The Housing Bubble

My posts express contempt for;

-The Housing Crime Sydicate
-Anyone who misrepresents the truth about housing and The Housing Crime Syndicate

(few if any fit that description here)

I “get” the academic mind. I used to be one, remember?

You want to “get” why this is not playing out the way you want it to.

The answer is that you need to survey psychology, legal precedent and history not mathematics and ethics.

Particularly ethics. That’s a wasteland actually.

People who are ethical are completely blindsided as to how the world actually works. I believe that’s polly’s point although I wouldn’t care to speak for her.

“The answer is that you need to survey psychology, legal precedent and history not mathematics and ethics.”

I tend to think anthropologists may have better explanations for people cyclically doing the same stupid things again and again than do arch-rationalist economists. You probably have already read this book, but just in case you haven’t, I recommend it to get a sense of what I mean by cyclical stupidity:

Cows, Pigs, Wars and Witches — The Riddles of Culture
Marvin Harris

Then there is this book, which provides a nice historical overview of cyclical mass financial folly all the way back to the Dark Ages:

This Time Is Different: Eight Centuries of Financial Folly
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“People who are ethical are completely blindsided as to how the world actually works.”

Speaking from personal experience, I believe that is an extreme, dangerous oversimplification. There are ethical people like my cousin, who grew up in small-town Nebraska where everyone was ethical, and had his violin stolen while carrying it around a bad part of a run-down Midwest city, on the assumption that everyone in the bad part of town would be just as ethical as the people where he grew up.

Then there are those of us who see the value of living in a society where people behave ethically, and establishing a rule of law to root out those who don’t. This group is not so naive to assume everyone will behave ethically without the incentives created by some combination of a fear of God and the law.

Hint: The law doesn’t behave the way you think it does.

You have a mental model, and at the risk of chanelling polly, your model is entirely broken.

One more time, ethics has higher standards than the law, and it’s perfectly possible, ironically, to be entire ethical and completely illegal.

Your mental model needs a reboot.

“and had his violin stolen”

Your immediate and extended family have a lot of violin issues. Kinda like mine with religion and marijuana.

“You have a mental model, and at the risk of chanelling polly, your model is entirely broken.”

Go ahead and channel a former Goldman Sachs attorney’s world view here all you want; I’m not buying it.

“Kinda like mine with religion and marijuana.”

I didn’t mean to suggest we don’t have those as well — I just find the violin issues far more pleasant to discuss, even the unfortunate theft incident.

Happy ending to the story:

- My cousin was able to buy a violin of comparable quality to replace the one that was stolen from him.

- The same cousin’s daughter has grown up into a well-trained and very fine violinist.

Happy families are all alike; every unhappy family is unhappy in its own way.

– Leo Tolstoy

…except for those which are unhappy due to some family members being drug addicts, that is…

…even the unfortunate theft incident.

Odds are the thief doesn’t play the violin, and never will either. This is the worst sort of thief, IMHO.

(my post above in response to FPSS)

Not really. I’ve been around here since 2004 (look it up!)

I just can’t get chuffed any more. I know how the game is gonna play out.

“I know how the game is gonna play out.”

Can you summarize in a terse list of bullet points for those of us with cloudy crystal balls?

P.S. Check out that latest post on the other thread if you want to know how the anger phase looks.

Slow descent into insanity while everyone (= pols + public) fights it all the way.

Of course, sanity will recover when everyone is too exhausted to fight.

I suggest you make a plan B for the next five years or so. There will be no hurry to buy a house. You can even skip the next eight or nine years and you will be at the same stage as five years.

Take up knitting or croquet or golf or a new language. You’ll be the happier for it.

Very bad things will happen but almost nobody here is likely to suffer (precisely because they are the kinda economic conservatives that have actually, oh the shocker, made plans! OOH, AAH!)

I’d be more concerned about what I’d do in the meantime. I’m planning another trip to India, one to Cambodia and a third to Japan.

No houses needed. What’s your plan?

I suggest you make a plan B for the next five years or so. There will be no hurry to buy a house. You can even skip the next eight or nine years and you will be at the same stage as five years.

I’m afraid you’re right, FPSS.

Last week I read a story about 2011 being a banner year for retirements largely due to the desire to “lock-in” a benefit scenario. I suggest they recall the retired airline captains getting their “honored” retirement contracts re-written after 9/11 squeezed the travel industry. The demographic retirement wave is well under way now. Want to buy a shopping mall, cheap?

