The Housing Bubble

Enjoy your swim dan, and watch out for the sharks.

Good post, Northeasterner.

Right. Once I’ve got my contact info, why the hell do I even need Facebook?

The only Social Media site that I’ve seen that has a business model I can almost understand is togetherweserved, but once again…once I have the contact info I’ve got no reason to pay for anything.

It was hyped because people equated number of users with number of customers. The user is not the customer…they are the product.

It’s kinda like Sharper Image…they were a really cool store with a lot of cool stuff and I always stopped in there when I was at the mall…but I never bought anything in there…not once.

That is a good point, michael. If the mall is where teenagers go to meet their friends, then the foot traffic will be larger. Are they more likely to buy because they are there? Yes. But unless you have something they want to buy and can afford, that possible sale will never become a real one.

I still say that Facebook has some value as long as they know that a woman is engaged or pregnant as soon as she is willing to share that news with her friends. It is is a heck of a source for marketing research information. But that doesn’t mean it is worth what its IPO price was.

I just don’t see the long term business plan in Facebook.

What is this “long term business plan” thing you speak of? Is it something they do in China, perhaps?

Step right up contestants!

Name That Liar!

bzzzzzzzzzt….. no cigar.

Hint: You have the gender correct.

Who is Leslie Appleton Young?, Alex.

Yes Jeopardy style!!! I was waiting for that.

You are incorrect Sleepless however this particular liar is just as dangerous to your wallet as Lester Appleton Young. Probably even more so considering the liar is a Fed Reserve hack AND a RealScum crony.

Honestly I’m happy you’re all stumped. It demonstrates how insidious the Housing Crime Syndicate permeates thinking without the slightest perception.

Todays Name That Liar! question was

In October 2007, this HCS liar stated “if you buy a house today, you’ll have guaranteed price appreciation”. Who is this liar?

drum roll…. please….

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Fed reserve board member, NARscum member and Flea/Max CEO Margaret HorseFace Kelly!!!!

Here she states on CNBC in 2007 “guaranteed appreciation” when asked what happens if you buy a house today.

http://www.youtube.com/watch?v=TD2_NmPevVs

And here she pimps inflation for the Federal Reserve Scumbags…..

http://www.kc.frb.org/speechbio/bod-bios/kelly.cfm

Because those economic blips are offset by debt… debt that will force us to chose between cascade default into depression or wiping out the value of savings through hyper-inflation.

Silly me, but I’d prefer long-term thinking over short-term.

“…chose between cascade default into depression or wiping out the value of savings through hyper-inflation…”

It’s either Darrell’s solution or financial Armageddon; which would you prefer?

debt that will force us to chose between cascade default into depression or wiping out the value of savings through hyper-inflation.

Ask yourself is Iceland better of today, after defaulting on their debt and devaluing their currency? What makes you think the US wouldn’t come out stronger at the end of the default? Don’t we consistently say here on the HBB that most underwater buyers would be better off with default and bankruptcy and move on, then continuing to be liable for the debt?

What makes you think the US wouldn’t come out stronger at the end of the default?

But who would lose money? Do they have the political power to force a less desirable solution so that they don’t lose money?

But who would lose money?

Anyone holding US Treasury debt would not be repaid. Anyone holding US dollars would lose purchasing power.

Think of what we could do with all the income that wouldn’t go towards debt repayment…

“But who would lose money?”

“Anyone holding US Treasury debt would not be repaid.”

Not necessarily as the government could default on some debt and not others, and pay out partial amounts. Foreign investors could be treated differently than internal, or institutional differently from individual. There are lots of different possibilities.

“Ask yourself is Iceland better of today, after defaulting on their debt and devaluing their currency?”

1) Iceland’s GDP is $12B. That is .019% of the $63T global GDP. Macro-economiclly speaking, Iceland could cease to exist and with would not even be a rounding error to the global economy.

By contrast, the USA’s $15T GDP is almost 25% of global GDP.

2) The total debt that defaulted and was restructured was about $10B. By contrast, the USA government has 1000x as much publicly held debt at $10T.

