The Housing Bubble

No Jingle_Fraud. Case Shiller excludes foreclosures and defaults.

Hows the construction biz going for you lately?

I agree, but hopefully you will concede that a significant drop in materials cost will add to the downdraft.

Of course. Just pointing out the clueless fallacy that still circulates. It’s merely a wild guess on the part of debt donkeys and credit junkies. What they’re really saying is “I have no idea”.

Rather, “I have no idea why I’m paying triple for a house but everyone is doing it so it must be ok.”

Worse, most of them don’t want to know. I wonder why that is.

Same reason they vote for the Republicrat Duopoly even though it’s robbing them blind.

I dunno. With the way it’s unwinding in China, the contagion is spreading. I’ll keep my powder dry.

I’m taking the view that the credit expansion was the thing engineered (by the Central Village Idiots [CVI]) and that the unwind is the unexpected and unwanted crack-up.

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.

CVI is screwed. Their strategy has always been founded on avoidance of the sole and inevitable outcome.

Figure that out.

It sounds as if you know little about these issues and have little imagination.

For example, the Australian government had a stimulus program back around 2007-8 which involved insulating buildings, putting people to work and reducing emissions at the same time. Australia was the only developed country that avoided recession during that time.

If you looked into it you’d probably find some climate activists who think that the fighting climate change should be more than economic growth, even if it meant that Americans suffered a decline in living standards.

But I doubt that there are many people who would embrace your solution: say F— You! to John Maynard Keynes and allow the country to sink deeply into poverty, thus helping the environment by pushing our per capita level of emissions down to levels common in the Third World.

There are large numbers of people who want to keep us reliant on oil. Remember, when it comes to energy, the oil and gas companies are on the same side as Saudi Arabia.

I’m not saying F– to anyone. Keynsianism has already impoverished us. I’m looking for a way out.

The example from Australia is great, as an ideal. But 99.99% of people pushing Keynsian policies could care less where the money goes, as long as windows are broken and repaired, and the right palms are greased. How much useless carbon has been spewed from Solyndra et al.

I know quite a bit of what I speak. I’m an EE that used to run a solar installation company, until I realized that my efforts were only making matters worse because of all the perverse incentives driving people to “green” consumption. I listened to enough customers speaking out of both sides of their mouth on this to last a lifetime.

There are better ways to address this, we’re not pursuing any of them at present that I can see, nor is anyone in power even hinting at a sensible direction. Kind of like housing.

“There are large numbers of people who want to keep us reliant on oil. Remember, when it comes to energy, the oil and gas companies are on the same side as Saudi Arabia.”

Isn’t FOX news owned by the Saudi Prince? No wonder they hate alternative energy.

+++

The Bush dynasty has always been comfortable putting profits before patriotism. Prescott Bush, Bush Senior’s father, extended credit to Adolph Hitler and supplied him with raw materials during Word War II. The U. S. seized his assets under the Trading with the Enemy Act, but grandfather Bush found other ways to replenish the family coffers.
Bush Senior struck it rich in oil and in the defense industry. Mahfouz (yes, that Mahfouz), Prince Bandar and Prince Sultan (Bandar’s father) were also heavily invested in the defense industry through their holdings in the Carlyle Group, where Bush Senior served on the board of directors. Founded in 1987 as a private investment group with strong connections to the Republican Party establishment, Carlyle increased its original investment of $130 million to $900 million when it went public in 2001.
“In recent years, Carlyle has been successful both at raising and making money. It has raised $14 billion in the last five years or so, and its annual rate of return has been 36 percent. Its 550 investors consist of institutions and wealthy individuals from around the world including, until shortly after September 2001, members of the bin Laden family of Saudi Arabia. The family–which has publicly disavowed links with Osama bin Laden–had been an investor since 1995.” (18)

“As the eleventh largest US defence contractor, Carlyle is involved in nearly every aspect of military production, including making the big guns used on US naval destroyers, the Bradley Fighting Vehicle used by US forces during the Gulf War and parts used in most commercial and military aircraft. United Defense has joint ventures in Saudi Arabia and Turkey, two of the United States’ closest military allies in the Middle East.” (19)

Don’t forget that Keynes wanted us to go around breaking windows, just so we could fix them. Reducing energy waste doesn’t actually break anything.

But 99.99% of people pushing Keynsian policies could care less where the money goes, as long as windows are broken and repaired, and the right palms are greased.

What evidence do you have to support such an assertion?

