patrick.net

@Randy H,

Though I seriously doubt CA will slide into a post-apocalyptic Mad-Max style dystopia anytime soon (back to dystopias again), there are a lot of powerful economic forces working against it in terms of retaining non-wealthy young skilled workers, not the least of which being cost of housing. Another force being powerful wage arbitrage both local (illegal immigration) and external (outsourcing/offshoring).

Some of these forces will prove transitory (the Fed/GSE credit-fueled housing bubble), while others will likely prove secular (illegal immigration & outsourcing, NIMBY/SMUG, UBLs, Prop. 13, etc.). I have already seen a measurable deterioration in the overall quality of life in my own relatively short lifespan, most of it spent in SoCal. Based on the dominant political/economic trends (which seem hell-bent on driving out everyone except rich Boomers and illegals), I see no reason to think these secular trends will reverse course anytime soon, regardless of what happens after the bubble's demise.

We don't really have to wait for evidence of the demise of CA's "virtuous cycle", it's already upon us and has been for some time. The evidence is lack of affordable housing for most wage-earners (though far cheaper than "buying", most rentals here can hardly be considered "cheap"), the increasing congestion/gridlock, "heroic" commutes, grinding poverty/ghetto-ization of large swaths of the state, degraded public/transportation infrastructure, etc., etc. It really doesn't matter to me if the public schools are wonderful in Bel-Aire, Malibu, Marin, Marina district, wherever. If I can't afford to live there, what good is that to me?

There are simply too many positive benefits to moving away for most post-Boomer CA natives, both skilled/educated and unskilled, and very little downside. There are many vibrant, culturally "diverse" high-growth urban regions outside CA, especially in the South, which can offer nearly unbeatable advantages in much cheaper housing, less congestion/pollution, better public schools, less crime and overall better quality of life. Yes, the people who are native to these regions tend to be more culturally conservative and the weather's different. Big deal --you go with the flow. At least I don't have to apply for citizenship or learn a different language. Low barrier to entry + high upside = serious competition for CA's best and brightest productive class (you know, the ones that CA's policy-makers are actively trying to drive away as fast as possible).

Oh, and btw, I never took "Escape from New York" as a serious treatment of post-urban decay :-).

The BA is an island unto its own. It is a perfect place, inhabited by perfect people living in tranquil harmony with not only each other, but all manner of insects and dung beetles. How could there possibly be something rotting in the BA, ie a RE bubble. Denmark maybe but the BA, never.

Surfahara-X has obviously attained enlightenment and ONE-NESS with the Bay Area! He is truly the Golden Lotus, the samadhi without seed, and indubitably has achieved the transcendent plane of Paramatma darshana.

:-) All rejoice in the resplendent Buddhahood of Surfahara-X! :-)

but surfer x is neither blonde nor blue eyed.

Blue eyed yes, blond no more, but if lots of surfing occurs hair does indeed turn blond.

1/2 mexican but got screwed out of the brown skin, very important when applying to finacial aid.

However, if you can establish a satisfying well-paid career in an attractive growing area in the US, it wouldn’t be a bad idea.

True, especially with good sushi.

Ahhh Face Reality, one of my fav psuedotrolls, let me paraphrase your posting.

The BA will continue to thrive due to it's amazing host of "intangibles". It rewards success, I am successful, if you work hard you will be successful. Not successful, perhaps you are a lazy untalented fuck? California (when I say California, I mean the area I see while travelling the 15 miles from my estate to my sweatshop), drives the worlds economy.

Get to the fucking point homeboy.

For example, I have no clue what I would do for a living in Memphis, TN.

man whoring?

The house had a swimming pool, tennis courts, greenhouse, billiard room seperate 3 car garage, view….all for $60K.

What was it in relation to their yearly income?

But still….this is my greatest fear….that once its gone up….it may never go back down!

So if one finds a suitable home that he can sustainably afford, it is okay to buy regardless of price.

Although prices may not come back down, price/rent ratio tends to revert.

Where I grew up, you weren’t (and aren’t) upper-class unless you can live off the interest of your interest.

At 3% after-tax real interest rate, you need 1100 times of your annual expense in assets.

If you spend 1M, you need about 1.1B.

At 3% after-tax real interest rate

I meant 3% after-tax nominal interest rate.

There is a manhunt currently underway in Palo Alto for an armed burger. Beware.

Damn, crime rate in Palo Alto is shooting up.

Damn. The flow of riches is almost impossible to escape, especially when you are all just kids and college students.

I sure could have used some friends like that 'back in the day'. Most of the rich kids I met in college had little use for a scholarship 'n loans beggar such as myself. I don't recall any of them ever inviting me to join when they took off for those annual Aspen ski jaunts or European summer tours --much less offering to pay for it!

