patrick.net

A couple of my favorite pro-nuclear power factoids:
--Living by nuclear reactor safer than living in Denver Colorado in terms of radiation exposure (thin atmosphere).
--If your brought a coleman lantern mantle into nuclear power plant it would set off radiation detectors (trace thorium content).
Favorite NE bumper sticker:
"Another Environmentalist for Nuclear Power"

Randy H -

"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."

Just to let everyone know, preliminary reports (from CNN) say that Rita didn't cause any major damage to pipe lines or refineries. Again, these reports are very preliminary so no one really knows for sure what damage there is, if any. I think Rita was more or less a disruption for the oil industry.

However, there is some major cleaning up to do because of the severe flooding. What kind of strain this will put on an already strained economy is a question better suited for someone other then myself.

Here's a link regarding the oil industry:

http://www.heraldsun.news.com.au/common/story_page/0,5478,16715130%255E1702,00.htm

Stanman, Does that mean conservative on fiscal issues and possibly don’t know on social issues?

I know exactly how I stand on social issues; it's just that I don't fit neatly into one of the Fox-News labels. Most would probably put me in the Libertarian camp, but I would use the small "l", not the big "L", because I think the L party is just plain terrible. I say rationalist because I subscribe to classic Objectivist rational philosophy. We don't have a party at the moment (and probably never will).

A great portion of the European influx you refer to as positive wasn't viewed so at the time due to what, at the time, people thought were dramatic religious differences. That is, most of the newcomers were Catholic and poor; most of the incumbents were Protestant and not so poor (or at least they were land-owners). Columbia University has a great compilation of newspapers and such from the period (NYC focussed) which shows just how resistant people were to incoming Catholics. Many of the arguments against allowing so many Catholics into the country echo those being made today , and at least back then they turned out to be unfounded. That doesn't mean you're right, it just means that I'm not convinced on logical grounds you're right.

I'm just skeptical about who's going to "do the picking" when it comes to which cultures will compliment the US and which won't. The problem with such things is that we each personally "know" what is best, but we can't so easily hammer out concensus. For example, I don't want either Pat Buchanan nor Hillary Clinton making those choices about my country's future. If they ever ask me to do it, I'll call you guys in on my team.

This is not a minor point (risking being long winded again). I think that we all here are having informed political debate, whether we agree or not. This is something that ultimately yields good policy (at least better policy), not the crap we have today. I don't see this level of debate going on in the public sphere, and that is the real tragedy.

How many of you guys can actually afford to buy a house?

Many of us own, or recently sold and are waiting to buy back in. Some of us still have a primary residence and are selling 2nd homes and investment properties. Some are rentors, some aren't. What's the difference? I don't have to be a professional baseball player to have an opinion about the Cincinnati Reds.

Well HZ, we can differ . . .

The pessimist eats well when the hunger strikes march in. The opptomist hopes that the bread lines will be short.

Sound far fetched?

Of course! If it didn't sound far fetched, then it wouldn't be an issue.

Ask around in the late 20s. Do you think anybody would have predicted bread lines in few years?

Pessimists!!

And, building on DC...

There is a marked difference between pessimism and skepticism. I'd say that we're skeptics here, most of us aren't pessimist, although we are cynical about a great many things. I for one plan to buy another primary residence to replace the one we just sold, probably before the absolute bottom; and I'll feel very good about that decision, regardless of the outcome, so long as I make the decision given a reasonable airing of the facts.

On the topic of the original thread: It does appear as if this second Oil Shock will be less than the worst predictions. Does this help much? At all?

I still think that the US has sufferred a significant, even if not doomsday severe shock to energy supply which will put inflationary pressure on the economy. I think volatility has also increased due to the other geopolitical events we discussed.

I maintain that there is threat of future inflation, and perhaps stagflation. Time will tell; and not that much time.

This will pop the RE bubble, one way or the other (either through higher rates as the Fed fights inflation or through inflation eating away at real incomes and increasing volatility and damaging consumer sentiment).

Unfortunately, I think that a bigger shock would have hastened the RE correction, but with only smaller shocks the correction will still occur, but play out over a much longer horizon.

Just my 0.02USD (nominal, unadjusted for future expected inflation).

I figure I spend about an extra $10 a week on gas right now, it's not breaking the bank so the prices at the pump are not bothering me. It's the rising cost of everything else, especially to heat the house, that I'm concerned about. That will affect my spending more.

DubbleHubble

How long ago did you buy and what kind of loan did you use?

Randy H - Oil isn’t going to do anything to change people’s consumption patterns.

Bubba

*boggle* Ok, then "there is no inflation", keep repeating. Last I checked energy inputs are among the most penetrating in the economy.

I figure I spend about an extra $10 a week on gas right now, it’s not breaking the bank so the prices at the pump are not bothering me.

