The Housing Bubble

Yes but then why would my coin shop’s web site identify certain coins as “sold out” then?

They are not raising the prices. Premiums are not much higher than seven years ago.

Like I said, when I was finalizing the sale, the salesman said they were running low. If he wanted to pump up the sale, he would have suggested at the beginning to buy x because they are running low on x.

Some salespeople are subtle.

Wheat has a utility as a food source and its value can be calculated accordingly.

What should be a fair value for wheat’s utility value as a food source, and why?

If people wake up each morning and think “I gotta have my coffee” then there is a built in demand for coffee and a reasonable price can be calculated if the other side of the equation - the supply side - is also known.

But how many people wake up each morning and think “I gotta have my gold”?

The unpredictability is the beauty (or ugliness) of the market. 35 years ago none of us would be communicating this way. No one could have invested in Firefox futures back then!

I gotta have my ISP.

Asking what’s the true value of gold is like asking what’s the true value of a Picasso? It’s whatever someone feels like paying for it. There is no fundamental valuation that can be applied to either. Gold could just as easily go to $5000 as it could go to $500 or $50.

It’s hilarious though to see people who whine about stocks being a casino and yet invest in gold. Pot. Kettle.

It’s whatever someone feels like paying for it. There is no fundamental valuation that can be applied to either.

+1, Smithers.

I would put the price of wheat, even with its clear “utility value”, in the same category.

I do very well in stocks. I don’t get too greedy and I take money off the table. I bagged more gain on my ex company stock than I ever put into it.

Now to shift some into beaten sectors. Hmm…what sector is being beaten daily by Whac?

It’s whatever someone feels like paying for it. There is no fundamental valuation that can be applied to either.

Unless, of course, it’s housing. Then HBB speaks with great authority as to how “what someone feels like paying” compares to “its fundamental valuation.”

At least housing has some utility value, more so than gold.

Then HBB speaks with great authority as to how “what someone feels like paying” compares to “its fundamental valuation.”

So… During the tulip bubble, tulips really did have incredible value?

My statement was intended to refer to non-bubble asset-classes only. Any asset-class that is in a bubble is not demonstrating equilibrium market forces, most likely due to a credit bubble.

‘Then HBB speaks with great authority as to how ‘what someone feels like paying’ compares to ‘its fundamental valuation.’

I can go to a used car dealer and pay $100,000 for a 1984 Ford pickup. Does that make the truck worth that much? Of course not. There are actually entire books and web pages that break down the variable of condition, mileage, etc, that are much closer to what that truck might fetch on any given day. How are these things ultimately calculated? Transactions. Millions of transactions, compiled over years and weighted, expanded a little here, pulled back there, depending on market conditions.

Although I must have missed the HBB meeting this week, I can safely suggest that the market (millions of transactions) will let us know what any given house is worth at some point.

Millions of transactions, compiled over years and weighted, expanded a little here, pulled back there, depending on market conditions.

Unless of course, you’re Zillow. Then HBB speaks with great authority as to the validity of Zillow’s model for compiling of millions of transactions.

I’m being very tongue-in-cheek here. Sure, $100K is too much for a 1984 pickup, but would you pay, say $1200 instead of $900? That’s 25%, which is the range we’re looking at for houses. Can we inherently know that something is 12.5% over or under? There is a lot more variation in houses than in trucks. Location alone can double or triple a house price and still be close to “true” value.

Location alone can double or triple a house price and still be close to “true” value.

You’re going to find out how untruthful that statement is….. the hard way.

And there’s the rub. One could argue that my house dollars are backed by about 10 years of my “ability to make more stuff.”* But what about the billions that bailed out AIG? Or the trillions of the national debt itself? How many millions of kids and grandkids promising making more stuff for how many decades to pay off this debt will China and Saudi Arabia accept? We are literally selling our first born (and their first born…)

—————
*If my house is 3x my income, then 30 years of 1/3 of my income is the same as 10 years of all of my income. If that makes any sense.

Gold is a bet on inflation, right? Is now a good time to bet on inflation?

Proceed at your own risk AlWog.

Gold is a bet on inflation, right?

I think gold is a bet on chaos. And right now people think chaos is subsiding.

The best time to buy hedges against inflation is when no one expects there to be inflation in the near term.

I’ve read a couple of places recently where El Erian is now more worried about inflation:

http://www.businessweek.com/investing/insights/blog/archives/2008/06/pimcos_mohamed_el-erian_says_its_time_to_worry_about_inflation_now.html

And:

http://www.madhedgefundtrader.com/breakfast-with-pimcos-mohamed-el-erian/

I like the phrase “constructive paranoia” at the end of the second article.

