patrick.net

by international comparison, americans often come across as braggarts in speech,

When I travel internationally, people don't think of me as an American (Hint: at LHR, the folks at the AA Arrivals Lounge tried to redirect me to CX's lounge.) But man-oh-man some of the Americans travelling abroad really are embarassing.

This is the best article on the topic: http://www.ricksteves.com/about/pressroom/uglyamericans.htm

When I was in London, I kept running into this retiree tour group from N. Texas. Unbelievably loud, making the same retarded comments about "what's this pound business?" - good grief.

What's sad is that you don't have to go intl to see "Ugly American" tourists - you just need to go to Times Square. Good grief. I once saw a mid-west teen girl almost get hit by a cab because their group was crossing 44th really slowly and basically holding up traffic. Afterwards, she happily exclaimed: "Wow! Did you all see that? I almost got hit by a taxi. How cool is that?"

Rent IS on the rise. A soft-landing for Bay Area real estate is a very real possibilty.

Some places -are- seeing large rent hikes, but in part because rent was so ridiculously low to begin with. Or... due to remodelling.

There's a complex in Mountain View on Crestview which was really cheap. The rates went up a lot - I'd guess 20%+ - after they remodelled and now each unit looks really nice (though the neighborhood is still rather blah).

One of them said straight out that a landlord that did anything that they didn’t legally have to for a tenant was a fool.

Why would you expect anything else?

Being a landlord is running a business.

For everything you do, you have to look at the ROI.

Randy,

Thanks for correcting my erroneous views on rents in the Midwest. I knew they were high compared to housing prices, but I had no idea they actually rose in real dollars since the 70s.

That is a rather counter-intuitive outcome. If being a landlord is such a great deal, why hasn't someone come in and arbitraged the buy v. rent difference? Could there be some hidden costs to landlord, ie worse quality tenants or higher vacancy rates?

PS - also, could there be hidden price support in the form of rising household income? The wives entering the work force could increase household income even while the individual incomes fell.

I was at the Santa Clara County fair last year and there was a senior holding up a sign asking people to sign a petition to “Protect The Seniors! Protect Prop 13!” - and there wasn’t even any anti-Prop 13 ballot measures!

Why? We should only protect assets. Are seniors assets?

PS - also, could there be hidden price support in the form of rising household income? The wives entering the work force could increase household income even while the individual incomes fell.

Sounds like this the Two Income Trap:

http://www.amazon.com/gp/product/0465090826/102-3205623-0517732?v=glance&n=283155

Why? We should only protect assets. Are seniors assets?

Doesn't matter. They're the ones who vote.

Isn't the AARP the #1.5 largest lobbying group? (they're either behind or tied with the NRA). I wonder what the AARP's position on Prop 13 is.

PS - also, could there be hidden price support in the form of rising household income? The wives entering the work force could increase household income even while the individual incomes fell

But even HOUSEHOLD income has been stagnant.

Doesn’t matter. They’re the ones who vote.

I know. This is why we should side with seniors. :)

AARP and Prop 13 - what a surprise, they only list the positive aspects of it:

http://www.aarp.org/bulletin/yourmoney/property_tax.html

I know. This is why we should side with seniors.

I will, once I own a place. :)

I love the idea of "get in early, get in low".

I wonder if there is something else (invisible M3?) that is allowing them to do this.

SP,

Oversupply is probably the cause. An article that I read a while ago says that the state and local governments fund major goods producers; and the overriding goal is to get to the top instead of making money because the top dog will always be rescued by Beijing, sort of the "too big to fail" mantra. Therefore, the firms are always in a frenzy to expand production capacity to get to the top spot, with the cheap money from local governments or the state. The banks are happy to lend and incur bad loans.

This is where your invisible M3 comes in. Unlimited money supply and a permissive lending policy induce over capacity which depresses prices of finished goods.

DS,

Wow, you managed to write 122 words on Communism without answering what your ideal of Communism is. So I can't actually either be convinced that your position is right or argue that your position is inconsistent. Every social experiment has errors, but I haven't found any evidence that its methods fell too far astray from Communist orthodoxy.

