patrick.net

I spent 3 years in japan, most of the sushi there really isn’t that good. The good stuff will set you back an arm and a leg. Sashimi is good all over though. Want good sushi, go to Angelfish in Alameda. Amazing.

They (in Japan) don't de-vein the shrimp, who wants gritty shrimp? I'm surprised you still would crave sushi after 3 years in Japan. I spent less than a year there and I've had enough to last a lifetime.

were headed for another world war

I wish I could object to this more strongly. But you could well be correct because the outcome is in the hands of politicians, and we have a serious vacuum of true leadership. All we can do is hope leaders arise, and fairly quickly. If there is a world war, then all our debates here are moot. Any war on such a scale today would be either (a) the end, period, or (b) so totally devestating that we'd reset the clock to about the year 1200 with a Mad Max twist. The problem is that nations don't like to lose wars, and there are quite a few nations that have trump cards they can use if they start to lose...and once one does, they all pretty much have to respond in kind.

An earlier statement said that "we grew up free of risk of war". This isn't true. We (most of us I assume) grew up during a period of extreme likelihood of nuclear-war, which nearly occurred on at least 3 occassions. In fact, tying this argument back to the original exchange between me and Peter P, the reason we have modern game-theory today is as an attempt to explain why the USSR and USA never pushed their buttons.

Plus the Japanese love to drink

Do they ever! I went to school in Osaka and my friends and I would bar hop on the weekends. Total blast. Love the theme bars in Osaka-- Bar Nowhere Jamaica-- stuff like that.

IMO there is a slight risk of war in the Taiwan Straits around the 2008 Olympics timeframe.

At least the ensuing war would solve our current account deficit problem as all the greenbacks in the Chinese Central Bank are suddenly "eliminated".

We (most of us I assume) grew up during a period of extreme likelihood of nuclear-war, which nearly occurred on at least 3 occassions.

Can you refresh my memory?

In fact, tying this argument back to the original exchange between me and Peter P, the reason we have modern game-theory today is as an attempt to explain why the USSR and USA never pushed their buttons.

Fundamentalists have a very different value system. This severely limits the use of modern game theory.

I feel that the US is so morally bankrupt, that given the right amount of green paper, people here would assist in bring a stray nuke here. When it gets lit off, and it will, watch the fuck out.

Scary scary but true. There are enough people out there who hate us enough to set one off, all it takes is getting their hands on one.

I feel that the US is so morally bankrupt, that given the right amount of green paper, people here would assist in bring a stray nuke here. When it gets lit off, and it will, watch the fuck out.

There are always people willing to sell out, in every country. This is a huge problem in Russia right now, as lots of these people who'd sell nukes are nuke-tech aren't terrible people, just well educated, poor, and desperate. But I agree, the first nuke that lights off changes everything, permanently. It will be the milestone that marks entry to the next era...and that's if we're lucky.

SactoQt,
Excellent quote! Should be taught in schools.

Thanks. I think there is a lot to be learned by looking at history. Problem is that a lot of people think "this time is different" but you know the saying, "The more things change the more they stay the same."

Randy H, I respect that you are intelligent and well educated. However, your desire to "rigidly" test everything will, in my opinion, waste time, money, and will end up impotent.

I stand, my back to the setting sun a breeze in my face. and note the wind blows lightly to the west. You fumble with your compass and portable weathervane trying to prove that the wind blows east.

What I learned a long time ago is that, regardless of the data, there is always an argument the other way.

I am sure you are quite excellent at compiling data and arguing what it portends. It's a useful skill in many contexts.

I won't argue on those grounds, because they are irresolute and can be molded to any conclusion.

You will have your opinion, and I will have mine.

I suppose where we may differ is in your belief that things are economically provable or not.

I believe not, which is why I have never played the stock market much, and why I never get a good answer out of an economist or investment advisor when I ask, "so why do I have so much more money than you if you know so much about the economy?"