Gee, I guess I wasn't "fun" or "funny" enough to amuse my overlords. :-(

You can already see what’s happening to congestion and cost of housing in those “high-growth urban regions outside CA”. However, if you can establish a satisfying well-paid career in an attractive growing area in the US, it wouldn’t be a bad idea. With some professtions, there are a lot of options, but with others there may not be too many options. For example, I have no clue what I would do for a living in Memphis, TN.

You have a point, but I'd guess the employment/career options elsewhere aren't quite as limited as a life-long CA native might think (and getting better by the minute). Aside from a film/entertainment, Yoga/New Age/Healthfood or VC/tech startup-related career, I just don't see how most people could not do elsewhere what they are already doing here. When I visit the South & Midwest these days, I'm shocked at how close salaries for the same jobs have converged. 15 years ago, this would not have been the case, but today it's a whole new story.

I also can't help but continue to see how overplayed the Red-State Dread is here. As WW2 and others have often pointed out, CA natives seem to have this bizarre fear of living anywhere else, as if rabid fire-breathing zealots inhabit every corner of the South & Midwest (aka "Darkest America"). As if the middle 75% of the country is some scary Terra Incognita exclusively inhabited by abortion bombers, cultists and rabid James Dobson/Tom DeLay acolytes. Such places/people exist, to be sure, but are hardly 100% of the population.

Life ain’t like the movies; not all people born into money are wretched, nasty people who won’t talk to a scholarship student.

No, just 99.9% of them. :mrgreen:

However, for the sake of sociology, perhaps I should mention that I am a girl/woman/female entity and my “don’t be silly, come with us!” pals were (and are, so far) too. Maybe girls r diff’rent.

Perhaps, though I've observed girls to be every bit as cliquish --if not more so-- than men. Of course, if you're attractive/hot, that helps a lot. Are you sure your *ahem* college "girlfriends" didn't tolerate you because they wanted something from you? :roll: Just speculating...

Until I found out spiralspace was a girl, I kept seeing images of "The Talented Mr. Ripley" play in my head as I read her posts.

It’s different this time…a new, permanent plateau….and all of my faith is dashed!

So was the "dot.com" revolution. totally new paradigm, only thing that mattered 5-6 years ago was growth, profits? Fuck profits. My fav still has to be those two fucks from Razorfish. ed bradley to fuck #1, "what do you do exactly", fuck #1 "we recontextulize the ebusiness environment' eb to fuck #1, "what is that exactly" Ahh good times, Razorfish, dot com valuation of 10billion was sold for 10 million.

new paradigm my fucking ass, same ole paradigm, transferral of wealth.

Or maybe we should just "face reality".

Na fuck that, fuck others reality.

cumfiesta

Try thehun.com

Alameda? Nice, we used to love going to the Lucky 13.

Peter P Says:
It is called New English (similar to New Math):

newer home = older home
30 years young home = 30 years old home
new paint = old everything
updated = outdated
near transit = noisy transit
cute = tiny
bonus room = unpermitted room

These should go into the Realtor's Devil's Dictionary aka the alternative glossary...

Peter P Says:
This shows that socialism is counter-productive.

oops, you just erased your brownie points! I don't object to free health care and free university. Is it counter-productive to provide a social guarantee of access to good health and education as citizen's rights?

Peter P Says:
This shows that social ism is counter-productive.

oops, you just erased your brownie points! I don't object to free health care and free university. Is it counter-productive to provide a social guarantee of access to good health and education as citizen's rights?

re Razorfish - was just reading about a study which demonstrated the immediate value of shares post-IPO was higher for companies with catchy or simple names... it was the biggest predictor by far... what does that say about market psychology

Any better sushi on this leetle man-made isle?

Angelfish on Bayfarm Island by Safeway has some of the best sushi I have ever had. including my 3+ years in japan

Lucky 13 is a cool pub on Park St, (not park ave)

Kobe Ya on Encinal is killer also. Killer margaritas and open until 3am at La Pinata.

could not distinguish between the words ‘cache’ and ‘cash’.

Aren't they the same thing?

there is the jesus freak guy I used to know that thought he was a genius pharma investor.

doubtless trying to make as much money as possible in order to give it all to the poor, share his tunic, etc...

I've just shaved my tunic.

each bubble rips at the seams of the economy a bit more.

each bubble rips at the seams of the economy a bit more.

ask surfer about the best way to rip at the seams...

Trade with the rest of the world will be cut off, when the US defaults on the national debt next year. All necessary parts and machinery will need to be produced by the working class here. Wages for the manufacturing work force will rise quickly, due to the shortage of skilled production workers like machinists. Workers in the US will not have to compete with $1 an hour Chinese labor any more.

The middle class is flexing it's muscles on the illegal immigration issue, forcing the Congress and the President to do their job, and enforce the laws, or be voted out. Yes, the poor pissed off middle class still has plenty of power, if not money, to battle unfair wage competition forced upon them, by the wealthy elitists. The value of necessary labor in the US will no longer be marginalized.