And that, my HBB colleagues, is a reason to buy it when everyone is beating it down. Bear trap is whats going on.

Hey Rental,

el-Erian advises TIPS and commodities.

I still think it’s way too early for TIPS. I want to get a reasonable fixed portion of the yield. Reasonable is at least 1%.

I like oil exploration companies and mining, like the juniors

I’m content with my REITs for now. I get paid a bit to wait (the dividends), and if there is economic weakness, the leases on the product types that I own are generally a few years to a couple of decades long, and the REITs have substantially cleaned up their balance sheets since 2008/2009 (better liquidity, lower leverage).

The REITs won’t react as quickly to inflation as commodities and TIPs, but they will react steadily over time as leases renew at higher rents.

Very wierd. Watch out just the same. Why is she no longer there? And is she good looking? If so, that could well explain things.

There is a very good looking Asian American woman at my former client site. I don’t think she does much useful work, but she has a great title. The client traditionally keeps one or two very good looking women employed.

Hey dude.

I know this is TMI, but here goes:

1) She quit because the other employer offered her about 50% higher pay on a permanent job.

2) I’m better looking than her; or maybe just conceited, I dunno. My current employer traditionally doesn’t hire women. I was told by a male coworker that there is only one manager at this company who hires women. I have since been transferred to a different manager. After having me work in his department, I guess he changed his mind because he hired a second woman. All the males told her that they were “worried” when they found out a female was being hired for her role, but then they learned that she is “chill”, so they like her now??? She is trying to fit in with the boys’ club now by buying a gun so she can go hunting with them. I think they’re starting to feel weird about her again. They definitely do not want her coming along on their hunting trips. Yeah, I just stick to the cubicle.

“by buying a gun so she can go hunting with them.”

Wow that’s awkward for sure!

“She is trying to fit in with the boys’ club now by buying a gun so she can go hunting with them.”

That’s kind of like a man trying to join a Bunco league to get in with the ladies. Somebody needs to talk some sense into this gal. There are certain things men like to do which, I hate to say it, they prefer NOT having women around while doing them. Hunting is high on that list.

Every fellow I’ve hunted with in the last 30 years has hunted with their wife or girlfriend at least once. I’ve taken a few ladies hunting as well. Some of them really like it. Some are really good at it, too. It’s not a male sport by any means. I hope any of our HBB women readers won’t be put off by the comments above. Hunting is a wonderful activity for men and women. You tromp around in the woods in the fresh air, get some exercise, observe and focus, study animal biology, and best of all, if you pay attention and don’t mind a bit of bloody business, you’ll return with the best organic meat protein you’ll ever have in your life.

Maybe it’s a New Mexico thing. A lot of women hunt in this state. I met a lot of women hunters in Wisconsin as well. Just say’n.

After having me work in his department, I guess he changed his mind because he hired a second woman.

Uncle Fed is a woman? I never did figure out who that was after the name-change, I guess.

The problem isn’t with women hunting in general. The issue is that most (some? all?) men have daydreams about “protecting and rescuing” and ultimately fulfilling the needs of the lovely feminine princess. Since this lady at the office evidently didn’t do much work, she was clearly there as a princess. When she started hunting and showing that she didn’t need protection, the princess act wore off, ripping away the male dreams. Of course they didn’t want to be with her anymore.

“It’s not a male sport by any means. I hope any of our HBB women readers won’t be put off by the comments above. Hunting is a wonderful activity for men and women.”

Oh, come on with this feel good PC crap. Over 90% of hunters are male. I grew up around hunters. Most of my friends and their fathers did it. I have been many times myself but prefer not to kill anything (if I’m going to eat meat I’d rather buy something farmed and spare the dwindling wildlife). The ritual typically involves hunting during the day, and drinking (oftentimes heavy) around the campfire at night (though I have seen my share of drunken hunters during the day). It’s just guys being guys.

The issue is that most (some? all?) men have daydreams about “protecting and rescuing” and ultimately fulfilling the needs of the lovely feminine princess.

Which is why Yours Truly has never married and has little interest in dating.

At least he had another job to fall back on.

What this all points to is a gross lack of oversight of employees by employers, and a complete misunderstanding of efficiency and labor needs. I have a hard time wrapping my head around how supposedly successful companies can waste this much money on people who produce such poor returns on investment.

He told me that my vote for Gary Johnson was “stolen” from Romney.

Ha ha, when actually it was Romney who stole votes from Ron Paul!

I voted for Gary Johnson.

Both your votes for Gary Johnson were voted for Obama. Live with it.

“Both parties love illegal labor. Slithers is nothing but a partisan hack who blindly toes the party line.”

