[bgates]

Someone please tell me I’m not the only one on this board who would have a problem breaking a contract like that. If you make an agreement with someone, you have an obligation to see it through. Even if the agreement is with a bank, and even if it costs you money.

[bgates]

Unless I misunderstood you, we’re not looking at people taking money out of housing. We’re looking at wealth vanishing.

If a guy bought a house in 2000, and somebody buys an identical property for 300k more in 2004, the first guy, and everyone in his position, has (or feels like they have, and usually spends like they have) $300k more than they used to. But if in 2007 another identical house sells for just $50k more than the 2000 price, $250,000 of the first guy’s paper wealth would be gone – not removed, not reinvested, not even stolen. It just wouldn’t exist anymore.

‘Taking money out of housing’ makes it sound like when you squeeze one part of a balloon and another part gets bigger. But when the housing balloon gets squeezed too much….

[bgates]

Right below the assessed value is a sales history:
935k in 12/04, 1.1M this year.

[bgates]

As a consumer you don’t care, but it’s a curious concept of citizenry that sees no difference between fellow citizens and foreigners.

[bgates]

I doubt that’s going to happen. There’s enough shale oil in North America recoverable using current technology to sustain world petroleum consumption for 15 years at least. The only reason it hasn’t been developed is people are gun shy after losing a lot of money in the 70’s thinking peak oil was upon us.

Even without any alternative energy source development – not that I have a great deal of confidence in those – oil isn’t going to deplete fast enough to be ‘prohibitively expensive’ in 10 years.

[bgates]

Carlsbad: no, the half trillion is not a problem. That’s a pretty good estimate for the total cost of the war, and might even be a little low. $320 billion has been allocated as of June, spread over 3 years, so 100B/year. It gives a better picture to combine that supplementary spending with the Defense Dept budget, which is around $450 B (annually). Bear in mind the federal budget is over $2.5 trillion annually, so the combined 100B supplemental + 450B defense dept is about 20% of the federal budget, which is in turn about 20% of the US GDP.

That means that with or without the supplemental money, defense spending is about 4% of GDP – compared to GDP, direct war cost is rounding error.

Perry, I agree the pyschological effects of losing a war are bad. That’s why I try to convince people like you, PS, and carlsbadliving to not root for defeat.

[bgates]

Well, there you go again, Perry. I agree with your first point, but that’s going to be a much more important factor in future economic performance than Iraq. Military spending as a percent of GDP is right about where it was in 1993, and far below where it was in the 60’s.

The President and this Congress are spending like drunken Kennedys (but I repeat myself), and I think the prescription drug benefit, earmarks, and general government wastefulness will hurt us in the future; the housing-driven recession we all anticipate won’t be good for tax revenues either. In short, the government has lots of financial problems. Iraq isn’t one of them.

[bgates]

Now that’s a safe bet!

I too am sure the next 100% move will be to the upside –
that is, the index will double (100% up) before every company in the index goes bankrupt (100% down, to zero).

PS, I’m surprised to hear you say you have no idea where the S&P is going. How do you square that with your statement, “don’t confuse predictions with economic and business and housing cycles which are repetitive and cyclical and don’t need predicting; they only need to BE UNDERSTOOD.”

[bgates]

Yes, PS, this was for you.

I think it’s remarkable the way you can call some posters condescending and others delusional in the same thread.

Your point on housing returning to 7.5x median income is a good guess, based I think on Rich’s graph of housing:income ratios over the past 25 years. If someone had chanced on that data in 2002, a cautious reasoned response would have been, “the housing:income ratio is very near the peak of previous cycles. Since prices have a cyclic element, there is a growing risk of housing price decline (relative to income) over the next year.”

I imagine your response had you seen the graph in 2002 would have been to say that housing:income is GUARANTEED to fall 30% from 2002 levels by 2008 because THE DATA shows that’s how long peak-to-trough takes and if you can’t see that you’re DELUSIONAL and living in FEAR.

You didn’t just say prices would drop, you said 30-50% by 2010. That’s pretty specific, and much better than I could do, but I don’t understand the business cycle as well as you.

A year is a long time, though. Could you name the day we’ll reach 30% decline for the county? The month? Maybe you think it would take someone absurdly overconfident to make such a specific prediction, and you’d like to stick to just the year.

[bgates]

Fascinating.

I didn’t provide much context here, but my initial post was in reaction to another thread started by a commenter who characterized anyone who disagreed with her as to the extent and timing of the correction as ‘delusional’, and stated that anyone who held another opinion must be motivated by some combination of greed, fear, and jealousy (of what I’m not sure – her intellect?)