This will happen either by the coming economic melt down, or by the coming bird flu pandemic, or both. Yes, it will happen. ONLY THEN, WILL THE TRUE WORKING MIDDLE CLASS BE ABLE TO REALIZE THE AMERICAN REAM ONCE AGAIN. Don't screw with us. We are your future world bread and butter. We will get our fair share once again, in the not to distant future.

THE AMERICAN REAM

ooh-er, heh... go on, surfer...

Mike/Sage, are you also Oracle?

It is not a dream, but a necessity of life, like food. Extortion of the middle class is what has been going on for too long. Piss off the middle class in the US and your asking for trouble.

Look at what is happening in the primaries this time. We're making the incumbents heads spin.

THE AMERICAN REAM

Very strategic typo --I applaud you, sir (or your fast fingers)! That's certainly what it has felt like for working class for the last 15 years or so. Can't say I see the U.S. defaulting on the National Debt though, considering that amazing new invention known as a printing press. Ditto for labor/wage arbitrage. Sadly (for most of us), the genie's out of the bottle on that one.

What is worse? Hyper-inflation, where the fed prints up money to pay the national debt, and ignores inflation, and lets foeigners buy up all our assets, or letting the government defalt on it's debts, making bonds worthless?

Remember, the federal government has no power over the federal reserve.

Someone wrote:

> If you make 300k- you’re loaded.
> Plain and simple. No buts, or IFs
> about it. Trust me.

If you only make $300K you are not loaded in SF:

A guy making $300K will be lucky to take home much more than $200K after taxes…
A shitbox in a good neighborhood that needs work costs at least $2mm If you put down 20% ($400K cash) your mortgage payments will be $120K a year + 23K property taxes so you are left with 57K just about the cost of sending two kids to good private schools in SF. You are then forced with either sending your wife to work full time (that often results in no real cash flow after the cost of the nanny and all the designer outfits, shoes and handbags she buys to impress the other women at work) or begging your parents for money (who can’t believe that their kids who went to good schools can’t make it without help like they did)…

P.S. To put the real estate bubble in to perspective a home near me that sold for $575K in 1993 is currently on the market for $12mm (yes it has been renovated)…

Labor/wage arbitrage:

There is no free lunch; not in physics, not in economics. The absolute advantage (in wage cost structure) enjoyed by China and India is accompanied by massive inflationary pressures which are largely being artificially suppressed by China and a little less so India.

This inflation is not just from obvious sources (people suddenly having more disposable income, corp investment, etc.), but a huge portion comes from the way these countries must peg their currencies to avoid losing the advantage that makes their arbitrage effective.

In fact, this is not arbitrage at all. Arbitrage means riskless return. The labor offshoring game contains lots of risk for all involved. Not the least of which for the host countries.

The whole cycle I keep beating on about US debt and its foreign owners is the engine of this risk. China needs to export to us (Mfg labor arbitrage) and India needs to sell to us (Service labor arbitrage, which is just a different harder to account for type of export) in order to fuel their economic expansion. But the more they do it, the less our dollar is worth, which should make their schemes less effective with each passing day. But they buy our dollars to keep the music playing. The risk to them is that they can't engineer a soft landing, and someday their currency peg breaks. This will result in massive inflation, a reversal of capital flows and abrupt recession. They'll probably nationalize their industries in defense of their economy, and the US corps invested in offshore operational holdings will lose.

Or they'll succeed, meaning this game has to go on for decades and slowly unwind.

And we haven't even talked about the effect of "capital sterilization policies" which they must implement to keep their own currency from being arbitraged by the likes of Soros. These policies involve making purposeful bad loans intended to default within their own developing economy. That's a hell of a way to develop a functional market economy: teach companies they don't need to be profitable because the gov't will always give you free money.

There is no free lunch; not in physics, not in economics.

Are you sure Zero Point Energy will not work? :(

To put the real estate bubble in to perspective a home near me that sold for $575K in 1993 is currently on the market for $12mm (yes it has been renovated)

Yeah, that's a little out of whack, even with a fantastic remodel. There's a 2000 sqft home near here that Zillow puts at $1.7M, that's now listing for $5.9M--and no renovations. Not that I'd pay either price.

@Randy H,

So... basically you're saying "risky labor offshoring" (technically distinct from labor wage arbitrage, though for practical purposes indistinguishable for us common folk) will either: (a) keep going on and on for decades, while the economies (and wages) of the U.S. and India/China slowly converge to equilibrium, or (b) the whole artificial currency peg game currently propped up by China's central bank buying vast amounts of USD denominated debt (mainly Treasuries & MBSs) may unwind, causing likely economic destruction for BOTH economies.