patrick.net

eburbed Says:
Santa Clara has a MCC program. Personally I think it’s ridiculous. Government manipulation like this only boosts property prices.

How does it boost prices? Why is it that posters here want a deus ex machina to come down and fix the market, and when govt starts to do just that, no matter on how small a scale, a huge cacophony of wailing and gnashing of teeth goes up, amid cries of 'we're doomed', 'it'll never work', etc?

4 months old, you say? Just when you start getting exhausted, frustrated and angry, they start smiling, interacting and being generally cute. It’s like an “intelligent design” to keep parents from killing their newborns.

yeah -- altho i think 'natural selection' may have put paid to the ones who didn't smile, interact and be cute... however, cuteness is evident across the mammalian kingdom, so it probably predates primate evolution... :D

Why is it that posters here want a deus ex machina to come down and fix the market,

They do? My feeling is that most posters here just want the government to enforce the law.

-Prosecute shady appraisals
-Restore integrity to the mortgage industry - lying on your application is a crime. Enforce it.

eburbed Says:
They do? My feeling is that most posters here just want the government to enforce the law.

-Prosecute shady appraisals
-Restore integrity to the mortgage industry - lying on your application is a crime. Enforce it.

And that will completely reverse the recent 6-7 year boom and completely prevent capitalist waves and boom/bust cycles? I don't think so. It will be increasingly necessary to quarantine housing from 'investors' into the future to facilitate a decent social settlement.

The primary drivers are liberalised credit products, a shaky sharemarket and historically low interest rates. And 'irrational exuberance'.

The few people who have overreached will come unstuck by themselves in a very short space of time. In this sense, the market is self-correcting. However, govt should be doing much more to guarantee a better social settlement and affordable housing for all.

However, govt should be doing much more to guarantee a better social settlement and affordable housing for all.

Ah.

I used to believe in that kind of stuff in college. Then I got a job and started paying taxes. This is a very cliche story. :)

I guess that brings us back to the France discussion earlier on this page... is housing a right? is medical care a right?

Tough questions.

DS,

I think what eburbed meant was, whenever government attempts to subsidize something, the market inevitably reacts by raising the price (to absorb the subsidy). Basically, all a subsidy ends up doing long-term is to raise macro consumer demand for the good/service, and producers react by raising prices. And this isn't some crazy, right-wing notion, either, but a principal that's been proven time and time again in real markets. It's been estimated that without perpetual corn & milk subsidies in the U.S., the price for these would be at least 50% lower.

In a nutshell, as a tool for redistributive economics (to help the poor), government subsidies generally suck. Even programs that add directly to supply (government-built/owned housing) don't have as bad a track record as subsidies do.

eburbed Says:
Ah.
I used to believe in that kind of stuff in college. Then I got a job and started paying taxes. This is a very clichéd story.
I guess that brings us back to the France discussion earlier on this page… is housing a right? is medical care a right?
Tough questions.

Questions that have been answered in other countries, as per France, Scotland, etc. There is no question that you are operating in a minimal govt laissez-faire framework at present. A better welfare state will articulate and offer more guarantees and rights of citizenship, whether it's health, housing, education, whatever. (e.g. I get free health care and heavily subsidised scripts as a universal health care right of citizenship.) And you have to ask where your taxes are going and to what use they're being put, at a 30% tax rate... Why would you be proud to be an American if all Americans are cut-throat and laissez-faire and your overarching govt is a corrupt shambles that helps no-one and extends no decent guarantees? It's just an atomised society of hairy-chested individuals with no unifying features at that rate...

A better welfare state will articulate and offer more guarantees and rights of citizenship, whether it’s health, housing, education, whatever.

Welfare only works in smaller population with proportionally abundant resources.

The US has 300M people. Welfare will not work.

