[EconProf]

Back when prices were rising 1 – 2% per month, many people made good money buying fixer-uppers, making all the improvements, and then selling them 6 months or a year later. They congratulated themselves on their skills, but forgot that it was a rising market combined with their leveraged position that gave them most of the profit.
In a falling market, both of those factors work against you, so the idea fails big time.
Add to this the tendency to underestimate fixup costs, ignor their own time committment, downplay transaction costs getting in and getting out, ignor the opportunity cost of their down payment, and you’ve got a losing proposition except in rare times and with the perfect property.

[EconProf]

Back when prices were rising 1 – 2% per month, many people made good money buying fixer-uppers, making all the improvements, and then selling them 6 months or a year later. They congratulated themselves on their skills, but forgot that it was a rising market combined with their leveraged position that gave them most of the profit.
In a falling market, both of those factors work against you, so the idea fails big time.
Add to this the tendency to underestimate fixup costs, ignor their own time committment, downplay transaction costs getting in and getting out, ignor the opportunity cost of their down payment, and you’ve got a losing proposition except in rare times and with the perfect property.

[EconProf]

Back when prices were rising 1 – 2% per month, many people made good money buying fixer-uppers, making all the improvements, and then selling them 6 months or a year later. They congratulated themselves on their skills, but forgot that it was a rising market combined with their leveraged position that gave them most of the profit.
In a falling market, both of those factors work against you, so the idea fails big time.
Add to this the tendency to underestimate fixup costs, ignor their own time committment, downplay transaction costs getting in and getting out, ignor the opportunity cost of their down payment, and you’ve got a losing proposition except in rare times and with the perfect property.

[EconProf]

Back when prices were rising 1 – 2% per month, many people made good money buying fixer-uppers, making all the improvements, and then selling them 6 months or a year later. They congratulated themselves on their skills, but forgot that it was a rising market combined with their leveraged position that gave them most of the profit.
In a falling market, both of those factors work against you, so the idea fails big time.
Add to this the tendency to underestimate fixup costs, ignor their own time committment, downplay transaction costs getting in and getting out, ignor the opportunity cost of their down payment, and you’ve got a losing proposition except in rare times and with the perfect property.

[EconProf]

UAW members average $73 per hour in total compensation, according to several accounts I’ve read. While their actual paycheck may only be around $30, from these same accounts, SocSec, health benefits, vacations, OT, retirement, etc. etc. pushes up the true cost to the big 3.
When someone takes a job, they buy into a bundle of benefits, of which pay is just one element. They weigh their decision to take or refuse a job, to retire, to work OT, or to switch jobs, on ALL those factors, including even nonmonetary ones such as status, team environment, patriotism (the military), dirty vs. clean, etc.

[EconProf]

UAW members average $73 per hour in total compensation, according to several accounts I’ve read. While their actual paycheck may only be around $30, from these same accounts, SocSec, health benefits, vacations, OT, retirement, etc. etc. pushes up the true cost to the big 3.
When someone takes a job, they buy into a bundle of benefits, of which pay is just one element. They weigh their decision to take or refuse a job, to retire, to work OT, or to switch jobs, on ALL those factors, including even nonmonetary ones such as status, team environment, patriotism (the military), dirty vs. clean, etc.

[EconProf]

UAW members average $73 per hour in total compensation, according to several accounts I’ve read. While their actual paycheck may only be around $30, from these same accounts, SocSec, health benefits, vacations, OT, retirement, etc. etc. pushes up the true cost to the big 3.
When someone takes a job, they buy into a bundle of benefits, of which pay is just one element. They weigh their decision to take or refuse a job, to retire, to work OT, or to switch jobs, on ALL those factors, including even nonmonetary ones such as status, team environment, patriotism (the military), dirty vs. clean, etc.