3) The actual loss to banks from Icelandic debt restructuring was less than $5B, easily absorbed by tier one capital. That same amount of debt is about 18 hours of the USA governments deficits.

4) Iceland had full control of its currency. The USA dollar is the global reserve currency and our trading partners are not letting us devalue as they race us to the bottom or peg their currency to ours.

Comparing USA to Iceland is like comparing an elephant to an ant.

(I play an internet space combat game called EVE that was created, is owned, and is operated by an Icelandic company. EVE has more active, paid accounts than there are people in the entire country of Iceland.)

“Think of what we could do with all the income that wouldn’t go towards debt repayment…”

False assumption that money goes to debt repayment.

Private sector, household debt is down by less than the amount being wiped out via foreclosures and bankruptcy and business debt continues to increase.

Public sector, we’re adding debt at a rate of $1.3T a year, but interest is only $250B a year.

Sorry, let me rephrase: think of all the money that currently goes to interest payments on debt that would be able to be spent elsewhere… like infrastructure.

I understand your premise regarding the size of the US vs. the size of Iceland, but that doesn’t change the reality of the US never paying back it’s debt. As I said before, eventually the rest of the world will realize it too, and then the game is up…

No, we do not have a party that wants to attack and reverse trade imbalances. We have a party that wants to make symbolic gestures while actually doing nothing significant.

Ox:

but we have a prez who is a terrible communicator, horrid….cant explain anything….heck you’d be a better prez

What about those f*ing credit default swaps that we are still bailing out?

Is this language appropriate? 3rd graders read this website

“Remember Solyndra? Those $500M were not “lost,” btw”

Wow.

“half a government that wants to attack and reverse the trade imbalances”

Nobody moves operations overseas because they get a deduction for the business costs of shutting down the current buildings and getting the new stuff up and running. They do it because they think it will save money long term and the deduction just means the costs for doing it are a little less. Reversing anything will require a heck of a lot more than eliminating those deductions. Much, much, much more.

Smithers, I actually agree that Solyndra dollars are not “lost” as defined in the commentary. However, but they do represent 2 things:

1. Malinvestment: A poor use of capital; and
2. Discouragement of private investment: If as a Venture Capital investor, there is significant malinvestment into your sector (keeping bad business plans alive), it discourages you from investing in that sector, as it impacts the natural creative destruction.

#2 is not absolute, meaning that investment stops, but #2 does effect people’s thinking with respect to competition in a sector.

There is plenty of room for government investment to drive innovation, but government should be quite cautious on such investments when there is a thriving private investment market (which there has been for “green” tech).

As an example, one place where government intervention is needed is in the development of antibiotics. Due to biology (and specifically the rise of drug-resistance in strains of bacteria), the biggest, baddest, newest antibiotic gets put on the back of the pharmacists shelf, only to be used when absolutely necessary. So, if you are successful in creating the best antibiotic in the market, you don’t get paid for it.

This is not a recipe for private innovation.

So, you need either a) direct government investment into the development of antibiotics, or b) changed laws relating to antibiotics to encourage private industry to develop them.

One idea I read about with the changed laws had to do with patents. The idea to encourage the development of antibiotics was to either a) give a much longer patent life for the antibiotic, or b) give the drug company a transferable patent life extension for a new antibiotic. In other words, if you develop a new antibiotic, you get a 3 year transferable patent life extender, which you could sell to someone who is about to lose their patent for a big money-maker.

Even with something as obvious as antibiotics, there are ways to encourage private innovation with direct government investment.

“Nobody moves operations overseas because they get a deduction for the business costs of shutting down the current buildings and getting the new stuff up and running.”

Then why do the tax breaks exist at all?

For that matter, why are there tax breaks for keeping profits overseas? That seems to provide (one hellva) an incentive to move operations overseas, as well.

So if it’s cheaper to move operations overseas, then they don’t need the tax breaks, do they?

Corporate tax breaks cost us FAR more than all the social services combined, but let’s blame the poor, shall we? After, what can they do about it? HAHAHAHAHAHA

“Then why do the tax breaks exist at all?”