Looking back, I guess it’s idea of appreciation is that over inflation. If you enter 0, you don’t break even - but the delta isn’t that bad:

Year: 30
PITI: $4,338.66
Payment After Tax Savings: $4,127.98
Rent Payment: $6,237.30
Value of Investment: $678,879
Home Equity: $657,060
I hate to sound like your parents, but what does the analysis look like after year 30. Your home appreciates with inflation AND you no longer have rent payments (you do have taxes and insurance, though). Not a bad (somewhat) fixed return on your investment for the golden years. That is why many here are pro-home ownership for the long haul. You will do okay in the long term if you buy now, but I'd continue to bubble sit for at least a year. Negative appreciation can be very ugly if you hold for "average" terms. People held onto their homes the longest in Monterey County (6.7 years) and the shortest in Napa County (just over four years).

I am not sure I understand the tone of the posts regarding education, competitiveness and getting admission to the Ivy League. Everyone is speaking as if all this ensures, that top achievers will get to rule the world as one of the few CxOs.

Since when did academic excellence start having the same meaning as professional success ? They are often mutually exclusive.

Yes, I have heard of the "Old Boys' Network". But as a middle class person, I don't expect my kids to be "accepted" even if I send them to Ivy League schools. But more importantly, high GPA does not imply high corporate power.

skibum Says:

> What is interesting to me is that competitive students
> and parents seem to think going to a competitive HS
> like Monte Vista, Gunn, etc. is a ticket to getting into
> a top college. I would second Mt. View Renter’s point –
> how many of the “middling” students at, say, Monte
> Vista get lost in the crowd of overachievers and hence
> don’t get into a top school? If that same kid had gone
> to a less competitive school, maybe that kid would have
> been valedictorian.

I went to public schools up until High School when I went to a real good private school. Going to high school with kids who all expected to be very successful and who thought that anyone that didn’t go to a top school was pathetic changed my outlook on college and life in general (remember as a kid I took apart old water beds and refrigerators to save the nuts and bolts with my Dad who didn’t go to college). If I ever have kids I’ll plan on sending them to the best private school in the area.

More often than not kids end up like the kids they hang around with so if a kid goes to a school with other kids who have been told since they learned how to talk that you need to get good grades and get in to a good college odds are your kid will get good grades and get in to a good college (100% of the kids in my high school got good grades and went to top colleges).

If you drive across the bay to Oakland Tech. or Kennedy High in Richmond where the kids all learned since they were little that the white man is evil and you need to act tough if you want to be a good gangster (depending on what report you read either more than half the kids or just under half the kids don’t even graduate)…

Why would you be proud to be an American if all Americans are cut-throat and laissez-faire and your overarching govt is a corrupt shambles that helps no-one and extends no decent guarantees?

Well when you put it -that- way. :)

I prefer to identify myself as a New York-American.

And our government isn't in corrupt shambles... compared to Somalia. :)

But as a middle class person, I don’t expect my kids to be “accepted” even if I send them to Ivy League schools.

I've seen it happen. Believe it or not, your ability to drink really helps. Joining the right frat (in the east coast) may really help your chances of getting a good finance job.

Peter P Says:
Welfare only works in smaller population with proportionally abundant resources. The US has 300M people. Welfare will not work.

That's ridiculous. You can upscale or downscale a welfare state to any sized population, it's simple math. America does have proportionally abundant resources, it's the most affluent country on earth, a large land mass with ample resources, and the largest oil consumer. Further, you already have a welfare state working in a multitude of ways, it's just that it's arguably not as good as other countries, and there are prevailing 'discourses' that have been generated in the public mind about why it should remain as it is. What we see is a huge abundance that is not distributed very well -- huge wage multiples, extremes of wealth and poverty, etc.

America does have proportionally abundant resources, it’s the most affluent country on earth, a large land mass with ample resources, and the largest oil consumer.

That last part isn't exactly an asset. :)

And it's that last part that will screw us over when Peak Oil hits thanks to our no-hope-in-the-future style of car-based living.

@DS,

There is an important difference between price-bargaining and price subsidies. In the case of subsidies, all that is occurring is the taxpayer is absorbing part of the cost, while the ultimate cost is never even a consideration. There are cases where this is a socially desirable solution (providing expensive medicine to poor people for example), but in the end, everyone else bears those costs.

