0
0

What's Next?


 invite response                
2006 Oct 20, 4:54pm   14,776 views  145 comments

by SP   ➕follow (0)   💰tip   ignore  

Start with any generally observable and credible premise. Example: "Rents are up 10%." Or "Inventory is up 135%."

Assuming the premise is true, what impact will this have on the Bay Area housing market?

For instance:
KCBS reported rents are up 10%. Most anecdotal evidence suggests anywhere between 7% to 15% increases. If this is true, it could have the following consequences:

1. Rents go up -> Wages go up -> Wage inflation slows job growth -> Puts brakes on population-driven rent increases -> Rent vs. Buy adjusts a little, not a lot.

2. Higher rents -> People move out of area -> Rents stabilize, maybe fall -> Rent vs. Buy doesn't change a lot, and demand for both rental and for-sale housing softens -> Prices continue to slide.

3. Higher rents + refis -> help to bail out a few homeowners, reducing the overhang of potential FB's -> Could cushion the landing a little.

4. Rents keep going up 10% per year -> Creative renting strategies (home sharing, warm-bedding, etc.) become common, but overall renting becomes an expensive proposition -> People continue to do whatever they can to buy, keeping nominal prices high -> Rent vs. Buy is mainly adjusted by higher rents.

Or another example.
Premise: Punch bowl gets thrown away after Nov. 8 elections.
FB's rush to the exits -> No buyer confidence -> Inventory spikes up -> Prices fall FB's put unsaleable houses for rent, driving rents down.

The above are just examples. You can start with any other credible economic premise and expand it to assess impact on the HB. And even those outside the Bay Area can contribute their own crystal ball visions. And if this turns out to be too arcane, feel free to start a new thread.

SP

#housing

Comments 1 - 40 of 145       Last »     Search these comments

1   thenuttyneutron   2006 Oct 20, 10:20pm  

As the RE crumbles, we will move our speculation to Tulip Bulbs. They will appreciate YOY at 10000% for 10 years and become worthless overnight. At that moment, all of those FBs who started Tulip farms on the properties that they paid too much for will be ruined. I can then buy a good home, Tulips and all, with a McDonalds Happy Meal containing a Beenie Baby toy.

2   Sylvie   2006 Oct 21, 2:14am  

When enough people can't afford basic rent and the tent cities spring up like during the Hoover administration the goverment won't be able to ignore the problem. We have to many rich elitist and politicians who like ostriches have thier heads in the sand. If they don't see it firsthand it must not exist... In fact alot of the country has that kind of thinking.

3   DinOR   2006 Oct 21, 2:24am  

I'm in the "Or another example" crowd.

Post Election? All bets are off.

Care for an accident? No thanks, just had one. I was talking to a SoCal mortgage broker last week and he puts 07's foreclosure rate at 10-14%. Uh, that's not for sub-prime loans, that's across the board!

Toasty.

If anyone (bull or bear) can devise an exit script, please feel free to share. Outside of "re-negotiating" purchase price (then "refinancin") show me how we're going to contend w/gushing negative equity? Uh...... let's see, I bought in August 2005 w/zilcho down at 475K, I'd be lucky to get 375k, I'm two months behind and my teaser period is set to expire next month! Other than that I'm in good shape. Here at Patrick.net we love to toss ideas around and I'm fine w/that but could someone please explain to me how "lenders" are going to deal w/this and still have some semblance of dignity? Some semblance of "standards"?

I got no where to go and all day to get there.

4   FormerAptBroker   2006 Oct 21, 4:19am  

An unidentified threadmaster posted What’s Next?
> 1. Rents go up = Wages go up. Wage inflation slows
> job growth. Puts brakes on population-driven rent
> increases. Rent vs. Buy adjusts a little, not a lot.

For the last 300 years (going back 100 years before the US was founded using records from GB) the cost to rent has always been close to the cost to buy (after making a down payment). Like all things this will revert to the mean (the cost to buy should actually drop after a few years of the media hammering us with stories of people that lost it all owning RE).

> 2. Higher rents = People move out of area. Rents
> stabilize, maybe fall. Rent vs. Buy doesn’t change a
> lot, and demand for both rental and for-sale housing
> softens. Prices continue to slide.

Rents are related to one thing… “supply and demand” (I grew up hearing my parents talk about how to rent apartments and homes every night). We have had an apartment bubble just like a residential bubble and we will have a lot of apartments go through foreclosure and the new owners will “lower” rents to fill them (this happened in TX and AZ in the early 90’s and CA in the mid 90’s and it will happen again this time).

