patrick.net

Sorry, I know nothing about wine. It is a shame considering how much I love food. But if I also liked wine I would be insolvent by now. ;)

I actually suspected this initially, but didn’t want to say anything lest I be labeled a conspiracy theorist.

Huh?

Dallas:
Lower: Charles Shaw Cabernet

God damn it, RW. Now I feel like lower lower class here in the BA.

$2 Chuck - cheaper than beer with red wine health benefits.

Make sure to sneer at me when I pick up my next case of Shiraz.

"I can think of no situation that would make me feel more Lower Class than joing the FBs". LOL!

Right on! We need to say that more often. Case in point. The poor guy that bought my old house. I'm not saying I walked away with a ton of money by any stretch but this poor couple will owe on it more than I EVER did and to boot the neighbors have decided they have better things to do than lawn work. I'm already starting to see places all over Oregon where people have hastily wrapped up projects (ready or not) and pulled the plug on numerous others. When the free money dries up evidently so does the enthusiasm. FRIFY, we walked away. Most people didn't. They don't have the luxury of all these idle pursuits nor any options. We've established that "just rent the f@cker out" won't work. Neither will selling it. Oh you can try and throw your hat in the ring but most will give up. So what does that leave? Ahem, tuffing it out. Thanks, I've done my share and then some.

There is a ton of nominal distortion to the income figures. This goes back to the regional inflation differentials.

Making $83,000.01 in the Bay Area is "middle class" in the Bay Area, but much richer if you were to make that elsewhere, like Mississippi. It's all about purchasing power parity.

The only reason to compare yourself to national figures is if you are planning/considering relocating. If you want to go to Mississippi but live in San Francisco now, then you are best to rent as cheaply as possible and save as many CADs (California Dollars) as possible. Then take those to Mississippi where they'll give you 1MSD for every 1CAD, since they peg the exchange rate thanks to your Federal Reserve system.

If you think this is fanciful consider what is going on in the Eurozone today, where effectively you have very different costs of living but a pegged standard currency.

If you're not planning on leaving the Calizone, then all you care about is your relative position in the income distribution of CADs. In fact, to the chagrin of saner regions, you are better off earning tons of CADs even if you have to spend lots of CADs to live here than you would be earning MSDs. This is because national products are priced nationally, on the margin. Since the exchange rate is fixed, folks with a pocket full of MSDs find they can't buy as much car or Hawaiian vacation as folks with a pocket full of the CADs.

Randy,

Puzzle this one then:

http://www.census.gov/hhes/income/4person.html

In terms of Median income, California is below CO and CT where you can still buy houses for $350K. CA has a much more bimodal distribution of income than these states, thus Median doesn't capture the fat upper tail of CA's distribution.

It's indeed your relative standing in that fat upper tail that matters the most because they're the one's throwing their $$$ and futures on a real estate bet.

The real victims in this group are middle income folks like WW2 on $50K. WW2, stop talking about it and get thee to a $45K Denver/Austin job.

Who says that the middle class makes middle level income?
“Middle” just means that it is between “upper” and “lower”.
It is about class (cast).

The term "Middle Class" is highly fungible, subjective and hardly precise. Even so, I can still remember a time when your average skilled wage earners were generally considered to be "middle class" (I am not that old --late 30s). This included teachers, nurses, cops, electricians, plumbers, carpenters, etc. --you know the people who actually DO REAL WORK for a living. Until fairly recently historically speaking, such people could buy a house in a decent CA neighborhood w/out a stated-income 107% LTV NAAVLP --just like it's STILL possible to do in most other states.

I'm with SQT, FAB, KurtS, etc. How out of whack is our perception here that $300-500K/yr can be considered anything BUT upper or (very) upper-middle class? Please. If these people are merely "working class", then I suppose that makes the vast majority of CA wage earners Untouchables!

Clean Air Day again...

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/06/26/BABADIGEST2.DTL

I think it is wrong to have free public transportation whenever the air is bad. What a waste of taxpayer money!

Instead, gas prices should be doubled in the entire week to discourage driving.

CA has a much more bimodal distribution of income than these states, thus Median doesn’t capture the fat upper tail of CA’s distribution.

This shows that socialism is counter-productive.

