patrick.net

Space Ace says: Where are these fabled engineers … seems only 40% in SCC have a 4 year degree or better.

Those engineers come from many places, including rich families overseas. They are also produced by clans of technical ninjas from mountain monestaries where they have been trained in software since birth. These super-engineers are buying up all the land in the Bay Area, which is why mere MBAs and lesser twerps like manufacturing peasants are priced out forever.

By the way, I'm using a literary technique from East of the Mississippi. I think maybe it's from Scotland or Ireland. It's called sarcasm. NOTE TO CALIFORNIANS: You can pretty much assume I'm going to use some sarcasm anytime I go off on a rant about the greedy middle class and its soulless worship of the perceived superiority of the financial elite. Sarcasm is kind of like the irony of paying over $1,000,000 for a shitty house on a .15 acre lot, except that you're the one laughing.

Anyway...

Most Bay Area residents can barely afford to live there. Millionaire DINK engineers might have a chance of clinging to housing in the face of $1.5M single family homes. Everyone below that cutline is pretty much screwed.

If I were below that cutline with a huge home equity appreciation, I would take the cash out and run for somewhere nicer and cheaper. Lots of locations to choose from. In the last 10-15 years, only the rich can truly afford the Bay Area.

Oh wait. Sarcasm? Hmm. Yeah, sarcasm.

The role of government must be to restrain people’s seemingly reasonable (in their own tiny context) but ultimately destructive tendencies.

In that case, you'll need a benign dictator, not a democracy.

Here's an interesting article that I read today that mentioned the growing disparity:

http://news.yahoo.com/s/ap/20070422/ap_on_re_us/virginia_tech_shooting_strangers;_ylt=AkswddqZSPfwdrESEucZuWoDW7oF

Criminologist Fox speculates that the increasing popularity of workplace killings, and public shootings generally, may be partly due to decreasing economic security and increasing inequality. America increasingly rewards its winners with a disproportionate share of wealth and adoration, while treating its losers to a heaping helping of public shame.

"We ridicule them. We vote them off the island. We laugh at them on `American Idol,'" Fox said

http://www.labormarketinfo.edd.ca.gov/cgi/databrowsing/occExplorerQSDetails.asp?searchCriteria=engineers&careerID=&menuChoice=occExplorer&geogArea=0604000085&soccode=151032&search=Explore+Occupation

I suggest you look at the stats... you will find engineers are not at the top.
Good freaking almighty engineers have big EGOs... Bahahahahah ! Its all about you and pampered lives.

Total 866,300
Office support 177K
Sales 85K
Managment 72K
Computer and Mathematical 67K
Food Prep 60K
Production 57K
Engineer 55K
Finance 46K

sybrib,

Given that I seriously consider the complete annihilation of humanity within my lifetime, my definition of historically terrible is rather more severe than other people's.

Oh, BTW, you've been here for long enough so pay attention. I am ethnically Chinese. In the last two hundred years, the Chinese have gone through two extremely bloody civil wars, one major invasion/occupation plus half a dozen substantial imperialist incursions, several large scale peasant revolts, a whole generation forcibly stripped of formal education and sent down to the countryside, several large scale famines - one of which is complete man made and killed upwards of 30 million people, and one totalitarian government complete with reeducation and purging (rinse and repeat).

Yeah, I know something about history.

sybrib says: Were here for the Great Depression? Were any of your relatives here for it? When you say it really wasn’t so horrible here, do you really know what you are talking about?

I tend to agree with sybrib on this one. Most of my family hit American dirt in the 1870's and 1880's. Their tales of the depression are horrifying indeed. No work at the factories, no aid from the government. They raised chickens in their backyards and farmed small fields, often without any hope if the crops failed. Several of my own relatives turned to bootlegging during Prohibition.

We can talk about living paycheck to paycheck before bankruptcy. Those folks were living harvest to harvest before the grim reaper. But perhaps hence their financial conservativism (and their fascination with food gardens). I wonder if Germans like gardens because they still remember worthless Deuschmarks after WW-I...

Space Ass: Can you possibly be that dumb? I WAS BEING SARCASTIC.

You strike me like a monkey trying to play jax, staring absently at the marbles while you munch on the prickly thing.

Brand,

I'm well aware of the farm foreclosures and the Okies and all that, I spent five and a half years in Oklahoma public schools! I said "too horrible" in comparison to Germany, Japan, etc. The American government didn't topple, Americans didn't start rounding up Jews or re-enslave the blacks. I was highlighting that the global event that you thought was horrible enough to teach Americans a lesson about frugality was also horrible enough to topple the Weimar Republic and send 6 million Jews to their deaths.