> 3. Higher rents + refis = help to bail out a few homeowners,
> reducing the overhang of potential FB’s. Could cushion
> the landing a little.

Rising rents are not going to help the people that barely qualified for the $1mm loan at 3% interest only when the payments were $2.5K a month when their loan resets and the payment jumps to $7K a month…

> 4. Rents keep going up 10% per year = Creative renting
> strategies (home sharing, warm-bedding, etc.) become
> common, but overall renting becomes an expensive
> proposition. People continue to do whatever they can
> to buy, keeping nominal prices high. Rent vs. Buy is
>mainly adjusted by higher rents.

Nothing “keeps going up by 10% a year”… Sure rents are up (some by more than 10% for the year) but rents are still lower than they were whey you could still by pets.com and webvan stock. Unless you have a huge growth in high paying jobs (like we did in the dot com boom) rents go up very slowly since when rents go up more and more people get roommates or move back in with their parents. In the real estate boom the number of mortgage brokers, loan processors and real estate agents in California doubled and today there are about 500,000 MORE real estate agents, mortgage brokers and loan processors than we had back in 2001. There are also about another 500,000 people involved with real estate construction, staging, inspection and rehab that we don’t need any more (I was recently talking to a bunch of illegals outside the Home Depot in Sacramento in Spanish before I hired a couple to help me build a fence at the Sac. apt.) and they said that it has become a lot harder to get work and many were thinking about going home to Mexico…

5   skibum   2006 Oct 21, 5:06am  

@allah,
I love how that forclosure "article" uses the perspective of a RENTER getting screwed by his landlord's foreclosure. Couldn't they have just kept the story to foreclosures screwing FB's? NOOOOO. The MSM has to throw in the "despite all this, it still sucks to rent."

Let's not forget that yes, that renter dude has to move, but at least his credit rating is still intact.

6   Randy H   2006 Oct 21, 5:07am  

Threadmaster for this thread is SP. Threadmasters should try to remember to sign their articles as many readers like to know who the author is.

7   skibum   2006 Oct 21, 5:09am  

We have had an apartment bubble just like a residential bubble and we will have a lot of apartments go through foreclosure and the new owners will “lower” rents to fill them (this happened in TX and AZ in the early 90’s and CA in the mid 90’s and it will happen again this time).

@FAB,
You bring up a good point. I think many people are not considering the possibility that this apparent increase in rents is likely transient. If demand is up b/c of "bubble sitters", when many of the sellers trying to sell can't cut it and put there places on the market, supply will go up, putting new downward pressure on rents.

The exception to your postulate that "nothing ever goes up by 10% a year" is if we enter a period of hyperinflation. Then all bets are off.

8   Randy H   2006 Oct 21, 5:20am  

Unfortunately the data directly refutes previous statements.

For the last 300 years (going back 100 years before the US was founded using records from GB) the cost to rent has always been close to the cost to buy (after making a down payment). Like all things this will revert to the mean (the cost to buy should actually drop after a few years of the media hammering us with stories of people that lost it all owning RE).

The fact: once adjusting for regional inflation factors, owning has *always* been significantly more expensive than renting, especially when plotted against income-affordability. The notable exceptions are *always* during periods of sustained credit-crunches, which are rare, not common.

Rents are related to one thing… “supply and demand”

This statement is *always* false as a practical matter. That is because there are no *perfect* markets, which are the only types of markets in which supply & demand are the *only* factor. In reality, things like apartments are affected by a dizzying array of macro and micro variables, barriers, frictions, convenience tariffs, discriminatory pricing, and asymmetric information. Invocations to supply & demand must also invoke all the other economics related to that generalized model, or they are nothing more than hollow cliches.

9   Randy H   2006 Oct 21, 6:05am  

As of today, every single home we were tracking in South Marin, without exception, is either in escrow, sold or pulled from the market.

No idea what they're getting for these homes, but I will tell you at least half a dozen of them are at least above 25-30% below asking, as those were the general range of my lowballs. At least in the +1.5M range in MV/TB/CM/LS there is a sudden surge of strength in buying.

10   Randy H   2006 Oct 21, 7:50am  

Any way we can get data on how these purchases are financed?

Not for a targeted area/range/demo. Loan data is only available in aggregate buckets, mostly grouped by credit worthiness/loan quality. You could try to cross correlate credit worthiness to income levels for a target area, but that won't be very reliable for predictions.

