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January 23, 2012 at 1:20 PM in reply to: Primary residence becoming rental – impact on existing mortgage interest rate #736618
EconProf
ParticipantSvelte: Not sure of your point here.
Mine was that Ford apparently is producing a great product without subsidies (as far as I know). GM got subsidies amounting to tens of thousands of $ per vehicle and still put out a flawed product. Maybe they fixed the flaw, but does that make the subsidies OK?
BTW, the average Volt buyer makes $170k per year. Why should we subsidize their purchase?ParticipantCongrats to Ford for trumping the competition in the fuel-saving race.
One question though. Why is GM (Government Motors) having so much trouble with their Volt even after huge taxpayer subsidies and a bailout three years ago–a bailout that Ford did not get?
This seems to be more evidence that the free market works, if only we would try it.Participant[quote=svelte][quote=HenryPP]
“4S Ranch is one of only five communities in San Diego designed and built according to strict “fire safe” construction standards. These standards resulted in not a single home being lost or even damaged in any of these communities during the October 2007 fires which affected much of Southern California and burned over 2000 homes…”[/quote]I notice you left off the next sentences from Wikipedia:
“The “Shelter in Place” construction concept of these communities was tested and passed through the fires without any damage. Although adjacent to other popular communities (Poway, Rancho Bernardo, Carmel Valley, Rancho Penasquitos, Rancho Santa Fe) in suburban San Diego, 4S Ranch is the only community among these that has been built to be sufficiently protected from wild fires such that it has been deemed a “Shelter in Place” community”
I don’t know about you, but staying put in a fire is not my idea of a good time. And it misleads the public into thinking that the homes won’t burn.
From other sources:
Shelter in place “doesn’t mean you always stay at home,” Bacon said. “It means you can stay at home because you have done advance preparation. You need to know when to evacuate and when evacuation is too late.”Opponents fear the strategy will endanger lives by encouraging people to ignore evacuation orders.
That’s precisely why San Diego developer Fred Maas balks at the idea of using shelter-in-place standards to promote newer developments as
totally fire-safe.“Short of completely sealed concrete houses, it’s very hard to absolutely give people a sense of security (that) you can weather any firestorm,” said Maas, president of Black Mountain Ranch LLC, which is developing the 2,600-home Del Sur project in north San Diego.
“To give people a false sense of security is imprudent, and to represent to them that they’d be safe from a natural disaster is something I’m not
comfortable with,” Maas said.[/quote]
Shelter In Place is a viable policy depending on:
1. The trees and brush near your house
2. The age and construction (esp. roofing and eaves) of your house
3. Your exit route possibilities.
We live in this area and during the last major fires happily stayed put. All the above factors were favorable, so we were in no real danger. Especially important is that the vegetation is 6-inch tall grass, green ground cover, and a few small ornamental trees.
Gov’t urged evacuation and 90% of my neighbors panicked and fled to gridlocked, dangerous highways and full motels. Most regretted leaving.
Americans are lousy at evaluating risk, weighing probabilities, and taking reasonable chances. Parents scare their kids about abductions, and then don’t buckle them up as they tailgate when driving late to school. We fear spectactular and well-publicized but rare events, and ignor the less dramatic, common risks.
Government’s reflexive action is to tell everyone to get out, rather than explain a checklist of factors to consider. Can’t blame the bureaucrats for taking the easy way out, but C’mon folks, we have to think for ourselves.ParticipantRegarding fire losses, keep in mind that the vegetation in these two areas is not conducive to fires. Few wooded areas like Scripps Ranch and Rancho Bernardo that fed the flames that destroyed so many houses.
December 12, 2011 at 10:23 AM in reply to: With Inflation looming and probable rental rates rising… #734506ParticipantThe price reflects the value of the land, not the building. It will probably be scraped.
Participant[quote=patb]Budget $6.5Million
Marketing Budget $12M???Gross Box Office Take $4.5M
The market has condemned Ayn Rand.[/quote]
Hardly. Her book has sold millions, and is still popular a half-century later.
Hollywood put out a poorly-done movie with no-name actors and a goofy title and it does badly.
So, patb, the markets are saying what?ParticipantI read this book waaaay back when I was a Junior in college, and with my socialist leanings at the time thought it was interesting but irrelevant, and as another poster here said, should be put into the Fantasy section of the library.
Now, I see its relevance. (as Keynes said when questioned as to why he changed his mind…”When I get new information, I change. What do you do Sir?” (paraphrased)).