No houses needed. What’s your plan?

Enjoy trailer park life and have fun playing with the new car, I guess. Oh, and having enough money to do things myself and with my family that I never had time or money to do back when I was keeping up with the Jones.

“Enjoy trailer park life and have fun playing with the new car, I guess. Oh, and having enough money to do things myself and with my family that I never had time or money to do back when I was keeping up with the Jones.”

LOVE IT!

Peace

“No houses needed. What’s your plan?”

1. Bought me a nice violin.
2. Learning the Brahms concerto and the Bach D Minor Chaconne over the next year.

P.S. I heard Szeryng play a flawless three hour (with encores) recital in Chicago in the late 1970s. My goal in my next life is to play like he did.

Wonder how are monuments will fare a couple of centuries from now?

The parts that aren’t recyclable will be buried in landfills.

Bulls make money. Bears make money. Pigs go feral and root up your garden….

Oh please!

You’re more melodramatic than a roomful of drag queens.

Nobody welcomes it. Nobody likes it either, and sometimes you can do something about it and other times you can’t.

You have to pick and choose your battles.

Being angry all the time is like dealing with a sullen teenager. After a while, all the adults move away with a “whatever!”

Got news for you, Faster. A lot of adults move away from people such as yourself, too.

You get your jollies first by deliberately antagonizing others to the point of driving them away, then by telling them to “lighten up already”. Naturally, everyone is supposed to adore and admire your erudite adroitness along the way. And if they don’t, then they’re somehow deficient.

Seems to me you’re acting like a spoiled, trust fund teenager.

Note: Just because others aren’t choosing the battles you wish they would so that you can enjoy YOUR life doesn’t mean that they should. While your world revolves around you, Faster, it doesn’t mean that everyone else’s should. Other people don’t exist to play toady to your whims.

Delusions of grandeur: Someone who is deceiving themselves into thinking they are impressive or awesome in some way. In reality, no one else sees them in this way. (Urban Dictionary)

Narcissistic personality disorder is a disorder in which an individual is described as being excessively preoccupied with issues of personal adequacy, power, prestige and vanity. (Wikipedia)

Do you have any interesting statements about either the economy or housing minus a whole buncha whining?

if you’re resorting to personal insults, you’ve already lost the battle.

Do you?

Yep, read Galbraith’s book to see why what is happing is happening as we speak (which was the original statement before all your pointless insults.)

You’ll get good at it. You’ll even learn how to predict the responses and more importantly, get in front of them.

Everything is pretty much playing out as expected. Human psychology has never changed.

Glad we figured out who is really in the anger stage…

“Yep, read Galbraith’s book to see why what is happing is happening as we speak”

Can you summarize? I don’t have time (serious).

Thanks

“if you’re resorting to personal insults, you’ve already lost the battle.”

That’s comical, coming from you.

BTW, being ethical doesn’t mean one is naive. Not hardly. What it does mean is fortitude and strength. When the proverbial sh*t really hits the fan, it is the ethical people I want around me, no matter the economic/social circumstance. Things provided for and sanctioned by government (including trust funds and houses) can be seized easily. Honor and dignity not so fast.

CITB- While neither here nor there, I’m definitely in the anger stage (if it is I you are directing your comment to). It’s where I’m going to stay by choice, and I see nothing wrong with it. I’m not about to be a withering wallflower, throwing up my hands and partying like its 1999.

That’s what weak people do when the going gets tough. They anesthetize themselves. They tune out. Such scared, willing ostriches dominate our society right now.

Can you summarize? I don’t have time.

Sorry, I don’t do ret@rds. I gave that up a long time ago.

You wanna learn something?

Show some initiative and get your goddamn @ss down to a library.

It’s where I’m going to stay by choice, and I see nothing wrong with it. I’m not about to be a withering wallflower, throwing up my hands and partying like its 1999.

That’s what weak people do when the going gets tough. They anesthetize themselves. They tune out. Such scared, willing ostriches dominate our society right now.

Oh fer’ cryin’ out loud, O Flowering Wallflower, you’ll get over it!

And we’ll still be here to laugh with you (and at you!) and you’ll be slightly embarassed at it all.