They are called deductions. If a company spends $8 to make a $10 pair of shoes, they are only taxed on the $2 of profit.

In your vernacular, is the $8 a “tax break”?

In my vernacular, it is an expense.

That’s an easy one.

If you invest money in a new manufacturing plant, the government says that you generally cannot expense the manufacturing plant to reduce income (the same way you can reduce income from the cost of a shoe). Presumably, that capital asset has value.

What you can do though, is take a deduction for depreciation each year for x years (different assets have different depreciation schedules).

However, that leaves the question, what do you do with that undepreciated portion of the capital asset once it ceases to be in operation? Does it sit as a capital asset on the books of the company? Or does the company ultimately get to write off the item in question? They spent the money on it in furtherance of their business, do they ever get to treat it as an expense?

These tax breaks are the same if you move manufacturing from CA to TX than if you move the manufacturing from CA to China. If they want to change the law for moving overseas only, fine, change the law, but don’t call it “closing a loophole” call it “protectionism”, because that’s what it is.

Why do the tax breaks exist? Because businesses have always been able to deduct business expenses. They don’t have to prove that the expense was a good idea (for the company or the country) for it to be deductible. Would you really want the IRS to be making that sort of decision? Sounds like a nightmare. Or a “tax accountant/lawyer full employment act” if you prefer.

The tax break for keeping profits overseas is a little more complicated in its motivation. I really don’t feel like getting into it right now. Ask me another day? OK.

I understand all about expenses.

I don’t understand tax breaks for something that is supposed to SAVE money and increase profits.

Yes, I know it’s complicated, but the bottom line is that it is either an expense or a savings, but it can’t be both.

But even worse, it demonstrates that corporations have been given transnational powers. Powers they are not entitled to, no matter what anyone says.

If a company bought a few new computers that allowed it to save money by firing an employee it would be able to deduct the expense (probably amortize over 3 years, actually, but you get the idea). This is pretty much the same thing.

Ryan says he did not request funds.
Later they find letters where he DID request funds.
That is a lie, whether the article says so or not.

Or maybe you think that Ryan truly “does not recall” what he did?

The article not only says he lied, but proves it as well.

What river are you on today? De Nile?

You are a political shill aren’t you.

Why are you concerned? Aren’t you Above Politics? And just coincidentally always defending Repubs and attacking Dems?

Did you get a new trolling motor for the boat, McGee?

I’ll edit down the article for the boat bums having trouble with the big words and long paragraphs.

“I’m not one [of those] people who votes for something then writes to the government to ask them to send us money. I did not request any stimulus money,” the congressman answered.

But as we’ve now learned, Ryan did write letters. He did request stimulus funds.

That’s called lying, last time I checked.

I am supposing that if you were not biased against this person you would have a different take. You might say that it is pretty common for a Congressman’s office to get requests for assistance obtaining grant monies. You might say that grant requests are routinely handled by staffers. You might say that this guy at least did some research and came back and said yeah it happened and I don’t think it should have, but I am responsible for everything that happens in my office. You might say that is a sign of good character.

Not that I automatically expect good character from someone who is a congress critter, because of the obvious corruption spilling all over the place, and I am not going to vote for Ryan. You give your own champion a pass on things much more serious.

If he’s unaware his staffers are defying his vehemently-stated, passionately-held political position, then he must be a really, really poor manager.

And he didn’t do “some research and came back and said yeah it happened and I don’t think it should have”. He realized he was being asked a specific question that he would be called on now that he’s in the big leagues, so he hemmed and hawed out some weak little half-denial.

But thanks for your usual defense of all things Republican, you ‘apolitical’ sage.

Knock yourself out. Let some real dirt come out on this guy and you can impale yourself on it. I’m sure your hysteria will only increase between now and November. I’m not apolitical at all, nor a defender of the Neo-Repubs.

I just laugh at the dogs.

Wait, you think that a statement that “A influences B” is the same as thinking that A and B are interchangable? No wonder you don’t understand the research/fact checking standards the rest of us prefer.