I WAS BEING SARCASTIC

HAHAH Thats OK I wasnt!

"Were here for the Great Depression? Were any of your relatives here for it?"

No not the 1929-33 one but I did survive the Silicon Valley Depression of 1989-92 and 2000-2002. Many others left for Utah and Washington.

-Deuschmarks
+Deutschmarks

"as wealth disparity approaches Third-world levels (What good is it to be “middle class” or wealthy, if it means having to live in a heavily fortified compound that you cannot leave without bringing along a small private army to protect you, a-la Mexico or Colombia?). "

I find it interesting that you mention Colombia. I live there. What do you really know about it? I don't need a small private army, and I find people co-existing quite well. Yes, there are people begging in the streets sometimes. Much less than what I see in San Francisco, I might add. One thing in the Bay Area is that it has become a place where the upper class and wealthy live, leaving their gated compounds during the day and in come the workers who keep their children, their lawns, their houses, serve them their meals in restaurants and fast food chains, bus the tables, paint , remodel, etc....and return home to ...Modesto? How will these Bay Area residents keep employees in the supermarkets that serve them, teachers in their schools, firemen and police and postal workers in their communities if these essential workers can't afford to live within the communities where they work? Believe it or not, I grew up in Marin county back when the post office guy lived around the corner from me with his 5 kids, so did the cop, my teachers, the librarian...We had 1 car. In Colombia, my husband and I have 1 old car. People fix things instead of throwing them away. The doctor and the dentist and the orthodontist aren't rich guys with Mcmansions and BMWs. Most people have good teeth and braces these days because they can afford them there. While there is poverty, there is not excess like in California and there is very little violence despite what the news media will have you believe. Certainly people don't show up at universities or elementary schools with guns. No-one has guns. I think there is more stratification in California than in my 3rd world Colombia. Just my take....

astrid: Relative to a true government or cultural collapse, I'll accept your point. My grandparents describe lean times when the family didn't have enough to eat. This wasn't in rural Oklahoma, this was near a major East Coast industrial city. The Great Depression was a very difficult time. Families pretty much carried all their relatives who were out of work, often at major risk to their own welfare. Nothing like that has happened in the U.S. since, at least, certainly not on that scale.

Princess,

I will make you a deal. If I live for 5 years in an Oklahoma-like region of China,
I won't go telling them that the dark periods of their recent history weren't so bad.

It would be bad form for me to say things like that over there, so I wouldn't do it.

read this from a recent book review, thought i'd share:

"For me," Vollmann concludes, "poverty is not mere deprivation; for people may possess fewer things than I and be richer; poverty is wretchedness. It must then be an experience more than an economic state. It therefore remains somewhat immeasurable ... I can best conceive of poverty as a series of perceptual categories."

source:
http://www.salon.com/books/review/2007/04/16/vollman/index.html

Brand,

My parents have told me stories about the short rations during the "three year natural disaster" that was entirely due to the disasterous implementation of the pigheaded 2nd Five Year Plan. They lived in Shanghai so they were relatively well off, but they said nobody had rosy cheeks during those years. Everyone looks drawn and malnurished. Lots of people, even in the Shanghai, had bloated bellies from the lack of protein.

My father spent a year in Anhui province after university (about 15 years later) teaching peasant to use tractors and met a monk who was the sole survivor of his famine struck village.

Sorry, it's very late in DC, and I do get a bit grouchy my history cred gets questioned.

Space Ace says: No not the 1929-33 one but I did survive the Silicon Valley Depression of 1989-92 and 2000-2002. Many others left for Utah and Washington.

Those were recessions, not depressions.

Unless you're being sarcastic.

sybrib,

If I were you, I wouldn't go around calling random people on the internet princess when I haven't bothered to find out anything about them.

Furthermore, I wouldn't write a condescending reading list recommendation when I hadn't even understood the context of their original argument.

annie,

Sorry if I mischaracterized the current situation in your country. I've never been there (have been to Mexico a few times), but for the most part, my view of Colombia mostly has been shaped by news reports of the "War on Drugs" and the civil war going on there. Also, a VP from a company my wife used to work for was kidnapped there, and that has colored my perspective, I'm sure.