LOL. Man you people live in an alternative universe. The GOP elite is all for amnesty. Juan McAmnesty and his boyfriend Miss Lindsey Graham along with Marco Rubio are the biggest amnesty boosters. If I were a partisan hack I’d be rah rah sis boom bah on amnesty.

Try thinking for a change and not parroting MSNBC talking points. The world is a much nice place that way.

Sweet! Obama just ushers in the collapse (and then the Phoenix of a new free market America) at a faster pace!

“Both your votes for Gary Johnson were voted for Obama. Live with it.”

Spoken like the quivering coward you are.

Hardly anyone ever inspects those cars or trucks. I’ve been through there countless times. A tiny percentage are pulled aside.

Sounds like the primary fencing area will be the easiest of the three to defeat. The double fencing really wouldn’t be that hard either. The triple fencing merely requires that the ladder be hoisted a couple times. If we spent billions on surveillance and enforcement, then the triple-fenced area might be avoided completely.

Wouldn’t it be cheaper to merely fine employers for hiring illegal aliens? Let the illegal employers pay the expense of prosecution. That seems to work pretty well with most other nonviolent illegal activity.

For the fence to be ecologically viable, it would have to have holes large enough for migratory animals to pass through. You do realize that you depend on planet Earth for survival, right? You can’t just kill off entire species for political reasons and expect no consequences.

Good luck getting over that with a ladder.

Yay! We’ll finally be fenced in by the government!

“Wouldn’t it be cheaper to merely fine employers for hiring illegal aliens? ”

What are you going to do, stalk every lawn care company in the country 24/7 and make sure they don’t hire illegals? Or every McDonald’s? Or every hotel? Or every restaurant kitchen? I suppose if we hire about a million new USCIS agents it might be doable. But that sure isn’t cheaper than building the fence.

And besides even if you imposed strict rules on hiring, $50 will get you an SSN card on the street. That’s how most illegals work now. It’s a wink-wink situation. The illegals pretend their documents are legal and so do the employers. Technically most employers of illegals aren’t breaking the law since they think (nudge nudge, wink wink) their employees are all here legally.

So how do you get around that? A national biometric ID would do the trick. You can’t fake that, or if you can it’ll cost exponentially more than than $25 that a fake SSN card costs making it cost prohibitive for an illegal making $7/hr cutting grass. But god forbid we have that!!! No we can’t have that because the government will have too much info on us (never mind that the govt has a transcript of every phone call you’ve ever made and knows more about you than your spouse).

Sounds like Mr. Smith will say anything to get those 30+ million progressive (read communist) voters on the roles. Most of them will not be competing for high end government contracting jobs I bet.

Do the “up to” match in retail IRAs.

Throw everything else into a Roth IRAs. At present, you can still withdraw your Roth contributions without penalty, and before 59.5. That will likely disappear somewhat, as government decides that no one’s earnings was taxed highly enough to begin with.

They’ll tax the h@ll out of Roth contributions as well.

Government Bubbles. Gotta love ‘em.

I can get most of my principle, nearly $200k, in three years. If I am too late and they confiscate my Roth why then gold will be very valuable and make up for the theft. Movable, hidable asset. Guarded with an AR-15 and .223 ammo.

Movable, yes.

Hidable? Well, thus far. There’s nothing to say that government-funded technology won’t be able to locate your “hidden” gold someday soon. Ditto cash.

I put nothing past those who want to steal the freedom of others.

“This is why I only do 401k up to the firm match and encourage others only to use 401k insofar as your employer matches it. A match is “free” (not really, since it’s part of an overall compensation scheme) and worth rolling the dice. Locking up a lot of money for 30-40 years otherwise seems like a bad bet in this economic landscape.”

Spoken like a true cool-aid drinking Maoist.

Movable, hidable asset.

Do you really have no paper-trail that shows your purchases? You walk in and buy gold coins with paper bills?

Locking up a lot of money for 30-40 years otherwise seems like a bad bet in this economic landscape.

Sure, there is some political risk in having your money in a 401k. But my “expected loss” due to this is lower than my “expected loss” due to the tax arbitrage.

I keep hearing people comment about how 401ks/IRAs are going to be confiscated, and Roth IRAs are going to be taxed, etc., etc., etc.

If the government needs to raise more money, which group is more likely to be targeted politically?

1. An owner of a Roth IRA?
2. A member of the 1% income earners?

Voting to tax withdrawals from Roth IRAs would be the same as voting to repeal Prop 13 in California…political suicide.

It is more likely that they introduce some kind of national sales tax…you get your money out of your Roth without paying tax, but you can’t spend it without paying more tax.

Expensive but good.

99.1% of men diagnosed with prostate cancer in the US service.

