[Diego Mamani]

(Duplicate post)

[Diego Mamani]

Little lady: the PI is an OK place to live only if you have money. Most local/native people have no money, low skills, and jobs are very scarce. That’s why they move to the US, for the jobs and the higher wages.

On the other hand, if you already have money, then the PI is desirable for its low costs, cheap labor (think maids, gardeners, etc.), and warm weather. Of course, poverty and corruption result in a number of problems that any prospective expatriate should consider along with the positives.

[Diego Mamani]

Dangerous?

The statement is not supported by the data given in your post. People migrate mostly because of the wage differential. In fact, a study done on L.A.-area immigrants found out that a sizeable percentage of migrants plan to return to their home countries once they have saved enough.

[Diego Mamani]

If it sells at a steep discount because of a recent death, I’d buy it in a heartbeat!

[Diego Mamani]

Is D.L. lying?

Well, if you walk into a Pontiac dealership, and a sales guy tells you how great Pontiacs are, that the quality gap with the Japanese cars is a thing of the past, and that Pontiacs sold today will have great resale value, etc., would you believe him?

More importantly, is the sales guy lying? Or is he just doing his job (which is to sell cars)? I think David L. is doing what he is paid to do. Intelligent consumers should know a sales pitch when they hear one, so IMO there is no issue of being truthful or not.

[Diego Mamani]

Someone posted this site either in this blog or in Ben Jones'. It shows foreclosures going back to 1982; you can select any start and end years. You can see how current numbers are not that high, but the speed at which they are growing is mind blowing. And to think that the "correction' (as industry shills call it) has only started!!

http://www.sddt.com/Finance/EconomicIndicators.cfm

 

[Diego Mamani]

JG, great graphs! Thanks. I’ve seen some data the last few weeks (can’t remember where) showing the the % of NODs resulting in foreclosure has shot up in the last half year or so. In other words, your NOD graph understate the ugliness of the housing market that we have in front of us. This spring-summer we’ll see some substantial price cuts, more so than in 2006. Enjoy the show.

[Diego Mamani]

SDnative, back in 1973 and 1974 there was a “silver bullet” tape recording that proved that the president was directly involved in cover ups and the funding of illegal activities like wiretapping, harassment of political adversaries, etc. The fact that the current Libby investigation on the Valerie Plame scandal appears to implicate Rove, is moving us closer and closer to the oval office.

The consequences of the presidential actions this time are far more serious than in the early 70s: possibly over 100,000 dead in Iraq, and a whole generation coming of age with a profound hate that will haunt us for several decades. That’s not fallacious logic, it’s measurable fact.

[Diego Mamani]

Reverse mortgage! Good one. There are probably steep points and start-up fees, not to mention pre-payment penalties and humongous baloon payments at the end of the rainbow.

[Diego Mamani]

Thank you for the link!

Unfortunately, the opening paragraph uses rents as a proxy for house prices. As we know, the two can diverge widely even in the medium term. For instance, monthly rents historically used to be a little under 1% of a property’s market value. At the peak of the housing boom in 2005, however, in places like coastal So. Cal., monthly rents were less than one third of 1% of the property value!

The article’s author had no better choice, as house pricing data is hard to come by. Professor Shiller does have a chart with house prices going back to the 1890s, which shows that in the long run, the stock market is a far better investment.

[Diego Mamani]

“I live my life in dollars today. I cannot to burger king and offer them $3.50 for a whopper because the $4.50 price is nominal dollars and I want to pay in real dollars.”

Real dollars make sense when making intertemporal comparisons. Today, $4.50 nominal dollars are exactly the same thing as $4.50 real (2007) dollars. Therefore, it makes no sense to distinguish one from the other if all I care about is the present.

OTOH, suppose that back in 1980 Burger King offered to give you a free burger a day for life, but in reality they gave you $0.99 coupons. If a burger cost $0.99 in 1980, that’s fine then, but what would happen as time passes by and burgers become more “expensive” in nominal terms? By 2007 the $0.99 coupon would cover less than a quarter of the cost of a $4.50 burger. Won’t you feel ripped off if the original offer had been a free burger for life?

To compare 1980 to 2007 we need real, or constant, dollars. Otherwise, we are comparing apples to oranges. If inflation is, say, 3% annual, after five years that’s 15.9% (compounded). Therefore, if a house was $900K in 2005, and still is $900K in 2010, then we say that the house in 2010 is actually 16% cheaper in real terms, even if the nominal price is the same.

Why? Because $900K can buy 15% less burgers (or shirts, cars, movie tickets, etc) in 2010 than in 2005. As we saw in the previous bubble burst, price drops will be in both nominal and real terms, the latter being of course a larger drop.

The point to remember is that money itself is not what maters. If we doubled all prices and all wages, etc., from one day to the next, nothing would change, right? Of course not. What matters is what I can buy with that money, not the dollar amount itself.

[Diego Mamani]

Of course things are slow!
Remember the last boom? It ended in 1989-90 (analogous to 2005-06 today), and prices dropped for many years until 1996. If you wanted to buy at the bottom then, you had to be patient, as in six-years-patient! Prices dropped very slowly in the early 90s, even though we lost many jobs in the aerospace and related industries.

No one knows how long the decline will last this time. It could be only two years, or 10 years, or more. Also bear in mind that a lot of the housing depreciation will be in real (inflation-adjusted) dollars.

Prices are very sticky on the way down, and I’m convinced that houses will remain overpriced for years. It think it’s smart to rent for at least the next couple of years. Rent is cheaper than you think. As an example: my wife and I almost bought a $900K house in 2005 after a job relocation. A house with an identical floorplan is for sale today, listed at $845K after many reductions, and still doesn’t sell! And this house for sale now has much better upgrades (flooring, landscaping, etc.) than the one we almost bought.

I figure, the $50K+ I would have paid (lost) for the “pride of homeownership” will pay for almost 2 years of my rent. It’s as if I’m renting for free. Besides, I’m convinced that that house can easily lose another $50K within the next 12 months. The way I see it, more free rent for me!

[Diego Mamani]

JG, you are right. Nixon’s impeachment was imminent, which is why he resigned. This doesn’t change the essence of the argument: that there are grounds to start impeachment proceedings today, as there were in 1974.

[Diego Mamani]

Cheney and Rumsfeld are entitled to their own ideological position. But not to blatantly deceive public opinion to bring the country into the quagmire that is the Iraq invasion and occupation. Worse than the lies and the cover ups, is the enormous cost in human lives. A hundred thousand people may have died as a result of this most misguided misadventure in Iraq. These two deserve to be tried for crimes against humanity.

How about their boss? Nixon was impeached for a far lesser offense.

[Diego Mamani]

JG, do you watch CNN and Fox News?
The other day, while flipping channels, I saw the following on CNN, in big letters: “Where is Obama hiding?” or something like that. The story, by the way, was about Bin-Laden! I don’t think it was an innocent mistake. A few months ago, when Israel was bombing the hell out of Lebanon, CNN run headlines such as “The USA has a biblical obligation to help Israel”. I was utterly disgusted at the war mongering; it was as if Rumsfeld, Cheney, or Rove composed the CNN headings.

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