Most Americans probably assume, like me, that life in Colombia is pretty rough and dangerous, after reading news reports like this one:

http://news.bbc.co.uk/1/hi/world/americas/1738963.stm

Colombia has been ravaged by decades of civil war and has become synonymous with drug-trafficking. Since coming to power in 2002, President Alvaro Uribe has stepped up the war on left-wing rebels. Right-wing paramilitaries are engaged in a peace process.
But Colombia remains mired in violence, beset by poverty and at the centre of the world cocaine trade.

Colombia, in common with many Latin American nations, evolved as a highly segregated society, split between the traditionally rich families of Spanish descent and the vast majority of poor Colombians, many of whom are of mixed race

BigBrother Says:

> I live in the city. SFH over $3 million is getting
> very common now

Property Taxes on a $3.5mm Home is ~$40,000/yr
P&I on a $3.5mm Loan at 6% is ~250,000/yr
I guess that must mean that Million dollar salaries are more common than I thought…

> Have you guys EVER wondered perhaps just maybe,
> the herd is wrong, that you are wrong, that property
> will actually be ok?

The “herd” is still buying over priced homes but many are leaving the herd to join us on this Blog (that is sort of a modern day “Galt’s Gulch”).

Things will probably be slow at the open house tomorrow so take a shot at arguing why even one of the points on the main Patrick.net site are wrong:
http://patrick.net/housing/crash.html

Brand,

Ok, now I'm a little confused too. Were you being sarcastic during the entire rant (lampooning rich people who describe themselves as "middle class" but really aren't), or do you really disagree with me that the economy is becoming increasingly bifiurcated --especially for Gen-Xers & later?

In all seriousness, I certainly don't even come close to your "75%" yardstick, nor do most of my friends, but that is hardly a statistically representative sample. I'm not particularly drawn to arrogant, shallow, materialistic people who like to live beyond their means. I know a few people like that, but most are older trustafarians or managers in my company.

Your definition of "old-school" middle class is MY definition:

Several decades ago, the middle class wanted nothing more than to get out of debt. They wanted to own their own house and have a lifestyle that would be sustained into retirement (including medical and SS). The Great Depression did that to people. But now that we’re two generations removed from remembering the Great Depression ourselves, people have bought back into debt=wealth. It’s the new era!

I was wondering about the rant from Brand too, because according to his definition, I've been living the lifestyle of the slave class. Thanks for the clarification:-)

. One thing in the Bay Area is that it has become a place where the upper class and wealthy live, leaving their gated compounds during the day and in come the workers who keep their children, their lawns, their houses, serve them their meals in restaurants and fast food chains, bus the tables, paint , remodel, etc….and return home to

There aren't that many gated compounds here, compared to say... Texas. Certainly none in Fortress Sunnyvale/Mountain View/Palo Alto - not that I'm aware of.

Having an education or SFH is seen as somehow extravagant these days, or as a sick entitlement complex. Anyone else get that drift?

I realize middle class has truly become extravagant of late, especially in the Bay Area (wine cellars, Lexi, private schooling, etc.). I recoil though when we're all painted with the same brush. A condo in Miltpitas and a state school degree are not on par with that. Please know the difference.

How will these Bay Area residents keep employees in the supermarkets that serve them, teachers in their schools, firemen and police and postal workers in their communities if these essential workers can’t afford to live within the communities where they work?

Well a long time ago Californians decided that they didn't need teachers or schools anymore - see Prop 13 and the transition from first to last in Public Education.

Firefighters, on the other hand, have an interesting story:

http://www.mv-voice.com/morgue/2005/2005_06_03.acommt.shtml

Firefighters in Mountain View make an average annual salary of more than $100,000, counting overtime, so their exodus has more to do with their preferences for bigger houses than abject poverty forcing them out of the city. Still, only two of the city's 69 firefighters and two out of 17 support staff live within the city limits, similar to numbers seen in the police department. By comparison, a quarter of the employees in other city departments live in the city.

That's right - Mountain View firefighters make ~$100k.

And where do they choose to live?

Out in Tuolumne County, Norvell now finds himself living in what has become a sort of bedroom community for Bay Area firefighters. His neighbors in the Sierra Foothills, many of whom grew up and attended the local fire academy with him, now work in departments from San Ramon and Hayward in the East Bay to San Jose in the south and Redwood City on the Peninsula.

"I hate driving," he said on the phone from his home in the Sierra Foothills. "But I just think about the benefits of living here, and it's worth it."

Why Mountain View's firefighters, who make just a little less than some Google employees, choose to live out there, is beyond me.

Harm, great topic. It seems like there are several fun points to kick around. Before really diving in, do you assert in your treatise that the poor class is growing or just a growing disparity? Important to clarify please.

I'm not really sure what this is saying; it is obviously bad if more people are getting poorer, it is a good thing if the middle class is shrinking due to more people getting richer.

The other thing I'd like to see brought into this is the appearance of wealth. Do you consider for instance, someone who owns a 2000 Camry outright, and someone driving a brand new Hummer who is indebted a growing disparity?

eburbed,

Firefighters don't have to commute to work 5-6 days a week. I imagine that if Google employees could work firefighter schedules, they would also move further from MV.

I can't think of anyone I know who meets Brand's definition of middle class. Guess everyone I know must be poor, even the multi-millionaires. And anyone with a 4000 sq ft home in San Francisco is definitely wealthy, by any standard.

Oh, I get it, you are being sarcastic.

HAHAHAHA

To expand my last inquiry, it is very possible for people of average means to temporarily project the image of being very wealthy. I get concerned when this turns into a keep up with the Jones's kind of wealth race. These people may be confused with genuine wealth but that would be wrong for this discussion.

There was a strong pull toward buying lots of *crap about 5 years ago when it became very acceptable to tap equity and interests rates kept dropping. Alan Greenspan feared a depression and pulled out all the stops to get people to spend. It worked! Probably only too well. The consequences will be interesting !

Jimbo, that's true, that's why I'm asking for a few clarifications. To me, the poorest people are the ones with the most crap in the garage. Wealth is a real net worth, not a bunch of toys with a hefty monthly bill.

In this country on average we live liike kings in comparison to other parts of the world yet on paper we are actually poorer than the poor. Around the world you are poor if you are worth a big ZERO, yet in this country you can be worth NEGATIVE something and still drive a new Hummer.

bobh Says:
April 21st, 2007 at 6:54 pm
"Why is the “poor” guy in the cartoon skinny? Poor people are usually fat. Just what in hell is a “poor people” defined as nowadays anyway? "

I think nowadays you are poor if you only have basic cable.

Hi Malcolm,

Basically, what I was getting at is that the U.S. is getting more and more polarized economically, which roughly means fewer people achieving "middle class" status (neither rich nor poor --however you choose to define it), with the lion's share moving from "middle" to "poor". Also, a greater share of the country's wealth, passive or otherwise, is now going to the top quintile, with the extreme upper 1-2% getting the lion's share of it.

And no, I would not consider someone with a bunch of HELOC'd status symbol crap they value above their own children "rich" in any sense of the word --economically or spiritually.

I have always thought of Peter P as a Stephen Colbert doppleganger.

My wife agrees.

Cool Harm, this will be a fun one.

yet in this country you can be worth NEGATIVE something and still drive a new Hummer

Yup. At least until someone closes the easy-money tap.

(Changed my tag to be more explicit; there's another ajh now posting on CR.)

just maybe, the herd is wrong

So now the bulls are saying 'the herd' is bearish. I disagree.

It is a well known sociological effect that a group that has had overwhelming reinforcement of their views for a period of time sees even a mild move towards neutrality as propoganda for the opposition.

It's a little bit like the people who think US interest rates are going to be lowered because they are "high", when in fact they are only just into the neutral range (and in fact some of the alternative-CPI types feel that in real terms they are still negative). They have become so used to the freakishly low rates of the last few years that they consider these to be 'normal'.

What is considered middle class? Earning $80,000 a year combined. or $250,000 a year. Having a S500 Mercedes or a Suburban. Supporting your kids in Private school or having them attend public schools. I know several people who are in the top echelon in terms of assets. I consider them as the higher class.($10 Mil - 150 Mil) The definition of middle class is very subjective. Do I think there is a disparity of middle class and the wealthy in bay area. I would say no. Do I consider myself as middle class. I would say so. Will another person think I am a tick above middle class, sure. I can be in the category of middle class as a renter. I can also categaorize a homeowner with a $800,000 mortage a notch below what I feel as middle class.

Middle class is as much a mental state as an economic category. There's quite a few surveys where everyone from people from households earning as little as $30K to as much as $1M thought of themselves as middle class. Two recent and pretty well discussed wrinkles follows.

1. The high earners start to see themselves as upper class rather than middle class, segregate themselves via private school and gated communities.

2. The low earners see trappings of high earner "middle class" life and believe that lifestyle is obtainable. Aim for lifestyle via big splashy expenditures.