patrick.net

Duke:
From that perspective, it's not the interest rate, it's the multiple of income, right? i.e. a median house should be 3.5 times the median income in the area, then 20% down, and terms as are appropriate to the economic climate (3% above inflation expectations)?

Although this now begs the questions of: 1) are median incomes going down or up over the next few year (inflation scenario says up, but slower than actual CPI, deflation says down, but how fast... yes?) and 2) How much are RE prices going to overshoot the bottom in any particular area?

And it is also a given that if you get it through the heads of the Hahvahd set that "it's the Price/Income ratio, Dummies!" then they'll want to wave a magic wand and raise everyone's income to support the current prices.

BTW, be aware that over in Cambridge and other Boston burbs, where Harvard Braniac Economists live and buy RE, the P/I ratio has been running 7 X to 10 X. At least. D'Oh!

MST (Boston)

Liberalism fails again.

Yep. Nazi Germany was ultra-liberal and it failed too. Liberalism and fascism share similar roots.

http://www.amazon.com/Liberal-Fascism-American-Mussolini-Politics/dp/0385511841

Fuzzy, a vote for Ron Paul is a vote for the Republicans, until they fix the election system.

Yes. Ron Paul _is_ a Republican. Bush is not a true conservative.

Just do the math. Since the democrats have a majority among the incumbents, you are in effect voting Republican

I agree with FAB and Fuzzy, there is little difference between D and R. Both supported giving W the power to take us to war, both supported the recent bailouts, Clinton was the one who got NAFTA and GANT passed, and Rebublicans raised the min wage time before last. Both trip over themselves showing support for Israel. Neither party will tackle the immigration issue.

If incumbents are kicked out, that will send an unmistakable message to those who get elected in thier place, regardless of party. Even better if third party wins some seats.

I do not know why you are so enamored with Democrats. They overwhelmingly supported the bailout.

I guess it is fashionable to be democrats. But then it was fashionable to buy homes in 2005 too.

Yep, it's cool to be Democrat/Leftish. Always has been.

We Conservative/Libertarians know that when you put a $2T honey pot on the Potomac, it will atract all manner of creepy-crawly things, and it will also corrupt nearly any incumbent, just by simple human nature. The longer they're there, the more likely they are to fall prey to "everybody does it" with a brief case full of "contributions", and "you're such a powerful man." (Usually said to Teddy, Bill, Larry, Barney, et al from a kneeling position.)

The very few who aren't corrupted are hard to spot. "No" on the bailout is only one possible indicator, and that could simply be cowardice in the face of constituent fury. At least they're manipulable, but that goes both ways.

Throw the bums out. Right, Left, Center. Presidents one term (with the threat of a second?), House "members" maybe three, Senators maybe two, then out with the scoundrels. Which they will be, by that time. I feel a Constitutional Amendment coming on.

Liberals seek to change human nature.

Conservatives put human nature to work.

Whose work is futile?

Fuzzy, It is a free country, you can vote for whoever you care to vote for.

Just know that when you vote for a 3d party, you are really voting for someone else, and that someone else is quite often not the one you would otherwise have as your 2nd choice.

Can we at least agree that the election structure in the US is flawed, and should be fixed so that more than 2 parties could get represented?

MST Says:

> The very few who aren’t corrupted are hard to spot.
> “No” on the bailout is only one possible indicator

Voting does not tell you anything. Once the “Replubocrats” had the votes they needed to pass the bailout of the rich bankers they let a large number of people in both parties (who had a large number of voters back home against the bill) vote against it. If the “powers that be” needed the votes they could get just about everyone to vote they way they want…

MST,

The problems with "throwing the bums out" every 4 years is that you are throwing the baby out with the bathwater. Besides, those of our representatives that make it as far as an election for congress have long since been corrupted (or never will be). Throwing out the bums every 4 years just means that we have a bunch of amateur choirboys running the country. Not good.

Not directed at MST, but in general: (I don't know how many times I have brought this point up in the last 3 years, it must be a dozen)

The problem of corruption in congress is a STRUCTURAL one, it has to do with how our election system is organized. If we have >2 parties that are electable then the parties will have to compete and stand their ground on GUIDING PRINCIPLES, not on "ISSUES", or else people will vote for another party. But as long as there is only 2 parties that can win representatives there is nowhere else to go.

SP Says:
"but her explanation for the strong dollar was that due to massive amounts of deleveraging, notional “dollars” were getting destroyed, which creates upward pressure on the actual dollars that are in the system

notional dollars are only in the imaginational of investors. the only thing they can affect is investor perception. current destruction of notional dollars only underscores how inflated the US assets were. Its should put downward pressure on the confidence on US assets and on US as a country. I don't think thats the reason for strong dollar.I believe , US dollar is getting strong due to increase in financial instability in the world ( not just US).
Since most investors are US based , they are hoarding cash and bringing home the dollars from foreign lands and US financial markets as well.basically , dollars are getting pulled out of markets and put under the matress ( banks) which is causing a deflation.

Bottomline : money supply (floating) in the world markets (including US ) is shrinking at an alarming pace causing value of dollar going up.

I agree with OO that this is temporary. Fed will fill up the void by printing money like crazy and filling the void. dollar can only go down after that if there is some stability in the finacial market.

'The Fed chief's more gloomy assessment appeared to open the door wider to an interest rate cut on or before Oct. 28-29"

http://biz.yahoo.com/ap/081007/bernanke_economy.html

The problem of corruption in congress is a STRUCTURAL one, it has to do with how our election system is organized.

The problem of corruption in congress is a STRUCTURAL one, it has to do with the nature of human and power.

Peter P,

Bullcrap. Other countries have much less corrupt legislatures than the US, and the reason is that they have properly democratic election systems. I don't think it is because human nature is better in Europe.

Other countries have much less corrupt legislatures than the US, and the reason is that they have properly democratic election systems.

Other countries are much less powerful than the US.

Can you say that Russia and China are less corrupt and/or less scary than the US?

Europe is DOOMED.

Peter P,

What, now you are saying they are less powerful BECAUSE they have more democratic election systems?

That reveals very clearly where you stand on democracy.

they==many European countries.

They are less powerful because they regulate their markets too much.

And, they care too much about political correctness.

And, they have too much welfare.

And, they are too heavily taxed.

The common denominator in a democracy is the voter.
Voters get what they want. Pure demand and supply. Assuming demand and supply are not manipulated.
US is powerful because
1)Demand and supply is "least manipulated" compared to other countries (free speech, fear of presecution..etc)
2)Voter's have been given the right script by founding fathers on what to demand ( again relative to other countries).This includes individual liberty, free markets..etc

As soon as 1 and 2 are gone, US will go downthe tubes ( again compared to other nations )

Also, the right to property is the absolute foundation of a successful society. It should be codified as the most basic human right. Without regard to property rights, we are just animals.

Peter P, stop changing the subject. European countries are weaker because they are too democratic, yes or no?

SNMR,

That's the problem. In the US, voters do NOT get what they want,. They only have two choices, both easily corruptible.

There are scores of democracies in the world that work better and are freer than the US.

Other countries have much less corrupt legislatures than the US

Sorry. That's just really funny. Not that I defend the US Leg., but to suggest that, say, the Italian, or French, or Indian, or Brazilian, or you name it legislative bodies aren't corrupt is hilarious. Corruption comes in several forms, and one of the biggest forms is maintenance of the status quo ante for the party in power through purchasing their constituents with their own money. This is rife in modern democracies. We just have a relatively uncontrolled media which shows all our dirty laundry, and we have an enormous budget which means the problems become proportionately larger. BTW, those lovely, non-corrupt Eruo-legislators have been running a scam so they get paid $100ks for traveling to the EU Parliment. Google it.

If we have >2 parties that are electable then the parties will have to compete and stand their ground on GUIDING PRINCIPLES, not on “ISSUES”,

Yep, that has worked so well in those multi-party places like Italy since the war, which mostly hadn't kept a government going for more than a few months for the first 40 years after the War. Or Germany, where the ability to play those small "principled" (hah!) factions off against each other gave Hitler the Chancellorship. And how do you make this multiparty system happen? By Decree? You want a party? Start one. Then convince 30 million Americans to sign up, and you might get somewhere. Really, there's nobody stopping you.

Throwing out the bums every 4 years just means that we have a bunch of amateur choirboys running the country.

And God knows we're so much better off with the Professional Bloodsuckers than we would be with the Amateur Choirboys.

you are throwing the baby out with the bathwater.

Observationally, after 4 years or so you are at a ratio of about 530 to 6 bathwater to baby. An entire congressional class of Amateur Choirboys may bring that up to 10%. "Choirboys," you see, suggests that they might be principled. Or you can keep your current gasbag pork barrel power broker, just like 98% of the rest of the country.

Justme,

Until we get that parlamentary system with a coalition based government, I say vote out anyone who voted for the bailout.

Democracy is the means, not the ends. Liberty is what we really want.

Europeans do not enjoy nearly the same level of liberty as Americans. That is the problem. They have a culture that stifles freedom. That is the problem.

Is that the result of being "too democratic?" I do not know.

(Wasn't it an European country that _voted_ Hitler into power?)

The Founding Fathers were brilliant. The Constitution protects the people not only from the tyranny of dictatorship but also from the tyranny of the majority.

By the way, JUSTME:

stand their ground on GUIDING PRINCIPLES, not on “ISSUES”

This is a false dichotomy. Guiding Principles are theory. Issues are application.