You think global warming is an entirely appropriate topic for a a blog called “The Housing Bubble Blog”?

No wonder your credibility is slipping.

It’s called “But Bucket” and it’s always been somewhat free associative.

Says so RIGHT AT THE TOP of the page:

“Post off-topic ideas, links, and Craigslist finds here.”

You were saying something about credibility?

“Bit Bucket” Dang

Carbon dioxide is in the undecomposed plants and organisms frozen in the permafrost. When the permafrost thaws, these plants decompose, and the CO2 is released.

Next?

“pioeers”

Should be “pioneers”. Sheesh, I’m just having brain farts all over the place.

In between we had MTV’s The Real World. And interestingly enough, as I went to Wiki to see the years TRW was running, I found this:

“The Real World was inspired by the 1973 PBS documentary series An American Family.“

Should be “pioneers”. Sheesh, I’m just having brain farts all over the place.

Uh-oh, better open a window.

Or as I repeatedly told the kids over the years as they grew: “The world is not as forgiving as we (mom and I) are.”

That is what bankruptcy is for.

Nobody put a gun to your head and forced you to either live or buy a home there.

It’s amazing what “full recourse” will do to a State’s housing situation.

I can’t find the reference, but supposedly the bubble didn’t get as frothy in state’s that allowed full recourse. I know MA is one…

Hard to speculate when you’re held liable for a highly-leveraged and ill-liquid investment. Maybe all states should be full recourse? Might cut down on the foolish speculation in what is essentially shelter.

“Maybe all states should be full recourse? Might cut down on the foolish speculation in what is essentially shelter.”

Canada is pretty much all full recourse, and hasn’t slowed our bubble one bit. My guess is that you don’t even consider the downside or consequences when you’re in the grip of a speculative mania

Maybe all states should be full recourse?

Add to that a minimum 20% down payment requirement on all gov’t backed mortgages and I’m in. Think of the low, low prices to be had!

Canada is pretty much all full recourse, and hasn’t slowed our bubble one bit. My guess is that you don’t even consider the downside or consequences when you’re in the grip of a speculative mania

And you guys don’t have the mortgage interest deduction either.

Another Etch-A-Sketch moment?

Maybe its time govt stops doing anything on housing?

Which brings us back to voting for “none of the above.” But Smithers has been telling us for weeks that we’re chumps for doing so.

What’s that old saying? If voting none of the above is wrong, I don’t wanna be right.

Dang. Ignore the unintended copy-pasted italics.

But Smithers has been telling us for weeks that we’re chumps for doing so

And stating that those who vote for 3rd party candidates “have no right to complain”

A vote for 3rd party = a vote for Obama. Either you’re chumps and you don’t see it. Or you’re dishonest and don’t admit it. Which is it?

I’ll say it one last time. I voted for Obama in 2008. I won’t in 2012. How in any objective, logical world is that a vote for Obama? How? And how does that make one dishonest or chump-like? How?

I’ll say it one last time. I voted for Obama in 2008. I won’t in 2012. How in any objective, logical world is that a vote for Obama? How? And how does that make one dishonest or chump-like? How?

Because your vote rightly belongs to Romney, even though you never had any intention of voting for him. By voting for Ron Paul or some other 3rd party candidate you’re stealing a vote from Romney, even though he never had your vote.

See how simple that is?

“You bought it in the obama campaign in 2008…”

I think the 2008 campaign hinged on 2 things - McCain’s choice of Palin and the crash in late September. Those two increased McCain’s negatives tipping the electorate away from McCain.

An early fall crash in 2012, will probably tip the balance toward Romney. VP is probably not significant this time around. Ryan is a strong enough choice to not be a negative. We have seen Biden for 4 years. He has made some amusing gaffes, but not enough to be a significant negative for Obama.

You’re nothing but a strawman caricature artist who posts BS here. And your Atlanta real estate investments are losing a bundle…

LOL we just waited 45 minutes for a table at Applebee’s LOL!

An independent in CA is likely to be more liberal than one in Texas.

“NYC now is a horse of another color.”

