patrick.net

I hope so. We need to step away from the precipice.
Fucking Brandon!

Yes, lets end this war. Means less people killed and no more distraction from holding Biden accountable for Covid and inflation missteps. However, watch Biden now take steps to prolong the war since the war takes the attention off of him.

The requests seem pretty reasonable, but not the first time they've been asked. Someone is pushing/paying Zelensky to stay in this against Ukraine's best interests.

"Can we keep our money laundering, drug smuggling and human trafficking in partnership with the West in East Ukraine? Otherwise, we will have to bring back the tourist trade."

"Yes, of course, but there is going to be a transfer of management to Russia. We'll keep all the dossiers on the old bosses for leverage."

https://www.youtube.com/watch?v=Lbiplu3Cyjg&source=patrick.net

Both links, twitter and youtube, point to the same handle: RussiaUkrainewar
Who are they? I'd bet that they are not a genuine Ukrainian source. I doubt that this is Ukraine propaganda. Looks more like pretend-to-be clowns.

Too clown-esque.

Patrick Lancaster has been reporting conflicts long before this.

If you want to talk about propaganda, at least this guy is actually on the ground, and does more than films smoke puffs off in the distance, then report any reality that they want.

Linky no worky.

Patrick is retired young and has the scratch to buy a home elsewhere if desired. Patrick's rent strategy is hyper-rational whereas home ownership is largely irrational, since you never own the pile anyway, you just rent it from the tax and insurance terrorists in perpetuity, even if you have paid off the vig.

That being said, the fake sense of security from home ownership is OK on the theory that a fake sense of security is better than no sense of security. A lot of people also like to orgasm on the notion of their fiat paper appreciation. Listening to Californians swanning about on the basis of speculative appreciation is kind of icky.

FarmersWon says

Can you really survive by being rational in this system?

You have a point. I would never argue with anybody who wants to enjoy benefits now in exchange for dangling carrots in the future. However, having been through a few downturns, nothing lasts forever, including fiat speculations. My tri valley hood had two periods when the houses stayed on the market for years without selling.

I have not accepted defeat, but I do worry that the money I have in cash accounts for living expenses is rapidly being devalued, so I'm looking for ways to invest it safely.

The majority of my money is in stocks in retirement accounts. I don't have access to it without paying taxes and penalties. On the other hand, stocks usually compensate for inflation, so the fed is on the side of people who own stocks in a way.

I would buy a house if I could find one I liked for a reasonable amount of money. I love California's landscape and weather, but the California government and taxes really suck. Another problem is that my wife has a job here, so we can't easily move out of state at the moment.

Ideally, enough people will get tired of taxes, crime, and corruption caused by Democrats that they will vote the bastards out, but so far I haven't seen evidence that people in California have made the connection between the Democratic party and California's problems.

Have we forgotten the maxim that founded this site!? Nothing goes up forever.

Patrick says

The majority of my money is in stocks in retirement accounts. I don't have access to it without paying taxes and penalties.

My way around this is to buy dividend paying stocks. If I need money, I can just decide to collect the money instead of reinvesting. Yea, I'd have to pay income taxes on it, but I wouldn't be selling anything.

Patrick says

Ideally, enough people will get tired of taxes, crime, and corruption caused by Democrats that they will vote the bastards out, but so far I haven't seen evidence that people in California have made the connection between the Democratic party and California's problems.

Eh... hard to claw back shit that's already in place. I've accepted that reality here in IL. The key is to at least tap the brakes on spending and increasing government. Cuts are not a thing in government unless it's an absolutely dire situation.

We have a natural instinct to want stability and control over our lives, so owning something is always popular.

I followed my grandmother businesswoman strategy of renting but I also was lucky to live in a nice place for cheap rent in Santa Cruz CA. I could go days without driving. I was going to buy a nice place in Florida and kept asking my landlord if he wanted me to move out. He said never, so I didn’t buy in 2017 in Florida, I missed the boat.

He retired, Wuhan came, his daughter and her boyfriend and he fought so I had to go, the daughter got my cool apartment. Adios Santa Cruz but not a huge problem for me.

Others may have difficulty relocating. I’m not working and I can visit California with the money I save in taxes every year.

Re: “defeat by the federal printing press” above
I don’t know what it means, but for me low interest rates have been good since I was investing in stocks.
A nice feature of my accounts is I paid zero “closing costs”, sales commission or property taxes while they grew.

Patrick says

Ideally, enough people will get tired of taxes, crime, and corruption caused by Democrats that they will vote the bastards out, but so far I haven't seen evidence that people in California have made the connection between the Democratic party and California's problems.

Unfortunately it seems like most people that make decent money in California are living in a Unicorn world and are oblivious to what is happening around them. I see the homes of the upper middle class filled with those signs about blm, respect an blah blah... Then in the neighborhoods where the crime happens, the people that vote want the Dems, because they provide the financial assistance they want and need.