We’ve all been there. It’s a phase like the teens. Then real life awaits!

Your friendly neighborhood FPSS!

“Show some initiative and get your goddamn @ss down to a library.”

Thanks! I’m on way!

To the t@rdmobile!

Muggy,

You gotta read it, buddy!

Seriously. It’s a wonderful book.

“Can you summarize?”

J K Galbraith is actually the first economist I ever heard give a public lecture. I found him to be a most engaging speaker. In retrospect, I was lucky to have the opportunity, as at the time I attended Podunk State University. They fortunately had a few visionary leaders and sufficient resources to bring in big name speakers and artists, which prevented the place from turning into a cultural wasteland.

A Short History of Financial Euphoria
by John Kenneth Galbraith

At a glance:

First Published: 1993
Type of Work: Business
Genres: Nonfiction, Economics

This short book, first published by Whittle Books in 1990 for limited distribution, examines the causes of such runaway speculative binges as Holland’s tulipomania in the mid-1630’s, France’s sale in the next century of shares in Louisiana gold that could not be unearthed, Britain’s debacle in 1720 when shares in the joint-stock South Seas Company rose to ten times their value in nine months, only to collapse ignominiously before year’s end, and Florida’s disastrous land-scams of the heady 1920’s.

Galbraith is not sanguine about the public’s ability to resist the quick and easy money that spawns speculative fever. Economic amnesia, it seems, hits the financial world with every new generation of financial gurus; what hot-shot broker today remembers in any vivid way the go-go 1920’s, the brutal 1930’s that followed them, the market-dull 1960’s, or even the panic of 1987? Add to this forgetfulness the allure of Ponzi schemes that reward early speculators handsomely as a means of attracting the unwary, who jump onto the reverse pyramid just as it nears the saturation point.

“Al crises have involved debt that…has become dangerously out of scale in relation to the underlying means of payment,” Galbraith cautions. Leveraging is a profitable business as long as no one rocks the boat, but once investors begin to demand what has been promised them, the disorderly market that ensues often generates panic. Financial panics, as Galbraith documents in lucid detail, occur with the monotonous regularity of the moon’s monthly phases, although over a period of two or more decades. The time between panics equals the time it takes for economic amnesia to be complete.

Did this raise a question for you?

“…what hot-shot broker today remembers in any vivid way the go-go 1920’s, the brutal 1930’s that followed them, the market-dull 1960’s, or even the panic of 1987?”

I’m guessing a lot more brokers have started studying up on those historic manias since when Galbraith wrote that book, now that they have enjoyed a real life education for over a decade running in Ben Franklin’s dear school for fools.

Experience keeps a dear school, but fools will learn in no other.

– Benjamin Franklin

He missed the entirely crazy “tronics” mania (the logical precurser to the “dot-com” mania) in the 1960’s.

I really wanna see the gold-standard folks explain the “tronics” mania that was entirely out of control.

Cookie companies merged with the emerging electronic companies just to get the “higher multiples”.

Humans are going to be humans and damn every standard (including the gold one) that comes in the way!

“gold-standard folks”

Eat much red herring?

“Oh please!

You’re more melodramatic than a roomful of drag queens.”

You’ll have to excuse Bile in Carolina- he’s in drag today.

To the t@rdmobile!

Damn! Locked my keys in it again.

Oh, well…To the short bus!

So why not listen to him/her?

I’m serious.

I second the suggestion. There is no reason to let the stupidity of others, no matter how ubiquitous, ruin your own opportunities.

Well, it’s getting very annoying so knock it off!

Ask yourself how a country like Ireland which has about 4.5 million people - (that’s smaller than a third of Mumbai or Tokyo!) borrow itself 2.3 trillion dollars in the space of a decade.

Just divide the two numbers to give you a scale of the absolutely insanity at play!

Holy frickin’ moley.

$2.3T over 4.5 million people is $511,111/per capita.

Hey FPSS - where did you get the $2.3Trillion figure?

Just search for “ireland external debt”.

That number is old incidentally. 2009-ish.

Bankruptcy (personal) has wiped out a lot of it so probably a lot smaller now but there’s a ton of it.

My point about human folly still stands.

Ask yourself how a country like Ireland which has about 4.5 million people - (that’s smaller than a third of Mumbai or Tokyo!) borrow itself 2.3 trillion dollars in the space of a decade.

