patrick.net

Boy oh boy. I am not a fan of censorship. Remember, Journalism degree? Big fan of free speech. The thing is that immediately following Iceman's post I had 2 people (I can't remember who besides Jack weighed in) who were really offended. I looked at the post and did see comments that unneccessarily brought race into the discussion. I made a choice to delete to try to keep things civil. Stanman interpreted the dialoge that followed as he chose to and started to engage Jack in a flame war without the full context of the discussion. It just further deteriorated from there. Jack doesn't get a free pass either, but as Jack is typically a gentleman I did give him the benefit of the doubt. At the end of the day, no one is happy. I'm tired of the nonsense and think I'm going to bow out. Perhaps someone else can create a new thread and moderate all the childish behavior. I already have two children to raise and don't need any more of this crap.

Wow, I was away from the computer for a few days and missed the party! This is one prolific group.

HARM, I think your list of guidelines is a very good one, and I also think you thread moderators are doing an excellent job. Thank you to HARM, Peter P, and Sacto (am I missing anyone?) for keeping this blog going so well.

This is truly the most intelligent group I've ever encountered in the internet. Now let's all hold hands and sing kumbaya. :-P

Random thoughts:

Sacto, I'm sorry you've had such a hard time trying to moderate this weekend. I hope you'll still stick around and talk to us. I always enjoy reading your posts. You and I share very similar views, so I know if I don't have time to post that you will have said what I was thinking. :-)

I have nothing intelligent to say about this particular thread's topic. But I keep thinking about a point that has been made here in the past few months regarding how some seemingly unrelated event--like Katrina--will be the thing that causes the housing market downturn. I can't remember who said that, but it's stuck in my head.

Seems like people are feeling really passionate this weekend, and I have to guess it's a residual effect if seeing one of our great American cities washed away and seeing images on TV that we never imagined really happening in America. (Anyone read Stephen King's The Stand? That book's been on my mind a lot this week...how when civilization is destroyed, we're left with trying to survive amid a struggle between good and evil. It was shocking to me to actually see a bit of that happening in NO this week.)

Prat, I want that "Bush - Just to Piss You Off" bumper sticker too.

"The fact is that people in the S.F. Bay Area act as if they live on a university campus where nobody can possibly state anything besides their liberal opinions, or they are banned or flamed."

A few BIG assumptions there about SF BA (and I darsesay not fact). This stuff really has no place on this blog, and to quote Jack "I truly don't want to keep this up". Agreed on all counts; there's no reason to go there.

Now...if the Fed keeps the rate low to help recovery in NOLA, does anybody think that will prolong speculation in housing?--just an on-topic issue I've been thinking about...

KurtS, I do think rates remaining low would probably prolong speculation outside the gulf coast. I have a hard time imagining people continuing to speculate right now in hurricane zones though. If they do...well, lot's of things defy logic in the housing market lately.

@Surfer-X: Re: refi. You pay property taxes on the assessed value of the house, not the sale price. Your taxes go up as the market goes up, no matter what you paid for it, or when. Some municipalities reassess frequently (annually!), some infrequently (10yrs). In some places, a construction permit will open you up to reassessment, regardless of your spot in the cycle.

Market changes obviously cause assessments to change, but refis are not part of a market because there is no sale -- just a payoff of existing debt, plus a secured loan.

(Right?) :-)

What I’d ask folks here to ask themselves is to be certain they are prepared to receive what many are wishing for: a crash.

We surely attempt not to be prepared for the crash. We will also attempt to anticipate and take advantage of the crash. There is no other way to go.

I believe the positive knee-jerk action to Katrina will fade very soon. The psychological effects of the storm will be quite negative. For instance, don't people wonder more about the consequences of a natural disaster to homeownership?

Moreover, the economic impact of the hurricane is far beyond damages in New Orleans. Any business with significant ties to the region will be severely affected. Many of them are small businesses whose survival depends upon the trade.

On the other hand, the new bankruptcy law takes effect in a little more than a month.

The perfect storm is brewing...

Randy H.:

How do you account for this, clipped from an Economist article of 2003:

America's rate of borrowing is high and rising. At just over 5% of GDP, the current-account deficit is the highest in the country's history. Even in the final decades of the 19th century, after the Civil War, America's deficit was generally below 3% of GDP (though Canada and Argentina ran deficits as high as 10% of GDP in that period). In the Reagan era, the current-account deficit peaked at 3.4% of GDP.

Some of the recent rise may be a statistical quirk. According to official numbers, the world as a whole runs a current-account deficit with itself, and one that has risen sharply since 1997. Since the world does not, as yet, trade with Mars, the numbers must be wrong, so some of America's current-account deficit may be more apparent than real. But not all of the recent rise, or even most of it, can be explained this way.

In fact, America's current-account deficit is becoming worryingly large. Several studies suggest that economies hit trouble when their current-account deficits reach 4-5% of GDP. Caroline Freund, an economist now at the IMF and before that at the Federal Reserve, looked at 25 episodes of current-account adjustments in rich countries between 1980 and 1997 and found that the current account typically begins to reverse after the deficit has grown for about four years and reached 5% of GDP.

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Perhaps your definition of current account deficit is different than the standard, but I do not believe any G8 nation has a larger one.