The problem is that those 10 marginal dollars you won't spend on other consumption. If you multiply that out by the entire consumer economy, it's many billions of marginal dollars lost to inflation. And, there is a multiplier effect to inputs like energy...I think petrol is a multiplier of something like 5-6 if I recall correctly, so that $10 is more like $50 when considering the increased prices to everyone in the supply chain, depressed incomes, depressed earnings, etc. A little adds up fast, that's why AG is such an inflation hawk. Inflation is the devil.

"...but if you are making a marginally salary ($100K or less) and can’t even afford a house, i suggest moving on and not wasting so much energy."

Well, exactly where is $100K a marginal salary? Oh, yeah--SF BA, where we whip ourselves for not making enough to purchase a house that people elsewhere buy with half the salary.

There are two classes: The haves, and the have-nots.

Nice. One could also say: there are those who feel entitled, and those who work for it.
Despite owning several pieces of property (yawn), I prefer to fall in the latter group.
Wealth is an illusion if you wish too hard for it.

And, while I'm not as diplomatic as Jack, I agree 100%.

"...will most likely get to see firsthand if a 100K reduction makes any difference or not in this market. "

Interesting...what's that--3BR? Keeps us in the loop, that's real data. :)

Does DubbleHubble remind you of anyone?

Could be his dad, trying to "set us straight" ;)

The problem is that those 10 marginal dollars you won’t spend on other consumption. If you multiply that out by the entire consumer economy, it’s many billions of marginal dollars lost to inflation. And, there is a multiplier effect to inputs like energy…I think petrol is a multiplier of something like 5-6 if I recall correctly, so that $10 is more like $50 when considering the increased prices to everyone in the supply chain, depressed incomes, depressed earnings, etc. A little adds up fast, that’s why AG is such an inflation hawk. Inflation is the devil.

I was so focused on the rising cost of other things due to oil prices that I forgot about the impact that $10 could have. But you're right, it might be one less cup of coffee or fast food lunch, but that is going to have an impact if everyone starts cutting back on the little things.

Jack

I was just guessing, but do you think DubbleHubble would take such an attitude for no reason? I doubt it. IMO people usually lash out because of fear.

So far I haven't been able to determine that it's someone we know, but all they'd have to do is use someone else's computer. If the pointless posts keeps coming in, then we'll have a good indication of who it is.

Randy,
Will the Fed have the gumption to keep the rate hike going? The long bond market has either been emasculated by foreign central banks and is not playing any disciplinary role.[...]

I don't really know; there are some other folks here who know the bond market here (like HARM) way better than I. I do think AG will probably continue with rate hikes to check inflation, so the Greenspan Put is a safe bet. But Greenspan ain't gonna be there forever, in fact for not much longer. And, I think I sense that there is increasingly political pressure being put on the Fed. I hope that I'm wrong about that and the Fed remains independent.

I worry less about the foreign reserve problem; but others have made very good arguments to the contrary. I don't worry too much about China because of my reasoning before, but China isn't the only foreign central bank holding a ton of greenbacks, so maybe foreign held debt is a bigger problem than I have concluded.

So far I haven’t been able to determine that it’s someone we know, but all they’d have to do is use someone else’s computer. If the pointless posts keeps coming in, then we’ll have a good indication of who it is.

Some fresh blood for the trolls? ;)

People automatically assume that renters rent and rant because of affordability issues. Gotta love it.

People automatically assume that renters rent and rant because of affordability issues. Gotta love it.

Yeah, that post is interesting to me for that reason. I don't feel bad about renting at all. I pay half as much for my house as I would if I bought it. There was also an interesting article in the NYTimes, http://tinyurl.com/csajh, that basically states that right now renting is a better option than buying for most people. The article goes on to say that there is a misconception that the tax benefits of owning make purchasing a better option, at least when the P/E ratio is so disconnected like it is now.

The article goes on to say that there is a misconception that the tax benefits of owning make purchasing a better option, at least when the P/E ratio is so disconnected like it is now.

People hate taxes so much that they are willing to pay more just to get a deduction.

If having higher interest rates and high oil price ( > $60 per barrel) is going to impact your style of living, then you were not leading the life that have earned..you were probably leading the RE bubble life.

Very well said.

People hate taxes so much that they are willing to pay more just to get a deduction.

lol
I can't tell you how many people who have told me I should buy just to get the tax deductions. Doesn't anyone own a calculator anymore?

I can’t tell you how many people who have told me I should buy just to get the tax deductions. Doesn’t anyone own a calculator anymore?

Perhaps they should pay me some money right now and I will give them a 40% refund next April. ;)

(Not solicitation of money)

Peter P

I think I want to come work for you.

(not a solicitation for a job)

South Bay and East Bay lower-end inventory continues to swell. Is lunarpark from Ben's blog here?

I think I want to come work for you.

And then you will become one of the Bay Area commuters...

I thought you loathe them. ;)

Awwwww I can't work from home? I thought that was the wave of the future. Actually I don't loathe the commutes, I just dislike what it's done to our housing market. But I understand if someone doesn't have a better option----- but how do they do it? I can't imagine driving so many hours a day!

I think many "BA commuters" telecommute. Our company has some people working from the Sacramento Metro area.

