The Housing Bubble

Was Fox news even around in 1996? If so - they may had 3 stations and 5 people working for it.

I remember Perot in many a debate. He could have won it too - he was actually LEADING in the polls the first time he ran. The he went absolutely bonkers near the end and lost it all.

“The he went absolutely bonkers near the end and lost it all.”

He didn’t go bonkers, he was always that way. He lost any chance because no one took him seriously after he dropped out of the race.

The last time I voted was in 1992. I voted for Perot. Looney as he was, at least he was addressing the real issues.

Come to think of it, was he really that looney? The media has brushed off Ron Paul in the same manner - treating him like some sort of a lunatic. Perhaps just a way to discredit anyone challenging the PTB.

“Was Fox news even around in 1996? If so - they may had 3 stations and 5 people working for it.”

Funny how Fox has become the quintessential news station. I’m sure there is something to be learned from that but it makes my head spin thinking about it. On the plus side, they were one of the earliest major media outlets to report on the housing bubble, way back in 2006.

Rupert Murdoch brand of jaundice-journalism was quite the hit, in the Yellow States.

Hey, I voted for Ross the first time. And yes, he didn’t GO bonkers, it just became increasing obvious how bonkers he’d always been. But it is emblematic of our sad state of affairs when only the crazy are willing to state simple truths: that our ballance of payments and government deficits are increasingly out of wack and con’t continue on the current course.

Perot was that looney megalomaniacal. I worked as a Perot county chairman in Colorado in 1992 until he dropped out, then he got back in and I went to see the man. That folksy, slightly daffy persona you saw on Larry King? Doesn’t exist. Napoleon on steroids is more like it. I have never been in another group of people where one person’s ego was that suffocatingly palpable. A little Dictator. I ran out of that hall and did everything I could to get Papa Bush back in. Supporting Perot for three months is the one thing I most regret about my political history, ’cause it helped make Billary a Hundred Million bucks, and gave Osama most of a decade to entrench Al Qaeda.

Perot is fully capable of screwing over the entire electoral system just to pay back something he thinks the Bushes did to him. And he did.

Well good for Ross Perot. He did us a favor and gave us 8 years reprieve.

’cause it helped make Billary a Hundred Million bucks, and gave Osama most of a decade to entrench Al Qaeda.

Seems to me Osama has had the last 7 years to dig in. At least the last president took a couple of shots at him, and didn’t divert our intelligence and military into Iraq.

Misery index and BS of inflation and unemployment numbers in MSM.

http://biz.yahoo.com/cnnm/080514/051308_misery.html

Napoleon on steroids is more like it. I have never been in another group of people where one person’s ego was that suffocatingly palpable. A little Dictator.

I worked for Perot Systems for a few years and you nailed it. Suffocating bureaucracy, a creepy militant culture, treating employees like dirt and management ranks stacked with paranoid (and incompetent) kiss-up-kick-down bullies, all of it run by Ross Jr. (what meritocracy).
Last I heard Ross Sr. was really losing it mentally (more so) and doesn’t speak in public much anymore.

Lets not forget his running mate…”Who am I? Why am I here?”

He was right about nafta though.

Although this post may be too late for notice, I had to uncloak to respond to the dig at Admiral James Stockdale, Ross Perot’s running mate in 1992. Many people mistook the rhetorical questions in his debate introduction (”Who am I? Why am I here?”) for mental confusion or muddled thinking. In reality, it was a well-considered and deeply philosophical point designed to address an existential conundrum.

To get a better sense of the man beyond the caricature, I encourage everyone to download the free PDF of his essay in which he describes his time as a POW in Vietnam and how he used ancient philosophical principles to maintain his sanity and identity. The document page is here: “Courage Under Fire” by James Bond Stockdale.

diogenesone

No disagreement here.

My mother taught high school for much of her 22-year teaching career. You should have heard the things she said about many of her colleagues. The remarks were directed at their intellect. Or lack thereof.

That doesn’t surprise me. For historical reasons, I’d expect most of the brighter HS teachers to be women, as men have had more other opportunities and are less likely to choose the career for lifestyle (summers off) reasons.