Patrick says

I'm looking for ways to invest it safely.

@Patrick, let me know once you figure it out. Right now, RE flip profits are to put food on the table and pay for living expenses. Apartment incomes are mostly reinvested into more assets. $30k/year in dividends is to give to daughter so she can be a millionaire by the time she’s done with college.

Life is a journey. I’m exploring various options. Don’t know what’s right and what’s wrong. Experience is the best teacher. Please share with us once you figure it out Patrick.

Patrick says

Ideally, enough people will get tired of taxes, crime, and corruption caused by Democrats that they will vote the bastards out, but so far I haven't seen evidence that people in California have made the connection between the Democratic party and California's problems.

I think it's more likely California will hit a turning point and spiral down quickly.

If I had new money coming in, I would continue to buy mutual funds.

If I wanted for the future beyond 5 years or so and didn’t want a 1099, I would buy Vanguard Tax Managed Capital Appreciation.

If I felt cautious, I would buy Vanguard Wellington which is a balanced fund. It’s bonds and dividend stocks so it produces a 1099.

Another cautious fund is High Dividend Yield Index Fund, which will produce a 1099.

If you buy something with a low interest loan that defeats inflation, then your house maintains or increases in value, then it worked. If real estate value drops, which it might due to higher Fed interest rates to clamp down on inflation, then you have just effectively started paying higher interest rate on the depreciated value you finance, maybe lost your down payment, and need to wait until the next real estate cycle upward to recoup.

Come on…

That’s a 4200sq ft house on a 90,000 sq ft lot in the desirable tri valley. The $2.5M wasn’t a real asking price. Get real.

BayArea says

Come on…

That’s a 4200sq ft house on a 90,000 sq ft lot in the desirable tri valley. The $2.5M wasn’t a real asking price. Get real.

This is true. $830 per sq. ft. (@ 3.5 million per 4228 sq. ft) is very close to current estimated market conditions, wheras 2.5 million is artificially low. That isn't even expensive compared to the peninsula areas.

I think a driver of the market is also the desire to trade today's fiat printing press money for hard assets. Even if the nominal fiat printing press money value drops, the asset will still hold on to value better than potentially depreciating, nose diving currency. All the better if you can pay for it with a low interest, fiat money loan. If they start burning up the printing presses cranking out fiat money, then appreciation in fiat dollars could become ridiculous.

People who like the idea of buying a house will not be discouraged regardless of the potential gain or loss of money.

My friend who sells houses in Santa Cruz just bought house #3; she lives in one and bought 2 in a state on the east coast.

She can’t help herself.

Her long suffering husband got a $55k inheritance and instead of investing he was roped into using the money for a down payment. He is in his 60’s with no IRA.

I can’t imagine the joy of seeking renters in another state, dealing with problems and paying property taxes in 3 places.

A few years ago her mother passed away and the proceeds from her house gave her $500k+ in cash.
“You can invest that money”
She used it to pay her mortgage and cars for her and her husband, etc. instead.

Ever wonder why movie stars collect mansions or even French chateaus?
It’s irresistible to most people.

With the inflation happening at historical rates, buying a house to park your money is probably still a good investment even now.
Mine is up $400k in five years.

Housing sales have dropped four months in a row now. It's not how much you ask, it's how much you close for that matters.

It’s been done before in the 1970-82 curve. 400% inflation in those twelve years and the government debt was pretty much managed. It went from “a real problem” to economists moaning that it wasn’t enough debt to provide liquidity for the markets!
The heroes of that time period weren’t at the Federal Reserve raising interest rates to the moon. The heroes were unsung CIA and deep state agencies which ensured that the inflation would continue until it was no longer needed. And they used the hell outta old Jimmy Carter to get that done. Look at the parallels from Carter to Biden and you’ll see that they’ve chosen another clueless moron with even more disposability for this tasteless job.

Inflation helps debtors, who pay back debt with money which is worth less than it was when it was borrowed.

An IOU or a bond doesn’t have “$1000, adjusted for inflation” printed on it.

I think you need a concrete interest rate vs inflation rate to attempt to answer this.

Also I do think they can run inflation a bit higher without needing to raise rates just by announcing the new target inflation rate is say 4%, allowing them to reap the benefits of inflation on their debts, without having to pay more to borrow.

I wonder how many costs are like SS, where they pay monthly a fixed price, but dont have the payments indexed to inflation. So at best, those payments might go up 1-2% a yr, or maybe none at all. High inflation would be a way for them to save on those entitlements. For example, pensions, or disability for veterans etc...

Inflation allows the government to spend unlimited amounts of money. It's a tax on labor that is hidden.

People who get the new money first, have the greatest amount of spending power with that money as well.

So, it's great for the people the control the government, and awful for the people under the government.

San Ramon + SB9 Lot split = $$$$

I was a big housing bull 10 years ago and I was crapped on. Thesis was Fed zero interest rates as far as the eye can see. I ended up buying a house and riding the wave. I like my house so I'm not selling and I'll probably see my paper wealth take a ding, my next prediction....

