patrick.net

Speaking of oil...I've heard talk in business news of speculation-driven crude prices--has anyone heard anything to support that? Or is it simply like current Au/Ag spot prices, ostensibly supported by "demand"?

HARM, we should save this quote somewhere. It is classic.

Thanks, but I cannot take full credit for that. It's a modest re-wording of a famous quote from Twelfth Night

IIRC the basmati rice Costco sells is imported from India, who has just embargoed any rice exports. So Costco is merely reflecting the shortage manufactured by the government of India.

On the other hand, Idaho has definately not embargoed the export of potatos.

If rice is too expensive, let them eat cake.

LOL!

I am just as happy eating rice, pasta, and boiled potatoes. (I hate roasted potatoes)

Speaking of oil…I’ve heard talk in business news of speculation-driven crude prices–has anyone heard anything to support that?

They certainly like blaming speculators. Even if that is true, I don't see anything wrong about that. Let high prices cure high prices.

It’s a modest re-wording of a famous quote from Twelfth Night

I wouldn't know... Shakespeare puts me to sleep.

Anyway, life is just a tale told by an idiot. :)

Oil didn't go up in the last 2 weeks if you pay for oil in AUD, Euro or other stronger currencies.

Oil went to $120 because you were looking from the lens of USD. Gold actually went down in AUD. Speculation? Yea, speculation that USD will soon become toilet paper.

I honestly think we should start talking about Au/Ag oil in Euro terms.

I am actually very surprised that inflation of the BA is still rather low. The big jump was at the beginning of the year, but our grocery bill didn't move that much. We didn't substitute either. If anything we shopped more organic now that the price difference is closing.

So what is everyone cooking tonight? I'll start off. For me, it's chicken marsala over a bed of rice pilaf.

So what is everyone cooking tonight? I’ll start off. For me, it’s chicken marsala over a bed of rice pilaf.

Not cooking tonight. I love chicken marsala.

Question: how do you guys caramelize onion?

I could get pretty good results but my rented apartment would smell like onion for a whole week. Any advice?

I am going to disagree with Randy that the HSBC report uses AGI. From Appendix C Income Estimates :
For the 50 states and DC, we have used the Census Bureau historical data on median household income directly for the available years from 1984-2004. These estimates come from the Census’ Annual Social and Economic Supplement to the Current Population Survey.
Everything I've seen on the web regarding CPS ASEC suggests that that their household median numbers are money income (not AGI with its attendant deductions).

HARM said: Again, let’s keep this in perspective: 5-6X income might be common for the more ‘desirable’ CA municipalities post-Prop.13 (1978), which Randy has demonstrated using Marin Co. as ‘prime’ example.
Okay, lets be a bit more exacting; his example was NOT Marin County. As Randy said, 6.3 price-to-income for San Francisco-San Mateo-Redwood City, CA (MSAD). FYI, price-to-income for Oakland-Fremont-Hayward, CA (MSAD) is 5.9 (again, 30 year average). I took both of those and said 6x to come up with a general estimate for the Bay Area. BTW, note that the Oakland MSAD price-to-income spiked to 11.6 by 2005. So using HSBC 2005 income numbers (yes, Oakland MSAD income is more than SF according to HSBC) and historic 30 year ratios we can calculate where median home prices should be (circa 2005):
Oakland MSAD $69,572 * 5.9 = $410,475
SF MSAD $68,087 * 6.3 = $428,946
All this to say, income did not go up that much, so we have a long way to fall (even using the 6x mutlitplier)! For reference SF MSAD median home price (circa Q3 2005) $767,777 and for the Oakland MSAD $804,363. Again all of this is from the HSBC report on Randy's website and the spreadsheet linked by BAI.

Oil didn’t go up in the last 2 weeks if you pay for oil in AUD, Euro or other stronger currencies.

Hmm...can you provide a source to support your statement? USD:EURO has fallen about 9% since Feb '08. Does that entirely explain the approx. 31% rise in crude prices (USD) over the same period? Surely the situation is more complex than that--whether or not our currency is "toilet paper". And, since speculation is rampant in other areas, I always question the trends...I'm expecting serial bubbles.

http://tinyurl.com/3a73f9

http://tinyurl.com/c4u59

I thought the census derived it's income data from tax filings which implies AGI. I could be wrong. It's been almost 2 years since I really dove deep on these data sets. But I recall determining the original data was AGI-based.