Ummmmm… One answer might be that the debt-mongers thought the populace was docile enough that they would make good debt-slaves?

Sorry, not buying it.

Then why is Slovakia (pop. 5.4 MM) not in the same position? Or Serbia (pop. 7.2 MM)?

Answer me that.

The blame lies firmly on the Irish.

They went complete bat-sh!t crazy over houses and took on a ton of debt. They all thought it was a fail-proof proposition, and it failed. Somewhere out there the world’s tiniest harp is playing a mournful Irish tune.

Éireann go broke!

Somewhere out there the world’s tiniest harp is playing a mournful Irish tune.

LOL!

BTW, my tongue was firmly in cheek in my previous reply…

“$2.3T over 4.5 million people is $511,111/per capita.”

That’s way better than the California bailout booty, which after all is limited to under 1million responsible California homeowner households.

Where does California sign up for the Irish deal?

“The blame lies firmly on the Irish.”
Bob the Banker, Brussels Banker’s Ball 2012

I never gave much to the Irish.

I just p1ssed it all out afterwards (= Guinness.)

You’re p1ssing up the wrong tree, buddy!

PS :- For mathematicians and statisticians, an employee of the Guinness Co. invented the “students t-test.” Completely random, no?

I just p1ssed it all out afterwards

Nice to see you’re now tempering your inborn vulgarity with numbers.

You do realize that in the face of facts, your entirely tackly and tasteless insults actually work against you, right?

Rio, what is the matter with you? You used to be one of the regular bullies here, insulting everyone freely. Then one time FPSS pulls your panties up over your ears and you are still like all toothless weeks later.

When the tides go out, there are no panties at all.

The fewer the entanglements the better, IMO.

Then one time FPSS pulls your panties up over your ears and you are still like all toothless weeks later.

LOL, right…….I don’t think I’ve ever been toothless. That’s why I bother pussycat and apparently now you so much.

It’s OK, you both will get over the anger stage.

I don’t know your age but as a betting man, I’d take the other side of the wager.

You’ll (probably) see it. I know I will.

Call me old fashioned, but if you’re making $40,000 then buying a $150,000 house is really stretching it.

Buying a $550,000 on a $40k income… that’s a total breakdown in responsibility.

Where were the grownups when all this was going on?

They were on the HBB.

That’s the glib response.

However, in my never humble opinion, you’re asking the wrong question because it completely ignores human psychology and states it in merely procedural terms.

If people want something badly enough they will get it, and most importantly channels will be established to supply it to them.

Ask yourself why it is possible to get home delivery of marijuana in any major city 24×7 but it’s not possible to buy milk after, say, 12pm (and you can forget about home delivery!) and you will see my point in a general context.

People wanted houses, and no set of rules was going to get in the way of that. And they got it good and hard!

7-11 and grocery stores by my house are open 24 hours.

Do they deliver?

You are arguing scale. You want one of the “same proportion” in which case I agree with you.

However, I’m arguing “category” not “scale” and I assure you, you will see another one if you meet my age criterion.

Human psychology being what it is, you will see one again.

(And if there’s anyone young enough on this blog, and lives a long life, they will see one of the same scale again, and they will laugh the laughter of the wise.)

Nice, Faster. You (like Clinton) decide to go the “what is the definition of “is?” route. Hang your hat on it all you want, but it ain’t gonna fly like here. At least not as it does when you host a dinner party with your fellow academes.

Were you one of the stars of Less Than Zero? If not, perhaps you and your pals should remake it and cast you as the lead.

LOL.

I love it when the “sausage factory” loses its money and then decides to take it out on someone, just about anyone will do.

Did you even parse the words?

There have been at least six bubbles since the 80’s that I can come of the top my head (and I’m deliberately leaving the current one out):

Kuwait
Hong Kong
Mumbai (1)
Tokyo
Mumbai Commercial Real-Estate (1990’s)
US (1985-1994)
Israel

But why bother with facts when mere rhetoric will do?

There’s seeing a bubble. Then there’s knowing you’re seeing a bubble. I lived through several big ones, and was making money just following the job opportunities, but didn’t see the bubble (until after).

Now I do believe I’ve seen and sidestepped a few, and even made a sort of a coup on one in my 50s. It seems to me that a regular guy would need at least a lifetime to not just win a few hands, but know even what game is on the table.