Once mortgage rates hit 5% things will slow, once they hit 6% houses will depreciate and once the word is out that rates are going a lot higher, we'll see a reversion to the mean.

Inventory is still low, but that can change in a hurry.

Ceffer says

Patrick is retired young and has the scratch to buy a home elsewhere if desired. Patrick's rent strategy is hyper-rational whereas home ownership is largely irrational, since you never own the pile anyway, you just rent it from the tax and insurance terrorists in perpetuity, even if you have paid off the vig.

It depends on what you buy and when. I paid $160 for the house I bought after the crash . I don't think a house like mine should be worth a penny over $250K(that's even too high) but now Zillow says it's pushing almost $500K. Patrick, like any sane minded person, says you would be stupid to put down $500K on that deal. Or $275 for that matter.

Patrick's message is, "Just because everybody else is doing it, doesn't meat it's a good idea."

Dholliday126 says

I was a big housing bull 10 years ago and I was crapped on. Thesis was Fed zero interest rates as far as the eye can see. I ended up buying a house and riding the wave. I like my house so I'm not selling and I'll probably see my paper wealth take a ding, my next prediction....

Once mortgage rates hit 5% things will slow, once they hit 6% houses will depreciate and once the word is out that rates are going a lot higher, we'll see a reversion to the mean.

Inventory is still low, but that can change in a hurry.

Interest rates won’t move past 5%.
They can’t. The national budget won’t allow for it given our enormous debt. And anyway the whole POINT of what the WEF folks have done so far is to drive inflation into hyper inflation territory and keep it there until the debt problem is resolved.

Shaman says

Interest rates won’t move past 5%.
They can’t. The national budget won’t allow for it given our enormous debt.

Maybe that's what TPTB want. The Fed is talking tougher than I've seen since Volcker.

Dholliday126 says

I like my house so I'm not selling and I'll probably see my paper wealth take a ding,

There's more to consider than appreciation or depreciation, when you have a house, you plan on living in and it's not an investment.
On one hand it's always nice to see your wealth increase on paper(it's not wroth a dime until you sell it), still it's nice to see your tax bill or insurance bill subside with the depreciation. Or at least it should. For me the biggest concern for depreciation is the lack in pride of ownership as people abandon, or rent houses out that are depreciating. They don't keep them up like houses that appreciates, they constantly polish those like a jewel. Unfortunately sometimes depreciation = blight.


I don't know if I can give advice to some of you millionaires here at Patnet with my frugalness or middle class view on Real Estate and the value there of.
I mean I dare not to give anyone advice mulling over a 2 million dollar purchase. The thought of which boggles my mind, of all of the things I would love to spend 2 million dollars on, real estate would not be one of them. At least not my residence house, I could see commercial investing or a huge farm or ranch.

Tenpoundbass says

It depends on what you buy and when.

And how much you spend relative to renting the same type of thing. That's my message.

Use a rent-vs-buy calculator and do the math. And for God's sake never believe a realtor about anything, or ask a barber if you need a haircut.

The NY Times, slimy as they are, does have a very good rent-vs-buy calculator:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?source=patrick.net

We at Patnet talk like housing is a free market.

It’s not, the game is rigged keeping prices going up up up.

Buyers are buying in panic in this market if you ask me.

FarmersWon says

Question for Economists: Is inflation Good or bad for Federal Goverment Debt?....adding.. Is strong $ good or bad for US?

Inflation is how governments with central banks pay for everything. Since they produce nothing of value, their only option is taxes and inflation, and taxes are really just a cover, as the percentage spent using inflation is MASSIVELY greater. Government debt is always preceded by inflation, it's a function of the system, so couching it as "good or bad?" makes no sense. Necessary would be the more appropriate term.

As to the second part, who is the US? If it's the government, refer to the above. If it's the citizenry, inflation is ALWAYS bad, and a strong currency, which we haven't had in over a hundred years, is vital. Not to our success as much as to our survival.

Anyone who talks about inflation being good for debt has never lived through hyperinflation, and has never read economic history. Wages cannot, and will not keep up with the price of basic goods people need to survive. Need an example, gas, in the US, today. If things continue you can add meat, bread, milk, eggs, produce, food. Yes, your mortgage will technically have less value. But you won't give a fuck, because you don't have enough money for food, so you can't afford the mortgage, or property taxes, or whatever the bill is that's not a about keeping you from starving.

So why do so many people put up with being robbed blind? In a word, greed. Silly as it might sound, most of us are so greedy, inflating the prices of things we own, makes us think we have somehow gained wealth. Notice I didn't say increasing value, I said inflating price.

One of the stupider things people of authority say is “out of an abundance of caution” which means roughly “I know what decision the facts and logic support but I’m going to ignore that because if I’m wrong I’m illogically scared of the consequences”

If you hear a government official say out of an abundance of caution, run.