patrick.net

After watching "Money as Debt" video, I now understand:

1. Why higher tax is good compared to government borrowing and paying interest

Federal Reserve 1913
The Federal Reserve Act was the most important legislation of the Wilson era and one of the most important pieces of legislation in the history of the United States."[21] Wilson had to outmaneuver bankers and enemies of banks, North and South, Democrats and Republicans to secure passage of the Federal Reserve system in late 1913.[22] He took a plan that had been designed by conservative Republicans—led by Nelson W. Aldrich and banker Paul M. Warburg—and passed it. However, Wilson had to find a middle ground between those who supported the Aldrich Plan and those who opposed it, including the powerful agrarian wing of the party, led by William Jennings Bryan, which strenuously denounced banks and Wall Street. They wanted a government-owned central bank which could print paper money whenever Congress wanted. Wilson’s plan still allowed the large banks to have important influence, but Wilson went beyond the Aldrich plan and created a central board made up of persons appointed by the President and approved by Congress who would outnumber the board members who were bankers. Moreover, Wilson convinced Bryan’s supporters that because Federal Reserve notes were obligations of the government, the plan fit their demands. Wilson’s plan also decentralized the Federal Reserve system into 12 districts. This was designed to weaken the influence of the powerful New York banks, a key demand of Bryan’s allies in the South and West. This decentralization was a key factor in winning the support of Congressman Carter Glass (D-VA) although he objected to making paper currency a federal obligation. Glass was one of the leaders of the currency reformers in the U.S. House and without his support, any plan was doomed to fail. The final plan passed, in December 1913, despite opposition by bankers, who felt it gave too much control to Washington, and by some reformers, who felt it allowed bankers to maintain too much power.

Wilson named Warburg and other prominent bankers to direct the new system. Despite the reformers' hopes, the New York branch dominated the Fed and thus power remained in Wall Street. The new system began operations in 1915 and played a major role in financing the Allied and American war efforts.

DinOR said:
So when the market comes roaring back

Like a tiger in S.F. zoo...

I don't know about you guys, I like Musharraf just as I like Saddam Hussein and Mao.

People within the US need to understand that there are parts of the world that are so unstable that it takes extraordinary personality and measures (which may seem cruel by western standards) to keep the country in one piece. If that extraordinary personality falls, the void cannot be possibly filled by anyone except for another such Godfather-like personality who knows how to pull strings and get things done.

Iraq is the best proof of this. For Iraq people, they are much worse off without Saddam under American occupation. Pakistan has nukes, if Musharraf falls, I don't know what's going to happen next. Between disorganized crime and organized crime, I infinitely prefer organized crime because I know who to please and negotiate with to secure my own safety.

HeadSet said:
I wonder why so many think condos are a good investment.

I am actually a fan of condo's - but only if they are in an urban setting, with high density of services and entertainment within walking distance, and good public transportation to a large employment base.

Condos in the middle of exurbs and suburbs - that I don't get.

I agree, no problem if it's in an urban area where you can do without a car, consider a car to cost at least $500 a month, AAA stats put it as much higher than that. If you're near the bus, the coffee shops, the train station, stuff that allows you to get around, good walking, then a condo in the city can make a lot of sense. Or a co-op, even.

You can live quite well that way and just rent a car or cab it when needed.

I also like condos in an urban setting, especially view condos because you can only get such sensational views on multi-level elevation. I don't want to drive everyday, so living close to public transportation hubs, shopping and restaurants is quite a plus. The only problem is, US urban centers seem to have this inner-city crime issue. If I live in Europe or Asia, I will actually opt for a downtown condo.

@ex-SR,

If you live in urban Japan, there are literally no places that you cannot get to on train or bus, and they are on time to the minute.

We are very screwed up on public transportation. The other day I was trying to be a good citizen and look up suburb bus schedule to see if I can offload some of my driving to VTA. NO WAY. I didn't realize that the public transport system in BA is so backward that it is divided by counties, so most bus routes stop right at the county line to hand over to the next county. Are public transport planners stupid? Do they assume that since I am living in Santa Clara county I will have no reason to travel to San Mateo county? What about those living at the border?

I agree with OO about Japan (lived there for 10+ years).

I also don't get about condos in suburbs or exurbs -- here in the OC, there are tons of condos in Irvine/CM area which I think are mostly owned by spectulators. And the "view" to boast of is a view of the 405 Fwy....