Otherwise the HSBC data is in direct contradiction with numerous other affordability data sets from matching periods. There is no way raw-gross-income supported people buying at 6x income for the past 40 years, not even in this gilded area. As much as the realtors would love to plug that into their economic drug pushing.

Here is a link to the Census Burea website. The data is survey based.

Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS)

Because of its detailed questionnaire, the CPS ASEC is the primary source of timely official national estimates of poverty levels and rates and of widely used estimates of household income and individual earnings, as well as the distribution of that income.

The CPS ASEC provides a consistent historical time series of many decades in length at the national level, and can also be used to look at state-level trends and differences (through multi-year averages). The relatively large sampling errors of state-level estimates for smaller states somewhat limit their usefulness.
My head hurts. I haven't had this much fun since the Randy/FAB price-to-rent debates.

Does this mean sushi will become even more expensive ? :-(

Does this mean sushi will become even more expensive ?

Don't worry... we will have more sashimi. :)

There is no way raw-gross-income supported people buying at 6x income for the past 40 years, not even in this gilded area.

Randy note that:
Three of the most widely used measures of household income are BEA’s measure of personal income, the Census Bureau’s measure of money income, and the Internal Revenue Service’s measure of adjusted gross income of individuals.
Money income seems to be what is used in the HSBC report . Personal income (aka raw-gross-income?) appears to be substantially more than money income used in the CPS ASEC reports. See this link.

Don’t worry… we will have more sashimi.

That sounds like a raw deal to me.

Whenever I caramelize onions, I throw in enough garlic so you don't smell the onions.

There are benefits to being a batchelor......

Peter, do you have a gas barbeque? You could always move smelly cooking outdoors.

Peter, do you have a gas barbeque? You could always move smelly cooking outdoors.

I only have a smallish balcony. But I do have a Y2K gas stove. :)

EBGuy and Randy

kindly get your act together will ya? You're confusing the idiot. Is it AGI and thus the 6x is explained, or is something else going on?

Costco is now rationing cooking oil and flour, not simply rice where there has been supply upheaval.

I'd speculate the primary shortage is being caused by hoarding. Inflation is really setting in and folks are stocking up before the price starts to really rise. But I don't know this for certain.

I find it very disconcerting. But maybe that is just me.

Hunger is already hitting the shores in the US. Food banks are empty and in crisis mode, many who rely on them are eating less. The fixed income crowd in downgrading food choices and also having issues.

@ Kurt,

www.itulip.com has a video on the homepage about Monsanto (owns more than 50% of the feed companies and reminds me of Soylent Green!)

Paul

In the south bay there are several "Barbeques Galore" stores, who sell mostly Australian design gas barbeques. Check them out. I have a 3-burner "classic turbo" which I purchased in 1991 - and it's still going strong. Plus they stock parts for all their old models. I compare their products to fancy-pants ranges like Wolf and Viking.

Their smaller units (like the 3 burner turbo) give you lots of cooking power in a small footprint.

feed = seed ?

Is it AGI and thus the 6x is explained, or is something else going on?
Not AGI, but money income, where:
AGI Bureau of Economic Analysis, AGI and money income are nearly equal (difference of $1-2k), but personal income is a lot more (nearly $8k per capita), so all is explained. At least in my universe...

northernvirginiarenter,

Driving by a soup line in downtown Chicago on a regular basis, my observation is that the line is about twice the length of a 2 years back.

Here is the info-

http://www.catholiccharities.net/about/administration/

The votes in PA are about 2/3 counted, and Ru Paul is in strong second place behind McCain.

McCain 300,676 72% 0
Paul 66,538 16% 0
Huckabee 50,097 12% 0

Oh yeah, some lady is up about 7% on that guy.

Ron Paul, Ron Paul, Ron Paul!!!!!

Oh, gosh, I'm sorry. I get names confused.

ptiemann Says:

> Anyone who thinks being free of debt to be the
> only right thing should listen to a business partner
> of mine. This guy has between $500k and $600k
> on credit cards at 0% or 1%. He told me last month
> that in 2007 he made over $50k from that alone.