If you say that Pure Communism has never been implemented, could it be that it just doesn't exist? The closest thing I can come up to a workable solution are Israeli Kibbutzes, but they operate more as extended family businesses than a REAL Communist society.

As for your busy schedule. Well, if you're too busy to write a summation (succinct would be nice) on your ideals about Communism (which, from your other posts appear to consist of unrealizable fantasies of going back to a state of noble savagery and the primitive unselfish man), maybe you shouldn't have started with a multiparagraph post full of tangential points.

On organ harvesting. Hmmm, I touched on some points about the economics of scarcity and hard choices (the peasant's left kidney or his family home), the problems of policing and moral hazards (dead v. live bodies), and moral hazards of organ donations. But rather than acknowledge the presence and interests of an organ market, you just go on (a paragraph after you said you're too busy to explain your position on Communism) about how the organ market is evil and then hold out some pie in the sky solution like organs from stem cells, which is at many many years away. So people suffering organ failure should just die rather than participate in something DS has called evil (without explaining why it is inherently bad or undesireable, to the point of elimination)?

Okay, let me say once more -- Huh?

Astrid,

why hasn’t someone come in and arbitraged the buy v. rent difference? Could there be some hidden costs to landlord, ie worse quality tenants or higher vacancy rates?

Because that isn't "arbitrage", it might be a local market strategy, but it isn't arb because it's full of local market risk. I wouldn't recommend this strategy because I believe that knowledge/information about a local market pretty much always trumps all else.

astrid and DS,
Wow, Communism and the organ market - that's quite a bit OT!

Okay, let me say once more — Huh?

Have you visited the Huh thread lately?

I wonder if there is something else (invisible M3?) that is allowing them to do this.

"Capital Sterilization". As others have pointed out, Chinese concerns can get huge amounts of essentially free money from the government. A portion of this churn is related to China's effective "laundering" of USDs by injecting them into their own economy in a way which circumvents currency arbitrage. No one can really come in and borrow RMBs to put pressure on the peg because of capital controls. Further, any bad loans are just written off because the money is nearly free at the end of the long equation that includes rate differentials, inflation and balance of trade.

It just occurred to me that China is effectively the mother of all Quant Hedge Funds.

skibum:

But just imagine, all the boomers, after cashing out their homes, can now plow their hard-earned winnings into the organ market, helping to create the boom in biotech that so many expect to be the Next Big Thing.

"But even HOUSEHOLD income has been stagnant."

Ouch! The Midwest really sucks!

I'm planning to vote against seniors in future cycles. There ought to be some loyal opposition when one over-represented demographic group selfishly pawns this nation's future for a couple more vi- (a) -gra filled years of golf and ambling around cruise ships.

But just imagine, all the boomers, after cashing out their homes, can now plow their hard-earned winnings into the organ market, helping to create the boom in biotech that so many expect to be the Next Big Thing.

Yikes.

I’m planning to vote against seniors in future cycles. There ought to be some loyal opposition when one over-represented demographic group selfishly pawns this nation’s future for a couple more vi- (a) -gra filled years of golf and ambling around cruise ships.

It is futile. No matter how you hate them, you have to side with them. How about a career in helping or lobbying for seniors?

http://tinyurl.com/lspd6

Supporters call them “stand your ground” laws. Opponents call them “shoot first” laws.

Thanks to this sort of law, a prostitute in Port Richey, Fla., who killed her 72-year-old client with his own gun rather than flee was not charged last month. Similarly, the police in Clearwater, Fla., did not arrest a man who shot a neighbor in early June after a shouting match over putting out garbage, though the authorities say they are still reviewing the evidence.

How long is it before we see the headline: "Man shot for lowering comp" ?

This might actually be a bankable idea. With the seniors already being such a powerful lobby– and only getting more powerful as the boomers age– the best thing would be to figure out how to profit from them.

The Boomer generation is the future. If we cannot fight them we should join them.

skibum,

Sorry.

Peter P,

Well, I'm a contrarian.

I also don't want to be the one whom, when the revolution comes and I'm thrust against the wall with a gun to my head, yells "Hey, I was just following grandpa's orders!"

They're essentially arbitraging US' consumer demand, open capital system and Fed policy. Unless the Fed drops rates to 0% and keeps them there long enough to break the peg, China isn't really taking any risk so long as they have GDP left to grow.