FRIFY --

Wine snobbishness aside, Chuckie Shaw is an incredible value. It's 60% as good as a $10 Cabernet, but at 20% of the price of a $10 Cabernet.
Sometimes, I will use a bottle of that to cook with so I don't have to cook with the expensive wine that will go with the meal. There is always a quite a bit left over, as you rarely need a whole bottle to cook with, which I drink later in the evening (once I'm too shitfaced to care about bouquet or mouthfeel).

Buying $100 Cabernet is probably stupid, but not as stupid as buying a $600k fixer-upper. That's what I tell myself, anyways. And I'd much rather sip my overpriced wine on Saturday night than install crown molding and granite new kitchen cabinets, or fix a broken hot water heater.

Who came up with that stupid term "fixer-upper"? Where I come from we have a term for things that need to be fixed: BROKEN. And the idea of buying anything BROKEN for two-thirds of a million dollars is retarded at best.

I suppose much of this hinges on if that income is W-2 or 1099. Self employed people can "fluff up" their Schedule C as well as their Schedule A yet a W-2 employee has very little if any wiggle room. During the 'go-go' 90's I was a W-2 wage earner and couldn't write off squat so my taxes felt out of kilter. You don't keep as much as you'd like to think. FRIFY, I'll take it the Census link you provided were all quoted in "pre-tax" dollars right? Still and all, 300K is decent money any way you slice it.

Who came up with that stupid term “fixer-upper”? Where I come from we have a term for things that need to be fixed: BROKEN.

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

"fixer upper"

No kidding! What kind of BS is that? How about "broken downer". My father used to drive past "fixer uppers" and say the only thing they need now is a match!

One of my favorites:
"handiman's special" = ready for wrecking ball

Though it might be a stupid marketing term, I for one, value some of the classic buildings as opposed to the kleenex and spit construcion of newer homes.

So the ideal house is a brand new classic building.

“handiman’s special” = ready for wrecking ball

Investor's special = ready for some NAAVLP

"The real victims in this group are middle income folks like WW2 on $50K. WW2, stop talking about it and get thee to a $45K Denver/Austin job."

-Frify,
I disagree. The real victim will be California. In essence, as mentioned countless times, the state will and is losing a TON of new talent and fresh minds. This was actually run as a major story in SF weekly not too long ago. I see a future of overly wealthy, gout-infused citizens, and a new generation of brain-dead kids sent through the useless public education machine.

FRIFY,

In terms of Median income, California is below CO and CT where you can still buy houses for $350K. CA has a much more bimodal distribution of income than these states, thus Median doesn’t capture the fat upper tail of CA’s distribution.

All that means is that CA has two very fat tails, upper and lower, and that CA's lower tail is fatter than CO's proportionally. I'm not convinced that either CO or CT are more or less bimodal than CA. The larger numbers and economic diversity in CA alone will make it less bimodal, not more, due to larger variation over a greater population. It could just be that CT and CO are slightly more skewed in a normal approximation of the upper tail distribution.

"Potential" bonus room = incompleted unpermitted bonus room

I will use a bottle of that to (Shaw) cook with so I don’t have to cook with the expensive wine that will go with the meal.

Agreed: that wine works very well for cooking, and it's mostly OK to drink. On the other end, spending $300+ for a bottle of wine is needless, unless drinking money is your game. I once shared a bottle of Marcassin Chardonnay that was very good, but $400 good? I doubt it. With so many good local wineries here in Napa-Sonoma, nobody ever needs to spend over $50 (if that).

The real victim will be California. In essence, as mentioned countless times, the state will and is losing a TON of new talent and fresh minds.

Americans are very mobile, and very flexible in where they are willing to live within the US. This is a great strength over what I was describing is occurring in the Eurozone. The whole "Polish Plumber" problem is precisely because people aren't willing to move from state-to-state within the EU, instead they force their governments to subsidize standards of living that aren't within the natural market equilibrium. Despite what some have claimed, almost no one is moving into East Europe to exploit lower cost of living. The opposite is happening, in fact. East Europeans are moving West to temporarily earn more EURs, which they send back East. They can do this because of the inflexibility of the Western countries economic systems -- they support many jobs at higher salaries than the market would bear.