Incentives are powerful, and are blissfully ignored by politicians, and touted by economists, at least conservative ones. The title “Atlas Shrugged” refers to the collapse of capitalism as the engine of progress, invention, and increasing material well-being as it it beseiged by bigger and bigger government, regulations, taxation, and well-meaning do-gooders who end up doing more damage than good.
Ayn Rand was deeply flawed in many ways, and the book is limited as a piece of literature. Rand was super selfish, and did not believe much in private charity–unlike most conservatives who claim that private charity would replace many government programs if they were eliminated and taxes lowered accordingly. She also dated Alan Greenspan when he was very young. (I used to wake up my dozing students in the last row with that factoid.)Scary–maybe that had something to do with his belief that all would be OK with housing finance if regulators just got out of the way.
The enduring popularity of the book and the fact that it is now a movie tells us something about its enduring argument. Her prediction has increasing relevance now that the economy is sputtering despite so much Keynesian monetary and fiscal stimulus being thrown at it. She’s looking down now at us (or maybe up!) saying I Told You So!ParticipantMarkmax33, I’m afraid that, in general, you are making overly sweeping generalizations based on too little, or simply weak, data. You may be right that hyperinflation will hit the US based on the clearly above-trend rate of increase in the money supply lately. But so far the recessionary factors have overwhelmed the monetary stimulus and we still have a deflationary environment–especially in wages and asset prices. Deleveraging is continuing in the balance sheets of most businesses and households, and it is a powerful force.
Yes, history shows an often sorry record for fiat currencies, esp. when politics and short-term oriented, politically attractive demagogues get control. But the $ is a fiat currency and is still strong by most measures relative to other currencies.
I certainly don’t know what the future holds for inflation here, but I have given up on strict monetarism, which I used to preach. Got tired of being wrong predicting inflation due to the clearly above normal rates of increase in money supply. Too many other factors, such as changes in money velocity and financial instruments now make obsolete the old connection between money supply and prices.
What also counts is how one defines “failure” of a fiat currency. Perhaps you would call a doubling of prices every 15 years a failure. But that’s actually only a 5% rate of increase per year. If wages, prices, investment returns, etc. went up at that same annual rate I think we could adjust to that. Back in 1980 we would have called that heaven. As monetarist Milton Friedman pointed out, it is big changes in inflation, either up or down, that does harm because some groups do not adjust fully or fast enough.
Relating all this to the housing price booms of the late 1970s, late 1980s, and late 1990s, those investors who jumped in and bought in mid-decade made out very well. It is interesting how the price decline or leveling out happened at roughly the first half of the following decade. Timing is everything.Participant[quote=Arraya]There is no inflation. Tradition measures of money supply don’t tell the whole story. Until deflation runs it’s coarse there no threat of inflation. We are few years from that. The fed wishes it could inflate and people will be begging for it[/quote]
The growth rate of the money supply used to be a good predictor of inflation. Milton Friedman championed monetarism in the sixties, seventies, and eighties and challenged the then-dominant Keynesian philosophy among economists. His theory could be summarized by the formula MV = PQ, where M = money supply, V = velocity (speed at which money changes hands), and P = price level, Q = quantity of goods and services produced. Since Q and V were largely stable, any change in M by the central bank would immediately translate into a corresponding change in Prices.
But with financial innovations, new definitions of money, and, more recently, changes in people’s willingness to hold liquidity (at .35% interest on your certificate of deposit, why bother putting your money in the bank), the M and V became less reliable.
So monetarism is dead, or at least not relevant to our current economy, and Arraya right about the current deflationary atmosphere in the face of rapidly growing money supply.Participant[quote=AN][quote=pri_dk]You mean like the 10%+ inflation in the late 1970s/early 1980s? – Whatever happened to that?[/quote]
I wonder what happen to nominal housing prices during the 70s. I could have sworn it drops less than 2-3%/year.[/quote]
AN is right–we had rapidly rising inflation in the 1970s, climaxing at about 13% in 1980, and tamed only by the new Fed Chairman Paul Volcker, who imposed super-tight money, put the economy through a deep recession, and conquered inflation, which later in the 1980s fell to low single digits.
But it was painful medicine. Try to calculate your monthly housing cost with a 15% mortgage.
As to housing prices during that period, they climbed along with inflation, and subsequently fell with the onset of high interest rates and recession.
