patrick.net

mell says

Han says

Unfortunately, as many have pointed out here, the US is well on its way to becoming one of these 3rd world nations, except instead of toiling away in salt mines or the fields, people are toiling away in soulless cubicles in nondescript office buildings for a mere pittance, all the while hoping that someday they too will be able to live the American Dream...

At this rate, they'll be lucky to own a 2/1 in Bakersfield or Stockton California...

It's up to them to change it - voting for more of the same is not going to do it. Time to put the xbox aside and engage in real change, not 'hope and change' ;)

Well they could vote, but that would be unlikely to really change anything. Unless of course they changed the law to allow foreigners to run for President. I would vote for Xi Jinping or Hu Jintao, two guys who know how to get the job done.

I'd even vote for Vladimir Putin over any of the clowns we have here, any day.

Reality says

The printing of new money is actually leading to American consumers being tapped
out.

No--the wealth disparity is leading to American consumers being tapped.

tatupu70 says

Reality says

The printing of new money is actually leading to American consumers being tapped

out.

No--the wealth disparity is leading to American consumers being tapped.

When the source of money is from government officials up high, you always get increasing wealth/income disparity . . . just like in Haiti!

Political wealth redistribution came before money (before even human evolved; dogs and lions all have pecking order regarding who gets to eat first). The emergence of (sound) money served to restrain the arbitrary power of political fiat command: everyone being equal in front of money and law, both are set as objective existence not as one person's whim . The fiat money undermines the very function of money, substituting what essentially is a plantation scrip for real money.

Reality says

When the source of money is from government officials up high, you always get
increasing wealth/income disparity . . . just like in Haiti!

So all the other countries in Europe that have much lower disparity than the US--that's because they are on the gold standard? Or because the governments there don't interfere?

Is that your theory?

tatupu70 says

Reality says

When the source of money is from government officials up high, you always get

increasing wealth/income disparity . . . just like in Haiti!

So all the other countries in Europe that have much lower disparity than the US--that's because they are on the gold standard? Or because the government's there don't interfere?

Is that your theory?

The alleged lower European disparity is largely due to measurement error: Europeans engage in more tax cheating and wealth concealment due to their high taxation rates. For example, the Swedish owner of IKEA keeps most his wealth in foundations.

It depends on how the new money is distributed and how the economy is structured.

--------------

How is new money distributed?

100 years ago, our currency didn't even exist. Now, there's an incalculable number of dollars circulating the globe.

Where did it come from?
How did it get to where it is today?

The question of USD hegemony is an interesting one.

What *would* happen if we can no longer run $500B/yr deficits?

http://research.stlouisfed.org/fred2/series/NETEXP

There's been big winners and losers in our current economy thanks to the rise of cheap imports. It's my thesis that landlords (via rising rents) have taken most of these savings over time, so the big loss of mfg jobs to get these imports is going to prove to be a shitty deal for most people.

rents are going to hit the 'third doubling' from the postwar period around 2020:

http://research.stlouisfed.org/fred2/series/CUUR0000SEHA

Han says

US is well on its way to becoming one of these 3rd world nations,

More like both world moves towards 2nd world, a more equitable world where labor of same productivity/ competence receive similar pay regardless of nationality/ race/ culture/ sex/ sexual orientation/ religion/ geographical location, but seem like a degradation for nations claiming to be first world/ advanced economy. Post-war abundance for Americans where a janitor earns more than a professor in a third world nation, is an anomaly in history. Note: Choice of janitor and professor is not meant to be discriminatory but just to illustrate the skill difference to execute the job.

Why must incomes go up?

Why can cost of living, primarily housing, be allowed to find its level? (Crash back down to 1990's levels)

I see the much easier solution being the halving of housing costs.

If my 1040$ monthly mortgage were 520$, id be much better off. If my 1375 per month rent were instead 690$, id feel damned near wealthy. And that's with the same morre or less stagnant income I've enjoyed for the past decade.

We were poised to find out how it would have played out five+ years ago, when house prices were crashing. The usfedgov stepped in and threw everything and the kitchen sink at this "problem" to assure that housing prices retraced their parabolic rise to insanity.

Now the problem is supposedly the republicans fault for not handing out free money, so that people can pay ever higher rents? And it was all caused by not high enough taxes on labor??

That's a tangled web you be weaving,,,,

tatupu70 says

If your cornerstone is built on Say's Law--that pretty much says it all.

Since you are such an ardent critic of Says Law, what is it?

indigenous says

Since you are such an ardent critic of Says Law, what is it?

I thought you already read up on it. You posted the mises.org version.

tatupu70 says

I thought you already read up on it. You posted the mises.org version

Yea I have looked at it before, anyway so what? Does that make it any less true?

Because a deflationary depression where real estate crashes down to 1990's levels will result in massive unemployment.

---------------

Why is a deflationary depression, the only way for real estate to return to its valuations of only 15 years ago??

I remember the 90s as pretty good times for everyone. Good employment, affordable cost of living.

Why would a housing market correction, require a 2nd great depression?

"democrats are just as bent on pushing debt as republicans."

http://research.stlouisfed.org/fred2/graph/?g=sXL

Democrats were responsible for stopping the debt growth of the 1980s.

Republicans voted against the tax rises required, and concern-trolled on top of it the Clinton tax increase would destroy the economy.

They, being wrong on absolutely everything, were wrong about that too.

As far as 'pushing debt', we must look at consumer debt too:

http://research.stlouisfed.org/fred2/graph/?g=sXN

shows very clearly the two great leverage events, the 1980s and the 2000s.

http://research.stlouisfed.org/fred2/graph/?g=sXO

shows the Bush era saw leverage rise 40%, under Obama it has risen 2%.

The GOP is against all tax rises, and they won't cut spending since that's how you lose elections.

Borrowing or printing are the remaining options for them.

hrhjuliet says

What are the first steps?

get people to vote for economic issues rather than the moral issues that the GOP panders to.

Looks like the big anti-gay campaign is running out of steam for the GOP, after 10 years of them running that con.

There's still gun rights and criminalizing abortion for them to collect votes on but I think educating people on what the economic problems actually are will result in enough shift to the liberal side.

Thing is, I don't see anyone other than Bernie Sanders able to articulate what is economically wrong here.

Obama is beginning to make some noises that sound sorta good again, but there hasn't been a crystallization into concrete policy from him yet.

Dems have been center-right for a very long time now, since LBJ passed on.

Country needs some actual progressive education again.

errc says

Why must incomes go up?

Why can cost of living, primarily housing, be allowed to find its level? (Crash back down to 1990's levels)

I see the much easier solution being the halving of housing costs.

Agreed. And it will, usually never to previous lows as they keep printing and debasing the dollar. But, hey, good for the stock market ;)

talking to these people is like taking a call from a nuthouse.

hence my ignore list.

Bellingham Bill says

talking to these people is like taking a call from a nuthouse.

hence my ignore list.

said the ostrich...

It's a madhouse, or so they claim.. ;)

Yep, this explains why the active listings are going off market. :)

Heraclitusstudent says

you can build new houses for less than $250K: that is about where the median price of a new home is in the US. That would be a price fall in California.

What about buying the land??? The problem is the places where people want to live are already built out and the land costs are similar to the building costs.

Heraclitusstudent says

What about buying the land??? The problem is the places where people want to live are already built out and the land costs are similar to the building costs.

The notion that the land is scarce and a cause for high prices is preposterous.

Phoenix and Las Vegas are in a middle of a desert.

Even the SF peninsula is half empty. Just hills with nothing on it, except maybe a few cows grazing. It's just forbidden to build there.

Heraclitusstudent says

The notion that the land is scarce and a cause for high prices is preposterous.

Phoenix and Las Vegas are in a middle of a desert.

Land isn't scarce. Land where people want to live is. Sure you can build in the outskirts of suburban Phoenix, Las Vegas or Chicago for that matter-but nobody wants a 2 hour commute to work every day. That's why the new starts aren't as high as you'd like. And why housing in the desirable areas keeps going up.

tatupu70 says

Land isn't scarce. Land where people want to live is.

I repeat: The SF peninsula is half empty.

The bay area can be extended east with less than 1 hour commute. Places like Danville have a lot of space to build.

And new development can be planned: You can encourage companies to develop in other areas. Lots of people would be willing to leave elsewhere if its cheaper and they can get a job.

That's assuming there is someone in power that actually wants cheaper real-estate.

Heraclitusstudent says

I repeat: The SF peninsula is half empty.

The bay area can be extended east with less than 1 hour commute. Places like Danville have a lot of space to build.

I don't know that specific area.

Heraclitusstudent says

And new development can be planned: You can encourage companies to develop in other areas. Lots of people would be willing to leave elsewhere if its cheaper and they can get a job.

Sure--but existing communities already do everything they can to lure jobs. What makes you think they would have any success in a new area?

tatupu70 says

existing communities already do everything they can to lure jobs.

You do that at the country level: take the execs of large tech companies/VCs and coordinate new development in one or two locations in smaller cities . Benefit for them: it's easier to attract people there and it's cheaper.

Heraclitusstudent says

Benefit for them: it's easier to attract people there and it's cheaper.

I don't see that one. As the business owner, I'm going to have to relocate all my employees--some (many?) for sure aren't going to want to move. Not to mention the cost involved to move them all.

I don't see how it's easier to attract people. Real estate is more expensive in larger cities because people WANT to live there. I think attracting them to the outskirts of small cities will be difficult.

Heraclitusstudent says

Even the SF peninsula is half empty. Just hills with nothing on it, except maybe a few cows grazing. It's just forbidden to build there.

I would think that with the right construction techniques, one could even built almost on top of the San Andreas fault.

zzyzzx says

I would think that with the right construction techniques, one could even built almost on top of the San Andreas fault.

Not for $250K

mell says

Exactly

exactly 'cuz the electorate put the GOP in charge of Congress starting in 2011.

So went the stimulus and further gov't attempts at fixing how fucked up things have become.

It's gotten so bad the Fed has had to step in and do what it didn't want to do.

the Bush flat period was just consumer debt getting out of control.

http://research.stlouisfed.org/fred2/graph/?g=sYp

Re Obama and Gini:

http://research.stlouisfed.org/fred2/graph/?g=sYt

interesting correlation.

The 1990s recession was tough on people, things didn't turn around until 1993.

http://research.stlouisfed.org/fred2/graph/?g=sYu

between the dotcom recession and the 2008 crash gov't spending went up 50%, from $2T to $3.2T

*and* the Gini trend flattened out..

Then when Fed spending got capped by the GOP in 2011, and the free money mortgage money spigot was still off, Gini resumes rising.

Plus rising welfare state outlays for food stamps and EUC aren't going to do a helluva lot to make Gini better.

"better" meaning down for our conservative friends who aren't clear on the concept.

Bellingham Bill says

4 years of recovery. Impressive.

Thanks Fed!

Dumb ass

Bellingham Bill says

certainly a continued deflationary drawdown scenario would have pushed interest rates down.

Hey dude don't bogart that joint

So the fed buying 85 billion dollars of dead MBS every month for the last year and a half, has no effect?

I find that hard to believe. If it has no influence, than why bother?

I won't pretend to know, so that's why I ask, but is it not fair to assume that the 1+ trillion they dumped at the dead MBS, has caused RE to inflate by 1T in aggregate?

Isn't that their goal?

Was up just a few km west of Stanford on 85 to see the Demos.

There are 100s of square miles of land just west of the 85 from a few miles north of 'Tino to north of Stanford.

Is this prime land for moderate density burbs - or is there a rare creature habitating there?

Entitlemented says

Is this prime land for moderate density burbs - or is there a rare creature habitating there?

Yes a bunch of dead flora and fauna that needs to be fracked.

I don't think the fed has had much of any effect on interest rates, other than possibly the opposite of what people think (instead of forcing rates lower, maybe they have slowly held them higher by warding off deflation). Rates have been dropping since I was born in 1981.

What would happen to the tens of thousands of baseball common cards that I have piled in boxes in my parents storage, if the fed was buying 85 billion dollars worth of 80's topps common cards?

I appreciate the discussions, and I ask questions because id like to better understand what's really going on. I won't pretend to know everything, but I certainly feel that its not above my potential to be able to understand. Its just a turn off when people get to calling one another stupid over the course of discussion.

Its my opinion that had the fed not poured over a trillion dollars into buying up zombie MBS, that in aggregate, housing would be worth less than it is today. How much less is up for debate

Consider that household debt has gone down Real Household Debt down 17% from Peak, Real Mortgage Debt down 21%

Read more at:

http://www.calculatedriskblog.com/2014/02/real-household-debt-down-17-from-peak.html#ptKL2WfxPDp2ACSv.99

http://research.stlouisfed.org/fred2/graph/?g=t1o

is an interesting graph.

it shows how we had the jobless recovery for two years, 2002 & 2003.

then in 2004 the real recovery that peaked at the end of 2007, 4 years.

Then le deluge, the Sisyphean return to the dotcom times, two full years of bad times, 2008 & 2009.

Then the recovery got going, and it's been 4 full years, giving us a similar shape to 2004-2008.

It's my thesis that $6T of new consumer debt got us out of the dotcom recession:

http://research.stlouisfed.org/fred2/series/CMDEBT

and we've seen a $7T boost in the national debt:

http://research.stlouisfed.org/fred2/series/GFDEBTN

which has given us a similar tractor to get us job growth.

(the 2011/2012 FICA cut was a nice touch)

http://research.stlouisfed.org/fred2/series/W068RCQ027SBEA

is total government spending.

http://research.stlouisfed.org/fred2/graph/?g=t1t

real (2013 dollars) per-capita (age 15-64)

This is pretty astounding actually, showing we're spending $28,000 per capita, one out of 2 average jobs (the median household income is $50,000 or so).

This is kinda scary stuff to me and I should stop making these charts.

Not knowing how screwed things are is a better condition.