MightyMike: For example, the Australian government had a stimulus program back around 2007-8 which involved insulating buildings, putting people to work and reducing emissions at the same time. Australia was the only developed country that avoided recession during that time.

Post hoc ergo propter hoc?

iftheshoefits: But 99.99% of people pushing Keynsian policies could care less where the money goes, as long as windows are broken and repaired, and the right palms are greased.

I pointed out the reality of value the other day. The example was 3 people in a barter economy. One person has a potato, one has a cow, one has a wheelbarrow. The person with the potato wants to trade it for a cow. The cow owner won’t do it.

Enter currency, and there is now a granular way to assign value. The potato could be 1 unit, the cow 200 units, the wheelbarrow 50 units.

I think value is poorly understood, but it is an underlying tidal force which goes hand-in-glove with human desires (need and want) which drives the economy.

Circulating currency in ultimately valueless activities is a Keynesian cornerstone, and we all can see how it’s supposed to work: “Pay people to bury bottles of currency and dig them up, and yadda yadda, the economy starts growing again on its own.”

Devil’s in the details. That “yadda yadda” part is poorly understood, and the impact of value is poorly understood. Hence the weakness of developed economies around the world as a result of current policies.

Also, tying the money printing to debt is too clever by half. If you want to print money, print money. They understood about the nature of currency in Rome. Tying it to debt might work for the government, as it can sequester it within the Fed’s balance sheet. But saddling the citizenry with debt - who don’t have high priced teams of lawyers to protect them, and about whom the central bank is at best secondarily concerned - doesn’t encourage spending.

For example, the Australian government had a stimulus program back around 2007-8 which involved insulating buildings, putting people to work and reducing emissions at the same time. Australia was the only developed country that avoided recession during that time.

And just see the results of that insulation.
Condemnation/buyback of housing etc..
http://www.act.gov.au/asbestos-response-taskforce

Post hoc ergo propter hoc?

No, that doesn’t apply. It’s pretty simple. Putting people to work helped prevent unemployment from getting too high. Even most conservative politicians in Australia agree that the stimulus programs (requiring deficit spening) undertaken at that time represented wise policy.

Neuromance:Post hoc ergo propter hoc?

MightyMike: No, that doesn’t apply. It’s pretty simple. Putting people to work helped prevent unemployment from getting too high. Even most conservative politicians in Australia agree that the stimulus programs (requiring deficit spening) undertaken at that time represented wise policy.

This is the problem with value-less activities: Economies are like plants in that they “grow towards the light”. The light being sources of currency. So, if the government starts pumping in currency in some value-less activity, the economy grows towards and becomes dependent on that light - those expenditures. Jobs will be created based on that spending. But - removing the light source will cause a die-back of the economy. Continuing the government spending will only encourage the economy to grow towards that “light”. What does this lead to? An economy based more and more on government spending - a centrally planned economy. And we all know the efficiency, based on historical experiment, of centrally planned economies. This dependence on government spending, plus massive debt, public and private, are why modern economies are sclerotic.

The devil’s in the details and that “yadda yadda” has a lot of obscured, poorly understood details.

This is the problem with value-less activities: Economies are like plants in that they “grow towards the light”. The light being sources of currency. So, if the government starts pumping in currency in some value-less activity, the economy grows towards and becomes dependent on that light - those expenditures. Jobs will be created based on that spending. But - removing the light source will cause a die-back of the economy. Continuing the government spending will only encourage the economy to grow towards that “light”. What does this lead to? An economy based more and more on government spending - a centrally planned economy. And we all know the efficiency, based on historical experiment, of centrally planned economies. This dependence on government spending, plus massive debt, public and private, are why modern economies are sclerotic.

How is that insulating buildings doesn’t have any value? Would it have value if it wasn’t the government doing it? Where do you get all of this? Have you ever a read a book on economics?

MightyMike: Even most conservative politicians in Australia agree that the stimulus programs (requiring deficit spening) undertaken at that time represented wise policy.

The other problem is side effects. Yeah, print up some cash, spend money on some project, and you get more jobs. What are the side effects? Short term and long term?

I think modern policy planners are so enamored of their high-error equations, they don’t realize how limited their vision is.

“You want X, do Y.”

“But what are the side effects of Y?”

“Don’t worry about it. How bad can they be? It’s not like we’re sowing seeds that choke any future economic recovery and slowly take us to de facto central planning. Our data-driven approach clearly says doing Y will cause X. Case closed.”