As anecdotal observations, none of the folks I know who've bought in S Marin in the past couple of months have used anything but standard loans, usually 15 year, and always with somewhere north of 50% in downpayment. But the couple dozen cases I know of do not the median make.

The most distressing case I know of came about 3 weeks ago. I was at a BBQ over in Strawberry with a guy who's a VC, his good neighbor buddy VC guy, and families. One of these guys' wives was essentially running a casual flipping biz for the past couple years; mostly SF condos. She's the one who started renting her inventory rather than sell for a loss a few months back.

Anyway, both of the wives know have joined forces and are running around buying up beater condos in the Marina and other prime SF neighborhoods, and a few neglected SFHs in good S Marin neighborhoods. They're making all cash, instant close offers for 25%+ off asking, and apparently have over a dozen now. I'm not completely sure what the plan is, but something along the lines of rent them out (all managed of course) and put zero into them. After some time -- they think 1-3 years -- they'll kick out the tenants, do major rehabs and sell them for a premium.

All that aside, the distressing part is all this involves NO debt. All cash. If nothing else, there's one source of demand, and these aren't FBs and even if they lose everything on these amateur investments they're not going to experience any financial distress. And they won't lose everything. I predict they'll lose about 20% net, which will all help offset their hubby's passive carried-interest income come AMT tax time.

11   skibum   2006 Oct 21, 9:06am  

Randy H,
Clearly the example of your friends' wives is not typical. VC types are in a different income category from the "masses" of BA buyers/sellers. At least the way you describe it, it sounds almost like this is all play money for them ("casual flipping" on the side) and keeps them from getting too bored. Otherwise, they might be "flipping" or "rehabbing" with the pool boy...

12   astrid   2006 Oct 21, 9:08am  

thenuttyneutron,

The FBs wish! North America is unsuited for tulip reproduction (wet summers, deer, moles, whatnot) and any effort at tulipmania will end very quickly.

I guess it might work for the dutch...

13   FormerAptBroker   2006 Oct 21, 9:23am  

I wrote:

> For the last 300 years (going back 100 years before
> the US was founded using records from GB) the cost
> to rent has always been close to the cost to buy
> (after making a down payment).

Then Randy H. posted:

> The fact: once adjusting for regional inflation factors,
> owning has *always* been significantly more expensive
> than renting, especially when plotted against income-
> affordability. The notable exceptions are *always*
> during periods of sustained credit-crunches, which
> are rare, not common.

I have no idea where the data on Randy’s link came from but I have a feeling that is plotting what the average renters in an area pay vs. what the average owners pay. This may come as a shock to Randy, but the housing stock that is owned is almost always much nicer (and bigger) than the rental stock. If someone was to compare the cost to own vs. rent in my zip code (94118) it has always been “significantly” higher since most “owners” in my zip code live in home worth over $2mm (with many over $10mm) while most renters live in crappy apartments renting on the open market for under $2K a month (with some studios renting for under $1K a month).

As a kid when my parents started buying homes with under 10% down the homes had positive cash flow and I’ve read over 100 books on real estate investing over the past 30 years and it is very rare to find a time (other than the past few years) when you could not make a 20% down payment and get in to the rental business owning a home (or apartment building) with positive cash flow.

I’m not sure what Randy means by “adjusting for regional inflation factors” since when I say that “the cost to rent has always been close to the cost to buy (after making a down payment)” it is without any fancy adjustments and it means that throughout modern history the cost to rent a home on a particular street will be very close to the cost to own a similar home on the same street after you make a 20% down payment…

14   FormerAptBroker   2006 Oct 21, 9:29am  

I wrote:

> Rents are related to one thing… “supply and demand”

Then Randy H wrote:

> This statement is *always* false as a practical matter.
> That is because there are no *perfect* markets, which
> are the only types of markets in which supply & demand
> are the *only* factor.

I challenge Randy to name a market with low vacancy (low rental unit supply) where rents were not going up and a market with a high vacancy (high number of rental units on the market) where (effective) rents (net of concessions) were not going down…

15   FormerAptBroker   2006 Oct 21, 9:33am  

SFGuy Says:

> Any way we can get data on how these
> purchases are financed?

The amount of (recorded) debt is public record for all property (only the amount, not the terms). I can pull the data for most real estate in the US.