I am optimistic about CA's long-term viability. The present churn is part of the natural, painful process of economic reorganization. NorCal has fundamentals not found but in a few places in the world, and these will attract new commerce and population as the old is replaced by the new. Industries which have become unproductive in NorCal can be productive in Atlanta, so they move there. That's a good thing. Industries which are too risky and untested for Atlanta can locate in the Bay Area. That's a good thing. Everything working together is good for all of us, even if many of us need to eventually pick up and follow our industry out of state.

All I got to say is, for me my family and my freaking sanity we did the right thing. For the longest time I didn't even want to see what became of 10+ years of blood sweat and tears but when I finally saw my old house surrounded by "handyman specials" and "fixer uppers" with lots of "potential" I knew we'd made the right move. Even had the "appreciation" continued? Yeah, uh bailing was the right thing.

Just imagine if you can, having the nicest house on the block and just keeping up on it while your neighbors go on a 2 year + "vacation" yeah it would be a lot like that yeah.

Middle class means 1) not on welfare, 2) not wealthy enough to lobby congress.

There you go. ;)

Randy,
I don't believe for a second that SF or California are immune to have a severe loss of industry. All points of evidence for California dominance is in historical terms. The way I see it, you cannot assume that just because the companies that are here do well, that the massive segment of workers that work for them feel or are doing the same.
There's a lot of people- even those that own- who are NOT happy. Unless the current situation changes, I wouldn't expect California to have much of an economy come the end of the decade, and with it they will lose quite a bit of what they once had.
The model that's being used compares other cities across the country as if they too were as static as California's cities. Truth be known, cities like Atlanta are the fastest growing in the country.500,000 PER YEAR. So are many others in that region- a region greatly under utilized for decades and now finding itself in a rennaisance. The future developments will happen there-Not California, where all posibble means of easy growth have been exhausted, and therein lies little opportunity for the aforementioned workers that will, as I mentioned, come streaming out of California and be eager to apply their talents. Perhaps they're people like me, who will offer a great product and wealth of knowledge with the ability to undercut California companies and still laugh all the way to the bank.
People that have had to and will leave California will be pissed off people- people that perhaps wouldn't mind seeing California lose a lot of it's economy in the form of competition it hasn't had to deal with in large quantities.
If Cali wants competition, then that's exactly what it will get. I'd love to see a CA firm even try to compete with an agency full of former californians in TX able to do more work for less, and at the same or better quality. Revenge will be sweet.

I would like to see bridge tolls doubled on Spare the Air days, along with the expensive gasoline and free transit. We can put the extra bridge toll money towards the free transit.

Then people will try to go around the bay, causing conjestion and even more pollution. We need an electronic toll road system. We need to charge people for distance-load-speed.

Why make people pay for the weather? The reason there was more pollution in the air was due to a change in the wind patterns, or lack therof. In reality, the pollution that is priduced every day is the same. It just gets blown out to see. So if punishment is doled out for the amount of pollution produced, then it shouldn't be because of the weather. Besides, there are many people like myself who drive responsibly, drive smaller cars, and carpool every single day. Why should I have to pay?

Perhaps it would help people to know their proper place in California society if we imposed a formalised Caste System like they have in India?

Brahmins: CEOs, Directors, bank executives, Senators, wealthy Baby-Boomers trust-funders and others of the elite inherited-wealth gentry.
Kshatriyas: Stock brokers, well paid corporate lawyers, high-demand surgeons, Googlaires and other software engineers that cashed out at height of NASDAQ or recv'd lucrative stock options.
Vaishyas: Mortgage brokers, Flippers/Specuvestors, Mini-mart & strip-mall shop owners.
Shudras: Most non-homeowning wage-earning professionals (vast majority of population). Includes most native-born Jealous Bitter Renters.
Untouchables/Mlechha: Illegal alien laborers, welfare/Section-8 recipients, tweakers & non-retired mobile home dwellers.

yes, even better. I’m a big fan of the pay as you go idea with vehicle weight and fuel effeciency in the calculation.

I believer that users should be charged.

Higher vehicle speed and weight will both cause excessive wear-and-tear on the road, so they should be charged accordingly.

I am a fan of Big Brother and small government. Paradoxical? :)

Perhaps we can set up a network for citizens to monitor other citizens. For example, a massive network of surveillance cameras can be connected to the internet. Ordinary people can see real-time video and report illegal activities. When the criminals are fined, the reporter of the crime will be compensated.