So please save all of your economic theories - they have done virtually no good for America, and I think they are currently useless at best, damaging, at worst. We are in a liquid situation, and you will not be able to apply your mathamatical models to such complex systems.

I view our fate not through the extroardinarly weak power of the macroeconomic lens, but rather through my own eyes. I have read much of the same information as you. Your theories tell you . . .

"Economically-speaking, the economy has not worsened as a whole, it has strengthened."

My understanding of people, in combination with the horrific data in front of us, tells me that your sentiment is exactly wrong.

I claim to be able to predict the behavior of people extremely well - they have rarely disappointed me, which is to say that they have almost always disappointed me.

So I have enjoyed the company of this board. You all seem like decent people. You all certainly are smart people.

When you first get the notion that I may be right, some of you might be able to find me. Send me an email.

Maybe.
Maybe we can help fill that void.

I think I know how.

I think we can do it.

Goodbye folks, be good to your neighbors, regardless of how little they will deserve your goodness.

I am all for the abolishment of small nuclear weapons. Strategic weapons (with near-guaranteed centralized control) maintain balance. Tactical weapons create chaos.

Escaped from the District..........with Kurt Russel

Hang around. We might disagree or find our way through the discussions differently, but it's the discussion that matters isn't it? If we don't have differing opinions then what's the point?

They (we) have nuclear howitzer shells. WTF?

There are nuclear mortar shells, nuclear torpedos, ... you name it.

Can you refresh my memory? [near nuke misses]

The Cuban missile crisis is the most famous.

In 1979 there was an incident in the Bearing Straits which involved naval and arial exchanges resulting in the sinking of a Russian destroyer and the firing of ship-to-air missiles at US planes. I think it involved a stranded russian nuclear sub in US waters and was a source of inspiration in a later Clancy novel. I knew this incident well because at the time we lived in Colorado Springs and my father worked in the Mountain. He was locked inside for a little over two weeks during all the shooting which, of course, we the public had no idea was going on. But, half the neighborhood's fathers never came home suddenly one day, so everyone knew something big was up.

In 1983 the Russians believed we had launched a decapitation strike and they went all the way to the point of opening their silos and readying the rockets, which is the last stage before pushing-the-button. If I recall, the commander disobeyed orders by not initiating the final launch procedures because he somehow felt like something wasn't right (he had bad data because the satellites had malfunctioned or something like that). Subsequently, he was court marshalled for disobeying orders and the Kremlin rushed to put in the "dead-man's-switch" so that the US couldn't exploit this newly discovered weakness in the Soviet response system. They were afraid Reagan would strike first with everything, unannounced, unprovoked, and it would disable the Russians response capability. They had the dead-man mechanism until late in the Clinton administration, well after the Soviet Union dissolved.

Randy, I am completely ignorant about the 1979 incident. How can I find out more about this event?

However, I think that and the Cuban crisis was not that dangerous because modern game theory would be able to "moderate" that.

Accidents due to misinformation are always dangerous.

Escaped from the District . . . With Kurt Russel Says:[...goodbye]

Debate can be healthy, and it can help to broaden your perspective and often to strengthen your convictions. Leaving in a fit of drama doesn't add any value for anyone.

I believe not, which is why I have never played the stock market much, and why I never get a good answer out of an economist or investment advisor when I ask, “so why do I have so much more money than you if you know so much about the economy?”

I'm not an investment advisor nor an economist, but you never asked me...because the answer is simple: "Life ain't fair". There will always be the marathon-running, cancer researcher who dies of spontaneous lung cancer while his alcoholic, chain smoking neighbor lives to the ripe age of 92. This doesn't disprove the researcher's life works, it just proves that there is randomness.

Randy, I am completely ignorant about the 1979 incident. How can I find out more about this event?

I haven't found anything good on the web, but I think much of this has been declasified because I once saw it referenced in a History Channel documentary. It was one of these widely-known but classified things for many years, but I swear it was partially opened in the 90s. Maybe it was only declassified by the Russians?