“But that didn’t really answer my question about side effects.”

“Look, I’ve got a PhD in this stuff, you’re clearly too simple to understand.”

“Look, I’ve got a PhD in this stuff, you’re clearly too simple to understand.”

Is this conversation something that you completely dreamt up yourself? Do you have any evidence that anyone of any significance thinks this way or that any such conversation has ever occurred?

MightyMike: How is that insulating buildings doesn’t have any value? Would it have value if it wasn’t the government doing it?

Insulating buildings may or may not have value. If it is a decrepit, abandoned building that will soon be demolished, it’s safe to say it doesn’t have value. If it a brand new building with state of the art insulation, and it’s ripped out to reinsulate, then no, it doesn’t have value.

And that’s the trap government-based action would fall into. A policy maker would say, “Let’s insulate buildings! You have fifty million dollars. Make it so.”

The reality of government spending is that it is not granular or motivated enough to only engage in spending which results in activities which have or create value. In principle, sure, government spending to stimulate the economy is a great idea. In practice, it’s of limited effectiveness, especially if the focus is just creating jobs. An economic ecosystem will grow around that value-less spending.

A policy maker would say just that, “let’s insulate buildings”, and a lot of value-less or destructive activities could occur. I’ve seen well-meaning policies like this one lead to inane and slightly destructive outcomes. Sure, jobs were created. Currency was injected. But what were the side effects? People being slightly worse off for the action.

How many times has aid been given to 3rd world conflict zones, only to have the aid end up in the pockets or warehouses of local authorities? Great in concept, doesn’t work in practice.

Government absolutely can, and does do, actions which create value. But the Keynesian theory that says it doesn’t matter if the action has value or if it doesn’t. Recall that Keynes said it would be useful to simply bury bottles of currency and dig them up.

Where do you get all of this? Have you ever a read a book on economics?

If it’s all the same to you, I’d prefer to stay on topic, and not stray off into trying to make the conversation about me, or you. It’s rarely an interesting tack for the readers, and virtually impossible to verify one way or another. People who tout their credentials are simply trying to engage in the “appeal to authority” logical fallacy instead of trying to debate ideas on their merits.

Neuromance: “Look, I’ve got a PhD in this stuff, you’re clearly too simple to understand.”

MightyMike:: Is this conversation something that you completely dreamt up yourself? Do you have any evidence that anyone of any significance thinks this way or that any such conversation has ever occurred?

Wait a minute: You just asked me whether I’d ever read an econ text, in an attempt to execute an “appeal to authority” fallacy, and then you’re asking me if modern economic pundits engage in ‘appeal to authority’ fallacies?

Yes they do. Try reading some economic pundits musings sometime. It’s rife with appeal to authority. Most of the social sciences have quite rigorous orthodoxies, which limit their ability to discern truth and reality.

If it’s all the same to you, I’d prefer to stay on topic, and not stray off into trying to make the conversation about me, or you. It’s rarely an interesting tack for the readers, and virtually impossible to verify one way or another. People who tout their credentials are simply trying to engage in the “appeal to authority” logical fallacy instead of trying to debate ideas on their merits.

While I agree that talking about me and you is usually not that interesting. But the ideas that you state or so wacky I just wonder why they come from. At some point the origin of this philosophy becomes more interesting than its content, simply because it’s so bizarre.

But the Keynesian theory that says it doesn’t matter if the action has value or if it doesn’t. Recall that Keynes said it would be useful to simply bury bottles of currency and dig them up.

This is really a straw man argument. No one of any significance has advocated such a program in a very long time, possible even ever. I don’t think that you can find any evidence that Keynes urged FDR or his own government to do any such thing when he was making recommendations to them.

You also have to consider what it was that finally ended the Great Depression in America. It was the spending for the war. In other words, deficit spending was employed to produce vast quantities of armaments, ammunition, etc. And do you know what happened to most of those tanks, bombers, artillery shells, etc.? They were used up or worn out. In other words, products were manufactured and then destroyed not long afterwards.

If the only tool you have is a hammer (e.g. government spending), then every problem looks like a nail.

– Maslow, approximately

Wait a minute: You just asked me whether I’d ever read an econ text, in an attempt to execute an “appeal to authority” fallacy, and then you’re asking me if modern economic pundits engage in ‘appeal to authority’ fallacies?