In the case of collective price-bargaining, the government itself acts as "informed consumer" on our behalf to negotiate a better price from competing suppliers. In other words, it uses free market capitalism to the consumer's and the taxpayer's advantage. IMO, a far more effective solution at containing costs long-term.

they are doing both, HARM :cry:

because one method by itself is not enough to guarantee affordability to the public...

Well when you put it -that- way.
I prefer to identify myself as a New York-American.
And our government isn’t in corrupt shambles… compared to Somalia.

heh, no.

oil is definitely a problem going forward. I've got some uranium I can sell you...

DS,

Your analysis is correct, but I think the cost of the PBS is going to become a big issue going forward. And people do abuse it; because, sad to say, they will always over-consume a "free" good.

What do you think of last May's Super changes? I was in the UK at the time, but I've been to a couple of seminars since returning and I consider the current rules absurdly generous to self-funded retirees (even though I fully intend to take advantage insofar as I can :twisted:).

I did west coast schools admissions as an alum officer for an Ivy League college for about four years

I did interviews for my non-ivy league east coast school for 2 years.

But I didn't really care so I would tell the kids that they could ask me questions about any east coast school, and I would just give them frank advice I wish people had given me: "Don't take it too seriously. Those are 4 years of your life you'll want to remember." "Get a job in the summer. Period."

But the one piece of advice that I gave that would always trigger fear and shock was: "DON'T BRING YOUR CAR."

Especially the kid who was driving a brand new Toyota Highlander.

"Seriously?"

And was also thinking of going to Columbia.

Ah, California.

StuckinBA,

I was reading an article only this week that pointed out that an unusually LOW percentage of CEO's at the 50 biggest US companies have Ivy League backgrounds at present. IIRC it was something like 7 out of 50.

Something like 60% of kids attending Ivy League schools receive financial aid of some sort.

But just to be clear, the school offering semi-subsidized loans is considered financial aid. When I was applying and read that, I thought it meant "grants". Boy was I in for a surprise. :(

And people do abuse it; because, sad to say, they will always over-consume a “free” good.

Yes, game theory 101. There is no free lunch.

Looks like my earlier question about an Email point for 'Guest Thread Suggestions' black-holed. Pity, I still think it's a good idea.

I was reading an article only this week that pointed out that an unusually LOW percentage of CEO’s at the 50 biggest US companies have Ivy League backgrounds at present. IIRC it was something like 7 out of 50.

Stanford's not an ivy - how does that factor in? :)

I hear Google doesn't require a 3.0 GPA anymore to be employed. Hurray!

Especially the kid who was driving a brand new Toyota Highlander.

And was also thinking of going to Columbia.

LOL. Was it a lot of work doing the writeups after the interviews? I've been thinking of doing something like that to help kids out. But don't have a ton of time.

There was 1 unofficial frat at Harvard, and a good number of what they called "finals clubs," which I think are pretty similar to frats except you don't get to live there. That's where the real old boys clubs were.

Was it a lot of work doing the writeups after the interviews?

Not really. But I wasn't invited back after I was too real and word got back that I had said some negative things about the school. :(

It's not like any of those things were exactly secrets. Oh well. Their loss.

HARM,

Wouldn't it be a piece of really useful research if someone was able to plot subsidy level against abuse level for a particular good or service? Especially if the result could be extrapolated.

Here in Australia there's been a bit of discussion about EMTR (= Effective Marginal {Income} Tax Rate) recently. Where I live there are points at relatively low income levels where people on welfare face an EMTR of 80%+, due to a combination of taxes and withdrawal of benefits.

My own nephew has told me he carefully schedules his work to keep his income just under one of these threshold points, and I can't say I blame him. It basically makes no sense for him to earn more than about $140 a week unless he's going to get $500 or so.

This is, of course, a huge incentive to get into the black economy.

eburbed,

The article writer actually referred to "Ivy League + Stanford + MIT", my bad.

http://www.prudentbear.com/articles/show/90

They’ll probably come through great, but having drug addict and convict parents and having to keep younger siblings doctors appts and register them for school, etc.