As the the Cuban crisis, I think this was way bigger than you give it credit for. By the way, it was two seperate near misses, the first being the Bay of Pigs, which we now know caused the Russians to consider initiating nuclear war. But as for the missile crisis, game theory nearly didn't work because we (the US) had a non-rational player on our side by the name of Curtis LeMay. If Kennedy hadn't been such a strong leader as to stand up to LeMay, we'd have not found the "Nash Equilbrium".

They were afraid Reagan would strike first with everything, unannounced, unprovoked, and it would disable the Russians response capability.

Perhaps Reagan should've never made that joke "...we begin bombing in 15 minutes"

If Kennedy hadn’t been such a strong leader as to stand up to LeMay, we’d have not found the “Nash Equilbrium”.

Perhaps LeMay found the Nash Equilbrium the Nash style - seeing things that aren't there. ;)

If someone can tell me how to link/reference/post a PDF I just got the NY Fed report on housing asset prices. A must read for anyone very serious about the real data and fundamentals.

Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions
Charles Himmelberg, Christopher Mayer, and Todd Sinai
Federal Reserve Bank of New York Staff Reports, no. 218
September 2005

From the Mercury News:

"More than 1,700 schools across California got bad news Wednesday: They either made or remained on a list of struggling schools that failed to meet federal testing benchmarks two years in a row.

In Santa Clara County, 29 schools -- including several on the East Side and in downtown San Jose -- were singled out for Program Improvement status for 2005-06. Two schools -- Fair Junior High and Gardner Elementary -- have been in the program for at least five years, which means that technically they could be taken over by the state. But the sheer number of California schools that are struggling makes a takeover unlikely."

Tell me again why people want to pay over a million bucks for a home here?

The public school my kids were supposed to attend (they bussed them for social integration ) was a 1 on a scale of 1-10. It was horrible. In addition to paying 4K property taxes, we had to shell out thousands for private school. I'm so glad we are out of there.

Wow, I go away for a few hours and suddenly we're talking about the end of the world. Haven't had time to read every post yet, but wanted to reply to Escape from DC's questions to me.

"as for “diversity spreading to middle America”, what do you mean by “diversity”?

Diversity of skin color?
Diversity of culture?"

Both, because I believe that in the long-term, everyone benefits from cultures, subcultures, and races becoming more homogenous. If we all end up mixed together, then the best aspects of each culture may be adopted as American, and the not so great aspects may fade away. I realize this is a shaky theory. :-P

"Because I gotta point out, the first is silly"

What's silly about it? I grew up in the racially divided South, white people on one side of town and black people on the other. Went to school during bussing and saw elementary school kids beat each other until they were bloody simply because they'd gotten into a racially-charged argument. I consider such incidents growing pains (not defending bussing here, just using this as an example) on the road toward a culture that benefits from everyone's stengths.

I think this should happen naturally--as it is now as a result of the coastal housing bubble, with immigrants moving to more affordable areas.

The city I grew up in is much more diverse (and tolerant) now than ever, and to me that seems so obviously like a good thing, I'm surprised when I hear otherwise liberal friends (and I'm not a liberal, by the way--I've voted both replubican and democrat based on who seems the least idiotic) from that area making veiled racist comments (about the latest influx of immigrants, not blacks). Is racism ever a good thing? I don't think so, but it seems to me the only way to overcome it is during the long process of people getting to know each other.

"and the second is probably unwanted if that culutre resembles the immigrant culutre in Cali, which is significantly mexican."

Unwanted? Probably by a lot of people, but I disagree with them. I am strongly opposed to illegal immigration, but I think any family who comes here legally should be welcome. So what if they're Mexican? The Mexicans I know are generally hard-working and family-oriented, and what's wrong with those cultural values?

"In the ideal society, there would be no diversity; everybody would be a good person looking to care for ems neighbor."

I agree with you there, and I don't support diversity for the sake of itself. I support it for the reasons stated above.

