patrick.net

Greenspan handed out plums to get people to plant carrots. Now benjamin bunny harvests their carrots while they get food stamps. Maybe he will use the carrots to motivate some smart new rabbits to do something interesting. Or feed the old rabbits so they don't off him. Most likely the carrots are rotting while he hoards them. I think they euphemistically refer to it as giving them 'the business cycle'.

Goran_K says

Mark D says

i already "debated" his ideas. "a broken clock is right twice a day." that's all that was needed to reveal his fraudulent scheme.

That's not debating his ideas. That's simply being dismissive.

See, as much as you accuse others of being"doomers", you can't even properly address one single point of Schiff's theory in an intelligent manner.

What does that make you?

doesn't look like you understood what was said. lets see some receipts first and we'll talk.

HousingBoom says

robertoaribas says

HousingBoom says

There aren't very many experts who have a better track record than Schiff.

ridiculous statement. In just 1 minute on youtube I posted 2 videos above with him making specific statements with dates. 100% wrong in both cases. Anybody who invested based on his advice got reamed.

I bought silver since 2009 because of Schiff. I am up over 100%. ;-)

you forgot to mention that he advised people to buy gold at $1900 as well.

Mark D says

HousingBoom says

robertoaribas says

HousingBoom says

There aren't very many experts who have a better track record than Schiff.

ridiculous statement. In just 1 minute on youtube I posted 2 videos above with him making specific statements with dates. 100% wrong in both cases. Anybody who invested based on his advice got reamed.

I bought silver since 2009 because of Schiff. I am up over 100%. ;-)

you forgot to mention that he advised people to buy gold at $1900 as well.

I think you're just jealous that I bought silver at $13 =) Keep hating!

HousingBoom says

Mark D says

HousingBoom says

robertoaribas says

HousingBoom says

There aren't very many experts who have a better track record than Schiff.

ridiculous statement. In just 1 minute on youtube I posted 2 videos above with him making specific statements with dates. 100% wrong in both cases. Anybody who invested based on his advice got reamed.

I bought silver since 2009 because of Schiff. I am up over 100%. ;-)

you forgot to mention that he advised people to buy gold at $1900 as well.

I think you're just jealous that I bought silver at $13 =) Keep hating!

no i'm not jealous. good for you if you made money on silver. but if you are a Schiff regular listener (I used to), you can't honestly say that you would make any money if you followed his advice 100% of the time. can you?

zesta says

In 2006 we had:

1. Low unemployment and it was trending lower as we approached 2007
2. Higher than expected earnings, with stocks trending higher as we approached 2007
3. Historically low taxes

2006 was also the peak for C/S.

Is the time to buy when everything is peaches and rosy?

So put it together zesta. 2006 lead to the biggest crash in RE history because of bubble pricing, and artificially giving away easy credit. 2012 has a dying economy, and the government is artificially propping up the credit markets by buying MBS.

Both booms, the big one, and the current mini-one were fueled by cheap money. Except a crash this time would be worse (as Peter points out) because of our weakened economy.

You're actually arguing Peter's point for him.

Mark D says

no i'm not jealous. good for you if you made money on silver. but if you are a Schiff regular listener (I used to), you can't honestly say that you would make any money if you followed his advice 100% of the time. can you?

I never listened to Schiff on a daily basis but from what I do know, he likes to invest against the US dollar. His investments will lose if the US dollar rallies.

HousingBoom says

I never listened to Schiff on a daily basis but from what I do know, he likes to invest against the US dollar. His investments will lose if the US dollar rallies.

Pretty much. That's why his gold call was so successful in early 2000. The U.S has been devaluing the dollar for over a decade.

Goran_K says

Both booms, the big one, and the current mini-one were fueled by cheap money. Except a crash this time would be worse (as Peter points out) because of our weakened economy.

So if you believe cheap money is the reason that you're predicting crash, then argue that point.

Obviously unemployment figures, hiring rates, corporate profits, tax rates don't have any bearing on which way you believe housing is going; you and Schiff are bearish either way.

zesta says

So if you believe cheap money is the reason that you're predicting crash, then argue that point.

Hey genius, that's SCHIFF's entire theory, not mine (though I agree with a lot of what he said). He thinks 1) There wil be a crash because of cheap money fueling home prices just like in 2006, AND 2)the crash will be WORSE because of those weak economic factors compared to 2006 (when the economy was relatively stronger). What about his theory do you agree/disagree with?

Did you even take the time to listen to the video, or did you just come in here to flirt with me?

Obviously unemployment figures, hiring rates, corporate profits, tax rates don't have any bearing on which way you believe housing is going; you and Schiff are bearish either way.

Unemployment has been high for 4 years, earnings reports are down, and taxes are rising.