I also don’t want to be the one whom, when the revolution comes and I’m thrust against the wall with a gun to my head, yells “Hey, I was just following grandpa’s orders!”

Just say that you were trying to fight them from within. To defeat the enemy, one must BECOME the enemy. :)

Also, there will be no revolution.

requiem Says:

But just imagine, all the boomers, after cashing out their homes, can now plow their hard-earned winnings into the organ market, helping to create the boom in biotech that so many expect to be the Next Big Thing.

Problem is, between the old age, heart disease from bad eating habits, most of their organs will turn out to be unsuitable.

skibum,

I think requiem was implying that the Boomers would not be SELLING their own organs, but rather daytrading/speculating in healthy organs purchased from impoverished Gen-X & Y-Millenials, who have no other way to support themselves --largely thanks to the Boomers themselves. The steady supply of dirt-cheap X/Y organs should also allow Boomers to extend their lifespans far beyond that of their parents, as well as the donors themselves.

HARM Says:

I think requiem was implying that the Boomers would not be SELLING their own organs, but rather daytrading/speculating in healthy organs purchased from impoverished Gen-X & Y-Millenials, who have no other way to support themselves –largely thanks to the Boomers themselves.

Yikes! That's worse than I thought!

All this talk about Generations - here's a good table that outlines what years belongs to what generations:

http://en.wikipedia.org/wiki/Generation_Y#Generational_demographics

All this talk about Generations - here’s a good table that outlines what years belongs to what generations

Just look at your pluto sign: Leo, Virgo, Libra, Scorpio.

At this risk of being labelled a troll (which I would hope not by this point) I'd like to make an observation - in previous threads, any time someone pointed out to the rent graph on patrick.net, and how rent was on the rise, the posted would be shot down saying "That's only the asking price".

I'm just glad to see that isn't being said anymore.

I'm not sure why people are in denial that rent is going up, anymore than FBers are in denial that prices are -not- going up (except in Palo Alto).

At this risk of being labelled a troll

You are not a troll because you do not smell like one.

I’m not sure why people are in denial that rent is going up, anymore than FBers are in denial that prices are -not- going up (except in Palo Alto).

My friend is looking in Palo Alto. Prices do not seem to be going up though. It does appear that inventory is building up even in PA.

At this risk of being labelled a troll (which I would hope not by this point) I’d like to make an observation - in previous threads, any time someone pointed out to the rent graph on patrick.net, and how rent was on the rise, the posted would be shot down saying “That’s only the asking price”.

eburbed,

No one who brings contrary data/views to the discussion automatically gets labelled a "troll" here. However, wild, exaggerated and unsubstantiated claims, such as "rent everywhere is going up 20-30% and I regret not buying last year" do come awfully close to gratuitous trolldom.

Technically speaking, the graph on Patrick.net main page does show ASKING rents, as Patrick Killelea pulls this data from newspaper classified asking rents (I asked him about this). Even if actual negotiated rent hikes exactly matched the roughly 12-15% jump on the graph since Feb (ignoring the Dec-Jan dip) and were certain to keep on rising at this rate (yet to be determined), it would still take at least 5-7 years for rents to balance out the rent vs. buy ratios for most areas.

Is it possible that the rent/buy ratio can be balanced solely through rental inflation? Sure. Is this likely to happen while renters' wages/incomes stagnate or even drop? Not really. The maximum % of income any renter can pay for rent is 100% of net income, and this can never be reached because people still have to eat, commute, use electricity, etc. I fully expect rental inflation to account for SOME of the balancing (and even this will require some amount of wage inflation), but not ALL of it as trolls/perma-bulls insist.

Of course, if all middle or working-class families are in effect forced out of CA, and replaced with a population mostly composed of 10-to-a-room illegals, then all bets are off.

eburbed,

I generally not considered a troll around here, and I have argued consistently that rents would, are, and will continue to rise despite stagnant income.

I also seem to be locked in an eternal point-counterpoint with my good SoCal friend, HARM, of late ;)

He's a far better creative author than I though, so in the end he'll be happier, even if I am right (which I, of course, am).

(man, I hate when the spell checker fixes spelling and ruins grammar)