Just not the color you wagered on.

NYC has massive price declines on the horizon. Just like all big cities.

Housing Is Cratering c’mon are you a landlord, an investor, or a renter, in addition to being a one-trick pony?

Pimp,

I’ve posted pictures of my stock in trade.

You on the other hand, lie and lie and lie about your occupation.

So I can’t say you’re anything more than a liar.

lol

Sounds like “Housing is Cratering” thinks that sfrenter is me…

Sounds like “Housing is Cratering” thinks that sfrenter is me…

Nah. He uses an area of effect weapon, rather than a target weapon.

lol.

Pimp thinks he’s the only pimp on the radar.

The supreme court has drawn the line at weapons that are target weapons rather than areas of effect weapons.

You can not aim a full auto weapon a a specific target, just point it in a general direction, therefore, not covered by the 2nd.

Flame throwers, not specific target, area of effect.

Grenades, other explosives, artillery (with explosive charges or above a specific caliber) are all area of effect weapons, so not covered by the 2nd.

Semi-Auto? You can aim between each shot, so target weapons, so Constitutionally protected.

You can not aim a full auto weapon a a specific target

Just because you normally don’t doesn’t mean you can’t :-). The machine gun instructor in the Wyoming National Guard was impressed at my ability to place single shots with an M60.

“d at my ability to place single shots with an M60.” The first shot is the same as a semi-auto. It is the 2nd, 3rd, 4th, etc that there is not time to aim between firings. It is the 2ns, 3rd, 4th that make it full auto. It is the 2nd, 3rd, 4th that make it an area of effect weapon.

I’m looking at the big picture.

Republicans have been beating Democrats over the head for 50 years for “wanting to take away your guns”. Don’t expect any ideas to come from the Democratic Party.

So what happens when (not if) we get to the point where there is a mass shooting every week?

Or there is a mass shooting at, say, Goldman Sachs or on the NYSE?

I’m just trying to pass along advice. The Republicans and NRA had better start thinking about solutions, other than “that’s the cost you have to pay, so I can own an AR-15″.

If they don’t come up with a solution on their own, at some point in time enough people will decide “enough is enough” and cram down a solution that you won’t like……IOW, a government solution enforced/crammed down, because the free market refused to do so.

There is a way to do that.

AMEND THE US CONSTITUTION.

But liberals don’t want to do that.

So go ahead and have your liberal power grabbing wet dreams.

Hitler, Mao and Stalin all agreed with you on guns.

If they don’t come up with a solution on their own, at some point in time enough people will decide “enough is enough” and cram down a solution that you won’t like……IOW, a government solution enforced/crammed down, because the free market refused to do so.

“AMEND THE CONSTITUTION”

Don’t think it can’t be.

For starters, Republicans don’t seem to have a problem throwing Granny and the poor under the bus, when it comes to Medicare or Medicaid.

But don’t mind giving the gun industry and liquor industries a free pass for all of the medical bills they generate, that are passed on to US Taxpayer.

(X-GSfixr is an “assault rifle” owner since, oh, 1987. Non-Drinker. non-hunter..)

And Somalia should be the NRA’s wet dream. Absolutely no gun restrictions there.

“Hitler Mao and Stalin”

Yeah, the old “slippery slope” dogma.

Wanna bet some people change their tunes, if it gets to the point where people are afraid to go out in public for fear of getting blasted by some whack-job? And they go out of business, or lose their jobs??

I’m not Liberal, I’m a Realist.

But the NRA and Republicans aren’t about generating solutions, or compromising with their fellow citizens to come up with a policy everyone (well, almost everyone) can support. Like whiny little two year olds, they want to throw tantrums when they don’t get their way.

“d at my ability to place single shots with an M60.” The first shot is the same as a semi-auto. It is the 2nd, 3rd, 4th, etc that there is not time to aim between firings. It is the 2ns, 3rd, 4th that make it full auto. It is the 2nd, 3rd, 4th that make it an area of effect weapon.