I wouldn’t say that reading a single book would make anyone an authority. I’m also not an economic pundit, so both parts of your argument are irrelevant to the point you’re trying to make. You’re pushing this appeal to authority fallacy thing too far.

Yes they do. Try reading some economic pundits musings sometime. It’s rife with appeal to authority.

I read plenty of economists. I don’t see much of this appeal to authority that you’re talking about.

If the only tool you have is a hammer (e.g. government spending), then every problem looks like a nail.

The other tool is tax cuts, which is also a way to stimulate an economy in recession. Like increased government spending, it also happens without a need the need for the president and Congress to make an explicit policy decision when an economy falls into recession.

Neuromance: But the Keynesian theory that says it doesn’t matter if the action has value or if it doesn’t. Recall that Keynes said it would be useful to simply bury bottles of currency and dig them up.

The only tool he sees is a hammer, so every problem is a nail.

MightyMike: You also have to consider what it was that finally ended the Great Depression in America. It was the spending for the war. In other words, deficit spending was employed to produce vast quantities of armaments, ammunition, etc. And do you know what happened to most of those tanks, bombers, artillery shells, etc.? They were used up or worn out. In other words, products were manufactured and then destroyed not long afterwards.

Ahh, yes, government spending as a result of WWII got us out of the Depression. But what else happened as a result of WWII?

1) There was a technological and industrial boom.
2) 600-some thousand young men dead plus a few hundred thousand more maimed, thus removed from the workforce.
3) Other world economies in smoking ruins.

So - yes - the economy boomed after WWII and standards of living increased for several decades. I think it’s the wrong lesson to take away from the WWII experience to say that government spending was the primary source of ending the Depression.

Yes, the government provided a lot of tools to help people stay alive. Those things create value.

Another problem is when people say that, “We grew our way out of the debt in WWII, we’ll do the same thing now.” Conditions are very different now. Other economies are strong or rising. Sometimes doing a dangerous thing and getting away with it is more dangerous than being hurt by the dangerous thing initially, because you wind up thinking, it’s not that dangerous.

OK, it’s relevant to a theory which no one has ever advocated, so it’s relevant to something.

Neuromance: Wait a minute: You just asked me whether I’d ever read an econ text, in an attempt to execute an “appeal to authority” fallacy, and then you’re asking me if modern economic pundits engage in ‘appeal to authority’ fallacies?

MightyMike:I wouldn’t say that reading a single book would make anyone an authority.

No, no, sorry I wasn’t clearer - you asked me whether I’d ever read an econ text with the hope of making yourself look like an authority, not me…

No, I wasn’t trying to make myself appear to be an authority. As I said, I’m more interested in where these wacky ideas come from.

Ahh, yes, government spending as a result of WWII got us out of the Depression. But what else happened as a result of WWII?

1) There was a technological and industrial boom.
2) 600-some thousand young men dead plus a few hundred thousand more maimed, thus removed from the workforce.
3) Other world economies in smoking ruins.

There was an industrial boom because the factories were working nonstop to produce armaments for the war. You’re second and third points took effect after the war.

Person A: Is anything sillier than the broken window fallacy? Smash things and we’ll improve the economy. How silly.

Person B: How did WW2 end the Depression?

Person A: The rest of the world was destroyed! Of course we flourished, fixing everyone’s, um….broken…windows…hmm.

Oh, dear.

WW2 did not end the depression. You might as well say that my birth ended the depression.

Oh! A naysayer! What did end it, Madame Skye?

WW2 did not end the depression. You might as well say that my birth ended the depression.

As I wrote above, the war put a lot of people to work, dramatically reducing unemployment and raising family incomes. But because economics is not a science, I suppose that there’s no way to prove anything and so anybody can issue a statement based on the feelings rolling in his brain.

‘anybody can issue a statement based on the feelings rolling in his brain’

That sums you up pretty much.

Question;

What draws these liars here?

It’s strange how everyone comes up with an excuse for inflated prices and conveniently ignore collapsing demand.

Why do you think that might be?

Jane, first off I haven’t noticed my clothing being in smaller containers.

I would say that I have observed prices of certain things drop like a rock numerous times over the past 40 years. Things that must be sold will be sold at discount despite greed. Since speculation is rampant and there is gross overcapacity, expect some rapid changes.

I think it is impossible that a 30% drop in oil price (quite rapid) will not lead to cascading dislocations, because of the extreme level of debt.

And by the way *you were here reading everyday* last Oct 2013 when the fenders started coming off this thing. Happy New Year.

