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Fearful
Participant[quote=pri_dk]Dave, you are one of the more knowledgeable posters here, but I’m afraid you don’t understand the definition of “zero sum.” And there really is no accepted use of the term “n-sum” such as you are trying to use with “1.5%-sum.”[/quote]
Dave’s point is entirely legitimate, and you are babbling about semantics.Increasing debt (a credit bubble) does not inherently result in any permanent increase in GDP. All it does is pull consumption in from the future. So it’s a “zero sum game” except that GDP productivity increases all the while.
My own analysis showed that the direct effect of “Mortgage Equity Withdrawal” is modest, a few percentage points here and there on the enormous Personal Consumption Expenditures number. Even considering total increase in mortgage debt did not explain the depth and severity of the recession.
Larger effects, such as the “wealth effect” of real estate equity or perhaps ongoing migration of less skilled jobs overseas or displacement by automation, are needed to explain the change.
Krugman is bizarre and frightening; far more bizarre and frightening is how seriously he is taken. He uses misleading graphics and shrill language to make his points; both are unethical and disreputable and hardly in keeping with his supposed stature. But people seem to just love him, perhaps because he is such an outspoken counter balance to the right wing.
Participant[quote=davelj]Straw man alert!! Krugman tries to convince us that these other economists are counting capital gains as GDP growth… when they’re not. They’re merely (correctly) suggesting that booming house prices led folks to borrow against their houses and… wait for it… “spend”. Which they did. And it’s documented. And last time I checked, “consumption” (aka, “consumer spending”) accounted for about 2/3 of GDP. This is neither controversial nor debatable.
I have no problem with Krugman in general… but it seems like he’s just twisting others’ views in order to nitpick in this article. (Must have been a slow economics news week.)
Contrary to your assertion, I don’t think there’s any confusion on the topic here. The arguments that “recent GDP growth is somehow artificial” has nothing at all to do with “asset price increases”. Rather, it has to do with debt creation driving demand (as opposed to “core,” non-debt driven demand). I’ll be so excited when the economics profession learns how to model debt into the workings of our economy. Until that time, we’ll remain lost in the financial wilderness.[/quote]
Not sure how much this adds to the discussion, but: Using the “Mortgage Equity Withdrawal” data from the Fed, I figured out that repaying the “Mortgage ATM” would not drain the economy all that much. Even taking the position that all increase in mortgage debt had to be reduced back to trend line did not result in a substantial decrease in GDP. A recession, to be sure, but no Great Depression. This was in answer to those predicting armageddon. I suspect the explanation for the length and depth of our current recession and slow recovery therefrom lies in other areas.Participant[quote=Brutus]Don’t get a permit unless the project is easily visible from the street. The job of an inspector is to find things that are wrong. They are not happy until you aren’t.
Use good plumbers and electricians and make sure everything is up to code. Make the house safe.
Don’t use permits.
I learned this the same way you are: experience.
Say after me: Inspectors suck. Inspectors always suck. Inspectors always will suck.[/quote]I did a lot of my own work in my house in Santa Clara and found the building department to be wonderful. The inspectors were patient and in no way abusive of their power. I understand that this is the exception.
The “Code Check” books from Taunton Press are a wonderful resource for the building codes. Illustrated and terse, I learned almost everything I know about building codes from them. So if you are going to be looking over your contractor’s shoulder (and you should!), you should build your own expertise in the codes.
Participant[quote=billfan]I would love to just “do nothing” but the senior inspector already said it will go to Code Enforcement in 30 days if I dont apply for a permit [/quote]
You can have all the code violations in the book, but it sure seems to me that a house couldn’t be condemned unless it poses a significant hazard to the occupants. Cities don’t just kick people out of houses for minimal reasons. I’m not saying that this is what you should do, but based on what you have written here it sure seems to me like a viable fallback position.
The building department, as with all municipal government offices, is desperate for money and is trying to avoid being shut down. Building inspectors and the permit offices just don’t have the work flow they used to. It is sad they are bullying you; I recall how picky the inspector was that came around to look at our pool.
ParticipantWhy not do nothing? Is the city going to condemn your house? Or are you planning to sell it in the near future? If you can get money out of your seller or title policy, certainly do so. But if your only motivation is having fully permitted remodeling work, consider letting go of that desire. If you already have unpermitted work, you may as well just add more.
If, for example, you do not expect to sell the house for 20 years, a lot could happen between now and then. Worst case you simply disclose to the buyer that there is unpermitted work on the property.
ParticipantI have not read the Q&A following Bernanke’s speech, but I understand via Calculated Risk that Bernanke said the Fed would only slowly reduce the inflation rate as long as unemployment remained up.
Them’s fightin’ words.
ParticipantIt’s so weird that the same people that talk about the plight of the poor and middle class talk also about the beneficial effects of just a wee touch of inflation – or at least the absence of any harmful effects.
I suppose they are assuming that wages and welfare would both be indexed to inflation. Thus the people that immediately suffer from the inflation are the savers, and, less directly, the great majority who do not see the beneficial effects of greater economic growth in the absence of inflation.
Really, it’s the middle that pays the most. The rich have inflation-indexed investments and the poor have inflation-indexed income.