Where DO YOU think that puts the housing market's future?

It just means the bailout will be even bigger this time.

Peter P says

It just means the bailout will be even bigger this time.

I highly doubt that. We would have a full on revolution if that happened. The first bailout lead to the Occupy Movement. A second might result in nation wide rioting.

Goran_K says

HousingBoom says

I never listened to Schiff on a daily basis but from what I do know, he likes to invest against the US dollar. His investments will lose if the US dollar rallies.

Pretty much. That's why his gold call was so successful in early 2000. The U.S has been devaluing the dollar for over a decade.

it's certainly stupid to believe in a guy who has been wrong every year since the crash. there have always bad news in the economy for past few years but do they lead to a crash as Schiff predicted every year? it's common sense.

if you actually listen to his show you can certainly tell he dumbs down his audience by telling them half truths most of the time. of course most of his audience do not realize that.

how there is a small chance that he may get it right this time, but that's only he's throwing out gloom & doom predictions every year so eventually he gets one right. it doesn't mean he has Nostradamus power.

now why would anyone believe in gloom & doom predictions from a long time GOLD SELLER is beyond me.

Are you actually going to address his points in the video or are you going to just trash the guy because he doesn't support your agenda of boosting housing?

Try to inject some intellectual thought into your post. What you're doing now is the equivalent to "we don't take kindly to your kind in these parts" for Patrick.net.

Goran_K says

Are you actually going to address his points in the video or are you going to just trash the guy because he doesn't support your agenda of boosting housing?

Try to inject some intellectual thought into your post. What you're doing now is the equivalent to "we don't take kindly to your kind in these parts" for Patrick.net.

i could say the same thing about you, you are trumping him up because he supports your housing agenda. see the irony?

you need to be able to comprehend what people have been saying before you can engage in any intelligent debate. it's hard to take you seriously when you keep missing the point: why would he be right this year when he has been wrong every single year since the crash? address that. show you are capable of an intelligent discussion.

Schiff is the typical anti-government nitwit and that ideological position is preventing him from understanding reality.

The reality of our situation is that the Feds have an IMMENSE amount of power to draw this process out a very very long time. I can't begin to describe all the BS they can bring to bear.

Note I didn't say "fix this". To do that will require the American people giving up this idea that we can get $6.5T in government spending with only $5T in taxes, and that's not a dream that's going to die easy.

http://research.stlouisfed.org/fred2/graph/?g=d5d

Complicating matters is that nearly all of the ROW is as screwed up as we are.

Even Germany is screwed in its own special way.

People think Japan is screwed but who the hell really knows. They had a $6B trade deficit last month -- something of a new experience for them -- but also had $12B net income from their foreign investments to pay for it. That's a tough problem to have, more money coming in than you know what to do with.

Bellingham Bill says

Schiff is the typical anti-government nitwit and that ideological position is preventing him from understanding reality.

exactly. this is what his listeners didn't take into account. if they looked up his family history they'll know why he's so anti-gov.

here's one example of his bias: go back to his podcasts during the last two weeks, find the one where he talks about Australia and Japan devaluing their currencies and listen to his spin on that. he's saying that they did that because they "felt bad" for the U.S when the reality was that they wanted to keep/boot their exports.

his position has always been that; the U.S gov is the most horrible gov on earth, the economy is facing an eminent crash (every year) and everywhere else is so much better.

i too was impressed by his prediction of the housing crash but the more one listens to his show, the more they can see his biases against the U.S.

Mark D says

i could say the same thing about you, you are trumping him up because he supports your housing agenda. see the irony?

you need to be able to comprehend what people have been saying before you can engage in any intelligent debate. it's hard to take you seriously when you keep missing the point: why would he be right this year when he has been wrong every single year since the crash? address that. show you are capable of an intelligent discussion.

I get along well with many people on this board who are housing bulls/investors but they are at least willing to discuss points. You know, the points of discussion?

From all of your post in this thread, it's impossible to ascertain whether you actually watched the video being discussed because you have barely made reference to anything said within it. That's called trolling on many communities.

Goran_K says

Mark D says

i could say the same thing about you, you are trumping him up because he supports your housing agenda. see the irony?

you need to be able to comprehend what people have been saying before you can engage in any intelligent debate. it's hard to take you seriously when you keep missing the point: why would he be right this year when he has been wrong every single year since the crash? address that. show you are capable of an intelligent discussion.

I get along well with many people on this board who are housing bulls/investors but they are at least willing to discuss points. You know, the points of discussion?