Check out the Calgary and Edmonton, Alberta Canada website on the housing bubble and market here:

Calgary Real Estate Market

OO,

There are aspects that I can get onboard with but that's what we were told about Marcos for years! "These people need to be ruled with an iron fist!" etc. yada, yada.

What followed was a bloodless revolution and I saw so many parallels to what occured in the Philippines and the Aquino assasination.

I also like condos in an urban setting, especially view condos because you can only get such sensational views on multi-level elevation.

Would you still have the same benefits if you rented an apartment or condo in an urban setting?

OO Says:
I don’t know about you guys, I like Musharraf just as I like Saddam Hussein and Mao.

Apples and oranges. Musharaf's behavior is not actually a stabilizing influence in the area - he is far too ambivalent about the war on terror to be a real ally, even though everyone likes to pretend that he is.

@Headset,

you can of course rent such a place. However, it is a bit different in other parts of the world. For example, in places like Japan, Hong Kong and Singapore or Sydney, such prestigious view condos command a much higher rent premium while the rental stock is scarce, and most owners are also occupiers, so it makes more sense to own. Well, if there is a gigantic bubble like what we have right now, all bets are off.

@Dinor,

Why would Aquino return to the Philippines? Most leaders-in-exile only return to their home countries because they secured foreign power to back them up, thinking that they may have a chance with returning to power. Same case with Aquino, and who was backing Aquino?

I am not defending Marcos, I don't like him or his wife. But look at what the Philippines is today? Not much improvement from the Marcos days, same old story. Maybe Marcos was not that effective of a dictator.

Mao and Stalin and other dictators are wonderful. They kill tens of millions of people but they bring "stability" and what is more stable than death?

Honestly, Pakistan is an artificial state with no identity except being anti-India.

It has been chaotic and violent since its inception and this is just one more step in that direction.

We just need to stay out of there and not interfere. If the US interferes or tries to put someone to our liking in power, it would only strengthen the islamists and jihadists.

I did the condo living for years. Was it cheaper than a house of the same size? No. The mortgage was cheaper, but then you had the HOA. At the time it was about even per sq./ft.. The key to the whole thing was good neighbors or great neighbors as I had and are very rare indeed.
When you are working sixty + hours a week it's nice to have the yard, pool, tennis courts, etc., taken care of for you. It is also a lifestyle choice. If you want to have huge parties, big family or wrench on dragsters in your garage, it's not the place. If you are buried in your work, starting out and taking care of business with not enough time for sleep, much less yard work, they are great. It's an apartment with a tax deduction. At that time in my life, I loved it. However, at todays prices, I cannot say that I would make the same decision again.

OO,

I was viewing it more through the eyes of say Marcos at the time. He'd been a CH darling for years for supossedly holding down a communist uprising...? All that aid money pouring in through the base agreements and other HUGE economic aid packages! The U.S wanted Aquino back in the P.I like they wanted a hole in the head. He went back in spite of warnings. Please read Stanley Karnow's "In Our Image" if/when you have time. It was a lot more than just a power grab.

Why we just couldn't get along without him! I was living there at the time and Marcos made statements to the effect that "he couldn't assure Aquino's safety" etc. If you've read anything about Rolando Galman, I mean c'mon, the guy was tricycle driver and the investigation revealed he'd been dead a couple of days BEFORE killing Aquino!? WTF?

Anyway, things may not have improved there economically as much as we (and they) would've liked to see but they're certainly more democratic than they've ever been. Like Newt said, "life is hard and freedom is frustrating".

"what is more stable than death?"

So true my friend. Or put another way:

It's not so much that life is so short,

but rather that you're DEAD for so long!

Check out this condo in Toronto, most of the people who lined up for a week were RW's.

http://toronto.ctv.ca/servlet/an/local/CTVNews/20071113/Condo_mania_071113?hub=TorontoHome

OO Says:
I don’t know about you guys, I like Musharraf just as I like Saddam Hussein

Oh, and by the way, _everything_ that the Bush administration lied about Saddam - WMD progams, links to Al Qaeda, selling nuclear technology, etc. - is actually a pretty accurate description of Musharaf. But hey, "Parvez Musharaf is our trusted ally".

Are we crazy or are we stupid? :-)

SP,

Americans are not crazy or stupid. They are gullible because there is a systematic ignorance about foreign policy and world culture over here.

Public education deserves a lot of the blame for that.

If you look up Pakistan's history (all 60 years of it!), it goes something like this: Brief periods of corrupt, ineffective democratic governments, replaced by military coups which last a long time. The West loves foreign dictators because (1) there is only one man to deal with and bribe to get what you want and (2) when things go south, you can demonize that one man and overthrow him, thereby claiming that you are supporting freedom.

