patrick.net

@Prat & Surfer-X,

Thanks for chipping in, guys --really appreciate it. I'm going to be away for a month, so Peter, SactoQt will really need the help.

G'nite all...

Nite Harm

Glad to hear from Prat (Yaaaa!)

Regarding immigrants, each time I drive through King City and see all those mofo’s picking whatever, I yell out the window “you sons o’bitches how dare you take jobs from amerikans”. Or alternatively “hola pendehos”

LMAO. It's good to have some humor amidst all these discussions about immigration. I think a lot of the comments are meant seriously, but sometimes it's hard to tell if there is veiled racism or if too much is being read into the remarks. Either way, we've all begun to take too many of the comments waaaaaaaaaaay to seriously. Thanks for lightening things up.

Re: the deletions on Ben's blog.

I'm feeling a lot more tolerant right about now.

I think a lot of the comments are meant seriously, but sometimes it’s hard to tell if there is veiled racism or if too much is being read into the remarks.

I do not think anyone is a racist. Most people here are very nice.

I’m feeling a lot more tolerant right about now.

Yes, indeed. Shouldn't we be proud for that?

Nite.

I do not think anyone is a racist. Most people here are very nice.

Peter P

I still maintain you are the nicest person here. ;)
But you're right, most people are are very nice, and I am constantly amazed at how intelligent and well thought out most of the posts are.

Stanman,

I believe, regardless of whether you like it or not, the whole world is moving towards freer flow of capital AND labor. If you don't allow immigration, job will go. If you allow, job may go too. In a word, in highly desirable places, you need to EARN YOUR RIGHT to live here. The fact that your ancestors arrived a generation or two earlier than mine doesn't give you a necessary edge in your competing with your contemporary, unless your ancestors played their cards right, e.g. hoarding large number of land when they first arrived.

Stopping people from moving upwards for a better life is simply impossible. That desire to lift ourselves up will express in the form of immigration/emigration, job outsourcing/insourcing, capital flowing out/flowing in...The whole evolution of human being is about flattening all arbitrage opportunities and giving the best of our kind a fair chance to compete against each other. Life, will find a way.

So the best way for the native citizens who got lucky for being born to the right country or right family to keep their edge is, work hard to lift themselves. A native citizen whose skills can only be qualified for a job that can be fulfilled in China at 1/10 the cost will become obsolete no matter what. Any immigration control is just a temporary fix, if this land continues to be desirable, people will come, legally or illegally. And for my own sake, I hope they keep coming.

Stanman

This ground has probably been covered before, so forgive me if I bring up something that's been discussed to death.

But isn't the argument for immigrant workers usually that they do jobs that native workers typically don't want? Or maybe it's more accurate to say that they are willing to work for wages that American's won't work for since they can get welfare that pays out more. As far as I know (and I may be wrong) illegal immigrants can't get welfare (though they probably can find a way to obtain it since they can get driver's licence's and health care) so they have to take low wage jobs.

Prop. 187 was meant to change some of this, but one lone federal judge threw it out as supposedly “unconstitutional.” He never was able to show what part of the 14th Amendment he was pretending to be referring to

Let me guess, 9th circuit judge? California can be ridiculous sometimes.

Escaped from the District . . . With Kurt Russel ,

Stick around. I rather enjoy your posts since they fit my world view (which is neither Left or Right ... since they lie on the same corrupted body).

Yes, the in-state tuition for illegal immigrants is unbelievable beyond words.

Regarding illegals doing work for lower pay as justification:
The premise is not good...and as per Stan's earlier post, it's mired in short-term thinking. The fact is, a balance of some sort will be achieved. Would we really pay $10 for a head of lettuce for eternity? No. Of course not. (Or maybe we would, but then we would gradually spend less & less on other things...like housing). More likely, there would be accelerated innovation...automation, etc., that could actually create other types of jobs (i.e. tech) thus buoying other sectors. No way of knowing for sure, though, right?...& when there is no way of knowing, it's best to just enforce the fn law.