16   FormerAptBroker   2006 Oct 21, 9:57am  

Randy H wrote:

>Wives (he happens to know) have joined forces and are running
> around buying up beater condos in the Marina and other prime
> SF neighborhoods, and a few neglected SFHs in good S Marin
> neighborhoods. They’re making all cash, instant close offers for
> 25%+ off asking, and apparently have over a dozen now. I’m not
> completely sure what the plan is, but something along the lines
> of rent them out (all managed of course) and put zero into them.
> After some time — they think 1-3 years — they’ll kick out the
> tenants, do major rehabs and sell them for a premium.

The worst actual condo (not a TIC) will be about 750K and doing a search of the MLS I found the cheapest 1 Bedroom condo in 94123 is up the hill from the Marina at 2342 Franklin listed for $625K (the most expensive condo in 94123 is the big place at 2347 Vallejo listed for $3.6mm).

World Savings has a 6.01% CD that would pay $37,526 a year on $625K. If I bought the 1br condo 2342 Franklin I could get about $24,000 in rent backing out a vacancy factor would leave me $22,800, backing out HOA fees (that usually include insurance) would leave me $16,800, backing out the property taxes would leave me $9,550, backing out a property management fee would leave me $7,150. With maintenance, repair and HOA assessments averaging about $1,000 a year it looks like the cash on cash return will just top 1%....

17   Randy H   2006 Oct 21, 10:36am  

it looks like the cash on cash return will just top 1%….

I'd guess free cash returns of more like -3% to -5%. But after tax returns will be net positive because they can write off losses against AMT passive income.

I challenge Randy to name a market with low vacancy (low rental unit supply) where rents were not going up and a market with a high vacancy (high number of rental units on the market) where (effective) rents (net of concessions) were not going down…

I challenge FAB to show me one economics text that asserts "supply and demand are the only factor" for anything other than purely perfect theoretical commodity markets.

I did not make the inclusive, absolute statement invoking (incorrectly) economic theory. He did. Nonetheless, I'm sure that his personal experience will be adequate evidence to convince himself that 400 years of economics are worthless and he has some divine insight into "the laws of supply and demand".

Note, he could have easily said, "supply and demand are the *primary* factor in rental markets", or "supply and demand seem to be the most important factor...". But he instead chose to make a definitive, authoritative statement of an academic nature -- I assume for effect of shock and awe. The only problem is that the statement he made also happens to be categorically false.

18   Randy H   2006 Oct 21, 10:41am  

FAB muses:

I have no idea where the data on Randy’s link came from

Clicking the link is difficult, I agree. "Randy's" link is actually a link to a massive body of research by HSBC.

As a kid when my parents started buying homes

...but this is much more convincing to him, apparently.

I’m not sure what Randy means by “adjusting for regional inflation factors” since

It is difficult to follow through the reference footnotes to the web site, on which you can download a 600+ page HSBC research methodology report, detailing the related formulae, models, criticism, and empirical studies both in favor and in opposition to their findings.

But again, it sure sounds so much better to make a nice clever statement like "I'm not sure what Randy means".

I accept your compliment that you think I am smart enough to have come up with those models. Now if only I could have the various grants, Nobels, and prestigious posts that went along with such fame.

19   Randy H   2006 Oct 21, 10:47am  

Skibum,

Yes, VCs are in a different category. There are a goodly number of them up here in S Marin, though. Mainly, they earn carried interest over a period of 8-10 years coordinate with the lives of their fund cycles. This carried interest for a GP of even a small VC fund can easily be 15+M total over those years. The problem for 30-40 year old VC guys is that the first 1-2 funds create a real tax headache. So they are in fact rewarded net of taxes by the kind of activity I described. All that much the better if these "adventures" earn a return as that basically pays the tax bills due now on unearned cash profits.

I have no idea as to the authenticity of their claimed "25%+" discount offers. Only that they have about a dozen such properties now. It could well be they are overpaying and simply bragging and fudging the numbers to show off. It wouldn't surprise me. I would be surprised if they are fibbing about it all though, but one never knows.

20   Randy H   2006 Oct 21, 10:53am  

...and don't forget also there are a healthy number of quiet little hedge funds sitting over in Larkspur by the Ferry. One of those "little" funds recently blew up when GM went double down. Only a couple billion lost, lol. Nonetheless, these guys aren't hurting for $ either. I have a couple friends who work in that industry in quant research/modeling/programming. Even a quant programmer who earns about $150K/yr can pull a bonus of 100%-200% in a good return year. This year is *not* a good return year, though, so no worry these guys are spoiling the housing market right now. But last year they made some serious cash.

21   Randy H   2006 Oct 21, 10:58am  

SF Guy:

>Any way we can get data on how these
purchases are financed?