I don’t post much, so I wouldn’t expect anyone to know my expectations for the housing market. For the record, I wouldn’t be at all surprised by a 30% correction by 2010. It’s just that I get annoyed by the attitude of, “I’m mystified as to why you mouth-breathing troglodytes are bothered by my 100% guaranteed, obviously correct predictions of housing prices several years in the future. You would recognize my wisdom if it weren’t for your own vanity.”

Anyway, that’s my position, and the little back story behind my post. I think it’s funny that two of the responses to my post about the dangers of making assumptions themselves assumed – incorrectly – that I’m bullish about the market.

[bgates]

Cognitive dissonance:
“And I regret that we couldn’t have a civil exchange…like adults.”
“Take some valium first. Sell your house, and get over it.”

May I suggest a 4th reason for your list: I get irritated at your posts because you can’t seem to even imagine the possibility that you could be wrong, and you are convinced the only reasons someone could disagree with you are fear, jealousy, or ego. It’s incredibly condescending.

The financial sector has a lot riding on the housing bubble. Do you think it’s impossible for that industry to come up with something clever and/or evil that hadn’t occurred to you?

I say this as a lifetime renter who hopes prices drop like a stone, by the way.

[bgates]

When you say ‘very simple black or white’ is that a bad thing?
Since you just described half the voting public as “religious fanatics hell-bent on imposing their values on everyone else” it’s hard to tell whether you’re in favor of overgeneralizations or not. Or it could be that you don’t think things through very carefully before you post on politics. That’s certainly the impression I got the last time you tried your hand at the subject.

[bgates]

Perry – what changed?
On Aug 19, you said, “As far as Iraq is concerned, now that we’re already there, I say, tighten our belts, make real sacrifices, send 1 million troops and really fix the problem, or get out.” A day later, you want to give up.

Of course, the fact that you choose to start a post with the sentence “Diego I agree with you” right after I show why all of Diego’s points that weren’t a matter of opinion were factually insupportable suggests you’re not a serious person.

In comparing Iraq to Vietnam, you sound like John Kerry. In 1971, he estimated 3000 people might be driven from Vietnam if the Communists won. Drive up to Westminster (aka Little Saigon) and see if that number seems a little low. Once again people like you and Kerry think America can retreat from a fight with no adverse consequences. Yeah, some people never learn.

Last thing, your first post on this thread was supportive of Nixon because he made China “a friend.” In your last post, you put quote marks around a paraphrase of Gen McCaffrey’s comments. He said the diversion of money into ammunition and medical expenses has sapped the budget needed modernizing to face strategic threats in 10 to 20 years might mean the army ends up broken three years from now (Here’s the link ). The strategic threat he’s worried about? Your friend, China.

I’m done with this thread, so if you’d like to have the last word with another argument-free screed about how Bush is a criminal or I must think real estate is going up or my mother wears combat boots or something, feel free.

[bgates]

Did I speak too soon?
Answering a question about the Holocaust with “Yes it happened, Americans bombed my mother’s neighborhood and trashed her house” is an exceptionally poor way to allay suspicions of anti-Semitism.

[bgates]

You’re ok, PS. If your earlier comments were based on simple lack of interest in politics, then I came down too hard on you, and I apologize.

At the same time, I would urge you to learn more about politics. Talking to you about this feels like talking to my dad about real estate; his mortgage is paid off, and he lives in a sleepy PA town that’s fairly non-bubbly, so he thinks housing is someone else’s problem. But if housing plays out the way you and I are afraid it might, it will be everybody’s problem. Same with the politics of the middle east. There’s a quote attributed to Trotsky: “You may not be interested in war, but war is interested in you.”

I know you don’t like Bush, and there are things about him that bother me (my list is different than yours 🙂 ), but I am pretty sure he’s not interested in starting a nuclear war. The evidence is he’s been in control of the biggest nuclear arsenal in the world for 6 years, and hasn’t touched it. The figurehead of Iran’s govt, on the other hand, may be nuts. Did you read the stuff about the green aura he said came out of his head when he spoke to the UN? That’s worrisome. Iran is supposed to respond to the West regarding their nuclear program by Aug 22. Germany, England, and France had asked for a reply on June 29, but Iran wanted the extra time. That’s a little worrisome. What’s more worrisome is that the night of Aug 21 matches an important date on the Shia calendar. It’s when “Prophet Mohammed (saas) ascended to heaven from the Aqsa Mosque in Jerusalem on a Bourak (Half animal, half man), while a great light lit-up the night sky”. The linkage between that phrase and the Iranian nuclear program is what’s been making me post at 3am the past few days.

Hopefully this is coincidence and nothing much will happen on the 22nd. Otherwise, we’re going to have to make some very big decisions as a country this week.

[Author]

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