Oh crap, can an admin person delete my second to last post, where my quotes disappeared? I reposted it with the quotes--sorry to clog up the thread with all that rambling!

"So what if they’re Mexican? The Mexicans I know are generally hard-working and family-oriented, and what’s wrong with those cultural values? "

Okay, so now I'm arguing with my own post, LOL...upon re-reading, this sounds like a silly generalization to me. All I meant was to point out that I disagree Escape's assumption that Mexican immigration/culture is a negative thing.

Also, on the subject of diversity, I think what it ultimately does is divide us up into classes rather than racial/ethnic groups. At that point, when we can accept each other as equals without having stupid prejudices based on each others' superficial differences, then we each have our own equal chance to move up in social class.

It's possible that it's becoming harder and harder to move from working class to middle class--that, I don't have an opinion on right now.

Regarding diversification, the school that was rated 1 (being the lowest score to be given statewide) was 72% Hispanic. Most of the students had a hard time with English. In addition, the parent's never showed up to help at the school. It was always about 6 of us from across town to volunteer ( I had my child in the school for 5 weeks and pulled him out when a student threatened to punch him in the face). That's when I seriously thought about moving out of CA. I think the language barrier was the problem. I remember noticing all of the Vietnamese signage taking over Milpitas and Fremont and I wondered how their children would do in school if the parents didn't try to learn English and in turn teach them the language. Anyway, I think diversity is a good thing but it can have negative ramifications such as schools being adversely affected.

"It is impossible to switch classes today. Anyone try it?"

Ooh, me, me! I did. I'm still a little working class around the edges, LOL, but I grew up in a poor single-mother working class family and managed to pay my own way through college and end up in the middle class. So I believe it's still possible...in CA, I don't know. I didn't grow up here. But elsewhere, yes, definitely. I had no advantages other than the example of my mother who worked her ass off.

Starting back at the beginning:
2. Marriages strained due to long work hours and struggles to afford BA cost of living
3. kids who have very little time with their parents
4. people with more of a grasping, greedy mentality than I’ve ever seen before

I've read quite a few articles describing how professionals, etc. are feeling the pinch from BA cost of living--and when they say "cost of living", don't we know they mean housing? Really, unless you have an incurable habit for gourmet foods, designer clothing and high-end furniture, aren't most other costs fairly manageable? Ok, gas has become a big issue too. It's really the housing that's hit us here; and most of us forget when that was reasonable too.

Regarding those "grasping" moneygrabber types: In addition to living costs, I think the BA has attracted a lot of people who came here to "strike it rich" in tech, finance, or biochem. First and foremost were their carreers and bottom line, which I'd say has poisoned the social climate and infected many other people. I might be exaggerating, but when someone makes huge wads of cash and shows off their new Corniche convertible or spacious hilltop mansion, people get envious and feel driven to be just as "successful"--without stopping to consider what life is really about. Following that reasoning, many people have divested themselves from any meaningful foundation in life. They become wealthy, but self-absorbed; life becomes measured by things and not by connections to people and environment. They grow old amidst expensive toys that collect dust. And in the end, they finally "arrive": under six feet of sod, their toys are now distributed to their children, who start the process anew.

While housing costs in the BA are currently high, they are somewhat avoidable...if one dares to stoop to be a lowly "renter". The irony is that many people--who complain about housing costs--have also bought into the lie, thinking they can grab just a little more wealth from buying a home now. Many want a meaningful life, close families, but they perceive that wealth is imperative to securing that. Perhaps that's why so many people are so willing to so far into debt: "the good life" is unobtainable otherwise.

Throwing borrowed money at happiness can't go on forever. One way or another, social values will find a saner equilibrium.

t is impossible to switch classes today. Anyone try it? There are the working poor, the poor, the we don’t think we’re poor because we have a house ATM, the wealthy and the uber wealthy. So that really leaves two classes, the have and the have-nots. And I don’t think the haves are taking applications any longer.