To an academic economist, no point of view on the economy is valid until sprinkled with an ample quantity of holy water from the tenured high priests of the profession. This is one reason that academic economists have trouble reacting to current and changing market conditions: It takes a considerable amount of time to turn current data into peer-reviewed studies.

We need a master painter and they give us a photographer.

Being Ben Bernanke (triple-BBB rated) is now packing heat as he maps out the rest of his miserable existence, as Fed chief.

Of course, so much better if critical economic decisions are made at all levels out of complete ignorance of actual conditions.

A lot of very interesting information can be found poking around the web sites of the various Fed Banks. Not to mention some prescient white papers, and a fair amount of inter bank sniping. I have a mild suspicion that they use Cleveland as a dumping ground for trouble makers, judging by some of the stuff they’ve put out over the years.

Although I wasn’t very impressed with Bernanke when he was appointed, I think he has done rather well steering the economy through the reefs and shoals that Greenspan left it in. Bernanke is certainly more humble and less cavalier than his predecessor, and since much of this fiasco was made possible by hubris–that’s a good thing. Furthermore, a detached analytical view of the economy is probably necessary after years of its political manipulation. Reason might just be coming back into style.

“It takes a considerable amount of time to turn current data into peer-reviewed studies.”

This is precisely how I found HBB: Mickey Kaus linked to it for some anectdotal info about school enrollment, saying by the time this all shows up in someone’s peer-reviewed study, the rest of the world already knows what’s going on. I went all cash shortly after that, LOL.

PB: you have that one correct. There is very little going on in the field to challenge the status quo, except for mavericks like Dr. Shiller and Gary Becker. No one else ever wants to be pinned into a position. I would bet that J.M. Keynes was dismissed by many during his time, only to be the father of modern economics today.

No he was actually pretty main stream, and rapidly accepted. He was pretty much born into the establishment at Cambridge University, and was also advocating interventionist government at a time when governments desperately wanted to do something.

He probably would have been challenged more at the time if this hadn’t been the case, and it would have been better all round if he had been.

“the Great Depression II”

The Great Correction II.

“That’s about right. I don’t think we are heading for the Great Depression II, just a grinding decline in the standard of living.”

But hey, standard of living is in the eye of the beholder. People may be eating less and buying more of their clothes from Wal Mart. But more people are bathing in luxurious jetted tubs, and eating on granite counter tops than ever before!!!!

Where it will really show up is public services ??

I have never seen that happen around here W T…They are already in increase fee mode…Everthing…Water, sewer, garbage, electricity, building, planning…Big pops to…15% +…

Aren’t the “slowdown, not recession” folks the same ones who brought us “subprime is contained” up until around August 2007?

He’s not an economist, but Hank Paulson commented sometime back last fall that the state of the American economy was the strongest he’d ever seen in his entire professional career.

Strong like Bullsh*t

If they ever uttered the words “soft landing” I wouldnt believe a word they say.

Are these economists the same ones who predicted a ‘rebound’ of housing prices in 2007-2008, or who didn’t see any problems at all…until they arrived?
If not, then discard their ‘expert’ opinion entirely. Greenspin, are you listening?

Yep that’s my litmus test.

Yeah, like all the dopes who said that housing would pick up in the 2nd qtr of 2007 because the weather would get warmer. The thing that baffles me is that these people have a better education and background than what I have. Are they educated into newer and more arcane forms of stupidity?

“Strong like Bullsh*t”

Smells like BS

On the other hand, if the White House fudges the numbers to play politics as usual.

Then the stock of the US gets slammed. The value of the US dollar gets slammed.

When the government doesn’t create an honest playing field, people will take their stuff and go home. ie they’ll buy gold, land, stuff and get rid of US promisary notes, stocks and bonds.

“Where are the ethics police when you need them?”

They’ll come out after the election.

Everything destined to come out will come out after the election.

I don’t know about the rest of you, but I personally can’t wait until we find out who will be pardoned of all high crimes & assorted badness, come January.

“Everything destined to come out will come out after the election.”

Yup, that’s my contention as well. Keep quiet (mostly) and hold the dike until January 21, 2009. Then, like a dying animal releasing all bodily function and control….

Auger,

Sacramento sounds like a similar market to where you are. Lowballing takes patience. While I have purchased two foreclosures in the last few months, most of my offers go into a black hole. The last house I purchased, the buyers came back to me 5 weeks later and accepted my offer. $286,000 on a 2,700 sf house that now rents for $24,600/year. The residents were very pleased to find an owner they knew would not foreclose on them, which is an interesting factor. Tenants are now qualifying landlords! I make it a point to take care of the clients who occupy my houses.

While the market is still tumbling here, there are selected deals worth purchasing at the right price. However, it amazes me how many “wishing prices” still exist in this market. Houses which have been listed for over a year, with price reductions (in stages), totalling 30% over an 18 month period, yet they are still over priced for the market. They are walking the market down and would have sold a year ago at a higher price to a knife catcher (which is risk I take, but the properties I purchase have cash flow and I invest for the long term).

I just looked at a 2800 SF house listed for $249,900. It sold for $435,000 in August 2005, using 100% sub prime financing. That is a 43% correction off the peak. $90/sf is one of the lowest prices I have seen for a new home (2005). The same model sold for $305,000 about 4 months ago. Given the amount of inventory still going back to the banks, I have decided to sit out the rest of the summer months, perhaps even the early fall. I believe we will see another round of price drops, though nothing like the 40-50% we have already seen. I like to submit offers when no one else is shopping. November, December and January will be another great opportunity to find selected deals. I wanted to buy a new home in 2005 and almost got sucked in. It has been very difficult to be patient, but it is paying rewards now. I am convinced more patience will pay more rewards in late ‘08, early ‘09.

When I’m looking at investment properties I usually use the (cost / AnnualRent)/2 formula to get the yield. Do you buy your rentals with cash? If not how are you making that work for you if you are paying interest to the bank of I assume around 5.3%?

I put 25% down and received 6.125% financing for non-owner occ, fixed 30-years. PITI + HOA is $19,700/year. Rent is $24,600. Typically, most people would pay 8% management ($2,000/year) and 5% vacancy ($1,230/year), but my properties are self managed and they stay full because I take very good care of my clients. I also should reserve about $500-$1,000/year for mainenance, but these are brand new houses, some never even occupied. You could say I am cheating myself, or kidding myself, but the net effect is I clear about $4,000/year on my $80,000 down payment (includes $8,000 in closing and initial set up costs). That is a 5% cash flow. I also get tax breaks for owning rental units, although the AMT usually kills that benefit in most tax years. I also benefit from about $300/mon in principal reduction and while that is not cash flow, it is real. That brings me close to a 10% return. I consider that decent, particularly since I am buying below reproduction cost and the builders can not match my acquisition basis, though building costs are dropping.

I am not saying this strategy is not without risks and most deals I see are still way overpriced. I also spend a lot of time watching the market and look at houses all the time. If you consider the value of my time, perhaps I am shortchanging myself on that basis, but I really like what I do (part time, as I have a job that requires 40-50 hours a week). Some people fly fish and spend a lot more money than I do all season long. I house fish. It costs me nothing and is more fun for me.

I am unclear on your formula of the cost/annual rent/2 = yield formula? That implies that your expenses run 50% for a rental unit. In Sacramento, single family rental units typically run 30-40% expenses before debt service. I can keep mine even lower, as you have seen in the example above.

Thanks for the reply. I’m a new landlord and I like asking people who are in the business questions who and doing it with a clue :).

The reason I use that formula is I figure if I can get to a break even at that formula then that should be worst case scenario.

Me personally, I’ve been driving 65 instead of 75 on the freeway this week, and I’m still getting blown off the road.

Just logged 60 miles on I-4. Cruise set at 65 and I didn’t pass any one and almost got ran over by a couple of semis. It doesn’t appear gas prices are having any effect in this area.

O’ Canada
Our safe deposit box land
For a small fee, it’s beyond Uncle Sam’s demand

Funny. Glen Beck talking to Dick Armey. Referring to the “angry renters,” he states, “we get up hard every morning.” LOL!!!!!!!!!!!!!!!!!

http://youtube.com/watch?v=-dM_oqraO7c

I understand the position, I just think it’s missing the point. The housing market is more or less free. Sure there are distortions and they are to be resisted. But government actions usually produce the opposite of the stated goal. The same is true in housing. Barney Frank can only make the bust worse and prices will fall even more. That’s the market at work.

What market participants need is information, and that’s what I focus on. It must be sorted through and put into a context different than the REIC puts out, but there is plenty of information out there that proves prices will fall to a sustainable level.

Financial manias are rare. IMO, eventually the idea that a stable and affordable housing market is best for all concerned will prevail.

My observation is the blazing RE fire, rather the mania as you call it, hasn’t been extinguished completely. There are still alot of believers out there and they are buying at all price levels. Maybe not all the believers are buying but those with access to cash/finance are. TXchick posted a instance of it yesterday where some dope got duped and laid down 1 million+ for a shack in California. The dimwits in the northeast are bargain hunting and buying junk at the lower end that fell a wopping 15%. Maybe I need another dose of vindication. I’m sure it’s out there but I haven’t heard any juicy tales of woe by anyone I know lately.

Here’s one for you. I checked this out btw, and “Desperate Grandmother” bought this house just last year. Evidently without a job.

http://dallas.craigslist.org/com/680042644.html

I’m with Ben on this one. Patience is the key here. This mess took decades to create. It will take a long long time to play itself out. My wife and I have chosen to be very patient and conservative. We are like a couple that is facing a cobra. We are moving very slowly and cautiously. We won’t be making any quick movements any time soon. Let the knifecatchers catch knives. Let the patsies be patsies. Sit back and watch the wreck unfold as conductor Bernanke barks out orders and drives the train over the cliff.

I don’t even care anymore if people buy and it is nowhere near the bottom. I just don’t want them to turn around a few years later and cry for bailout money because they are underwater. The lenders better be making prudent loans because if we are still talking bailouts after the last option arms reset, then I will hold Uncle Sam exclusively responsible for this mess.

I’m finally in a position to hit the stop cord and leap off the train but now there is some fat lady stuck in the inter-car area. I may have to go out a window.

You’re right IMHO exeter, that it’s nowhere near extinguished.

It seems around here that any evidence of pickup in sales volume reignites the idea that things are turning around. It’s even affected a friend of mine who’s been in the biz over 20 years and should know better. She claims to be finding great deals for people and herself (she just bought another house herself) but to me, 20% off ask isn’t doing anyone any favors right now.

And then there’s the radio commerical that really bugs me: “Power One Financial and the Federal Housing Administration….working together to keep YOU, SAFE in your home.” With zero down options, of course.

“There are still alot of believers out there and they are buying at all price levels.”

I can’t help but wonder how much of the below-market-rate lending from the Fed will wind up funneled back into the market for vacant homes, coming from banks speculating on the theory that “real estate always goes up, in the long run.” I see the potential here for a parallel to the Japanese banking problem of the early 1990s, but with a twist: Instead of zombie companies, we have zombie houses. One thing is for certain: Unless incomes go up a lot, or lending standards relax a lot, there will be no fundamental demand to speak of at current price levels.

Like spike66 posted the other day, be patient or be poor.

The crooks would LOVE to see houses cycle through the hands of multiple knife-catchers as we grind our way to the bottom. That means more FEES for them! Anything to avoid truly affordable housing for people who save and who work normal jobs.

I will not buy until it is my financial interest to do so. That means something under $100,000. And I will pay cash on the barrelhead. I don’t care how long I have to wait. I like renting and having my garbage and recycling picked up for me. I also enjoy seeing the landscaping truck come every week and watching the workers mow my lawns and put out fresh flowers.
Homeownership is overrated.

By title… but not equity.

SF Mechanist–BINGO and that was true BEFORE house prices started to decline. Of course like CC debt this is highly concentrated. Plenty of people own their house free and clear. Plenty more bought pre-bubble and never got HELOCs so they’re likely to be fine. But a sizeable number are already upside down and even more will become upside down in the next few years.

Those pesky little nuggets of truth are pretty cool WT.

I agree 100% with WT Economist’s post. Both Democrat and Republican buffoonery can be blamed for the present financial mess. However, CRA is being used as a scapegoat by the right-wing ‘think’ tanks, hoping to deflect attention from the fact that a complete lack of regulatory oversight is the real culprit behind a complete gutting of lending standards and Wall Street’s inappropriate leverage.

I call BS, there wasn’t any “regulatory oversight” in the 1950’s, and we didn’t have this problem. The problem isn’t regulatory oversight it’s the ability of anyone to lean on the government to bail them out of stupid decisions. If a company that made bad decisions no matter how big or “important” were allowed to go belly up, and the investors lost everything then the investors and companies would be more careful with their money. Those that aren’t careful with their money will soon be parted with it as is the natural order.

There was PLENTY of regulatory oversight of banks in the ’50s. Rules meant that there really was NO national market for residental banking products. (loans or savings accounts) Really only investment banks has a national presence. You got your mortgage from a local bank that could really only sell it to Fannie or FHA. As likely as not they kept it on their books and therefore were VERY interested in the borrowers ability to repay. But it was at least in part the regulation driven lack of a national market in mortgages that drove them to keep them on their own books.

Securitization, the rating agencies conflicts of interest, and the ability to socialize the losses are the problem. CEO compensation that is focused on short term gains and golden parachutes can be thrown in as well. As far as I know the first two did not exist in the 50’s. It would have been very easy to outlaw no doc loans, or make lenders keep 30% of every loan on their books, or force rating agencies to create a system that prevented the conflicts of interest that lead to crap being rated AAA. It would have been very easy to outlaw preditory lending, but our government did the exact opposite. They went after states that tried to prevent preditory lending.

The economy was a lot smaller in the 50s so cockroach operators had a harder time moving from one job to the next.

The great failure of this decade was all the independent brokers and middlemen in the chain who could rape their customers and their own book to the point of failure, but (in their expectations) hop into a new situation as a new hire and do it again.

I’m not sure what’s worse, the governments endless series of hobgoblins (Iran, Iraq, Osama, Hamas, universal healthcare, illegal drugs) or the endless series of happy feet dances (all is well so keep buying stuff, mission accomplished, we will be greeted with flowers, inflation is under control, the credit crises has passed, etc.).

Osama is an imaginary hobgoblin?

US healthcare costs are an imaginary hobgoblin?

No. Osama is just another hobgoblin to be wheeled out when most convenient.

exeter understands my point about Osama. The universal healthcare hobgoblin means standing in line for months to see a GP and dying while you wait a year for open heart surgery from a underpaid, angry quack. The fear card, instead of a rational presentation of the facts.

Lad, I love you, but I’m breaking out my disappointed English teacher cluck because you’re such a gifted student. I think you can do better.

Please beware of comma splices, i.e. commas that interrupt a sentence or an independent clause.

Now, continue drafting your research paper conecting the lack of water in Southern California to the mother of all gold price run-ups.

You are aware of what a Fleet Enema, is?

Record High Foreclosure Rate Could Be Good for Buyers
San Diego Sees 100% Increase in April from Last Year
May 14, 2008
Andrew Phelps

A new report shows the rate of San Diego home foreclosures jumped 100 percent in April, compared to the same time last year. That’s a staggering increase for one year, especially since San Diego’s foreclosure rate was already so high.

Rick Sharga of RealtyTrac says there were 5,300 foreclosures in San Diego last month. He says the vast majority of foreclosures here are in an early stage, before the bank can repossess — and Sharga says banks don’t want to do that. He says homeowners should immediately seek help if they can’t pay the mortgage.

“Hiding is the worst strategy, and reaching out and telling the bank you’re really interested in figuring out a way to make the situation work can only pay dividends,” Sharga says.

He says the foreclosure crisis will likely get worse before it gets better.

“It’s very likely we’re going to end the year at another peak, in terms of foreclosure activity, before we find a way to work through this problem,” Sharga says.

the first time i read your post i thought you were saying that the floor of the room, presumably in the second floor, fell because of the weight. lol.

Ewww…I’ve got a nice scar on my ankle to remind me of a similar adventure. Hubby used to be a ww raft guide. He’s witnessed a few “near death” moments during the Spring time waterflow that he reports only make you more respectful of what you’re dealing with.

If only underwater buyers had similar scars and scares to remind them of their adventures, perhaps they’d approach the next bubble with similar respect for the downside of risk.

‘Surely there must be some real victims in all this.’

How about the kids? It can really suck to have stupid and/or denial-prone parents. I would know.

But ,your a victim if your investment plans didn’t work out . It’s not fair that people can’t live off the houses and sell them to greater fools on toxic loans they can’t afford . Its not fair that people can’t buy big houses they can’t afford on 10 dollar a hour incomes and than blackmail the government that they will walk unless they are given the house for free .

I guess people think they are victims because they believed that real estate would continue to go up and it wasn’t relevant if they could afford the loan they took. How dare the real estate market values go down and I be asked to pay my loan payments . That wasn’t the plan, this isn’t fair .

Ah, I daydreamed of being like her - a smalltime real estate magnate! Only, it seemed like it was too late and prices too high. Plus, I preferred loafing on my porch watching the flowers grow. Laziness has its upside.

Txchick, I would pay money to see you talking to our financial whatever…. Even with everything I’ve learned on this blog, even with the things I had to beg him to do for us based on things people said on this blog, he still thinks I’m stupid…

Have you seen the IQ of the average HR person?

You really need to understand the process of bamboozlement. A few drinks, and fancy dinners along with intimidation will pay for a cr@pload of fees in the future.

Somebody posted here the other day, and asked the sales rep, “What is inflation? How does it happen?”, and the sales rep nearly cried. Sounds about right.

Definately. I was surprised to see he took a job at a medical center in Baltimore. I figured with a Darden MBA he would be working for a large Wall Street firm.

What about that million acre ranch the Bush twins bought in Paraguay last year? Is that where the family is going to hide after they finish wrecking the financial system and destroying the dollar? No extradition treaty.

Not at all similar to the Clintons.

Clinton retired 7 years ago. Welcome to year 2000.

someone hasn’t told the Hildebeest

You mean the democratically elected Hillary?

the one who is comically continuing to embarrass herself on a daily basis

and it will look even worse a year from now when it turns out that she lost to a guy who went on to lose the election to a 72 year old

I mean the faux-Yorker carpetbagger?

Let’s put a sock in the politicking, yes? It’s big-fedgov thinkin’ on all sides that helped get this country into this mess.

The enemy is big, nanny-state government, whether the nanny is a self-righteous multiculti or a self-righteous bible thumper. They all want to control how you live, what you eat, whom you fcuk and how you think in the name of “social justice” or “family values”. They ALL suck and they ALL need to mind their own fcuking business. All wisdom flows from humility and respect for the sovereignty of the rights of the individual, their equality of opportunity, and their equal treatment before the law.

Is Barack that old?

Clearly
Couple of years ago, the lowest priced house for sale in some burg S. of San Franscisco (Palo Alto?) was $400,000 for an 800 square foot adobe.

I just shake my head to watch exeter. That 10,000 sq ft monstrosity in Camillus that the young family custom built only to put on the market less than a year later is still sitting.

http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=146286

But the funny thing is the house I mentioned above that sold to the NJ couple was a builder’s home and when it sold he went and built an even bigger house right around the block. So I’m thinking he wasn’t planning on any slowdowns in his business.

The wheat checks my wife got came in a box about the size of a postage stamp.
I saw corn for 50 cents an ear, a few years ago it was 12 for a buck. I know it’s off season but still.
Meat is down because meat producers are slaughtering their animals because they can’t afford to feed them. It is about to start rising. I bought some chicken producers in anticipation.
Milk is about 30% higher at 2.79 a gallon

Milk in Florida is $4.29 a gallon, cheapest. Same or more in Virginia.

Dairy, fish, and produce are where I see the big increases over the last 6 months. OJ finally under control, thankfully.

Not to state the obvious but legalizing production has the effect of causing the price to collapse to “rational” values.

Right now, marijuana is the largest cash crop in the US eclipsing corn and wheat put together.

Surely people consume more tomatoes and carrots (even indirectly) than smoke pot!

So the price would collapse. The premium only exists because it is illegal.

yes, of course the price would collapse and although I think that is good for several reasons (stop the easy money for big criminals, less crime and troubles caused by the regular buyers, probably better quality = safer), it is also reason for concern. This might attract even more users, especially from outside Netherlands. Most of the buyers in the coffeeshops in my area are foreigners (French drugsrunners, Belgian/German tourists etc.). It is difficult for one country to buck the trend. Most of the EU countries are in favour of even tougher drugs laws, and reality is that the EU has a strong influence on the national legislation for such issues.

Easy way to keep price from collapsing too far.
Tax the crap out of it.
Take a look at what our drug laws cost the US in terms of enforcement, jail time, court time, ect. Take a look at what the cost Mexico - Daylight gun battles and executions of police and politicians. The army is outgunned. Why is it don’t blame the gun blame the criminal but we need a war on drugs. You can tax it and then use the procedes to put problem users in jail for long periods of time. DUI 1 strike and you go to jail. Rob a bank get in a fight break public property go to jail

Easy way to keep price from collapsing too far.
Tax the crap out of it.

I hate to say it but that’d only work on a federal level… Unless the feds demanded a minimum level of state taxation that would prevent smuggling, and I’m not sure that’d be constitutional (or else it’d be done with tobacky, surely?)

But hells yeah, legalise and tax to the point that it’s unprofitable to smuggle.

(and of course, legalisation = “homebrew” (homebake?))

yes, same problem in Netherlands. Cannabis production is controlled by powerfull, well-organized gangs (with good political connections I am sure) that cause serious trouble: violence mostly against competitors, energy theft, dumped chemicals, occasional fires and flooding in homes because of the secret plantations etc..

To give an idea how well organized they are: if you provide them a space to work from, they will organise everything else for you (all required equipment and installation, free electricity, plants, harvesting services, protection etc.) and you can still pocket something like 25-50K euros each year with a good sized home. Too attractive to turn down for many people, it’s easy money. And when people get caught, there are legions of lawyers who will explain to the judge that they are victims instead of criminals, so the punishments are nothing. Usually they are preparing for the new cannabis harvest within a few weeks of seeing the judge

The problem with legalization of cannabis appears to be organized gangs from SEASIA, Mexico, China

NO that’s the problem with making it illegal. You’ve made these people rich. Let Americans grow small quantities and license growers and sellers the way you license bars. Then use the money to step up enforcement of illegal smuggling into the counrty. The gangs face a better financed more focused drug agency and a lower price for their product, and potentially an increased penalty for smuggling. This leads to less crime not more, it leads to less bribery of public officials not more.

The only downside is more people smoking and getting high which would lead to more lung cancer and possibly decreased productivity at work, but you can fire people who are not productive and it’s a free country if you can kill yourself with cigs MJ should be legal. Education and taxation work in the long run, just look at the percentage of people who smoke in the US now. Same would hold true for marijuana.

Look at alcohol, a far more destructive drug than marijuana in terms of violence and bad behavior. It generates big revenues for the tax man.

I stayed at the Marriott Marquis in Manhattan early this year. I got last minute clearance tickets (about 3 hours before show) at a kiosk at street level on north side of Marriott. I got balcony tickets for my daughter and friend to Phantom of the Opera at 50% of face value.
There were huge lines at the kiosk and they were selling cut-rate last minute tickets to many shows.

Yeah, I know exactly which place you are talking about. I use that myself but even those are not true “market clearing prices” because the shows are frequently still not completely full.

To have true “market clearing”, you must keep lowering the price to sell as many as possible till the price is 1 cent.

I call them “market acceptable” prices which is what they are.

Someone brought me Horse Piss beer from Kentucky today. Not bad stuff.

nuthin like a frothy cold swig o’ Horse Piss.

beers good too!

I agree with higher gas tax analysis.

Right on hoz. A big fat surcharge on fuel will knock the hell out of demand. Apparently bubba is far too stupid to understand it.

Gas tax is regressive. The rich can afford it and the poor will suffer. As for starting a trade war, I doubt consumers (who import almost everything) will take kindly to jacking up the price of everything they buy.

