patrick.net

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.

Sir Rick of Bulldust Says:

> actually i usually find older women more attractive.
> and im still in my 20s. when older women want it,
> they just go straight for it. they’re not buying the
> romance crap (usually at least ).

Older women are not “more attractive” but they sure are a lot more fun and easier to sleep with (as Sir Rick says “they just go straight for it”)...

One of my big regrets in life is that I never went out with any older women. For some reason when I was in my 20’s it seemed strange to sleep with an older women…

I can’t even count the times I got hit on by older good looking divorced ladies when I was racing out of the SFYC on Friday nights as an undergrad.

Rather that head home with a great looking 38 year old I would head back across the bridge to school and try and get some super hot looking 19 year old from Atherton to go home with me.

Now that I’m older I know that the hot 19 year old sorority girls were leaving the fraternity parties early so they could sleep with good looking 38 year old guys that lived in the Oakland Hills…

I felt like a proud father when one of my 26 year old analysts told me that he not only went home with a 36 year old he met at the Balboa but her got her to open a bottle of Turly Zin when they got back to her place (you won’t ever find a wine rack of good Zin in the apartment of a 26 year old)…

Enjoy the 30 something women while you can since the same 38 year old hot women that will send a 24 year old guy on his way the next morning without asking his name will drive you absolutely insane trying to “take the relationship to the next level” if you ever become a relatively successful guy in your 40’s…

thier proof: psychic evidence. Is it just me or are things getting wackier?

You do not believe in that stuff huh?

FAB,

great comment especially the last paragraph.

30 something woman who is looking for a relatively successful man in his 40s because her biological clock is ticking, sounds like a nightmare to me :-) I know very well what you are talking about, saw plenty of those, it is sooooo difficult to find a confident, relaxed and attractive single woman in her late 30s. After meeting a bunch of those, you start to understand why they are still single at that age.

@HARM,

(b) Would not result in devastation to the US economy. It would cause a recession, but probably not the worst we've ever seen. Remember, we already generate 80%ish of our GDP domestically; China generates almost all of their GDP through exports/import activity (they import tons of stuff too, like agriculture).

It would hurt them so bad (b) is very unlikely until they (a1) get far enough along that they can command real world economic power like the G7/G8 do, or (a2) they have a big enough strategic military that they can do what they want within their sphere without risk of direct military retaliation.

@Sir Rick of Bulldust Says:

can you explain something? how does a country ‘peg’ its currency

Oh man. Ask me something easy next time.

The short answer is that their Central Bank buys and sells the foreign currency with which they peg in order to keep the exchange rate within a defined band.

The longer answer is that the above is not sufficient because of hedge funds that will try to exploit this and arbitrage the hell out of the CB doing the buying & selling. Hedge funds can make 10s of billions if they can "break" a peg--that is force a foreign central bank to revalue their currency, even by a small amount.

So the foreign CB has to do lots of stuff with reserve requirements, capital controls and interest rates to try to stem the tide of "hot capital" flowing in and out daily. China does this very effectively, but only at the cost of not having a functional free capital market. Others like Japan do it better by not really pegging, but instead "gently influencing" the Yen to be within acceptable range of the USD and EUR, carefully tuned to maximize their export exposure. The BOJ does this by buying & selling USD and EUR, but also by encouraging various patterns of investing and lending within Japan.

Currency pegs are usually good for emerging markets straddled with foreign debt and dependent upon lots of imports and bilateral exports, like many poor African countries. Pegs generally are bad for developing countries which are trying to compete globally, like many of South American country learned the hard way. Currency pegging in China is a unique experiment on a scale not really tested in the global capital markets. You'll find as many "experts" who claim it will all implode as you'll find who claim it is pure genius for either us or them. In reality, it's kind of anyone's guess. I tend to think it will unwind very slowly because China has a good history of strategic discipline over long periods of time.

Randy H,

"You’ll find as many “experts” who claim it will all implode as you’ll find who claim it is pure genius for either us or them. In reality, it’s kind of anyone’s guess. I tend to think it will unwind very slowly because China has a good history of strategic discipline over long periods of time."

Randy, don't know what you're drinking, but just 'cause some Shaolin monk appears to be disciplined in a Bruce Lee movie, that does not equal a history of strategic discipline over long periods of time.

Check out the bottom of the link, good summary of events of just the past 100 tumultuous years at the bottom of the page.

Chi.

http://en.wikipedia.org/wiki/Timeline_of_Chinese_history

Randy H said:
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.

I see this whole picture quite differently to you, randy, which came up as a quiet and amicable discussion in an earlier thread. I see the Chinese and Indian economies as almost an open-ended and effectively independent system with effectively infinite quantities of cheap labour on tap. The labour arbitrage can go for decades before it's exhausted. One thing they are doing with international ramifications is bringing in foreign currency, and then having the dilemma of deciding where to invest it -- and they may choose to invest in US treasury bonds, etc. It's much like the Saudis have a trillion dollars invested in the US stock exchange because there's nowhere else to put the money except in their mattresses.

There is no nationalist conspiracy in this, it's just short-term decision-making by multinationals who are choosing to offshore to save a buck and maximise profits and return. simple micro-economic decisions with a short-term payoff. i don't see any macro intervention involved at all, apart from govt efforts to bring as much business to china or india as possible. I don't see that the chinese and indian govts have to 'artificially force down inflation' when there is a massive, effectively endless, pool of subsistence-based peasants to draw from. literally billions of people.

There is no doubt that wages etc are creeping up in places at the nexus of the offshoring arrangements, and if the pool of low income people is exhausted, then the arbitrage advantage is gone, so the work would dry up. but the supply of low income labour is effectively infinite. we only see arbitrage diminishing in places like s. korea with smaller populations who quickly escalate their quality of life with industrialisation which first came to the country through labour cost arbitrage. once costs went up, multinationals quickly moved on to cheaper labour countries, leaving the s. koreans to immediately have to get smarter and take advantage of technology transfer and sponsored development, to try to become a new Japan. koreans are determined and fanatical workaholics also, something else that might give them a comparative advantage.

further, the reason that india is service-based and china is manufacturing-based when india has had the advantage of speaking english for centuries is simply about culture -- levels of corruption, the work ethic, the desire (or lack of desire) to get rich, social organisation and social/govt control, the structure of the typical working day, etc etc. the indians have had the potential for decades to industrialise and become a 'factory for the west' to a much greater extent than they actually have -- but the well off and educated indian upper middle class just leave the place asap to get a better lifestyle in the west -- no loyalty lost at all...

FAB said:

Now that I’m older I know that the hot 19 year old sorority girls were leaving the fraternity parties early so they could sleep with good looking 38 year old guys that lived in the Oakland Hills…

FAB, I am unfamiliar with BA. What's Oakland Hills like? Isn't Oakland a dump (compared with Atherton and Menlo Park)?