FAB:


The amount of (recorded) debt is public record for all property (only the amount, not the terms). I can pull the data for most real estate in the US.

So the answer, SFGuy, to your specific question is NO. You can find out how much was financed, but not *HOW* it was financed. If FAB has some way of finding out the _terms_ of specific financings then he is either (a) breaking privacy laws, (b) an insider with access that he is prohibited from sharing, or (c) full of it.

You could make assumptions about equity %, but that again wouldn't provide enough accuracy to yield any predictions with a decent confidence interval.

22   thenuttyneutron   2006 Oct 21, 11:28am  

astrid,

It is a shame that I cant grow tulips here. Maybe I can grow "special" crops in my basement:)

23   astrid   2006 Oct 21, 11:41am  

"Maybe I can grow “special” crops in my basement:)"

Ha! Yes you can. As it happens, I'm contemplating getting some growing lights of my own - for wintering tender plants (that have no medicinal uses).

There is "good news" for BA FBs. Tulipmania the book notes that after tulipmania came dahliamania and cliviamania. Both of those plants will do very well in Northern California.

The housing bubble party continues, praise Greenspan!

24   astrid   2006 Oct 21, 11:44am  

venture capitalist

25   astrid   2006 Oct 21, 11:46am  

HF = hedge fund
IB = investment banking or international baccalaureate
ETF = exchange traded fund

26   OO   2006 Oct 21, 12:18pm  

When you are talking about $1.5M+ market, they are usually not bought with a big mortgage, because the carrying cost of the property will already be close to 20K a year on property tax alone. People with that kind of family income or asset buy for capital gains, until capital gains turn out to be capital loss.

I don't have the data for Tokyo, but I was watching the luxury market in Hong Kong as it sank. A particular area (South of Island) I was watching in Hong Kong has the same characteristic as S. Marin, tons of Ibankers, VCs, etc. the high finance type, so money is not an issue, the potential of making even more bucks is.

In the first couple of years after the crash in 1997, that area held up very well, lost far less value than the rest of the market, because lots of money jumped in on the way down in the hope of holding out for a couple of years to generate capital gains later.

However, the general market didn't turn around in 99, nor in 00, nor in 01. Then that premium market started panicking. The reason was nobody could make a positive cashflow on luxury properties, the only way you could make money was through capital gains. But the rich people have a particular disdain for losing money. By the time SARS hit in 2003, that luxury segment lost just as much % as the rest of the market, a total 60-65% off the top.

I am kicking myself for not picking up a good deal back in 2003 (my lowball offer was accepted but I pulled out for the fear of another SARS comeback), because the price now has headed back to around 220% of 2003's bottom price in only 3 years.

The lesson I learnt from watching luxury realty segment's performance in a recession is, they are momentum stocks that bear no relationship to rental income or cashflow. It is a way to PARK your money.

27   OO   2006 Oct 21, 12:27pm  

What's next?

It is a patience game. If you have waited that long, don't jump in till at least 2009. In fact I am now adjusting my timeline to target 2011. I will really kick myself hard if I don't at least make an effort to capture the bottom having seen two previous bubble bursts in my life.

28   astrid   2006 Oct 21, 1:36pm  

I guess a couple moderate (5.5-6.5) size earthquakes in 2010 will be very handy for creating that lifetime buying opportunity.

Would be extra nice if the lending market goes crazy tight (relative to now) in 2009.

29   FormerAptBroker   2006 Oct 21, 1:46pm  

Randy H Says:

> Don’t forget also there are a healthy number of quiet
> little hedge funds sitting over in Larkspur by the Ferry.

Years ago kids from Ross used to rent office space in Larkspur and “manage the family investments” when they were not drinking in the city or playing golf at the Meadow Club.

About four years ago it seems like all these kids (and kids like them from Presidio Heights that rent office space in SF and play golf at the SFGC) all started “running hedge funds”.

I’ve seen recent articles that say “the number of hedge funds has doubled in the last five years” and I’m wondering if this big increase is primarily from people just starting to refer to their investments as a “hedge fund”.

I know in theory that a hedge fund is supposed to “hedge”, but I have heard people say our fund only has long equity positions and cash right now. I’m wondering if Randy knows if there is anything stopping a “day trader” from calling himself a “hedge fund manager”…

30   B.A.C.A.H.   2006 Oct 21, 2:32pm  

A couple of fantasy articles were written in 2005 telling what would happen next.