An assault rifle on full auto is not the same as a machine gun. An M60 fires from open bolt and you can’t (or at least shouldn’t) squeeze the trigger slowly like you do with a standard rifle with a closed bolt. The sights are also not made for shooting accurately. There’s a reason he was surprised.

I’m just trying to pass along advice. The Republicans and NRA had better start thinking about solutions, other than “that’s the cost you have to pay, so I can own an AR-15″.

If they don’t come up with a solution on their own, at some point in time enough people will decide “enough is enough” and cram down a solution that you won’t like……IOW, a government solution enforced/crammed down, because the free market refused to do so.

Which is of course why arms and ammunition have been selling so well lately. Nobody sees a good solution to crazies that still allows the non-crazies to buy what they want, so they’re trying to stock up enough to make sure that several generations of their family can feed and protect themselves even if nobody else can. We survived the last AWB as a country and I assume we’ll survive the next one. It’s when you try to take what people already own that TSWHTF.

The old “if we have freedom and reduce the size and scope of government will be Somalia” argument.

It really gets old and is an insult to America 1784-1970

And Somalia should be the NRA’s wet dream. Absolutely no gun restrictions there.

AWB?

Automatic weapons ban.

When you outlaw automatic weapons only outlaws will have automatic weapons.

AWB?

Sorry, assault weapons ban.

Assault, oops

Psssstt….wanna hear a secret? More people die in car crashes than from guns every year.

So what happens when (not if) we get to the point where there is a mass shooting every week?

We shrug it off and accept it as normal. Just like we now have lock down procedures for K-12 and colleges. Other civilized countries don’t have those, but it’s now considered “normal” in the good old USA.

Perhaps we should spend some time teaching situational awareness and self defense (to include training in disarming). Granted people will still be shot, but someone eventually has to get between the ahole and his power (the gun or other weapon) or shoot him/her/it dead.

There is a very appropriate saying: “When seconds count, the cops are just minutes away.” In a dynamic critical incident, it’s you against the world, so you have a choice to beg for your life or fight.

Only law abiding citizens abide by gun bans - a lot of you are safe in your homes at night because criminals know that there is a distinct possibility that the homeowner is armed. How would those criminals react with a total gun ban?

Stop being sheep. We have to be a tougher people…not bad-ass tough, but tough enough to take action to save our lives or the lives of a family member if possible.

+ 1

6 houses is not worthy of national news

Yeah but Drudge linked to it therefore it is “newsworthy” LOL

At least it had something to do with housing.

Unlike the vast majority of posts of democratic talking points or reposts from the Democratic Underground blog…

Yeah but Drudge linked to it therefore it is “newsworthy” LOL

“6 houses is not worthy of national news nor does it constitute a trend.”

It could be the start of a trend or a flash in the pan. Flash mobs were getting a lot of press last summer. This appears to be a new iteration of that phenomenon.

I see a lot of reports of murder-suicides this year. Is that trending up or just getting more press?

Do events like these indicate a general increase in stress levels?

And BTW Darrell…

You’re a liar.

And BBTW…. there are 25 million excess empty houses in the US today.

It’s been fun watching the folks from the coasts melt in this 105 degree weather.

I bought a down vest at Costco a few weeks ago. Been wearing it every single day since. Brrrr…July and August is ch-ch-chilly in SF. Kids and I play “spot the tourist” (people wearing shorts in the city in the summer).

“This summer was actually better than 1980.”

I lived in the Dallas area in 1980. The AC in my rental house went out the first day of the heat wave and we could not get it serviced until it was almost over. I spent a lot of time at work, where we had AC. I slept nearly naked on top of the sheets with a fan blowing on me all night. Lows were 85+.

I really enjoyed the weather in SF recently. Of course, if you are walking up Mason you want it to be cool. That is one steep climb. Not hard to see why they ran the trolley up Powell.

“$12/hour job”

That’s 50k/year for a couple both working. With cheap rent and housing, a couple could live below their means pretty well on those jobs you mock. Back in my poor days, I would have killed to have a $12/hour job.

$12 an hour is $25,000 a year, not $50,000

Thanks professor, but I said couple, please read the whole post.