Interestingly, people were still clamoring to buy even with the high interest rates, which shows the importance of inflationary expectations. If you expect inflation to go from the teens to the twenties, you try to buy a house, even with a 15% mortgage. It was a crazy time.Participant[quote=tugg49].
What you should do….make an offer on a house you might want….go through the paperwork drill and don’t fax or email thing. DO IT ALL IN PERSON. Get a working relationship with the person that presents your paperwork. If you are uncomfortable find somebody else. The short sale paperwork has to be BULLETPROOF! NO DEPOSITS OR QUESTIONABLE TRANSFERS. Lots of cash(5 figures) in the bank and a six figure retirement savings helps. I’m no rich guy just an average guy doing an average job.
Be generous with your money. If the realtor calls and says he’s got a guy that’ll do the work for 500 bucks tell him to go ahead and bring him a check for the work. TRUST! My loan is for 450K. I’ve got 5K for the tip jar.
BUT until this is over the deal isn’t done. I’ll let you know when we sign the papers…are you able to cope with that stress? It’s all about the kitchen and the garage and a nice deep tub to soak in! Hope this helps and have a happy holiday season.[/quote]
Congratulations on jumping through all those hoops. You had to have terrific, verifiable liquidity, knowledge of the complicated requirements, and the right people working for you. But this also shows how difficult it will be for the market to come back. Banks and their regulators are being so demanding they are narrowing the market to very few buyers, which also means they are getting less for their product than they could otherwise get. Good for you, however, in navigating the system.November 13, 2011 at 12:30 PM in reply to: CA Revenue comes in 6.5% lower than expected (and some common sense solutions) #732838ParticipantPhew, lots of issues here, hopefully I can address a few. I was adjunct faculty, not full-time, which is a different world. Only teaching quality guaranteed rehiring each semester, not tenure, publishing, or schmoozing. Accordingly, it is a meritocracy far different from the incentives tenured faculty live in.
SDSU has always had a pretty good student evaluation system, polling students annonymously at the end of each semester about what they learned from their professor. A study I did found that, controlled for different courses and other variables, students on average learned far more from our stable of part-timers than the full-time faculty. Yet we were paid one-third, per course, as much as full timers teaching the same thing. And we often taught more students than full-timers. (BTW, that’s controlled for average grades handed out too). Yes, full-timers do some advising, administration, and research that part-timers don’t, but that does not fully explain the pay gap. So yes, that grates on you after a while. Add to that a foot in the private sector and one tends to switch from flaming liberal to libertarian lite, as I did. Anyway, to address the charge of hypocrisy, my pension of $540/month and health care I see as deferred compensation for years of relatively low pay.
Based on how our governor and legislature act, our state economy will continue to underperform our neighbors, and far more fiscal austerity is in store for us. That should include cuts in overly-generous state pensions, including mine.November 13, 2011 at 7:13 AM in reply to: CA Revenue comes in 6.5% lower than expected (and some common sense solutions) #732824ParticipantI taught for 23 years, mostly at SDSU, while also investing in SD real estate, which eventually displaced teaching in my family’s priorities. Also started up a glazing contracting business, 11 workers at its peak, sold profitably after 9 years. Was not politically correct at SDSU, writing UT articles against tenure, inept teachers, for trimesters instead of semesters, etc., so moving toward the private sector was inevitable. Got a small pension at 50 and free health care for family. Way too generous and no I’m not giving it back.
There is vast waste and bureaucratic bloat at SDSU, as at most universities. Quality teaching is not rewarded, tenure protects the incompetent, useless research and never-read publication is prized, gold-plated student centers and gyms and over-the-top facilities are overdone, and students are not warned that certain majors are useless in the job-market. The public would be shocked to learn how light the teaching load has become for some faculty, and how little some actually work. Of course, there are many fine, hard-working and effective teachers. But they get about the same pay as the bad ones.
SDSU, UCSD, and all the other universities of course do a lot of good for San Diego’s work force and economy….spend a few billion and that’s what happens. But they could do so much more if they were shaken up and realigned in their priorities and methods. The protesting students and faculty, and their enabling media coverage do not get it, and say all we need is more money as we Californians are undertaxed, so I see little hope for genuine change.November 11, 2011 at 8:18 PM in reply to: CA Revenue comes in 6.5% lower than expected (and some common sense solutions) #732780Participanturbanrealtor: to what would you attribute the shortfall?
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