patrick.net

New thread: Housing Bubble Pre-Flight Checklist

Karmic Bubble Correction

I am going to consult my astrologer.

HARM-

Hear, hear.

I am in an exceptionally foul mood today, so I will say something extremely mean-spirited: I don't even feel that sorry for the blue collar homeowners.

Sure, they are financially unsophisticated. Sure, they were getting a lot of bad advice from older friends and relatives ("real estate always goes up," "I couldn't afford to buy my own house," blah, blah, blah.)

They don't know who Ben Bernake is, what the LIBOR rate is, or whether their ARM will adjust.

But each and every one of them knows that $600,000 is A LOT OF MONEY. More than they can afford. And when someone offers to lend them that much, they all know that something smells fishy. But they are holding their noses and signing on the dotted line anyway.

They also know that debt=bad.

Everyone has heard of the concept of a 20% down payment. And ain't none of them putting down no 20%.

Interestingly, the people I feel a little bit sorry for are the 20-somethings and the FOB immigrants. These people have very little experience with the US economy. Heck, you tell a kid in his early 20's that he can afford a $450,000 condo, and he'll probably believe you. Same goes for the FOB immigrants.

But your average Joe Sixpack buying a $400k tract home in Ontario, and then "cashing out" some equity to get a new Tahoe and a flat screen TV -- these people are just stupid.

I hope they all suffer.

I hope they all suffer.

Why hurt your karma by wishing harm on other people? What needs to happen will happen.

I do, however, avoid hydrogenated fats and high fructose corn syrup and I’ve never smoked. But you’ll have to pry that butter out of my cold, dead hands.

@SFWoman,
You are absolutely 100% dead-on correct. If everyone followed this tiny piece of advice, there would be no obesity/diabetes epidemic here.

But you’ll have to pry that butter out of my cold, dead hands.

I like flavored (e.g. herb, anchovy) butter.

High fructose corn syrup? It is something we should uninvent.

@newsfreak,

"Karmic Bubble Correction" has been added to the Housing Bubble Glossary

It’s nasty and should be avoided.

Although I love food, I do not drink sofa or consume much processed food. Perhaps this is why I am still under 200. :)

Skibum,
Thanks for the "Fallen Fruit" link. Given the price of fresh avocadoes & lemons, I may be going "shopping" this weekend.

HARM,

I think you live pretty close to the Claremont Colleges. I highly recommend the fruits there, particularly Pitzer's citrus grove. Pitzer's experimental garden is also open to public grazers, the kumquats are very good.

Afterwards, you can pick a bouquet of flowers for your wife. Scripps has a beautiful patch of birds of paradise as well as a rose garden. They should both be in full bloom right now. There's a free picking policy in effect.

Astrid,

Thanks for the info. I actually went to one of the Claremont Colleges as an undergrad (won't say which one --can't give too much away ;-) ), so I know exactly what you're talking about.

HARM,

I would tell you an even better source of free food, but that would totally give away my identity. :P

Randy,

From Merriam-Webster Online

inflation (noun): an increase in the volume of money and credit relative to available goods and services resulting in a continuing rise in the general price level .

From Webster Online

inflation (noun): A general and progressive increase in prices.

If dictionaries can't agree on a definition of inflation, I can't expect we will. The first definition is the classical definition of inflation and simply means that the money supply is growing. This is what many people refer to as "monetary inflation" to distinguish it from "price inflation". Let's not dwindle on the definition of "inflation" and instead refer to "monetary inflation" and "price inflation" to describe these two obviously different phenomenon.

Once we're past the semantics, there are some unanswered questions I posed to you that I’d like to get back to.

All inflation is monetary.

I would tell you an even better source of free food, but that would totally give away my identity.

Join Google, another source of free-food. Wait, I mean you will not need free food. :)

Well, I'll put it in terms HARM might understand. :) I made a mean cheese tray when I was in college.

Zephyr,

That was my stance, but frank has pointed out (correctly) that this is semantic in our debate (on fiat money), so we can move past it. You and I obviously subscribe to neoclassical economic theory, at least insofar as the quantity theory of money.

Frank,

We can continue the fiat money debate if you wish, or we can pick it up when a more econ-focused thread comes up sometime soon. If none are posted by other authors I'll probably start one myself within a week.

"I’ll probably start one myself within a week."

Cool. thx.