I think many “BA commuters” telecommute. Our company has some people working from the Sacramento Metro area.

Judging by the traffic, telecommuting still hasn't fully caught on. I've known quite a few people who share housing in the bay for the work week and only come home on the weekends. I'd rather rent. ;)

Why don't we talk about if telecommute is getting popular, where around BA would you like to live?

I just came back from a party way east from East Bay, man, the new developments there are just astounding. And even more astounding is the price. They developers are trying to sell a 2,500 sft house on a 4,500 sft lot for something like 800K. Grant it these are brand new developments, but they are so plastic and blatantly boring, and there is really no geographical distinctiveness whatsoever. I won't even touch these homes at half of 800K. I wonder how hot it gets further east in the midst of summer.

If I can telecommute, Santa Cruz will be on the top of my list.

Why don’t we talk about if telecommute is getting popular, where around BA would you like to live?

Let me see...

- Vancouver, BC
- Las Vegas, NV
- San Diego, CA
- Victoria, BC

(Not in any paricular order)

I don't have a RE strategy so to speak because I'm not interested in it as an investment, but rather as a home. I think we're pretty realistic about the whole thing, I don't expect a scenario where we swoop in and buy up a bunch of cheap foreclosures. I think we'll wait until the market comes down enough for us to comfortably buy and then we will.

I was joking about the telecommuting. I expect to stay home with my kids until they're older and then maybe go back to work, I haven't decided if I would stay in teaching or go to a different field. I guess whatever is most convenient with the kids. But I actually like the Sacto area, I just like to complain about how pretentious the newly flush RE genius' in my area are becoming.

It's interesting that somebody who likes Vancouver BC would even put Vegas on the list. Peter P, Your list is like one of those IQ tests, which city doesn't fit?

Even if I telecommute, I still need a place with easy access to a divided highway. I cannot drive on 2-lane highways every day.

Btw, I'm going to be really busy over the next week, so I am not going to put up any new threads. I know Surfer-X was going to put up the next one, and Kurt mentioned adding one too. Hopefully more people will step in as I am going to be out of commission for at least a few days.

It’s interesting that somebody who likes Vancouver BC would even put Vegas on the list. Peter P, Your list is like one of those IQ tests, which city doesn’t fit?

LOL

You are right!

Red October!

http://tinyurl.com/cpsvm

Regarding impact of gas prices:
In San Jose (at least), PG&E has sent notices to expect something to the effect of 42% higher costs this winter (perhaps just on gas?). *That* will surely crimp consumer spending. Look for slow xmas sales if winter comes early & cold...fall sure has come early.

In San Jose (at least), PG&E has sent notices to expect something to the effect of 42% higher costs this winter (perhaps just on gas?).

Considering how much NG has gone up, the increase is well justified IMHO. Long winter follows a brutal October. Planets appear to align for something major this year.

Wow, Peter P, that's a rather surprisingly doom&gloom article. Here's what I found this a bit astounding:
"Almost 40 percent of credit-card holders pay only the minimum balance, according to Cardweb.com. The average household credit-card balance is around $9000, according to Boston's Babson Capital. Previously, families paid a minimum of $180 a month. Now, they will have to pay $360 each month."

And this is surprising in that it echos lots of expressed sentiment on this blog:

"The basis of the American economy is consumption financed by debt. The economy's health is measured by its growth, and its growth is dependent on consumer spending and debt. But consumer debt is too high, income isn't growing, and jobs keep disappearing overseas. "It may implode," warns Adler. A perfect storm is brewing -- and San Diego may be in the eye of it."

SJ_Jim, we definitely have an economy of make-believe.

Beliefs may shift during flight...

Donald Kohn:

"But if current expectations are badly distorted, then the way forward may not be so smooth. Eventually, reality always asserts itself over wishful thinking, and such realignments are sometimes abrupt, as illustrated by the collapse of the high-tech bubble a few years ago."

I love this guy. Let's hope that he succeeds Greenspan. I do not want the helicopter man to be the next Fed chairman.

Coming from a conservative Asian culture, my parents used to buy their primary residences with cash, not because they couldn't take out a mortgage, but they would only buy a home that they could pay off right away with cash. Their philosophy is, if I have to pay for something by borrowing, then I shouldn't buy, it is beyond my affordability.

So far, I have had 0 credit card credit and always bought my vehicles on cash, and drove them to the ground. I was astnoished to find out that some of my colleagues, all earning 6-figure salaries, carry credit card debt in the range of 10,000 to 30,000, on top of their car loans, student loans etc. Some of them quoted items to me in terms of minimum monthly payments, like, this LCD TV will only cost 259 a month, or, this cruise vacation will only add another 125 per month, it's so smart of me to do remodeling since I pulled out an home equity loan that is tax deductable... The list goes on and on, it is all about spending now and dealing with the monthly payment later.

I have to say, some Americans are psychologically sick, they need to see a shrink about their spending habits. I sometimes feel like starting a seminar teaching people how to hold back their urge to spend.