One was published in the Atlantic Monthly in the summer, "Countdown to a Meltdown". http://www.theatlantic.com/doc/200507/fallows

The other was published online, "The Day After Tommorrow". http://www.theatlantic.com/doc/200507/fallows

Both of them are plausible (likely, I think) fictionalized scenarios of a positive feedback loop between a deterioration in the value of the dollar, fed policy, longterm interest rates, "mortgage resets", foreclosures, stock market crash, credit collapse, liquidity implosion.

Probably the best we can hope for is a Paul Volcker type correction. Those of you who were around to remember, this was a very painful process, official unemployment reached 11 or 12% in 1982. Other outcomes are more likely, and more painful.

You can also read about similar such aftermaths to asset bubbles in Edward Chancellor's book "Devil Take the Hindmost". They all ended badly.

Both those fantasies I mention were published more than a year ago. Elements of both of them are coming to fruition.

That's what's next.

31   B.A.C.A.H.   2006 Oct 21, 2:33pm  

Sorry about the last entry, the link to Day After Tommorrow, http://www.financialsense.com/stormwatch/2005/0222.html

32   DinOR   2006 Oct 21, 2:37pm  

FAB,

Good point. Th term "hedge fund" has been broadened over the last several years to include plain vanilla mutual funds that have elected to skirt traditional registration guidelines. Anyone that can come up with 20-40k can form an LLC/LP/? that "qualifies" as a hedge fund for regulatory purposes. I can't buy a round without that including 2-3 "hedge fund" managers! Another issue is that most HF's are NOT AIMR compliant. In many cases these are simply "blind trusts" that are unencumbered by securities law.

If a manager approaches myself/clients and says we're buying apt. bldgs. (or whatever) and at the end of 3-10 years we're going to sell them at the market, well fine. At least we've defined terms. We're all big boys here and know the risks/rewards. When someone says "Spot me 100k and let's see what happens, that's a different story.

When HF's had a $1 mil. entry point the investors truly were sophisticated and could dispense w/the formalities. Now that it's a 5k min? Go figure.

33   OO   2006 Oct 21, 3:12pm  

Ha Ha,

That's why regardless of what happened lately, I am still firmly in commodity, gold and foreign currency.

I don't trust paper currency, period.

34   OO   2006 Oct 21, 3:18pm  

DinOR,

the HF limit is lowered to 5K only? That's like a retail fund of the lower end.

35   SP   2006 Oct 21, 5:53pm  

FAB said:
An unidentified threadmaster posted What’s Next?

Sorry, that was me. It was late past midnight by the time I posted the topic. I was working out various scenarios on the ride back from an after-work party, which is what gave me the idea for the thread.

Thanks for everyone's excellent contributions so far. Just one comment though - I didn't mean to start a discussion on whether rents were going to continue going up. The example was just to illustrate a chain of cause-and-effects to lead from a premise to a conclusion.

Almost every premise I could think of seemed to lead (at least logically) to a fairly steep correction. So I wanted to see if the blog could collectively brainstorm a few more of these.

SP

36   SP   2006 Oct 21, 5:57pm  

Randy H Says:
Threadmasters should try to remember to sign their articles as many readers like to know who the author is.

As I said, it was an oversight, probably caused by a preoccupied, sleep-deprived (and perhaps mildly inebriated) mind. :-)

I agree it is a good idea to sign threads - however, I have seen other threads in the past that did not specify an author.

SP

37   surfer-x   2006 Oct 21, 6:08pm  

God damn I'm on my deck right now ass packing Confused Renter's Mom, and I must say that the summer corn looks good on my little buddy. I'm no longer confused as I went to Craigslist and found out Confused Renter posts there as LittledickSFonhiskneespieceofshitcocksucker, yes quite a title but hey at least the troll is still giving a go.

38   surfer-x   2006 Oct 21, 6:16pm  

I’m not sure what Randy means by “adjusting for regional inflation factors”

I think what he means is that on a cost adjusted basis that the bias always shifts towards the spread in such that the holding buyers who adjust the carry trade given the float on the Euro dollar Vs. Yen market on the London exchange any given day minus of course any transactions floated across the bond yield divided by the cost of money times the Fed charge in reverse. If you factor in the cost of money divided by the absolute value of M3 times 4 then you come to the conclusion that it is as it has always been, you lose.

I hope this helps.

39   surfer-x   2006 Oct 21, 6:18pm  

- "of course" my commision.

40   surfer-x   2006 Oct 21, 6:25pm  

"VC" = Ventura Communist

Comments 1 - 40 of 145       Last »     Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions