patrick.net

Prat, Sorry. I missed that you were joking.

Girgl, Detroit should have been sustainable, but the big auto makers got complacent and built themselves into cost structures that could not be sustained.

Interest only loans and negative amortization loans are not new, but they are more widely used than before.

If you disregard their use during the great depression, Interest only loans are new as for the past 5 years....and none of these products have been time tested...and being that they are more risky, there is obviously much more likely that they will fail. When the dust settles after mass foreclosures, these loans will never be used again.

Zephyr says:
Girgl, An area should thrive if it has a sustainable economic base that generates good paying jobs (in addition to the low paying jobs that are everywhere). Alternatively, the real estate can do well if the area is a preferred destination for people who have lots of money. If an area has both, even better.

That would be the SF Bay Area, IMHO. Oh goody :-)

It’s not easy selling real estate.

...but in the same post you said: The proper attitude is this: the house sells itself.

There is no marketing strategy, no sales pitch or seller’s concession that is ever going to change the fact that she’s not going to buy the house.

This is not true.....people are talked into buying real estate all the time. You act as if there are no dishonest people in the business....almost as if you are sticking up for everyone in the business. There are dishonest people in all occupations....but some occupations are more prone to attracting dishonest people...especially salesmen, and realtors are salesmen!

Scott, you never answered my question "Is it ever a bad time to buy?" yes or no?

Maybe it’s just me, but something about your post expresses an odd fixation with women.

Here we go again ....and I'm not going to touch this one! :)

Just reported on the radio, “sales after Thanksgiving are flat” does that mean same as any other day? Or, no more/no less than expected?

Well you didn't think black friday was about great house prices did you?

SW has had a pretty good run on the east coast since 1992-ish. Even now, I think that good developers are making a bit over 100. I tend to think of the west coast as more hw-centric, so maybe that explains the drop-off that sunnyvale referred to.

This is totally not true..........they are not paying these kinds of wages on the east coast.

The Oct. issue of electronic design has a salary survey:

Typical EE is 46, white, makes 93k and works 53 hours/week.

This is so not true.......don't believe what statistics say...they always make salaries out to be much higher than they actually are.....I don't know why, but it is. Go to Salary.com and look up the salary for the occupation you are in....after you get really pissed, relax....they are not getting that much.

I am in Software and I make around 150K in Bay Area……

By the way I do not own a house and can not afford to own a house….

Ha Ha, I am an Embedded Hardware/Software Engineer...... I live on the east coast and while I have many friends that don't make as much as me, I make less than 100k.

Scott C says: “What I am not going to do is make fun of her, using a pretence to superiority to justify laughing at her, as some conceited asshole might.”

My my, a bit touchy aren’t we!

I understand your frustration, but did you really expect to get rich after simply taking a one month course in real estate at the height of the bubble? Lol.

I have absolutely zero sympathy for that “poor” girl because she was such a bitch during that open house. To sell the overpriced shit-box, she lied, tried to pressure us, played the fear card, and when nothing worked, she taunted us as we walked out the door - I’m sure you’re familiar with those tactics.

Scott, the bubble is over, done, finito. The sooner you accept that fact, the sooner you can find a job that serves yourself and our society better.

"It’s not easy selling real estate."

Wait till spring.

Allah says, "Scott, you never answered my question “Is it ever a bad time to buy?” yes or no?"

Isn't this like asking a barber if you need a haircut? ;-).

My theory (to repeat myself) is that engineers believe strongly in rationalism. Thus, they are profoundly offended by the irrational bubble. (”Can’t these idiots see that this is irrational?

How can a rationalist be offended by anything at all?

Very true. It’s sort of like we’re all becoming “collateral damage” regardless of how we did or didn’t participate in the current bubble. I find myself in an interesting position because I want the market to come down to a reasonable level but I also fear the outcome if it turns in to crash rather than a correction.

No fear. Just make sure other people get hurt more than you do. :twisted:

I think the goverment a) doesn’t care too much about expenses, b) is very short on competent engineers, and c) is still in the payscale mode of the .com era. Commercial work in the DC area is more constrained after the excesses of the late 90’s.

Maybe the DC area pays well, but I live on LI and the pay isn't as great as you think it is. The government probably pays very well to help inject liquidity into the market due to all the printing they've been doing..... Gotta get me a government job! ;)

My theory (to repeat myself) is that engineers believe strongly in rationalism. Thus, they are profoundly offended by the irrational bubble.

More like Engineers believe strongly in logic.....they have to know whether or not a project is feasible because their job depends on it and deadlines enforce it. Engineers(at least those who are looking to buy) know that housing prices will crash based on sound logic, yet they just don't know how much it will crash.....only that logic tells them they would be fools to buy right now.

Funny thing, several years ago, my sister knew of this older retired couple, the husband was an engineer and since they were retired, they wanted to downsize and move to FL, but the husband wanted to wait because he felt that the value of their house would soon increase greatly in value while the wife just wanted to move......well it was just before the boom, the husband died and the wife went ahead and sold the house....even below the current market value because she just wanted to get out of there fast....I was even thinking of buying it at the time. Right after that, the house just appreciated like crazy, I could just imagine her dead husband turning over in his grave! :)

An interesting analogy for this housing bubble, but who will be the cops and the EMTs?

The repomen will be the cops and the taxpayers will probably be the EMTs.

Allah says, “Scott, you never answered my question “Is it ever a bad time to buy?” yes or no?”

Isn’t this like asking a barber if you need a haircut?

That's pretty much it, I just wanted to hear what Scott would say but it looks like he won't dare answer it being that I asked him 3 times already without a response.

From this article what really cracks me up is this:

[snip]

Industry experts have mixed feelings about whether the boom is beginning to ease. The East and West coasts, parts of Nevada, Florida and the Northeast are recording strong sales where jobs and populations are growing. Other areas have seen the rate of appreciation slow, including parts of Colorado.

"I think that price appreciation will for the most part remain pretty solid for another three, four quarters," economist Celia Chen of Economy.com, said. "By the end of the next year into early 2007, we'll see substantial slowing in house prices."

One would think maybe 6 months ago this might be believable, but now! :roll:
They just don't want to stop! :lol:

Oh now they're being given a break....how nice, the bubble pops and they don't like it so they spill back some tax money........ this money should be going towards the bailout, not to the cause!

[snip]
Now homeowners are crying for relief, and many states and towns are responding.

Allah, Sunnyvale, pop, etc.. Re: tech salaries.

Tech salaries for workers in their 20s are adequate (really quite good) if you are able to live in or very close to the city, and either don't need much space, or can share with roommates or working spouse.

By the time you need space or time for your life or kids, etc, hopefully you've either risen to a senior level, or moved into management (both unusual before 30-ish). Otherwise, you'll probably have to commute (difficult in SF/SV, near impossible in NYC), or find a job further out, which will not pay the same rate. The problem comes when you're close enough that the COL is still high, but far enough that the pay scale is depressed.

Also, I think hardware designers are under more pressure than software. With the exception of ASIC design, (which itself is under pressure from cheap uCs), the better a hardware design is, the fewer jobs it supports going forward. (and the more of those jobs that will go overseas). The trend applies to software as well, but it's happening more slowly, probably because there are more applications, they can change more quickly, and the changes usually still start here.

But the simple truth is this: most technology jobs don't require any more intelligence or knowledge than any other job, and since the responsibilities require less physical presence, these jobs can move freely to telecommuters anywhere in the world, as long as they have the equipment ($500 PC) and a translator.

Outsourcing is here to stay. If you're in technology, they are coming after your job. You have a few options that will delay the process, but none of them allow you to be complacent. If you have family-raising responsibilities (or want them), it would be irresponsible to not be thinking about this problem today. And stop blaming other people. I'm old enough to vaguely remember the auto unions complaining about the transition to robotic car assembly, and how sadly anti-reality their arguments sounded. On a macro level, this is different, yes. But on a micro level, we either change or we go hungry.

And don't think there won't be a portion of the (dangerously ignorant) population cheering the tech industry's starvation.. Schadenfreude, jealousy echoes, hollow puffery, whatever. This blog is made up of a self-selected group of people who are at least thinking about the future...don't go down with the ship.

quesera says:
Outsourcing is here to stay. If you’re in technology, they are coming after your job.

Outsourcing will slow down a lot after a few stories about "copied" intellectual property make the rounds. It's starting already.
Remember, the folks in India and China have their own bigwigs who want to run companies. They don't need Americans to fill that role once they have the IP.
Be ahead of the trend: Make sure your job has some IP aspect to it. Produce quality on time.

http://www.cio.com/archive/111503/offshore.html

Outsourcing is here to stay. If you’re in technology, they are coming after your job. You have a few options that will delay the process, but none of them allow you to be complacent.

Actually, if you work for the government, especially a military company, you don't have to worry about outsourcing. The day they outsource those jobs will be the day that the world comes to an end!

And stop blaming other people. I’m old enough to vaguely remember the auto unions complaining about the transition to robotic car assembly, and how sadly anti-reality their arguments sounded. On a macro level, this is different, yes. But on a micro level, we either change or we go hungry.

Problem with this is that assembly work doesn't take years of education and experience. Leaving an assembly job to find something similar is far from leaving a highly technical job for something similar....and don't forget, as these tech jobs disappear, many teaching jobs will also disappear. ...and this is not a matter of just changing jobs, there is no job that can be quickly learned that will pay anywhere near the same. This is having a strong effect of shrinking paychecks. Inflation rises year after year due to a growing economy.....people are maxed out on credit more than any other time in history and part of it is due to outsourcing. There is now a tug-o-war with a bungee between inflation and shrinking salaries and at some point, one way or another it has to give. Companies want to grow but at the same time they are hindering their growth. This is a topic that could use a thread of its own, maybe even its own blog.

Remember, the folks in India and China have their own bigwigs who want to run companies. They don’t need Americans to fill that role once they have the IP.

I have always said this myself........... intelligence is power, give it away and you become powerless! Losing brain-less jobs while gaining brain jobs is a step in the right direction and goes along with evolution......going the other way will have extreme consequences in the future.

quesera says:
But the simple truth is this: most technology jobs don’t require any more intelligence or knowledge than any other job, and since the responsibilities require less physical presence, these jobs can move freely to telecommuters anywhere in the world, as long as they have the equipment ($500 PC) and a translator.

The reason why people have been, are and will be doing business in the U.S. is that there are educated people with moral integrity to be hired here, and their rights are reasonably protected.
The very last thing the U.S. needs is degradation of moral integrity and education, or (worse) pervasive pessimism like the folks in Europe who don't seem to know what they have.

allah: yes, there's definitely a difference, but on a strictly pragmatic level -- you and I still need to feed our families, so if it requires more creative thinking than just getting another job, we still have to do it.

And the long term effect on the economy will be tragic. But it will still happen.

Girgl: I agree that IP is one of the shelters against the storm, but in the long run I think the industry is still doomed. Allah raises a good point: we won't have foreign-designed weapons systems any time soon.. But as I've said before...as the manufacturing and development activities move offshore, the design talent will too. Give a smart and creative person all the tools and resources needed to make something new, and he/she will. Pretending that we have all the smart and creative people here in the USA is asinine hubris.

Right now, the USA is providing first-class paid vocational training for the next generation...of foreigners. Which might be a good idea (e.g. post-war Japan, Germany) if we had industry here, and products that we could look forward to selling them when they could afford to buy... but we don't. They do. And we will buy them.

The growth that SV saw in the last few decades was due in large part to the scalability of the (new) "manufacturing" business. The incremental cost of production for ICs, PCBs, and especially software, was greatly reduced compared to traditional manufacturing. And the market was the whole world.

We outsourced PCB and IC manufacturing first, because there was only limited creativity required...we'd design them here, send very large datafiles over there, and get back shipping containers full of products designed to our exact spec. Before long, we were hiring USA-educated locals to work in our Taiwanese offices to manage the process, eventually there were full service design shops in Taiwan, we just had to call and describe our requirements. At first, they sucked. Now, they're very good. (And PCB manufacturing is spreading to a dozen other countries...IC mfg less so, because of the expensive equipment and more predictable volume requirements..)

Software is following the same cycle. It took longer because there is a less clear design / manufacturing division in the development process, so the skill level of teams of new workers had to rise first.

Girgl: my point, lost in the rambling perhaps, is that having valuable IP will slow the process for individual companies, but before long all of the skills and capacity will be elsewhere, and they will develop their own IP, and we'll still starve.

None of this is good or bad. It's necessary. And inevitable. Gov't regulation (tariffs, tax incentives) could slow it, but the genie's out of the bottle. We'll still train anyone in our educational system, so we could never have kept the genie in, anyway. All that gov't intervention would succeed in doing is making it more difficult for domestic industry to compete globally. We might get it, but we shouldn't wish for it.

The optimistic view is that something, something, will replace the tech industry as the driver of the American economy, and although some specific skills will lose value, and some people will suffer for it, "we" will be as good or better than before.

That view has some appeal, and who's to say what will come? There might be a decade or more of middle-space-muddling between here and then, but American ingenuity will always find a way, right?

It's also possible that the American post-war prosperity was just an aberrant spike in the gaia-economic ebb and flow, and that a reversion to the mean is the only reasonable expectation in the macro-societal long term.

One thing is for certain, though... we in the tech industry need fallback plans. All waves crash. This one was huge but very fast moving. ("that's great, kid...play ball all you can. but stay in school.")

Anyone have a topic for the next thread? Something light and amusing, please. :-)

Think about it.

If I'm the CEO who needs software done that is central to the business, like an online retailer's web site, do I travel to India, specify exactly what I want, wait 6 months and get the web site, ready to roll, fully implemented to spec, even the aspects of my business philosophy that are kinda hard to express, even the aspects that have changed last week and the week before?

What if I want changes?
Has my outsourcing vendor moved the people who wrote my original code to some other project? Will the guys who will now implement my change be at home in the other team's code from day one, no learning curve? Will they understand my business philosophy, too?

Software development is not like physical product development.

It has no definite beginning and no definite end. It's all about continuous communication between business and engineering, at levels that are hard to capture. Really, the hardest part by far is communication - making people think what you think. You can not do that with a specificaton.

Business people would really really love to think about engineers as machines, "implementation units" so to speak. Exchangeable. Replaceable.
That would be so easy. And they really think like that sometimes, because they do not have the slightest clue about how software development works.

They can save some money in the short term to give themselves a nice bonus, but their business will fall behind their competitors who have a dedicated team of good software people onsite, in the long term.

It all comes down to greed and stupidity, as usual.

Girgl: I agree, but for most businesses, having an on-staff development team is not sustainable (nor defensible). They hire consultants to write their business software. The project manager and tech architect have to show up at meetings, but the developers could be anywhere. Maybe there's a tech guy on staff who does the IT work / "sustaining engineering".

Eventually, the CEO's will effectively be outsourced when the other countries form their own companies and compete with us....don't forget, if you send all brainpower overseas, you will get to a point where they no longer need us. They will be our biggest competitors and they will have the upper hand......their software will be cheaper and they will charge us more for development making our software more expensive. We will effectively switch positions with them. Outsourcing our brainjobs is like making a u-turn on evolution.

quesera says:
Software is following the same cycle. It took longer because there is a less clear design / manufacturing division in the development process, so the skill level of teams of new workers had to rise first.

I disagree. Software development, especially if the software to be developed has a consumer user interface, is incremental. Usually, at the beginning of a project, no one knows what exactly is required.
During the project, the requirements change, often frequently.

The amount of communication (formal and informal) that you need to keep the incremental process going and come up with great software is much large than what you can do with conference calls across oceans and cultural barriers.

Well, you might say that we will develop ways to cleanly specify all those subtexts, be prescient about future requirements and operating environment changes and go back to the waterfall model that works so well for construction of bridges and buildings (where all this is not an issue), and I will not believe you because all of my experience contradicts that, every day of my work life.

What might work better is having everybody offshore, including the business people. But then everybody's out of work, including Mr. Outsource "Fat Bonus" Bigwig.
Unless Mr. Bigwig and all the creative people he needs really want to live in India.

I fear that all the fearmongering about outsourcing will prevent young talented people from learning about software development, making outsourcing a necessity and thus seal the fate of the U.S. as the place to create innovative products.

I fear that all the fearmongering about outsourcing will prevent young talented people from learning about software development, making outsourcing a necessity and thus seal the fate of the U.S. as the place to create innovative products.

Case in point for manufacturing today:
http://www.cbc.ca/cp/business/050630/b0630102.html

Extrapolate if you will.

Quote:

The factory will cost $800 million to build, with the federal and provincial governments kicking in $125 million of that to help cover research, training and infrastructure costs.

"The educational level and the skill level of the people down there is so much lower than it is in Ontario," Fedchun said.

Ha Ha says:
Can’t we survive by real estate jobs alone :-)

Great idea! Check here for the whitepaper: http://tinyurl.com/aoehp

I fear that all the fearmongering about outsourcing will prevent young talented people from learning about software development, making outsourcing a necessity and thus seal the fate of the U.S. as the place to create innovative products.

That's a good point. Presently, the trend is clear, but it is dependent on the availability of higher-value (equivalent production at lower cost) labor overseas. Probably, what will happen is that the markets will approach equilibrium... Pay will rise in India (this is already happening) and production will shift to other places (China, Russia). At some point, the talent pool will reach another mostly stable point, until the next batch of outsourcing locations come on line. This is the natural order of things. There will always be software developers in the USA, and there will always be a premium for local talent. But the numbers and the margins will get tighter.

I agree that software has proven extremely difficult to specify to the same precision as hardware. But look at the trends in software development, toward decoupling and multiple interfaces...it isn't a leap to imagine that components with clear APIs can be built elsewhere, with local (or imported from the USA) talent used for the interfaces.

But you were talking about internal development work, for which I agree, there will always be a need. So there will always be jobs. But now we will have to share with the rest of the world. Actually, a local internal development team might be considered a service. They aren't selling a product (internal designations of "product", "customer", etc are just convenient shorthand...there is almost never a market, so the concepts are meaningless).

There is no wealth in services. IP and creative capacity can disappear more quickly than factories can. We don't want a living standard normalized against the (ambitious) developing world.

quesera:

I think you are far too pessimistic about the future of development here in the US. A good local developer is worth the cost. Y2K gave outsourcing a good name, but the hardest part of software development is clear communication of requirements, and, as I understand it, most post-y2k outsourcing efforts are either failing outright, or turning out to save far less money than projected.

Not that I don't have fallback plans. Or that any imaginable outcome for my career short of an insane public offering would allow me to buy a decent home in the BA. Which is why I don't plan on being here much longer.

_smile_

Cheers,
prat

I just wonder why America is still the source of many innovations, even in its hard times (such as the 2001-2004 period, with Google), instead of China, Taiwan, or India. Our education system is terrible, with kids lacking interest in all subjects (but sports), and our technology system is still filled with people who can't distinguish a phone connector from a CAT-5 one. Yet, the computers, the Internet, the search engines, Windows (does this count?) are still originated by Americans, in various American companies. What makes our engineers different from the rest? Is it because the creativity? The effects of multiple personal freedoms on the minds? Or is it because McDonald's and Burger King's food additives help brain rewirings?

Maybe,when we can find out what makes us able to formulate new ideas and turn them into success, that is when we find the right stuff to put aside outsourcing for good.

To me, outsourcing is a fad. One company does it, and the others follow. While they can get rid of overpaid and under-educated staffers, companies soon realize complex projects still require on-site personel. If that is true, the answer to beat outsourcing is probably just keep learning and making yourselves recognized as irreplaceable. Be a clever acrobat with office politics.

Great idea! Check here for the whitepaper: http://tinyurl.com/aoehp

While some have argued that the fraction of income spent on mortgages must remain under
100%, not all economists agree. Dr. Hallucinatory R. Heartwarming (a mainstream economist)
defended the New Housing Economy:
“Using the most modern econometric techniques, we can project where the mortgage payments
of all home owner reach 100% of national wage income. Basically what we do is draw a graph
of the percentage over time, lay a ruler over it, and draw a straight line. We use the point in
time where the line crosses 100% as our forecast”, he stated.
Some have charged that this type of forecasting is devoid of any economic reasoning, and even
that it violates common sense. How, for example, could mortgage payments reach or exceed
100% of income?
Dr. Heartwarming responded to these charges, “Home owners can simply extract equity from
their home by refinancing and use the cash they take out to pay the difference between their
income and their mortgage.” Home owners extracted $491 billion of equity from their homes in
2002 according to the Wall Street Journal. “Home owners are already using home equity from
refinancing to meet ongoing monthly expenses”, he continued, “It is a small step forward to start
using these funds for the mortgage itself.”

Very funny paper indeed!

Yet, the computers, the Internet, the search engines, Windows (does this count?) are still originated by Americans, in various American companies. What makes our engineers different from the rest? Is it because the creativity? The effects of multiple personal freedoms on the minds? Or is it because McDonald’s and Burger King’s food additives help brain rewirings?

IMHO, it's a combination of culture of innovation, world class universities that attract the best and business people who are smart enough to finance developing that innovation into products, even if it may not pan out.
That's still unique in the world AFAIK, and it's hard to copy, even if there's the political will to do so.

In Europe (at least the countries I know), you have to prove to the bank clerk without doubt that your innovation is going to pan out, you won't get much money anyway, and you're personally liable for everything you borrow.
I grew up with stories about people whose businesses failed and who were now in the hock for the rest of their lives. No fostering of innovation and risktaking in _that_ culture, that's for sure.

Here's a good example of what Girgl was saying before.... If you use Netscape and you create an email account and want to use their email client, you can't.....It's bugged and has been for the last few revisions. I don't even have to verify it but, it is work that is outsourced and is not getting fixed. If you try to set it up you get the following messagebox:

"The registration server is not available at this time"

Will this ever be fixed? Probably not, at least not anytime soon......and if you search around, you can find that so many people have complained about it. If this work was done here, it would have been fixed ASAP because peoples jobs would be on the line.....but those who are doing the work overseas get much more slack. I have also tried to setup a Netscape email account for my sister through the Netscape email client...couldn't do it because the "state" listbox was made too small that when you clicked on it nothing happened, so after all the work filling out the form, I couldn't complete the application using the email client...however, on the website I was able to set it up.

These are just simple examples that everyone can see and if you look around the net, you can find plenty more. We have pretty good quality control here in america or at least we had. If there was something wrong, something wasn't working correctly, it would be fixed in minutes, or days....not years! Sure hope the firmware that goes into pacemakers doesn't get outsourced!

Goldeneye977,

Now that the housing market has clearly turned, do you still feel so confident? Sales in every bubble market (CA, FL, AZ, NV, OR, WA, MA, etc.) have fallen off a cliff, inventories are up --WAY up-- and same-house prices are falling nearly everywhere. Hell, even the usual perma-bulls/industry cheerleader types (NAR, Toll Brothers' CEO, WSJ) have gone on record and (reluctantly) admitted things are not doing well now.

Still bullish?

I thought not. :lol: