[HenryPP]

I’ve always loved all things history. Mainly economic and political history, but also including some military history. So I was pretty interested in the Arab-Israeli conflict.

I can’t really say that one side has a monopoly on moral behavior. Both have behaved quite badly. However, over the years, as I’ve read and seen more and more, I’ve become less and less sympathetic to the Israeli side, and more sympathetic to the Palestinians. Especially as they are by far the weaker side. I originally got interested in this as a military conflict. But then I realized that this is not really a “military conflict,” sort of like how a 12th grader beating up a 3rd grader and taking his lunch money is not really “a schoolyard fight.”

I think the thing that bothers me the most about Israeli behavior is the hypocrisy. A lot of other countries and militaries behave brutally. But they don’t pretend or claim that they are all sunshine and flowers. Israel does. Basically, when it comes to Israel, I’ve learned to go by their actions, not their words. Some examples:

Israel continually claims to want a “2 state solution.” But then they keep grabbing Palestinian land. That’s the land the Palestinians are supposed to build their supposedly future state on. Claiming you want a peaceful “2 state solution” and then doing everything in your power to sabotage that is hypocrisy.

Israel got the West Bank and Gaza in the 1967 “6 Day War.” Israel claimed that this was a defensive war. But when you actually look at what happened, you see that Israel struck first, and struck first MASSIVELY with their entire air force. This is like WW2 Japan saying that Pearl Harbor was a defensive action.

Also, during the 1967 war, Israel attacked the crap out of the USS Liberty, an American navy spy-ship that was nearby and listening in on the war. Even though it was a clear day and the ship was flying a massive American flag and Israeli fighter planes had flown over it several times – positively ID’ing it as American, the Israeli air force and navy proceeded to attack it for several hours, almost sinking it, and killing 34 American sailors and injuring 171. Aside from bombing the crap out of the ship, the American survivors claim that Israeli gunboats machine-gunned the lifeboats full of American sailors. They would have sunk the ship, too, and probably killed all the sailors, had a Russian navy ship not come on the scene to investigate. Israel then said “Oh, sorry, we didn’t realize that was an American ship.” Ummm, bullshit.

And the reason they attacked the USS Liberty? I read a book by one of the surviving officers from the Liberty, who speculated that the Israelis wanted to sink the Liberty because they knew it was a sophisticated spy-ship and it could monitor some things that the Israeli government and military did not want the world to know. Two items he listed were that, first, Israel was preparing to invade Syria to capture the Golan Heights. And second, that Israeli troops were at that moment perpetrating a war crime in the Sinai, killing several hundred Egyptian POW’s. At first I thought the second explanation was unlikely (stupidly, I believed the Israeli army claims about purity of arms and all that). Then a few years later, several Israeli parliamentarians stood up in the Knesset (the Israeli parliament) and said “Why yes, we did kill several hundred prisoners of war in the Sinai in 1967. And we did it in 1956 too.” I see!

And in this latest war in Gaza, two things stood out for me. First, an Israeli ambassador saying that the Israeli army is so peaceful and careful to avoid civilian casualties that they deserved the Nobel Peace Prize. Huh? Every report on the current fighting, including Israeli reports, say that the vast majority of Palestinian casualties have been civilians. Over 1,000 of the 1,400 dead Palestinians have been civilians, including hundreds and hundreds of children. (Meanwhile, only 3 of the 59 Israeli dead have been civilians – the remaining 56 dead Israelis have all been soldiers). UN refuge areas hit and destroyed, schools destroyed, hospitals bombed, over a thousand homes deliberately targeted and destroyed. Every single one of these is considered a contravention of the laws of war. Nobel Peace Prize?

And then I saw a video of a bunch of Israelis dancing and singing “It’s a school holiday in Gaza because all the children there are dead!” Wow!

But the thing that’s worst is that the US seems to have a weird battered wife syndrome relationship with Israel. No matter what Israel does, America supports it and pays for it. Pays in terms of money (several $Billion/year). And pays in terms of world relationships and even pays in terms of blood – a lot of the conflicts the US has gotten into in the last few decades have been for Israel’s sake and because of this mulish support for Israel.

Even after Israel literally blows up a girls school in Gaza, killing dozens and injuring hundreds, and a vegetable market, again killing dozens and injuring hundreds, you have the spectacle of American politicians rushing to show their support for Israel. From both parties (apparently, that is one thing that unites Democrats and Republicans). And sending piles of American taxpayer dollars there. Just how much “campaign donation” money are they getting from AIPAC anyway?

And Israel is the only country in the world that can attack and insult a sitting American president and secretary of state, and almost all of congress will side with them. John Kerry proposed a cease-fire that Israel didn’t like, so the Israeli government and media all attacked him and some even called his proposal a “massive terrorist attack.” Wow! (I had gotten used to Israelis calling anyone they didn’t like “a terrorist” – but I never expected they would call the sitting US secretary of state that). Even more weird was that he, the secretary of state of the world’s supposedly only superpower, then had to get in front of the cameras and say that nobody was more pro-Israel than him. As an American citizen, watching my government officials grovel before a foreign power that was actively insulting them was a bit hard to stomach.