Start drilling off the coasts. To hell with sea lions and snail darters and all that. I don’t give a rats a$$ about someone’s “view” at $4-$5 a gallon.

So, you’d be cool with drilling all over Lake Michigan, if it had a couple years of oil, underneath?

Let’s drill in Blanos’ yard.

Whatta ya say Blano? Can I set up my rotary mud rig right next to your patio? Maybe use your front yard for a laydown area for my bits? It’s a clean operation…. no mess…. honestly.;)

I still say put the price of liability auto insurance into every gallon of gas, maybe additional taxes to offset spending on the Navy’s mission to guarantee freedom of the seas and access to oil (thus incentivizing citizens to address the international free-rider problem of Americans paying for global free trade).

And since vehicles that actually do work don’t use gasoline but diesel, don’t change diesel taxation at all so that costs of goods don’t rise unduly due to transport fuel costs.

Diesel-powered non-commercial owners would still have to buy regular liability insurance like they do now, while gas vehicle owners would have liability insurance priced into gasoline (and additional insurance such as comprehensive/collision would remain a private free market) so those driving less would pay less for insurance. And those driving more-efficient vehicles would pay less than less-efficient vehicles for the same coverage. No need for feel-good surcharges for SUVs, their thirst for fuel would be penalty enough.

And what about the poor? In the immortal words of the Roman Senate: FCUK THE POOR. Let them eat mass transit or carpool. Or let them drive altfuel vehicles, which would be covered by this but would only be taxed to the extent that they use petroleum-based gasoline (so E85 would pay 15% of the insurance tax and get 100% of the benefit, thus requiring a higher tax on the gasoline portion overall, boo fricking hoo).

It’ll never happen, of course. Meh.

The problem is that it turns liability insurance into a no-fault proposition, raising a huge moral hazard issue.

“And what about the poor?…”

Reply to Otis:

God must love the poor…she made so many of ‘em

A ton of states are already no-fault, for better or for worse. Presumably the sort of laws that prevent fraud in no-fault districts would be carried over into this system. It would be the states’ responsibility to police fraud as it is to police the roads paid for by federal highway funds.

My greatest fear, of course, is that it builds another Medicare-style bureaucracy and embiggens the federal DOT. But at least it’d be fully funded thru end-user sales taxes instead of income tax (or, god forbid, Social Security Ponzi-style) and hopefully enough folks would be paying attention since it’d be such a “where the rubber meats the road” sort of tax.

Gas tax (not diesel tax) will help the poor, as they ride public transit, which will be getting a much heftier funding stream!

Also, higher gas prices mean more infill, which means you are closer to work… also helps the poor a lot.

Most poor who drive do it because they have to to get to work… Imagine how much better their lives would be if they didn’t have to do that… They could actually get ahead instead of getting behind what with those nasty car repair bills that always crop up at the worst time…

“They’ve achieved the impossible. They’ve turned the Dems into the party of fiscal responsibility.”

Oh, I think it’s more like they (GOP) gave Alice in Wonderland: mushrooms, crack, maryjane & meth in an Monsanto organically grown granola bar and said: Visualize, Mcpain giving the commencement speech at Oral Roberts University in 2009.

Honest to God… I believe that 14+% interest rates for 14 months will inoculate the “Body Public” for the next 30 years.

CarrieAnn,
I miss those cartoons…I swear someone of influence on the “Medium” TV show is reaping material from this blog (Thank Goodness!) I saw last week shows talking about brokers being bottom feeders, “they’re” having financial difficulty, she made $300.00 consulting for a Liarwer, the liarwyer complaining about having “over paid” for the home & “they” couldn’t really afford the payments…blah, blah, blah…

Still long gold or is that long gone?

gone. looking for the 7s now. that chart is scary

my contrarian indicator on gold is a used car lot here in Roseburg, when he has the sign out and is actively buying and selling…..you should go long.

When he pulls the sign down, sell it and go short. but hey, we all have our little tells.

signs up.

I’ve gotten over my fear of being a contrarian indicator (finally). Was even able to see the market turn around and thus avoided a trade that would have lost me some moolah.

I’m making progress, I think.