It's not impossible, just increasingly improbable. My wife and I both succeeded to move up, quite a lot actually (we both grew up pretty damned poor). But that was years ago when education was a great enabler of upwards mobility; it would have been harder much harder today.

I still think there are at least 4 classes, because you've left out the abject poor--a frighteningly quickly growing strata. The working-educated who have the ATM-houses aren't the same as the New Orleans, in-the-projects poor. Of course, there's no officially agreed upon classification, but most stuff I read tends to divide into these 4(5):

* The poor. Truely no wealth, often little or no secondary education, entirely dependent upon others for economic survival, usually the government. This group has little chance to gain education or skills from formal training due to early childhood neglect and failure to understand the process of education.

This class is growing.

* The working-class. Little or no wealth; any wealth is distressed or at severe risk of loss due to insufficient access to or understanding of insurance. This group lives paycheck-to-paycheck and can be moved down to the Poor by a single event such as a sickness of the primary provider.

This class is not growing or shrinking by some estimates.

* The Educated (or educated-working class, or The Skilled Class). This group has some wealth, usually in the form of home equity, which is generally not distressed and is often insured. They are strongly deliniated from the lower classes by an education (University, trade school, etc.) which is generically applicable to many jobs. This group generally has 4-times or more the rate of health care coverage and property insurance. This group has little risk of falling to the Poor, and only slight risk of occassional dips into the working-class. This class can sustain moderate periods of reduced or no income without falling into poverty.

This class, when summed with the next highest, is not growing.

(The "Rich" classes)
* The near-wealthy/sub-wealthy/"BoBo's"/neveux rich. This group has often moved up from the Educated Class, usually within the most recent generation. It is a dispute whether this is attributable to quality of education, timing and location, or simply luck. This group has significant, usually growing wealth in the form of assets in addition to their primary home, often in the form of equity ownership, investments, or income-producing assets. Few in this group move up to the "True Rich", and many consume much of their wealth within 2 generations, their children and grandchildren settling back into the Educated Class. This class can sustain significant periods of loss of income by liquidating assets--often equating to multiple years worth of viability.

This class, when summed with the previous is not growing.

*"True Rich". Total financial independence. This group requires no income to exist economically. This class leaves long lasting wealth legacy, often esnuring that their families will maintain this level of existence for many generations. It is rare and often spectacular when there is downward mobility out of this strata.

This class is not growing.

Randy, nice breakdown of demographics.

If there's an overal reduction in wealth, that would appear to spell doom for US corporations relying on consumer spending, unless they find a way to keep the credit binge going fullsteam.

"I’ve read quite a few articles describing how professionals, etc. are feeling the pinch from BA cost of living–and when they say “cost of living”, don’t we know they mean housing?"

True that housing is the biggy, but I think it causes everything to be more expensive (since everyone who provides a business/service there has to pay for housing too). Every business, every service rendered--everything's more expensive there. Sometimes significantly more. Off the top of my head, I remember comparing private school costs for elementary kids recently, and it's around $25K yearly for some of the better school in the BA, while it's more like $12K for some of the better schools in cheaper locations.

"people get envious and feel driven to be just as “successful”–without stopping to consider what life is really about. Following that reasoning, many people have divested themselves from any meaningful foundation in life. They become wealthy, but self-absorbed; life becomes measured by things and not by connections to people and environment."

I can't agree enough with this. It's just so sad and true. And now that you mention it, it made me realize that yes, when I visit the BA I do see more extreme exhibitions of wealth than I do elsewhere, and it does affect me too. It erodes my less-materialistic definition of success. And then I visited my hometown this past summer, where all my family is still living pretty far below the middle class standard, and I realized that my own lifestyle, which I consider modest, seems conspicuously flashy compared to theirs.

Excellent social class breakdown, Randy. Very insightful. Definitely something I'll be thinking more about now.

The RE wealth effect out here is really interesting. I've heard that most lottery winners usually end up losing all of their winnings because they've never had that kind of money before.