Benazir Bhutto was prime minister twice before; both times she was dismissed unceremoniously. Her dad was a prime minister who was overthrown in a coup and executed. Her brothers were all murdered (in fact, she is suspected of murdering her brother Murtaza!) and now she has been assassinated.

The USA has continuously interfered and that hasn't helped at all. We need to learn to leave other sovereign nations alone.

We need Ron Paul!

Duke:

Step 1: Buy Microsoft Excel
Step 2: Use pmt, ipmt, ppmt

The actual math is kinda icky.

The actual math behind fixed rate mortgage payments is not at all icky (it relates to some beautiful subjects like roots of unity) and is in fact pretty straightforward and easy.

I'd like to think that if more people actually understood the simple basis of their monthly mortgage payment, this would have dissuaded a good fraction from being suckered into the bubble in the first place. The mortgage brokers know this math, but their gamble was the ongoing ability to bamboozle buyers who didn't. The Wall Street brokers know all this math, but their gamble was a greater fool stepping up to buy all the MBSs/CDOs/SIVs. The way to have broken this chain was for the buyers to have understood -- either though their own diligence or through reasonable loan regulations -- and said no to these awful loan terms in the first place.

I like the idea being floated that all home loans should be fixed rate, unless the borrower opts out. That will at least save people from having to learn any high school mortgage math.

The USA has continuously interfered and that hasn’t helped at all. We need to learn to leave other sovereign nations alone.

Yes! Not that "sovereign" has any real meaning, just that it is best for us to stay out. Sweden and Switzerland have the right idea, they have managed to avoid war even when all countries on their borders were involved in conflict. Not sure how they did it, but having policies of strict neutrality plus a strong military may have helped. The Swiss did shoot down over 80 German aircraft that strayed over Swiss territory in WWII.

When Iraq invaded Kuwait, we could have stayed out. Intead of spending billions on war, we could have put those resources to oil conservation and alternatives, and thus divorce ourselves from dependence on a backward peoples who happen to breed over a needed product.

Yes, Mao/Stalin/Saddam are good if you are out of their reach.

I am sorry, OO, I don't agree at all with what you are saying. It's easy to say such things when we are safely tucked in our homes protected by a strong military.

I don't believe any large group of people deserves such a ruler.

DinOR :

What can you expect ? You are not what the Realtor would call a "repeat customer". Talk about flipping this condo or buy a few investment properties. Then you might be upgraded from Twix to Godiva.

StuckInBA - LOL!!!!!

HeadSet - good examples of Nationalist, Protectionist, Isolationist countries. Switzerland even has a Nazi mayor, a young kid, maybe 20, who ran and won on the Nazi platform, with the town's blessing - they all know him, he's a good kid. It made the news a couple of years ago and I'd be pleased and proud to sip coacoa in that town.

The USA has the equivalent of a Saddam or Mao, just gentler to the regular man in the street. There are layers and layers between the dictator and the public, and the dictator is composed of many people who agree to collectively fill the role. So you have the commanders of the armed forces, the puppet (bush) the guy with his hand up the puppet's patoot making it go (cheney) and so on.

And it's all OK with US'ians as long as they can get their 99 channels and their Columbian coffee, and gas up their SUV.

So this talk about dictatorships being worse or different than the USA is kind of silly.

Erm, the answer to the math problem is 5...square the numbers on the x and y axis, add them, and square root the result to get the length of the hypotenuse.

...out of interest, does anybody have any idea why the Pakistani govt is now insisting that Benazir Bhutto died by hitting her head on the clip that held the sun roof in place?
Apparently, the gunman 'missed' and the shrapnel did not get her, as she was inside the car at the time...

speedingpullet, that is an attempt by the government to claim that there was no security lapse.

"repeat customer" LOL!

Yeah, try... reluctant customer! Again I didn't know if it was intended to be insulting or really was the best he could muster. I've seen his chicken scratching so it must have been his wife's?

He told me he'd been in the biz for 29 years yet there wasn't ONE blank in the Earnest Money Agreement that he didn't need to cross out and start again!

"hitting her head on the clip that held the sun roof in place"

I'm pretty sure I hit my head that hard at daughter # 2's wedding last Saturday and am still largely intact...

sriramgopalan,

I may sound cold-blooded, but Mao was killing millions of his own people, why should you care if you are not a Chinese who is stuck in China?