California illegal immigrant cost info:
http://www.fairus.org/site/PageServer?pagename=iic_immigrationissuecentersffec
There is a link to a 19 page .pdf file that includes references for data ( no, haven't read it).
I don't know anything abou this website...just found thru ggl.

Stanman,

don't get me wrong, I am for immigration control, take away all the privileges currently available to all illegal immigrants, or cut down drastically on the quota of H1B, or raise the bar for labor certification, raise the financial hurdle for family reunion. I am fine with these measures because they don't affect me a single bit. But what I want to say is, this won't work in the long term. Control imposed by human beings can only go so far.

When you close the door, jobs will simply leave. Jobs will always go to harder working, smarter people, no matter where they are. How many native citizens are able to obtain PhDs in scientific disciplines? How many native citizens are able to get off their fat ass and put in some hard work, instead of running up massive insulin injection bills cos' they are hooked on McDonald's? How long do you think US consumers can pull credit from their inflated home equity to support their unjustifiably excessive lifestyle? The American moral of hardworking and frugality was long gone before the recent immigrants arrived. It was the immigrants who are still hardworking and saving hard to realize their American dreams.

Immigrants or transplants simply work harder because they have nothing to fall back on. If the illegal immigrants can make a living by taking the minimum wages, why can't the Americans? If the native citizens find the ag jobs too low for them, perhaps one day all our food will be grown in Mexico. Even a lordship's estate gets diluted several generations down, you can't expect any native citizen to naturally assume that simply because his great-great-grandpa came here in the 1700s, he is more entitled to enjoy a better lifestyle than all other human beings. America is about, what have you done for yourself, for me, lately?

America needs a big recession because we have been lazy, incompetent as a national for a while, and the past laurels that this country's great founders and ancestors collected had gone through the last mile, we need some new ones, NOW. This country currently lacks leadership, vision and motivation, immigration is just a minor issue compared to the above. Confident Americans should never be afraid of competition, a true winner should thrive on competition. Perhaps native citizens have lost that fighting spirit, and that's exactly why we need hungry, smart, willing-to-risk-it-all immigrants to carry this country further.

Ownerocc,
Many of your arguments work so nicely for anti-illegal immigration...and once again, nobody here has a problem with LEGAL immigration. If suddenly there are no illegal immigrants to work the hard work...the long days, etc...the things to which you allude. Here in California, that would lead to some tough times...recession??? People WILL have to look for some kind of work. Shit, can you imagine today's spoiled college kids going to work in the fields of the central valley to earn a few bucks for the upcoming school year? I can't either; but if times get desperate enough...i'd wager it would happen. It's happened before: I had an instructor once in a Comm. Coll. course who, in the early '60's, worked his ass off picking apples in washington to help pay for undergrad tuition. Kind of like college kids who, more recently, would go to Alaska to work the fishing boats.

Social Effects of Bubble:

1) Divorce (Actually have read anecdotal stories on craigslist about divorces happening because a husband didn't want to buy into this hype ... but the reality is many more divorces will happen in the fallout of this RE bubble ... financial stress is a major factor in divorce, i.e., blaming ones partner for bad decisions). Divorce has many affects on the childeren of divorce but will not be felt for many years later.

2) Vice is not Nice. Vice funds should do well (although I will never invest in one). People like distractions from reality and reality is going to suck for many in this credit deflation. I see social and moral entropy ... not across the board since some people will reflect on their decisions and awaken but many will seek distractions that will lead to their further downfall.

3) A minority of debtors (see 2) will strengthen themselves and become better for it. Struggle makes strength.

4) More Government and Taxes. If you rob Peter to Pay Paul you can always count on Paul's vote. I think we will tilt more socialistic since many voters will demand government to ease their suffering (suffering that is deserved in many cases such as speculator greed ... but I feel empathy to those that bought out of fear of being priced out, no matter how misguided they were).

5) Our illegals will be able to afford houses that are subsidized by the current housing debtors (and through Amnesty will be gifted with citizenship). This will further divide our country (divide and conquer is the moto -- I believe the death of the Constitution is the goal -- but I hate typing and it would take way to long to state my case).

investwith,
Sadly I agree with your point #4; and it relates to a big gripe of mine: more and more, when we as a society screw up, we look to government for the solution...rather than collective societal introspection. I think it relates to a social psychology that is increasingly based on external (vs. internal) locus of control (some psycho-babble terms I just heard about...google it--it's kind of interesting).