Guiding Principle: Killing Human Beings is wrong. Issue: Pro Life vs. Anti-Death Penalty.

Guiding Principle: Racial Equality before the Law. Issue: Pro- vs. Anti- Affirmative Action.

GP: The Bill of Rights is Sacrosanct. I: Except for the ones we say aren't vs. No Exceptions.

See how that works?

MST,

How about we fire the CEOs every 2 years, because they are all corrupt bloodsuckers, too.

And, no, I do not agree with your analysis. Most Western European countries have democracies that are superior in their intended function (namely, to enact the people's will) than is the US.

I would like to correct a misconception. You should be aware that Germany has since the post-war constitution (1949) a rule that says that any party must have >5% of the popular vote in order to get a seat in parliament. This law was enacted exactly to avoid that extremists get to play a significant role.

Headset,

I wish it were that simple. I'm afraid if we all become single-issue voters we will end up with a dictatorship (and I have an issue with that :)).

Thanks for remembering my previous lecture on the topic :-). Really! :-)

Gold is looking more and more interesting.....

If I wanted to buy gold--would you guys suggest IAU or GLD?

THX--will look nto it--

Right--AIG is managed by Barclays--How strong is Barclays? Didn't it drop 30% today?

Sorry-meant AIU

Gold is looking more and more interesting…..

That's called a bubble, LILLL. If you want to play that deja vu, make sure you time it right.

Justme:

Fire the CEOs? Fine by be. Fill in your proxy ballot that you get by being a stockholder. Throw the bums out.

And as for Western European democracies? take a look at what they've done with the vote on the European Constitution. It has been defeated in France, the Netherlands, Ireland, but still they forge ahead. EU President Junckers before the French/Netherland vote: "If it's a yes, we will say, 'on we go,' and if it's a no we will say, 'we continue.'" That's EU Democracy! Tony Blair wouldn't even let a referendum be held on the total transferral of British Sovreignty. He knows the answer, and it isn't the one he wanted. So much for listening to the will of the people.

And the 1930 election was the first time the NAZIs had any influence, and that was with 19% of the vote. Your 5% popular vote limit wouldn't have made a difference: it was window dressing in 1949.

In the past, I've had a knack. I sold my house in LA Aug of 2005--rented for almost 3 years.
Picked up a SFH at around 1/4 of what I sold the last house for.
I'm feeling gold right now---A little hedgie never hurt.

I'm holding off opening my brick and mortar store until the tide passes. I actually make things--unlike most Americans-so I'll be okay--I hope.

MST,

Wonderful. You understand the difference between PRINCIPLE and ISSUE, and how PRINCIPLE is applied to resolve "issues".

Now understand this: In US politics, "issues" are blown out of proportion in order to create electoral advantage. Scheming politicians (and parties) create false and over-emphasized "issues" that give them electoral advantage.

For example, Republicans are blowing the "issue" of the financial bailout out of of proportion and trying to make it into The Only Thing That Matters (TM) in the upcoming election.

This is done to exploit the groundswell of resistance against the bailout, in both parties. But it is to the Republicans' advantage, because fewer of their up-for-election incumbents voted in favor of it.

Make no mistake, if you are a democrat in principle, and vote republican or independent in this election because of bailout anger, you are being exploited, and the republicans are laughing all the way to the bank (literally, the bank).

The bailout was necessitated by the bad 28 year regime of republican de-regulation. The democrats that dis-proportionally voted for the bailout were just trying (perhaps in futility) to contain the damage.

If you are a Democrat by heart, for God's sake, do not vote against your own party just because of your bailout. You are just punishing yourself by setting yourself up for 4 more years of the same failed policies that got us here.

And that is how the whole discussion on election systems started, this time around.

If I wanted to buy gold–would you guys suggest IAU or GLD?
Yes -- diversify. I believe the overhead for both is around .4% a year (see prospectus). I hold them in retirement accounts, but if you are looking at more than 10 oz. that is not in a tax-deferred/free account, you might want to try a safety deposit box.

MST,

On that note, perhaps everyone should be be made to re-apply for their own job every two years, I mean, you might grow complacent or lazy or too tight with the customers or vendors.

European Constitution: Tony Blair did not have the power to decide, as prime minister, whether to hold a referendum or not. Parliament does. I can totally agree that the EU converts are a sneaky bunch who will keep trying to fool the majority, but what does that have to do with election systems or democracy? When the Union of the US happened, do you think it happened with or without the consent of those "unionzed". At least the europeans are not having any "civil" wars about it. This stuff in this contect is a perfect example of a false issue. (also known as a red herring).

Nazis and 19% in 1930: Yes, any democracy can fail under the extreme duress of lost wars and depression. That is not a good argument for not having REAL democracy,.