I think we're going to see that kind of phenomenon out here. So many of the Re "investors" here have never had the kind of money they are seeing right now and it's like it's burning a hole in their wallet and they can't get rid of it soon enough. Hence all the Escalades, super lavish vacations, home improvements and so on. I also think that people here have never seen this kind of run-up in RE before (LA and the BA I believe are more used to big gains in RE) and it seems as if they have pretentions to try to be like the moneyed BA types. I think a lot of newly flush RE lottery winners are going to go broke very soon.

If there’s an overal reduction in wealth, that would appear to spell doom for US corporations relying on consumer spending, unless they find a way to keep the credit binge going fullsteam.

That is a very reasonable worry. The problem, according to the demographics I stated, is that most consumer spending comes from the Educated & Near-Wealthy classes. The housing bubble is putting pressure on one of the attributes of the Educated Class which makes them more prone to fall to Working-Class status, that is primary home-related wealth. As more in this class distress their homes unwittingly with NAAVLPs, they risk losing their primary asset base.

I suspect that a significant restructuring of corporate revenue expectations is in store. But, then again, we're ignoring many macro factors which could extend "credit" outside of this analysis, the biggest being international trade and purchasing-power-parity adjustments. If you want to know why Wal-Mart with a zillion tons of cheap plastic products from China works for the economy it is because this dynamic helps to plug the hole you pointed out.

I don't think it's likely that the "music will stop" suddenly one day, though. I think it will be a period of prolonged, quite painful and slow structural adjustments. The effect will be less upward movement across the big class divide between Working-Class and Educated, and perhaps more in the opposite direction. I think the churn between the Educated and Near-Wealthy could slow or stop too, and then within about 30 years that class will evaporate. The rich will always stay rich; the poor will always stay poor--sadly.

The rich will always stay rich; the poor will always stay poor–sadly.

There is a saying, if you want to be rich, make money off the poor.

I think the churn between the Educated and Near-Wealthy could slow or stop too, and then within about 30 years that class will evaporate.

Very well said. That class is so unnatural in the order of things. Randy, what caused this anomally?

Very well said. That class is so unnatural in the order of things. Randy, what caused this anomally?

I don't pretend to answer that conclusively. My guess is that it's not an anomally at all, just a temporary phenomenon. I think such sub-rich classes arise naturally when there is structural change, rapid growth, or rapid technological shifts. Such a class existed for about 20 years in the early 20th century and ended with the onset of the Great Depression. I think something similar occurred during the great Industrialization phase also. Maybe it comes into existence because the societal structure can't accomidate new wealth generation fast enough.

That is, it takes the Rich time to figure out how to transfer new wealth back into their own pockets, in the mean time the neveaux rich get to spend it for a while.

Jim Cramer: "the housing bubble is dead"

I thought he used to say that there is no housing bubble.

Okay, the unicorn is dead.

Hey, MP, did you see the sfarmls link I posed in the last thread? Do you think that one is "underpriced" because it is below the $1000/sf you suggested?

A $3.051M house in premium SF hardly provides any evidence of the housing market. What next, shall we shop comparables on Belvedere Island and in Atherton? I really could care less about asset values in the

Hey guys, are you surprised that this house went for $550,000 over asking? I mean, it’s September right and we’re supposed to be in a bubble right?

Not surprised. I even expect the condo link I posted yesterday to go for 400K over asking.

It proves nothing about the housing market in general.

i think it’s good value

Whatever. That link provides little info for comparisons.
And speaking of which, what's with this micro-focus on select SF markets?
So the examples you hand-pick are selling high, one could easily take issue with that if we're making assumptions about the overal RE scene. What are providing to overal commentary? You examples are repetitious, and rather irrelevant and absurd, IMO.

What next, shall we shop comparables on Belvedere Island
Well, speaking of which: homes in Belvedere are mostly sitting. I've seen some with signs for 6 mos. or more--with no price reductions.