Then HeadSet Says:

> So your buddy has not only found a way to pay only
> 0% or 1% beyond a teaser rate on credit cards, but a
> way to avoid the typical minimum payments, transfer
> fees, and credit limits. Not only that, he has can take
> that money and make a consistent low risk 10% return.

It sounds like ptiemann has a “business partner” that is full of sh*t… If it was possible to get anywhere near a half million at 1% hedge funds would be doing it (and saving a lot of money on expensive parties to raise money)…

Randy H Says:

> It’s been almost 2 years since I really dove deep on
> these data sets…

It has been even longer since I dug deep in to the census date…

> There is no way raw-gross-income supported people buying
> at 6x income for the past 40 years, not even in this gilded
> area. As much as the realtors would love to plug that into
> their economic drug pushing.

Most of the historic price to income data around 3x is “total household gross income” to “home price”. The number will get higher if you use “household AGI”. I have seen people look at the median home price divided by the median “individual” income and the number is a lot higher and it will be real high if you take the “per capita” ratio the number is even higher since about half of the people in America make almost no income…

KurtS,

I am just talking about most recent price movements which is primarily driven by USD depreciation than speculation.

If the Saudis are already admitting not adding capacity (for whatever reason they choose to disclose), there is NO speculation. Peak oil is real and it is already here. Unless all the oil consumed in transportation can be cut very substantially, we will continue to see oil breaking $150, 180, or even reaching $200.

I won't call it a speculation before you see the cover of all business magazines touting oil as the sure bet / can't lose investment of the year.

EBGuy
thanks! I think :-)

That *income* will have to be AGI, not gross.

Banks lent on gross income. I just checked with a retired neighbor who used to work for US bank. He said there was no way ever before this bubble that people could buy at 6x of their household income.

Interest rate aside, which made mortgage payment impossible, most banks had to carry the mortgage on their balance sheet in the 80s. ABS came out in mid-80s and was not gaining momentum until early 90s, so in the 80s the secondary mortgage market was non-existent, meaning there were no investor fools to offload to. When they had to carry their own loans, they tended to act much more conservatively. The rule of thumb was, one could borrow up to 4x of the household income on the house. Assuming 20% down, that would be a housing price at 5x household income.

The only possibility was higher dp. But there were fewer immigrants from overseas in the 80s, and interstate immigrants usually came from a state with lower housing cost, so it would be difficult to save that much dp particularly in a highly inflationary environment.

AGI or money income, whichever is fine, just not gross.

EBGuy

Thanks for the crack work. Money-income makes sense. I wasn't really aware of how that measure worked until now.

I was really hoping to get FAB's response to "ptiemann". I've had a few debates with Peter T on Zillow. He seems a reasonable enough fellow, but lately he's been making some unsupportable statements that don't hold up well to quantitative analysis. And then there's his new blog that Alpine linked earlier above. Upon reading it I immediately thought of FAB and how he'd be able to call bullshit on half that stuff.

FormerAptBroker tried to think and nothin' happened:

>denriddy Says:
>
>> That’s what it is today, in this world, with the
>> organized criminal activity (considered “business
>> as usual”) known as “fractional banking.”
>
>Do these criminals fly around in black helicopters?

I ain't their travel agent.

In an early period, they rode around in head baskets. Maybe you should look into one.

Peter T

Thanks for the explanation. Unless moderation rules have changed since I've been active, posting more than 1 link will trap you in mod, as will a number of verboten words, mostly spammy things or troll hot words.

I don't disagree that Patrick has bias, by definition, to the articles he selects. As you said, that is the purpose. He's not going to try to be "fair and balanced" and post 50% NAR approved ads. It's up to the intelligent reader to seek out and edit their own info.

But Patrick's blog has always been unique. A lot of deep, contemplative conversation has gone on here over the years. Zillow, as a perfect contrary example, everything degrades to cheap one liners and cutesy clever pictures, along with a who bunch of emotionally needy cat lovers.

I do appreciate your willingness to respond thoughtfully to debates, even if I disagree with you time to time (though more of late, I will admit).