"Also, in an economic way, socialism can make sense to many. For instance, “taxes for the rich” are a constant success because few people fall into that rich category. As long as the poor and middle class outnumber the rich, there will always be political advantage to proposing to tax the rich and redistribute to others."

It's sad because it reflects that these people either (a) are only concerned with short-term affects on themselves (as opposed to general economic/societal well-being of America) and/or (b) they don't have any hope that some day they, or their children/grandchildren, will be the ones shouldering this increased burden.

SJ_Jim,

You're right on the no societal introspection. Many people are afraid to look inside of themselves out of fear that they may be wrong and have to change. Change can be painful, but only those who have love for the truth will bear down and accept the truth ... and change. Most will take the path of least resistance and look externally for blame. Winston Churchill once said...

"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened."

"we look to government for the solution…"

So true.

I think people want to be lead because it is a lot of work to be the leader. Personally, I cut my own path through this world. I don't care what people think of me but most people who know me like me ... only because I love my neighbor and sincerely watch out for those who are foolish (I don't believe in the kind of gain that relishes in 'stupid' money passing into the hands of 'smart' money)

Stan, agreed; didn't mean to sound too naive and overly enamored with the "american way"...or whatever. I'm pretty well aware that there is overly gratuitous tax structure for extremely rich...which I would consider a long-time (how long?) shame for this nation.
Hey, going to bed. It was good to exchange thoughts. G'nite all.

Hey anyone dig astronomy? Just looked up and saw the moon, the pleiades star cluster, and mars arranged in a nice bilateral triangle. Pretty cool. g'nite again.

‹^›_‹(ô¿ô)›_‹^›

The scary thing about the doom-and-gloom prediction is that it could happen. A lot of parallel's have been drawn between the great depression and now. Low savings rate, credit bubble, RE speculation and so on. Does this mean we're in for another big depression? _shrug_
I sure hope not.

Maybe we should focus on what's different now to see if a similar depression is realistically possible. I'm not as economically savvy as a lot of posters so I'd need input from elsewhere to make the comparisons. But we didn't have FDIC insurance before the great depression. Will that make a difference? It should, but would it be enough? I'm afraid I have more questions than answers. Does anyone else have thoughts on this? Maybe a new thread possibilty?

Holy ____! Look at the size of this thing! Where do I begin?

"I was remembering something more in the neighborhood of cutting the line….
(still completely reasonable though! IMHO) (and in this particular case) "

Jack--
More of a joke than a real threat--although I felt the urge, and if an animal needs a mercy killing, I'm willing to obligue.

the reason American farmers have not invested in the capital is that the have the cheap labor.

Just for clarification, between 1948 and 1996 US agricultural productivity, as measured by inputs-to-outputs capital efficiency, increased by 250%. During that same period most European agriculture (excluding small, insignificant producers which usually have high productivity but low output), increased by less than 100%. I couldn't find Austrialian data for this same exact period, but from 1960 to 2000 Austrialian productivity rose by less than 100%, so unless Australia grew productivity astronomically between 1948 and 1960, they lag far behind US efficiency.

In the King & King International economic policy report they cite overly strong US agricultural productivity as being the primary reason that developing nations seek 1-way trade barriers on agricultural goods. Simply, if the US agricultural output was turned loose on the global markets it would destroy prices for Europe and most of the developing world.

Holy cow. Are we shooting for the world record thread here or what?

HARM, I will register as soon as I can figure out how... I won't start a thread for the next week though. I have a book deadline in a week and should be banning myself from the internet at this very moment. Must...resist...tempation...

Lots of great discussion going on here (Owneroccupier, loved your last big post), but I'm going to make this my last post for now and vow to shut up until I get my work done. Somebody kick me in the ass if I post again before October 1.