It used to be hard for most because they couldn’t read. Now I think it’s hard on most because they read all day what some rube said five minutes ago. Thanks FPSS fror the book recommendations, I’ve read one of them. Now I’m wanting to do some amazing things….

I’d want to do half a dozen amazing things just on general principle but I’d start with one.

It’s a magical world out there. Get out and do it!

LOL, I’m plotting an amazing course.

Yeah, well five years is a bit historical but the past week is more akin to current events.

“I had (much) older cousins who tried to “rebel” by looking like Boy George”

“To be fair, they are all very cool now”

Exhale.

Not that there`s anything wrong with that.

I probably should have stayed away from this too.

Why you dissin’ entertainment, man?

It was entertainment then and it’s entertainment now by reminding them of it.

It’s like comedic gold, and you expect me to give it up?

Although looking through those youtube videos I saw Deborah Harry, I had forgotten just how hot she was back in the late 70`s and early 80`s.

Yeah, I think you don’t usually see women that hot in bands because they can already have anything they want without going to all that work. I think it must have been an art project for her rather than an attempt to obtain money or success like it usually is for guys.

If Obama wins the election, the United States could plunge into darkness very rapidly, with no way to stop it. I don’t think many people really recognize what is going on here.

There’s no a dime’s worth of difference between Obama, Romney, Santorum, or Gingrich. They are all statist, corporatist politicians who pay lip service to “freedom” while not lifting a finger against the accelerating erosion of our liberties or the crony capitalist system that is robbing taxpayers blind. Santorum and Gingrich, in particular, are neo-con stooges in the mold of McCain who will follow the dictates of AIPAC even if it means embroiling America in more ruinously expensive “needless foreign entanglements” of the sort George Washington warned so preciently against.

If Obama wins the election, the United States could plunge into darkness very rapidly, with no way to stop it. I don’t think many people really recognize what is going on here.

So have we already plunged into darkness?

“If Obama wins the election, the United States could plunge into darkness very rapidly, with no way to stop it. I don’t think many people really recognize what is going on here.”

I hate it when RNC talking points pollute the HBB.

Me too. Especially when the Establishment GOP alternative is as bad or worse.

” Any time I visit my local Wal-Mart”

Some “others” are actually taking bullets in the head so $ammy has a ginormous safe well lighted parking lot complete with painted lines.

I’m sorry to tell you I won’t be attending your wedding, but I wish you and your sister well and hope you use birth control.

both described the neutron bomb as a “capitalist bomb”, because it was designed to destroy people while preserving property.

(Appears Wall $t. Inc. got hold of the detailed design$, re-applied the target$ as a means to increase profit$)

To me it says even the smartest, richest guys in the room some times make epically stupid financial moves.

Except he hired Greenspan so is that corruption or not?

You’re being inconsistent when it suits you. Not logical.

“Except he hired Greenspan so is that corruption or not?”

What kind of useful advice did Gross get from Greenspan? Selling all Treasurys just before they had their best, ever year?

In the vernacular “inflation” means “rising prices”, since that is what ordinary people experience in the real world, as opposed to the ivory tower definition.

Even wikipedia says: “In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.”

In that case, the vernacular ret@rds need to understand how “mv = pq” works (a.k.a. the “system”.)

Those that don’t get it pay those that get it just to breathe. I suggest you make a transition. =)

Pussycat, maybe you need to get that Asperbergers Syndrome medicated or something.

“I’m sure you notice the entirely delicious notes that he writes for the viola!”

Indeed. I once had the exquisite opportunity to perform one of the viola quintets (string quartet + an extra viola) with a professional quartet, as the extra viola player. That was probably the point in my career when I was at the greatest risk of sliding into a life as a professional violist.

He’s like this p0rn genius for the viola after Mozart!

It’s like this buttery genius that can’t really be explained to those that don’t get it.

Again, what’s the freakin’ holdup?

99.9% of the problems occur because parents think that their kids are stupid. (Hint: they’re not.)

Level with them.

Explain the housing bubble and why certain things are NOT possible. Explain your income situation as it is.

Lay it on the line. Don’t sugarcoat it, and don’t dumb it down. Be blunt.

They will both appreciate it and turn out just fine.

Kids are smart. It’s the parents that insist on being dumb!