When I interviewed for Harvard, the interviewer strained to find some sob story for me to get in on. "Do you parents have any problems that you had to overcome?"

I knew I wasn't a very good candidate - but that certainly didn't make me feel better.

BTW, I didn't know the kids could read your report. I thought it was confidential.

“Do you parents have any problems that you had to overcome?”

Easy question.

Even if you had perfect parents, you could always say that your parents were trying to be too perfect and that you had to learn to face reality yourself. :-P

eburbed Says:

> I’ve seen it happen. Believe it or not, your ability
> to drink really helps. Joining the right frat (in the
> east coast) may really help your chances of getting
> a good finance job.

This is not just an East Coast thing…

It is biggest in the South where there are many firms with over half the guys from the same frat, but even here in SF there are many firms with a high percentage of guys who were in the same fraternity. More than fraternity ties it is after college groups that seem to help people get jobs. I can quickly think of a dozen firms in SF where over half the guys are Guardsmen, Bohemians, or members of the St. Francis YC or O Club…

I thought the report was confidential too. But my wife had a work-study job in the admissions office just doing filing. I bet she could have went into the archives and pulled out anyone's file.

I shouldn’t say the kids were losers, they actually weren’t. They were exactly the types I’d hire as babysitters. They do as they are told and are nice and responsible. They were just over programmed and not very individualistic.

This is gonna be great. I need a source of potential baby sitters. On second thought, these kids sound like sort that are most likely to get into trouble when they're left completely alone for the first time.

I just thought interviewing would be a nice way to talk to ppl I wouldn't normally have the chance to, and get some good stories to tell. Maybe I'll do it next year when I have more control over my schedule.

ajh Says:

> I was reading an article only this week that pointed
> out that an unusually LOW percentage of CEO’s at
> the 50 biggest US companies have Ivy League
> backgrounds at present. IIRC it was something
> like 7 out of 50.

Can anyone name a top 25 VC firm where half or more of the partners DID NOT go to Harvard, Stanford, or Wharton?

FAB,

The interesting thing to me is the article in condemnatory and IMHO rather elitist. It proposes that this low Ivy (+Stanford/MIT) percentage correlates with the overriding characteristic of the current crop of large-cap CEO's being greed rather than intelligence.

I would personally consider noblesse oblige somewhat obsolete as a business principle.

(Link to article posted in reply to 'eburbed' above.)

yeah, sorry to imply FAB's comment were yours, SF, just omitted to cite everyone's names for less typing, and just addressed a cluster of similar ideas. ;)

ajh said:
I think the cost of the PBS is going to become a big issue going forward. And people do abuse it; because, sad to say, they will always over-consume a “free” good.

I don't think it's as bad as all that, because there is a small contribution or 'hurt money' when you buy scripts at say $15-30, and how many extra antibiotics are you going to want to buy anyhow? Plus the prescribing doctors themselves act as gatekeepers - both quantity and type of med. It's free or very low cost only to pensioners, and, once again, why over-consume antibiotics, and there's not so many pensioners around. The system has been in place for many years now, and is not in fiscal crisis. Similarly, bulk-billing and free provision of medical services has also been in place for many years. The HIC has to watch its costs, of course, and make decisions about what it will subsidise. Sure, there is an aging population, but maybe that's where the $12bn Federal surplus will come in handy...

What do you think of last May’s Super changes? I was in the UK at the time, but I’ve been to a couple of seminars since returning and I consider the current rules absurdly generous to self-funded retirees (even though I fully intend to take advantage.

Not entirely sure. I haven't really appraised it this time around, there is the 'free choice' of provider feature now, which is fine, I guess, but not worth the expense of running ads all over buses and TV to tell people about it. (More 'you deserve free choice' voodoo rhetoric.) The Labor party had a number of Super reforms in mind such as tying it to tax file no to trace 'lost super' amounts better, and so forth, which I endorse -- as a govt-mandated pension replacement, I believe govt needs to guarantee Super won't be lost, etc and make it easy to roll over amounts.

Coincidentally, I linked to an article in The Australian a couple of threads back which suggests the Super scheme has stabilised the Oz economy, and set up upcoming retirees in a way EU and US retirees simply won't have access to...