From all of your post in this thread, it's impossible to ascertain whether you actually watched the video being discussed because you have barely made reference to anything said within it. That's called trolling on many communities.

you mean one needs to watch his video to find out what's being said in the video? really? he's been repeating the same things for many years now, along with many predictions, none of which came true. in fact, one must have some kind of memory deficiencies if they need watch the video in order to find out what he says.

most people can tell what he is going to say before he even says it. that's how predictable he is.

address my points first and you may be taken seriously. until then you are a troll wishing housing would crash so you can buy it for cheap. are you war/darrel/liarwatch?

Goran_K says

Both booms, the big one, and the current mini-one were fueled by cheap money. Except a crash this time would be worse (as Peter points out) because of our weakened economy

I didn't watch the video, I read the text article pimping his book, complete with a referral link to Amazon.

Lending standards have toughened up considerably since 2006. Foreclosures and defaults are declining.

Unemployment is improving as is consumer confidence. Real disposable personal income is up 2% YOY. Car sales are back up. The economy is improving.

Schiff's main argument for impending doom is hyperinflation, and the numbers don't bear it out.

Beyond the obviously low inflation numbers:

- The bond market is still exceptionally low, and investors are still flocking to US Treasuries.

- Since the US prints it's own currencies and is the de-facto global reserve currency, the only way we'd hyper-inflate is if people believed we'd default on our debt. Given that the US infrastructure and economy is strong, and there's still a lot more room for taxes, there's no reason to believe we're anywhere near a default.

@zesta: Goran_K is a resident troll here. he doesn't care for facts or reasons. he's like that guy war/darrel who keeps repeating the same nonsense, counter-productive arguments at this site. could be the same person.

zesta says

Unemployment is improving as is consumer confidence. Real disposable personal income is up 2% YOY. Car sales are back up. The economy is improving.

I'll agree that there are indicators showing that consumer confidence is improving, but .02 growth in disposable income is almost laughable compared to the current household debt ratio. Also none of that "confidence" is trickling into housing as the MBA Purchase mortgage index just reported another 2% down month-over-month (we're already at mid-90s levels). Buying an Apple IPad is a lot different than buying an over priced house.

On top of that hiring forecast, earnings reports, and non-existant wage growth show that this current run is highly suspect as a "true" recovery.

If I can refinance an existing debt for half the cost, I effectively have less debt.

Absolute value of debt is less important because this isn't 1920 and banks can't call notes due.

If I go from paying $2000 a month to $1000, the risk of default goes down and my disposable income goes up. Ignoring this is a great way to make terrible decisions based on the economy.

If interest rates were zero, debt would literally not matter because you'd just keep reissuing indefinitely.

Darrell In Phoenix says

When you borrow an inflated amount for a rapidly depreciating asset

Sigh. Housing does not "rapidly depreciate".

For one, the land component does not depreciate at all, unless you live on an active volcano or on an eroding seacliff (or, alas, the ghetto comes and gets your neighborhood!)

The fixed improvement -- sticks and bricks -- lasts 50+ years in most temperate areas, and inflation here tends to also mitigate depreciation.

The bottom line is that at 3% mortgage rates it makes more sense to buy a $700,000 house than rent one for $2000/mo.

Now, this will change if for some strange reason this nation decides to double the tax rate like we need to.

But we're not going to do that unless we're forced to, and nobody can make us.

Darrell In Phoenix says

Houses depreciate ALWAYS.

NOPE.

My parents paid $60,000 for their house in 1980. Worth more than that now, LOL.

And as for the fixed part, the actual decay of the materials is not "rapid" as you asserted.

The shake roof lasted 25 years for instance.

Darrell In Phoenix says

like ALL manmade items.

"Depreciate" here means goes down in value.

My parents house has not gone down in value, thanks to inflation outpacing the decay of the fixed improvements.

What was $60,000 in 1980 is $150,000 now. That's a 3% pa compounding rate of inflation. With a 50 year service life, that's a 2% pa non-compounding rate of depreciation.

Darrell In Phoenix says

ALWAYS
like ALL manmade items.

Land isn't a man made item. Or did you foget that?

When acquire title, the real value of the title is the power -- backed by the State -- to say who gets to use that real estate.

Darrell In Phoenix says

Considering 95% of the globe is undeveloped, it's essentially worthless. If you're paying more than $500-1,000/acre, you're getting ripped off.

Good point. I'm sure 1 acre lots in the Pacific Ocean are very reasonable.

Darrell In Phoenix says

Considering 95% of the globe is undeveloped, it's essentially worthless.

This guy is the biggest troll I've ever seen.

Or the most reality-challenged.

Yes, land in Gila Bend is going for under $4000 per acre:

http://www.redfin.com/AZ/Gila-Bend/0000-UNDETERMINED-85337/unit-0/home/40366054

this is because the economic potential of that land -- its NPV of all future rents, is around that.