Maybe we should focus on what’s different now to see if a similar depression is realistically possible. I’m not as economically savvy as a lot of posters so I’d need input from elsewhere to make the comparisons. But we didn’t have FDIC insurance before the great depression. Will that make a difference? It should, but would it be enough? I’m afraid I have more questions than answers. Does anyone else have thoughts on this? Maybe a new thread possibilty?

It is always possible, but probably significantly less likely. It would make a good thread, as would a discussion about how these multiple shocks to the US and gobal economy might play out.

The events that led up to the Great Depression were a "perfect storm" of factors coupled with a general lack of understanding about economic theory and capital market theory. Remember that Keynes had yet to publish his critical work (the Great Depression was the data he used to form modern theory that led to the IS-LM model).

In the 1930s the Federal Reserve initiated perfectly antagonistic monetary policy while the Federal Government, pre FDR, initiated perfectly wrong fiscal policy. Add in an unregulated banking system, a vacuum of consumer protections for deposits (actually, I think in a well functioning economy FDIC insurance does more harm than good, but that's a deeper discussion), and very inefficient capital markets and you have the seeds of a depression.

Also, the pre-depression period was marked by a dramatic contraction of global trade, which had been on the rise pre WWI. It did recover some in the intra-war period, but started to decline when Germany enountered the hyper-inflation era. Today we have an order of magnitude greater gobal trade, and it is rising not declining. Global trade and free movement of capital tends to blunt some of the factors necessary for a dramatic, sustained deflationary cycle.

Of course, with new Fed leadership, an ignorant Federal leadership (Congress and the Administration), and a well placed war or 2, we could have most of the ingredients necessary to cause another depression. We'd need to see some ill-founded capital controls and trade policy enacted too.

So, this doesn't really keep me up at night. Stagflation, on the other hand...

Randy H

Since you seem so knowledgeable, and most here agree that your posts are well thought out, maybe you could suggest a thread topic-- I'll post but you can run with it. I'm fairly busy and getting too brain fried to think of good posts. So any ideas are helpful.

"Must…resist…tempation…"

Um, that was supposed to be "temptation." Oh, and I'm supposed to be gone now. Oops.

Thread Suggestion:

Oil Shock! It now appears that the US will suffer another severe blow to its oil refining infrastructure. With this being the second major shock to the supply-side of energy in less than a month, and with oil, gas and petrol being major inputs into the US economy, how could this affect the overall US economic situation. Could inflationary energy pressures, rising interest rates, and worsening deficits finally pop the real-estate bubbles in the "frothy" RE markets?

C’mon, how hard is it to register and create ONE MEASLY THREAD!

Harm--sure, I have a bit more time to contribute on that; I'll go ahead and register.
To avoid a possible "bubble of threads", how do we make this orderly?
Is the X-man first?

Kurt

Since this thread is so bloated, I'm going to go ahead and post Randy H's suggestion. There's no rule that another thread can't be posted simultaneously, so if Surfer-X wants to post then that would be great, and you can put yours up whenever you want to. It'll all work itself out I'm sure.

OK Randy H, I'm going to be obligated to play your anti-self.

You wrote . . .
"The events that led up to the Great Depression were a “perfect storm” of factors coupled with a general lack of understanding about economic theory and capital market theory. Remember that Keynes had yet to publish his critical work (the Great Depression was the data he used to form modern theory that led to the IS-LM model)."

I disagree that the Depression was caused by a perfect storm of factors. The depression was caused by the Fed. The next depression will again have been caused by the Fed.
Everybody please save the above-quote. It will be used by economists in 40 years to explain the next ten.

Keynes' critical work. Many intelligent people with very sophisticated backgrounds in economics think Keynes was a fool and his theory even more foolish.

You think Randy H is right? You think modern economics "understands" things better than the economic folks who were pulling the levers back in the 20s?

OK. They ask 100 economists with PhDs what's going to happen over the next 5 years. You'll get 100 answers. Some will say bad bad things. Some will say, like Randy H, good good things.

What does that tell you?

It tells you economics is all a bunch of hooey that provides extraordinarly weak method of predicting the future, which is all we really want it to do.