This way, we can achieve an ideal Big Brother society with minimal government involvement.

Great Idea! Let's make SF EVEN SHITTIER by introducing even more useless laws that in the end crimp ordinary people, create more problems as a result, and drive the cost of living even higher! Yay! maybe we could put a law like this on the shelf along with other marvels of modern legislation, like prop 13.
By the way... is that rubber on the soles of your shoes? You evil tyrant! those are made out of resource-wasting plastics and rubber! Are you wearing clothes? How could you! they're made in factories that produce nasty fumes in India! Do you ride a Bike or train? Ughhh! Those things use precious things like alluminum, steel, rubber, and plastics. Do you walk? Well you're wasting air by walking- air that animals alone should be able to breathe! Do you eat food? How could you do such a thing! Ants and beetles now have less foraging areas thanks to farmers! Do you talk? Well.. you're polluting the air with NOISE POLLUTION!
So... I will keep on driving my car that uses steel, and I will keep on making my choices based on what's best for me, not for people that I don't know or really care about. If that sounds cruel, well I'm sure there's a million more opportunist parasites living here that would gladly take what I have worked hard for, so no thanks.

Shit_hits_the_fan,

I've written a lot about the subject of virtuous circle economies. Of course no one knows the future. But I'll take the other side of your revenge bet any day. The history of attempts to artificially recreate virtuous circles is full of failures. I know you want it to be different this time, but I'm not a believer in new paradigms and "it's different this time" reasoning. The problem is people are quick to decry the failures of new paradigm thinking when they work against them, but yet silently accept them when those outcomes would work for them.

I remind you that New York was supposed to be a prison island by now, and that London was supposed to be abandoned and flooded; both widely believed predictions of early 80s pessimism. Virtuous circle cycles take a long time to break down. Much longer than any of us has to plan for, I suspect.

To add a final comment( for me) on the whole " California is a genius" argument, It wasn't long ago in modern history that the majority of modern science, research, and technological innovations occured in the UK, where they had the world's largest navy, and the most extensive settlements. " The sun never sets on the English empire" was a favorite sayng at the time from people- that like Californians Can't even imagine that anything could would EVER happen to them.
Yup- pile on all the useless laws, cost of living, business tax, energy prices, and environmental laws and somehow, some way, everything will be Just great and rosey. If you think things can't change and that California is somehow this unsurpassable genius full of geniuses, then perhaps you're right in line with those old English chaps drinking tea circa 1900.

Great Idea! Let’s make SF EVEN SHITTIER by introducing even more useless laws that in the end crimp ordinary people, create more problems as a result, and drive the cost of living even higher!

Charging the users (as opposed to the taxpayers) will result in more efficiency and lower costs because people are better incentivized to consume resources efficiently.

For instance, if we charge people for speed we will have:

1) fewer accidents = less stress on emergency care
2) less wear and tear on the roadways

Both will reduce social costs.

Most people overestimate the benefit of driving at a higher speed. The time saving is simply insignificant over short distances.

Yup- pile on all the useless laws, cost of living, business tax, energy prices, and environmental laws and somehow, some way, everything will be Just great and rosey.

My idea:

Fewer useless laws, better enforcement of useful laws, better incentivization, lower cost of living, NO business tax, free-market energy prices.

Shit_hits_the_fan,

The sun sets on every empire, eventually. Someday someone will accurately predict the end of the world, too. It's all about playing the odds.

"Genius" is but one component of a virtuous circle. You can read a lot about the subject if you're actually interested. It's a nexus of education, innovative/entrepreneurial culture, risk capital infrastructure, risk-reward potential, perception of upward mobility, and "co-opetition". Of course the Bay Area won't have all these forever, but I'm not willing to bet today is the end of the world. There's a chance I'm wrong. There's a much bigger chance you are. I'm agnostic about such things; I just draw the best available rational conclusion without pre-supposing "it's all suddenly different this time".

I do find it a bit amusing that many here seem to think one needs to be a self-hating Bay Arean in order to be a fully qualified bubble-believer. It is possible to think the bubble is real, but not at all outside of a normal part of the cleansing process. I appreciate the free-market, even when it works against me. I continue to maintain that very very few people truly favor free markets; they just invoke the doctrine when it suits them.

@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.