Thing is, until either a virtual economy is perfected, or teleportation technology comes along, land has immense site value.

Site value is simply the value of whatever is OUTSIDE the lot lines. It is the value of the location, what that location can access, plus any scenic views it may possess.

What is the value of a beachside residence? How much would you pay to see the sunset off your balcony every night for the rest of your life?

More prosaicly, people also pay to be able to find work in a given local economy, and also good schools for the kids, safety at night from criminals, etc.

Darrell In Phoenix says

Sure it has. They've merely offset the rapid depreciation by throwing more money in it.

Not at all. Thus far they've put on a new roof, and one new water heater, refrigerator, w & d, sprinkler repairs, garage door, carpets. $20,000 tops.

They'll never get out of it what they have in it.

I've done the calculation of if they'd have been better off investing in the S&P since 1980 rather than buying when they did.

Area rents overtook their mortgage payment in 1988, so they would only have had 6-7 years of investment in the stock market to build up.

Currently my parents cost of housing is $200/mo. Equivalent rent is $1000+ more, $12,000 a year.

At 3% rate of interest, $12,000 in income requires a $400,000 pile of savings. No way several thousand in an S&P fund from the 1980s would amount to that now.

Darrell In Phoenix says

It seems the truth gets in the way of your realtor driven narrative.

Dude, reality is not "realtor-driven". They're just along for the ride, usually.

Peter Schiff sells gold, so he has a vested interest in having an economic collapse.

This is his website.
http://www.europacmetals.com/

The other thing is that gold can always go up. It is purely an emotional purchase.

You can also look at QE3 as a deflationary event. The United States economy has plenty of room to decline.

Darrell In Phoenix says

It must be quite the run down place.

It's livable.

Darrell In Phoenix says

Oh it's realtor driven. And it's so ingrained in your mind you don't even know it.

It is entirely true that realtors have participated in forming the reality we have today.

And you are correct that land is inherently valueless (it takes the state to make it valuable -- Thomas Jefferson recognized as much)

Problem is, the powers that be own a lot of land -- and profit immensely from this ownership, so the bullshit legalities of land economics are simply not going away, and are, thus, reality.

As Philip K Dick said, "Reality is that which, when you stop believing in it, doesn't go away."

60-70% of this nation has been corrupted by the dynamics of land wealth. People do actually think "up is down" -- higher land values are good.

As a quasi-georgist I would love to tax away every last dollar of land value such that all acreage did trade at $1000.

Unfortunately, the only place where any semblance of this reality obtains on this planet is maybe Hong Kong, Taiwan, and Singapore, since these (AFAIK) are the only major land value tax regimes around.

Without a LVT, land will always have immense value. Without tenancy to land, nobody can live much of a life.

And that's the reality we're in now.

Darrell In Phoenix says

Not at all considering acreage can be had for less than $1000/acre in all 48 states.

Sure, economically worthless land out in BFE.

You are clearly impervious to argumentation so having already said what I wanted to say on that that will be all for you.

David Losh says

The other thing is that gold can always go up. It is purely an emotional purchase.

Similar to a house. Question is which holds their intrinsic value better than the other?

zesta says

Lending standards have toughened up considerably since 2006.

No. The FHA is willing to make a loan to anybody for close to nothing down.

Kevin says

If I can refinance an existing debt for half the cost, I effectively have less debt.

That's somewhat true, but you also have less buying power. But it is still potentially a good deal for you (if your financed asset rises with inflation) because the loss of buying power is distributed throughout all (other) people's cash.

mell says

Similar to a house.

A house has an economic viability. There is rental income.

You can peg the value of housing to the rental market, CPI, and wages.

mell says

That's somewhat true, but you also have less buying power

How do I have less buying power in a *refinance*?

Here's an example:

I bought my current home in 2009 for $550,000. I borrowed $440,000 at 5.5%

I refinanced in 2011 at 3.25%.

Over the 30 year duration of the loan, and ignoring the slight difference in principal at the time of refinancing, that refinance effectively saves me $200k in debt.

Aside from the long-term calculation, in the short term my payment went down by several hundred dollars per month, which means more money to spend on whatever I want (the only other debt I have is at 0% interest, and thus not worth paying off early).

The low interest rates are effectively reducing the debt load of american home owners. Every time someone refinances a $100,000 mortgage for 1% lower they are reducing their long term obligations by around $20,000 and their short term obligations by around 10%. That's real money going back into the economy and making that person's life easier.

Now, the effect on purchases is certainly not as pronounced, but the fact remains that low interest rates absolutely are helping ease the debt burden and boosting consumer spending. Until such time as these things are corrected by other means (inflation, new jobs, etc.), the low interest rates are essential.