In Denmark it’s 47%. In England it’s 69%.

Where would you rather live if you got cancer?

“Where would you rather live if you got cancer?”

The place that doesn’t bankrupt me for the rest of my life.

“The place that doesn’t bankrupt me for the rest of my life.”

You’ll be dead but rich. Awesome!!

You’ll be dead but rich. Awesome!!

In most older men with a mildly-elevated PSA, the disease is not worth treating, as the patients will with high probability die of some other cause.

So the fact that we run the PSA test much more broadly is why we “survive” more cases of prostate cancer. Nothing more.

Quoting this statistic as a valid comparison of our health care systems makes you either a political operative or an idiot—wish I knew which.

I have friends who live in Canada and and you have no idea what you are talking about.

You are still free to have private insurance and see any doctor you want any time you want.

For poor people, those wait times beat NEVER, here.

Meanwhile, with my full insurance, I’ve got to wait 2 months to see an ENT. Really.

Anecdotal proof is fun!

I guess your “friends” in Canada never visit an ER or go to the doctor. Here is what reality is like in Canada under a “FREE” system run by the govt.

http://www.thespec.com/news-story/2264985-canada-s-er-wait-times-among-world-s-worst/

“Overcrowded emergency departments in Hamilton show why Canada has been found to have the worst emergency department waits of any developed country. The average wait for a Canadian patient is longer than four hours, according to a Canadian Institute for Health Information report released Thursday. That is 19 per cent higher than the average of 11 international comparators.”

http://www.cbc.ca/news/health/story/2011/12/12/wait-times-surgery-fraser.html

“Wait times for a referral to a specialist rose to 9.5 weeks in 2011 from 8.9 weeks in 2010. And the wait time between a visit to a specialist and actual medical treatment increased to 9.5 weeks from 9.3 weeks, according to the report.”

Funny. My parents live in a resort area, Palm Springs, and know of many Canadian snowbirds who complain about their healthcare system. They are not poor people. They are retired, though.

Thanks to tax dollars being spent to subsidize it. That’s the thing with “green” power. On its own it has never been profitable. It always needs some tax credit or incentive to break even. It’s govt welfare at its finest. The left goes nuts over $4B tax breaks to evil oil companies. But hundreds of billions of dollars for wind, solar, power? No problemo.

“If state regulators approve the request, Xcel (NYSE: XEL) will have more than 2,700 megawatts of wind power in Colorado, it said Thursday. Xcel had asked the Colorado Public Utilities Commission in February for permission to request proposals for wind power projects because the utility said it needed to move quickly on wind projects in order for developers to get projects completed before the current federal wind Production Tax Credit expired. The credit, worth about $22 for every megawatt of power generated, received a two-year extension in January. Developers have to have projects substantially underway by the end of 2013 and completed by the end of 2014 to qualify for the credit.”

About 1/2 way between Seattle and Spokane on I-90 there is a huge windfarm. Miles and miles of wind mills. I drive this route about once every 2 months. Each time I drive by there at least 1/3 of the wind mills are not working. It’s not because there’s no wind, because god knows that area is always windy. We’re talking 20 mph is considered a gentle breeze for that area. And yet 1/3 of the potential output is down at any given time.

Here’s a fun article on what happens to old windmills when they break down….nothing happens. They just stop working. And start decaying. 14,000 and counting so far in the USA. Get ready Colorado, this is your future in 20-30 years.

http://toryaardvark.com/2011/11/17/14000-abandoned-wind-turbines-in-the-usa/

Smithers, the problem is the 25-year ramp up period. We can’t run out of oil on Wednesday and suddenly be running on wind-turbines on Thursday. Someone needs to get the infrastructure built up before peak oil hits, and it’s NOT going to be the oil companies. They’ve been greenwashing us with “beyond petroleum” for years, but it was a scam and everyone knows it. They really do want oil to run out on a Wednesday. On Thursday, they’ll just use their profits to buy servants to fan them in the heat.

Overall, is oil profitable? Sure is… when you get to pass off the costs of bad health, global warming, polluted environment, and military protection onto the taxpayer.

try more like Thank You Open Borders for 50 years. Katrina was a blip in the long term trend of Texas (and America) becoming non-white.

Smithers is right on this one.

Step 3. Demonize the companies in the market that are forced to charge higher prices able to pocket the government subsidy, and happily do so.

FTFY.

It’s just a weird coincidence that the vast majority of homeless people are either alcoholics or drug addicts.

It’s not a coincidence at all: the vast majority of them have mental-health issues, and many people with mental-health issues attempt to self-medicate with alcohol and drugs.

Thank Reagan, as he was the one to shut down the funding to mental health. Treat ‘em and street ‘em!