SFWoman Says:
Eminent domain is considered to be very extreme in the United States, and is extremely unpopular, as can be seen by the recent uproar over the Supreme Court decision upholding the right to transfer property from one individual to another for private development uses, while paying the owner the going MARKET RATE for the property. To not pay the owner market rate would be considered an illegal seizure of private property, which is one of the few constitutional rights this administration hasn’t considered tinkering with.

I agree it's not terribly popular with people at first sight, although it is ultimately in the community's interest. It could be managed reasonably easily in the case of redeveloping unused commercial premises in brownfield sites, though. And mandating an affordable housing developers levy is one way of forcing down 'market prices'. The Roads Authority here is always buying up houses to demolish for freeways, so it is exercised regularly. Further, the state govt claimed it would 'resume the land if necessary' to build a desalination plant at Botany Bay. It requires some leadership and planning, something govts are supposed to provide. There is nothing illegal about exercising eminent domain, it in fact IS the law -- nobody really owns land but the state, in fact, which is on-granted as supposedly 'freehold' title. Some of the 'market rate' prices offered by govt can be pretty begrudging also.

The North Beach projects (Fisherman’s Wharf) are attractive on the exterior, but aren’t exactly some sort of urban utopia. The cable car turn around to one of the Fisherman’s Wharf lines is there, and there are a lot of muggings, and the last time I walked by the projects (to take my kids to Barnes and Nobles to redeem gift certificates) there was a stabbing in a street fight in front of them.

These sorts of things are unfortunate. Unfortunately, the 'middle middle' and 'lower middle' are missing out with these sorts of band-aid housing affordability schemes. You have to show up pretty broke to be eligible, and with that comes social problems. I see the FW's project as the merest beginning of a solution. Note that FW apartments are not for sale, only for rent. I am arguing for a forced cooling of the market regarding land price inflation, involving the sale of cheaper housing with price covenant caps as well as providing rentals.

I think it's fairly well established that the 'housing boom' is really a land value boom based on location -- the value of the house itself is fairly immaterial. I'm suggesting ways of depressing land values by fiat, if necessary, although there will probably be an automatic market-based depression in prices in the near future, as we are already seeing.

DS,

everything is great about Oz except for the water problem. I was down in your neck of woods a month ago, and the drought was so severe that all the major cities were put on a water alert level of 4 (max 5). I read somewhere that you guys need to start drinking recycled water pretty soon. I tried some of your recycled water, all I have to say is, god bless the Ozzies who have to live with this thing day in day out.

Since you guys have so much energy and such an extensive coastline, why don't you just build more desalination plants? Recycled water sounds like the last resort for a landlocked country which you are not.

They could be recycling more, and using less. However, things like swimming pools then become a luxury and a cardinal sin. The stormwater design of the coastal cities, where the rain tends to fall, has been to get it out to sea as quckly as possible, like the European model, rather than try to harvest the rainwater. City populations have increased, and the rainfall patterns have retreated to the coast away from catchment areas. Major cities are on Level 3-4 generally, some other areas are Level 5.

They have to look at desalination, however most of the power to the plants would be from coal-fired power stations, so there is an environmental dilemma of sorts -- do you produce more CO2 to solve the water problem? The other option is to start building nuclear, but there has been a longstanding tradition in Oz to never construct a nuclear plant. (Selling uranium to other countries is fine, however...) There could be a nuclear future there though... The desal plant was put forward in Sydney as the best choice, then taken off the table because it was unpopular for those reasons. Now Melbourne is deciding. I think they just built one in Perth for about $400M...

As they point out, they need "a 'security through diversity' strategy. This approach comprises seven key platforms - water trading with irrigators, water recycling, enhanced catchment management, demand management, new groundwater, new surface water and the construction of the new desalination plant."

There's a page of links to 'environmental' stories I just stumbled upon while discovering that desal plans are back on the table. Buried amongst the links are references to desal, drought, etc. There's an amazing technique using 2 satellites and the gravity of water which measures global water levels:

Environment