Frankly I am not a citizen of Pakistan, nor of China or the Philippines, if their leaders decide to use some very oppressive and iron-fisted measures to keep that region stable for me, so that nukes don't fly over my head in the Bay Area, all power to them.

I am opposed to dictatorship in the US, but I don't pay taxes to overthrow dictators in other countries, unless these dictators are coming over to harm my interest. The citizens of these countries should figure out what they want to do with their leaders.

A math requirement won't help save people from their own greed. Excruciating, long-lasting, good grist for story-telling financial pain however, will. The way to achieve that pain is to treat anyone venturing out of straight-forward 7-15 year fixed-rate, 20% down, 30% DTI, 3x gross income, owner-occupied loan instruments as professionals playing with the big boys. Wander out of those confines, and foreclosures, walking away, and short sales are no longer protected by rules meant to shield distressed homeowners under extraordinary circumstances.

Question: how do I determine the insured amount on a prospective building? This information doesn't seem to be publicly available. Because this bubble is not so much a building bubble as a land bubble, I want to start comparing $/psf between parcels and the improvements separately, as doing a $/psf comparison using just the improvements' sf is just muddying the analysis.

There's nothing wrong with being double standard on Saddam or Musharraf, if we did our intelligence and determined which one is a more trustworthy ally. By trustworthy I don't mean that they like the US geniunely, I mean they are steady, capable individuals who make rational decisions, which ultimately will benefit the US, whether intentionally or not. In international politics, I don't choose the person I like the most, I choose the person with the most predictable behavior, and the biggest overlap of interest.

It is also very dangerous to assume that we know it all and our standard is more "noble". In certain resource-deprived countries with a small portion of educated population, the social interaction and model of management should be decidedly different from ours. There is nothing to condemn, just a fact of life.

I think Mao did a lot of wonderful things for his country, and in doing so, also caused harm. Sure, millions of people died, however, he probably also saved millions of lives. China was a fractured colony managed by many interests at the turn of the century, and Mao had to employ drastic measures to keep China in one piece. Can the millions of people he "accidentally" killed be saved? Probably not, because China had too many low-quality and lowly-educated bureaucrats at the time so whatever the social experiments were, they were bound to head for disastrous endings. If you have traveled to the more remote parts of China, you wouldn't be surprised that no matter what your good intentions are, the results won't differ much.

The people and their government, whether forced upon them or elected, deserve each other.

OO, if you are worried about nukes flying over the bay area, it is the U.S. government that you should be worried. There is a higher probability of that happening.

In the end, I do agree with you. It doesn't affect us and we should ignore what happens elsewhere, generally speaking.

Which doesn't make Mao or Stalin or Saddam or Musharaff good in any sense of that word.

As an intellectual, I follow what happens around the world and I hate these guys for what they do. On the other hand, I am in favor of leaving these countries alone.

I don't think Mao (or any of the other dictators) did much good. These megalomaniacs are directly responsible for tens of millions of deaths. Just think about that. I know people cannot grasp large numbers but we are talking about tens of millions of individuals like you and me, with thoughts and dreams and hopes and loved ones who had to die because some narcissistic control freak thought he could fix the world by force.

They blamed someone else for everything that went wrong (which was a lot) and history is being too kind to them and attributes any and all accidental goodness that happened when they were around.

While I agree with you that the people and their government deserve each other, I wouldn't be as effusive in praise.

Sweden and Switzerland have the right idea, they have managed to avoid war even when all countries on their borders were involved in conflict. Not sure how they did it, but having policies of strict neutrality plus a strong military may have helped.

The Swiss as a people are expert marksmen - it's the national sport. When WWII broke out, a journalist asked the defense minister what they could do to defend themselves. The DM said "we have 100,000 master marksmen in our militia." The journalist replied "yeah, but the Germans have 200,000 men massed on your border - so what will you do?. To which the DM said "we all shoot twice and then go home." :) I have one of those Swiss K31 rifles and it's a nice piece of craftsmanship.

OO, if you are worried about nukes flying over the bay area, it is the U.S. government that you should be worried. There is a higher probability of that happening.

Huh?

OB, those are horrible people as well. 1984 riots in the aftermath of Indira Gandhi's assassination led to the death and arrest of thousands of innocent sikhs.

Headset, the US has a lot of nukes. I believe there is a finite probability of one these accidentally dropped on an American city. Remember the incident last year?

And I think that probability is higher than Pakistan launching a nuclear missile onto an American city.