Participant[quote=walterwhite]Sometimes it can be very small things. Like the two cots I put out on the covered porch. Nap there. It is so awesome. And all it took was the concept. Cots out on patio. I wanted to buy an outdoor couch but this is better cuz we have them.[/quote]
Covered patios are excellent. But they have to be designed right.Suntuf makes Lexan panels. They’re corrugated but don’t look as bad as you might think they’d be. They are available in clear as well as various smoke finishes. I think the clear is best but it does get cloudy.
My favorite design was rafters, then lattice, then the corrugated panels. I then had sheets of Sunbrella fabric to put up there during the summer months.
Lexan is pretty good but I was always tempted to try to put glass up there. Difficult, expensive, and dangerous, but it would be nice for it to remain clear.
The covered patio enabled us to keep furniture out of the weather; everything stayed clean, and the wind was less objectionable. It was great.
Participant[quote=Rich Toscano]
Yes, this is a good description, Fearful. I’d also add that high inflation reduces economic growth and productivity, because prices (which usually function as a signal for how to allocate resources) become distorted.High inflation (and most notably the move from lower inflation to higher inflation) is highly disruptive and very negative for general economic well being, as one can verify by studying past episodes of inflation in our country and elsewhere.
This thread (the OP anyway) is a good example of the extreme complacency about inflation that seems to be the norm these days.[/quote]
I suspect the near zero overall inflation of 2007-2008 got people thinking “it can’t happen here”. But wasn’t there a brief period in which inflation was suddenly destabilized? I remember food and commodity price rises.I also suspect that the low interest rates (“liquidity trap”) has gotten people thinking, again, that inflation will not happen any time soon.
I think technically that high inflation could be tolerated if it were stable. The economy could plan for it. However, I think it would be almost impossible to stabilize inflation expectations at some high level such as 10-20%.
Jeez – a little uptick in interest rates, the Fed’s inventory of securities is worth less, so the Fed can’t sell them without making the quantitative easing permanent … it is a precarious position.
Doesn’t complacency about inflation make its existence that much more likely?
Participant[quote=DomoArigato]So we’d get some inflation which would cause the value of any remaining debt to go down, further alleviating any ‘debt crisis’. Additionally, the value of the dollar would likely go down, no? This would increase the competitiveness of American exports and likely lead to higher employment.
What are the bad things that would happen, if any? Would we just be trading fear of invisible bond vigilantes with fear of the inflation boogeyman? Maybe the only thing we have to fear is fear itself?[/quote]
It is strange to hear someone being blase about rising prices. If the value of the dollar falls, imports become more expensive. Imports include food. When food prices rise, people complain loudly.Rising prices act like a consumption tax. Therefore they are regressive: The poorest people spend the largest portion of their incomes on consumption, so they feel the effect the most. The other group affected by inflation is conservative investors. Equity (that is, risk tolerant) investors are more able to survive a bout of inflation. So inflation hits poor people and old people. Not exactly where you want the effects to be felt.
The other, large problem with inflation and deflation is they are subject to positive feedback. If inflation is expected, people are more inclined to spend money sooner – before prices go up. Spending money sooner rather than later is itself inflationary. The opposite but also positive feedback mechanism works for deflation. Thus the central bank has to maintain an unstable equilibrium, with positive feedback mechanisms in both directions.
Participant[quote=CA renter]
“Type L” copper pipe, 1/2″, for the kitchen and two bathrooms in a single-story house.[/quote]
L is probably an unnecessary expense for indoor lines and non corrosive water. But in the scheme of things it is not such a big deal.One tip: If you are running a cold water line to an outside hose bibb, make that line 3/4″ all the way. Otherwise, do everything in 1/2″. I can’t believe people run 3/4″ for hot water; it makes the hot water take twice as long to arrive at the faucet. But if you have a monster 10 gpm shower with a recirculating system then your needs are different.
Participant[quote=flu]Just curious. Typically how much does a repipe run (ballpark).[/quote]
Varies with whether there is a second story, and how many bathrooms are being served. Also varies with how well the drywall is cleaned up afterward. Cheapest option is to just shoot a section of poly tubing from one end of the house to whatever section you can isolate. Overall, ranges from $1,000 to $10,000.Participant[quote=svelte]
Perhaps, but you get a brand new furnace FOR FREE to replace one that is likely 20-30 years old. That can tide you over for awhile.
[/quote]
There’s a massive potential debate regarding this, but personally I would rather be saddled with the potential repair bill than be saddled with a crappy furnace, crappily installed. I’ve lived with lousy major appliances (ask me about my Viking built-in fridge some time!) and lousy installations and both are not worth their freebie value. You wouldn’t believe how noisy and inefficient a bad furnace can be; you wouldn’t believe how problematic a bad installation can be. Water heaters are about the only major appliance that I would take a freebie on; the installations are so simple, the codes are so strict, and the appliances are so uniform, that I would trust even a freebie doofus to install one.In that vein, and back to the original topic: I hope Mr. sd92128 does not cheap the repiping. Badly done, it can be a real detriment to the house; well done, and it is a real addition to the house’s value.
Participant[quote=sdrealtor]Actually the home warranty is more to benefit the seller than the buyer. Its a bit of insurance for non-disclosure of problems. In essence the seller says, here is everything I know about the property but if something happens you think I did or should have known about call the home warranty company not me.[/quote]
Excellent perspective. However, that warranty protection is illusory for the seller, also. If the buyer encounters a large scale problem that the warranty company does not cover, they may pursue the seller anyway. -
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