I will admit).

ptiemann Says:

> I thought it would be interesting to start collecting
> articles with a positive spin, there are not many at this
> point, and those that are may have some issues.

All you need to do is link to Realtor ® newsletters and web sites since they (almost) always have a positive spin (I recently saw one that said it was a good time to buy in Modesto)…

What is interesting about this site is that people ask questions and if someone can’t back things up they just go away (we have not heard much from Marina Prime in a while)…

pt,

all I have to say is, your ushousingrecovery will take about a decade to get to where patrick.net is today.

Real estate has very long cycles. The last BA bust lasted from 1990 to 1997. That was a localized California bubble with no intertwined global financial issues, no peak oil, no tanking USD, no looming food issues etc. the list goes on and on.

With all the intervention going on as of now, I'd be happy if we are out of the woods by 2015. Unfortunately I don't think we will be that lucky.

@ Paul

Monsanto may be the most *evil* company on the planet. It is shameful our country allows this to company to exist. Shameful.

The system is broken.

OO,

I'm too tired to do the easy math at the moment, but you might be able off the top of your head.

What does the current value of the US stock market look like through the eyes of a strong currency investor? Current Real Estate market?

We are USD down about 50% off the Euro past couple years, right?

Is the reality that the US stock market has *crashed* in value already if you are a foreign investor?

What a mess.

Paul-

Food bank demands are at all time highs and climbing in the washington dc area, while donations are declining drastically due to rising food costs. Food bank managers are calling it a crisis of the first order.

There are a rapidly growing class of hungry families about, even as Dennis happily stuffs himself with potatoes in Idaho.

And it goes without saying what is happening to poor overseas.

@BAP

I hear you on california, I suppose if one is having to buy things which are skyrocketing is cost (energy, select foodstuffs, meds, ect) one is ok on a fixed income. However, inflation is absolutely killing anyone those who must spend a very high percentage of income on those things rising in value.

My parents for instance. I know the rise in cost of gas, food, utils, meds is killling their budget. Unfortunately that budget is tight, and sensitive to price rises. They are certainly not alone.

But when I try to get out of debt people tell me it's a stupid thing to do...

If I'd only listened to Uncle Ric I could have enjoyed that magic 8% return in the market recently.

Sorry, here's the link.

Ptiemann :

Thanks for a lot of clarifications. It is perfectly possible to disagree without turning nasty.

Eventually, housing will recover. So your blog will become relevant. There are advantages of owning and as long as you present logical arguments and not mindless drivel like a Realtor, it will even be a good advice.

I am not sure about the tone and the association though. The whole taunting attitude of Mr. Alpine might turn off a lot of people who prefer sound arguments. This "renters are losers", "see there are bidding wars" etc is SO 2003-4 ! I will be surprised if even a single blogger here takes such comments seriously now. It's just boring. Hardly adds any value to the discussion.

Good luck with the project.

NVR,

Compared to 2 years ago, USD index (weighted against a basket of currencies) has declined from 90 to 71.4, about 20% decline.

Dow advanced from 11300 to 12700, which is about 12% gain. So the stock market is in a slight decline if we measure it in Euro terms, but not that big of a decline, YET.

Paul-

Thanks for that itulip video link. http://www.itulip.com/

Just finished watching, about 1 hour long fyi. A must watch in my opinion, good job explaining what Monsanto's master plan is. It will be an eye opener for many here.

I just don't understand US policy in some regards. So short sighted. It would seem our government *allows* itself to act as proxy to this large multinational to the detriment of the human race, including American citizens. Meanwhile, our national intelligence establishment is asleep at the wheel. They *think* their priority is supporting US business interests overseas without question.

I take issue with this point of view. Monsanto is a threat to our country, our citizens. Yet the intelligence community looks the other way. Are they not suppose to be protecting us? If a large multinational subverts the political process to such a degree, the state to such a degree, to its own interests, and if those interests are not aligned with those of the average US citizen, should not the intelligence community deem Monsanto a threat to the united states?

What is the United States interests relative to Monsanto?

The intelligence community should take these guys down, using all methods at their disposal.

Brent,

it is not wrong to carry a big debt today if you can lock down a 30-year rate of 5% denominated in USD.

Forget about the 10 reasons you posted. There's only one reason, this is the best way to take advantage of the falling dollar.