My dad called it ‘out in the boondocks (or sticks)’, and ‘Timbuktu’ was occasionally used as well.

If you mean in an Oil City sense where housing and cost of living is cheap, no. You would have go further out — say another 20 miles — to even get close to viable Oil City type properties under $100K.

I think that’s understating a bit. Course I don’t know MD and try to avoid it like the plague.

Here in VA, the exurban exurbs - the boonies close to the WV line - are Winchester and Gore. Winchester is an old gritty town that I happen to like (courtesy of Deer Hunting with Jesus, a book recommended here). Gore is still snotty as h*ll.

Gore is still up in the 400s for a nothing-special mcmanse on 5 ac. Winchester had a wannabe bubble, but it was so reasonable compared to any of the armpits bordering DC that it always felt like a real buy. The people are different. They’ve got less pretense and they don’t sneer to your face.

Where’s Big Al? What’s he doing to his equities before it all comes down?

There’s really only two alternatives to hide your dough if you don’t want to spend your life obsessing over it. Equities or real estate. RE is so tainted that it’s not a good place to camp cash. Markets are a rigged casino.

Jeez, this time I hope I have my ear to the ground well enough to pull the trigger into TIPS right b4 it all goes south. I dislike crawling up from under my rock and drawing attention to myself like this. However, last time I changed over into TIPS ten days before Lehman went down. Did not use any technical charts. It was based on a general shrill hysteria on the part of the pumpers, coupled with knowledge about the derivatives markets. 200:1 leverage, no way any of the counterparties could ever have satisfied the calls.

There was more dough owed on derivative bets gone bad, than could be satisfied with the entire global GDP. I guess some of the gamblers (the majority) got quiet attaboys and do-overs. Really, when everybody is that much in the hole and there’s no regulation, what can you do but shrug and go on to scr*w the next mark?

This time, I have not taken the time to be anal about it, and to do the required research. Indulging in magical thinking, I say to myself “I’ll do it when the tea leaves look right”.

For all the new landlords - your tenants are going to be stiffing you big time and long term on the rent again. If I had some time (personally I don’t, but just sayin’) I’d get the creds and grease the palms required to be a process server. Last time around, they didn’t have enough to go around.

rumors are that Aladinsane did not go to Australia or New Zealand but went to Mexico.

supposedly had a lot of gold. Was fond of hiking in the southern Sierra Nevada mountains. I probably crossed paths with him years ago, since I used to do a lot of hiking in the high country.

I heard he’s heading up a gang of desperados in the Sierra Madre. (More interesting than your version.)

The QE queue is growing.

I drive a Prius, and regularly cut people off who are driving very large vehicles. The problem is that they can’t see, so I need to cut them off because otherwise they would always be in my way.

OPEC has done nothing except stand still. Something else has caused the unexpected to happen.

They can always buy an oil futures contract for Christmas.

I’m not sure why considering it will be worth less in 30, 90 and 180 days.

Don’t they need them to furnish the empty condos they’re buying everywhere?

I think the popular doorbusters (TVs and Computers) sold out. I’m guessing that it was the lesser stuff that got left on the shelves.

I picked up online some 7″ droid tablets for 39.95 each, including shipping, for gifts.

I have one of those cheap droid tablets to use as an Pandora device. The battery life is a joke an the screen cracked twice. I made them replace it for free once. The other time I had to pay $20.

common core

I read that the latest jargon from the right wing media complex is to call it Obamacore.

You’re probably right. H.L. Mencken is another that would have been unmercifully brutal.

H.L. Mencken’s words are as apropos today as in his time. Like this, which describes to a T the Obama Zombies, McCain Mutants, and Romney Retards: “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”

Eastern Canada, highest recorded tides in the world:

http://en.m.wikipedia.org/wiki/Bay_of_fundy

“some very scientific explanation about how global warming is affecting the tides”

Add to that the unnerving and relentless lowering of the age of puberty. It is probably the earth’s desperate attempt to save mankind. There is likely a complex scientific model that explains this, though none of us could understand it. Completely ominous.

The ocean level rose in Galveston 30 years ago, about ten feet. We should have taken that as a warning.

Nice job confusing local weather variation with global climate trends! Your Republitard thinking cap is proudly on display.

Region V crush Miami, getting the regions all mixed up

Ohio State-Miami: The “Pass Interference” Call - YouTube
http://www.youtube.com/watch?v=NFpTkYMLzdc - 539k -