[EconProf]

UAW members average $73 per hour in total compensation, according to several accounts I’ve read. While their actual paycheck may only be around $30, from these same accounts, SocSec, health benefits, vacations, OT, retirement, etc. etc. pushes up the true cost to the big 3.
When someone takes a job, they buy into a bundle of benefits, of which pay is just one element. They weigh their decision to take or refuse a job, to retire, to work OT, or to switch jobs, on ALL those factors, including even nonmonetary ones such as status, team environment, patriotism (the military), dirty vs. clean, etc.

[EconProf]

UAW members average $73 per hour in total compensation, according to several accounts I’ve read. While their actual paycheck may only be around $30, from these same accounts, SocSec, health benefits, vacations, OT, retirement, etc. etc. pushes up the true cost to the big 3.
When someone takes a job, they buy into a bundle of benefits, of which pay is just one element. They weigh their decision to take or refuse a job, to retire, to work OT, or to switch jobs, on ALL those factors, including even nonmonetary ones such as status, team environment, patriotism (the military), dirty vs. clean, etc.

[EconProf]

The beautiful thing about the oil price decline is that it is defunding our enemies. Russia, Iran, Venezuela, the middle eastern despots are all hurting, and are now much less likely to poke us in the eye with a sharp stick.
Let’s also congratulate our (relatively) free markets and capitalism in bringing about this happy result. As TG points out, entrepreneurs respond to price signals by innovating, oil companies by drilling (if allowed to), and consumers by conserving. All the actors take time to move, and they understandably wait until a price trend looks long-term. The fear-mongering media and anti-market politicians need to stop bashing capitalism.

[EconProf]

The beautiful thing about the oil price decline is that it is defunding our enemies. Russia, Iran, Venezuela, the middle eastern despots are all hurting, and are now much less likely to poke us in the eye with a sharp stick.
Let’s also congratulate our (relatively) free markets and capitalism in bringing about this happy result. As TG points out, entrepreneurs respond to price signals by innovating, oil companies by drilling (if allowed to), and consumers by conserving. All the actors take time to move, and they understandably wait until a price trend looks long-term. The fear-mongering media and anti-market politicians need to stop bashing capitalism.

[EconProf]

The beautiful thing about the oil price decline is that it is defunding our enemies. Russia, Iran, Venezuela, the middle eastern despots are all hurting, and are now much less likely to poke us in the eye with a sharp stick.
Let’s also congratulate our (relatively) free markets and capitalism in bringing about this happy result. As TG points out, entrepreneurs respond to price signals by innovating, oil companies by drilling (if allowed to), and consumers by conserving. All the actors take time to move, and they understandably wait until a price trend looks long-term. The fear-mongering media and anti-market politicians need to stop bashing capitalism.

[EconProf]

The beautiful thing about the oil price decline is that it is defunding our enemies. Russia, Iran, Venezuela, the middle eastern despots are all hurting, and are now much less likely to poke us in the eye with a sharp stick.
Let’s also congratulate our (relatively) free markets and capitalism in bringing about this happy result. As TG points out, entrepreneurs respond to price signals by innovating, oil companies by drilling (if allowed to), and consumers by conserving. All the actors take time to move, and they understandably wait until a price trend looks long-term. The fear-mongering media and anti-market politicians need to stop bashing capitalism.

[EconProf]

The beautiful thing about the oil price decline is that it is defunding our enemies. Russia, Iran, Venezuela, the middle eastern despots are all hurting, and are now much less likely to poke us in the eye with a sharp stick.
Let’s also congratulate our (relatively) free markets and capitalism in bringing about this happy result. As TG points out, entrepreneurs respond to price signals by innovating, oil companies by drilling (if allowed to), and consumers by conserving. All the actors take time to move, and they understandably wait until a price trend looks long-term. The fear-mongering media and anti-market politicians need to stop bashing capitalism.

[EconProf]

One would think the financially interested party–the bank–would really like to know about this. Let them have the facts. They have a lot at stake in minimizing their loss, so should have the incentive to act accordingly.
Of course, this assumes they are economically rational…….

[Author]

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