Economists, investment gurus, and a myriad of others all suck you in with the same technique. They start quoting this and that theory knowing that you can't possibly keep up unless you've been schooled in the same garbage. After enough time, people start believing that the economists must know something.

But in the end economists are just like palm readers . . . They will argue till the end that they know what's going on, but if you ask them for a simple, well-limited prediction, they can't do it repeatedly.

Some will say, like Randy H, good good things.

Just for the record, Randy H is not an economist, and doesn't think good good things are in store. I just don't think a depression is likely, and I study a lot of economics in my line of work (econometrics, actually). Finally, I have never met an economist of any credibility who ever portends to predict the future, only to understand the variables at play. Economics is a sciene insofar as it lends itself to hypotehis testing and falsification. The popular media tends to misuse economics, as it does other softer-sciences like psychology. But, emperical testing is factual, and can reveal interesting phenomena, correlations, and interdependencies.

Randy H, ok, I take your point . . .

I'll throw out that your comment . . .

"Economics is a sciene insofar as it lends itself to hypothesis testing and falsification."

can be extended to read . . .

"Goblin hunting, sociology, and tarrot card reading are sciences insofar as they lend themselves to hypothesis testing and falsification."

I'd define a "science," as distiguished from other things, as a field of study that . . .

"uses the scientific method to move toward conclusions on the basic nature of observed phenomena, wherein those conclusions are verifiable through testing that yields repeatable results."

This definition applies well to physics, biology, chemistry, and so on.

Not so well with economics, which, although replete with elements that individually fit within the definition, becomes less and less of a science when viewed in the aggregate.

In other words, while it is ostensibly scientific to note that "bond yields will fall when investors believe inflation will worsen in the near term," it is, in my opinion, unscientific to use economics to predict the direction of an economy three years down the road.

I guess I derive this from the sheer number of factors, and, in particular, the role of human behavior.

Whereas true sciences like biology are independent of human proclivities, things like macroeconomics are not.

At some point, trying to figure out the ecomony is like trying to figure out when the first hurricane of 06 will reach landfall - it's possible, but given the huge amount of inputs, it's pragmatically beyond reach.

So the only thing that I need from economic theory is a maintained list of those things that cause big problems.

Like fiat currencies . . .
Fed pumping of money into the system . . .
Stupid people overextending to buy houses, thereby putting me indirectly at risk, and so on . . .

Escaped from DC,

I accept your points as well, but I disagree that overwhelming complexity precludes scientific method. The problems with economics also apply to weather-prediction, cosmology, and quantum mechanics, which I hope you'll agree are scientifically driven endeavors. Just because human behavior is an input doesn't mean that models can't be applied. In fact, human interaction directly affects quantum outcomes, yet this is consisitent with quantum theory.

And, the fact that economics is a self-falsifying discipline which replaces old theories with new solidifies the scientific nature of it, not the opposite. I've yet to see a good model for "goblin hunting" which passes the hurdle of occam's razor. If you can point to a more unifying, simpler explanation for economic-phenomena, then I'll jump in with both feet.

Do you know anybody that has lost money in real estate in California, such as the bay area, in last 20 years or so? Assuming that they held onto the purchase for more than 2 years.

I do NOT know of a single person that has lost money in real estate. I am in the market for a condo in San Jose' but they seem so outrageously expensive. Of course, that is what I said last year. But now look at the prices! It's practically doubled in last couple of years. I'm waiting for the prices to drop but if I had NOT taken any of your advice and bought it 2003 or 2004, I'd be sitting pretty!

Are you ever going to get it right?

Phoung, If I had a time machine I'd be mindbendingly rich. If you want to dive into the bucket, kindly do so. No one is forcing you to do anything. Buy that condo if you want.

Do you know anybody that was hit by lightning in a golf course? Assuming that they did not swing a 1-iron in a storm?

I do NOT know of a single person that was hit by lightning.

I’m waiting for the prices to drop but if I had NOT taken any of your advice and bought it 2003 or 2004, I’d be sitting pretty!

You must have missed the (Not investment advice) disclaimer. No advice of any kind was expressed or implied.

Phoung Nguyen, I am not trying to be mean. Can you tell us why did you think prices were expensive back then?