Of course, the Palestinians have some really odious people in their midst, and a lot of the Islamists in the Middle East are downright scary. But at least with those clowns things are clear-cut. Some of them don’t even try to pretend to be in the 21st century. Some are literally trying to recreate the 7th century. (Although to be fair to the Palestinians, it’s the ISIS goons in Syria and Iraq who are going for the 7th century stuff, not Palestinians. The Palestinians give the impression that they only want to go back to the late 19th century).

So the hypocrisy factor is not the same. And all those dead and injured Palestinian children (watch some of the videos, if you can) have nothing to do with any of that. Although I’m sure that many of the Palestinian children that do survive this war will be some of the most extreme fanatics we’ll see in the next couple of decades, based on their childhood trauma.

Israel acts the same way – “God gave me this land” religious fanaticism combined with thuggish brutality – but Israel then turns around and pretends to be a civilized 21st century society. I guess that’s the part that annoys me the most – the hypocrisy of it.

[HenryPP]

I have to question slightly the basis of the original question.

People get all alarmist about things like hyperinflation, market crashes, etc. Because these things are dramatic and grab attention (and readers, which helps sell ads). The reality is usually much more complicated.

I will use the common definition of inflation as the increase in prices of items (not the official definition of an increase in the money supply), since that is how almost everyone uses the term.

Leaving aside 1970’s-style supply constraint shocks, the only way we can get significant inflation in prices of widely used goods is to either increase the incomes of the people who buy these items, or to increase the number of these people, or increase in their willingness to borrow to buy these items.

As I see it, the only people who still have the ability to buy (or borrow to buy) significantly more of things are the rich and upper middle class. The rest of American society is close to being maxed out.

So the main items that are going up in price are the things in demand by the ever-richer rich and upper middle class. These are the people who have benefited in various ways from government actions and the modern economy.

So it is specifically the items with high demand by the rich and upper middle class which are seeing inflation and will likely to experience price increases.

What are these things?

-Higher education: The kids of the rich and upper middle class go to college. One way or another, through cash or loans, these kids will get that important status symbol – the college degree (and law degree/medical degree/MBA, whatever).

-Complex medicine: The rich and upper middle class like being healthy, and like their kids being healthy. Money will always be thrown at this problem. One way or another, money will be found to ensure this.

-Financial markets: The rich and upper middle class, along with the pension funds, hedge funds (for the really rich), etc, which cater to them, have enormous amounts to invest. And central banks are there to make sure their financial positions keep looking rosy for the foreseeable future.

-Luxury items and art investments, etc. These are things for the rich and wannabe rich. These people have money and/or ability to borrow to get these status symbols. Plus a lot of these investments have been going up, so there is a virtuous cycle which will keep going until/unless the rich/upper middle class get whacked by something. Central banks are there to make sure 2008 doesn’t happen again anytime soon.

I actually think that there is already very significant inflation going on in the economy. It is just in things beyond the “necessities” and which are not well captured by the CPI (probably deliberately – can’t let the COLA for ordinary folks get too out of hand, now can we).

But hyperinflation in the historical sense, with people pushing wheelbarrows of money bills to buy bread – no, I don’t foresee that at all. Instead, you push wheelbarrows of money to buy the items desired by the rich and upper middle class, especially if they are supply-constrained – the stocks of hot tech startups; luxury condos in the hippest cities; dinner at fancy restaurants; putting your kids through private colleges – that sort of thing.

So it is in the rich/upper middle class items where inflation is. For everything else, 99 Cent stores will welcome you with cheap made-in-China goods.

[HenryPP]

Joey, I can’t answer for other people, but for me it actually has some importance.

I bought this house about 1 1/2 years ago in a short sale. That big drop in the Zestimate, especially how large it is, and the fact that none of the neighboring properties shows a similar drop, made me wonder. I’d heard and read about various short sale horror stories. I wondered if perhaps there had been something wrong with the short sale process and I would suddenly hear from some bank saying “Surprise! We have a lien on this house.” Probably far-fetched. But is it possible? I also thought of various other unlikely scenarios.

So it’s not that I actually believe the Zestimate. I was just wondering if it was picking up on some problem or issue. Sort of an early warning canary in the coal mine.

This is somewhat relevant since there is a possibility that I might sell in 2015 and I would rather know ahead of time if there are any potential issues.

After reading the numerous complaints on Zillow’s website by people disparaging the Zestimate, I’m leaning towards the view that the Zestime is not actually picking up any hidden issues. Rather, their algorithm is the one with issues.

[HenryPP]

Jeff, my thinking used to be exactly like yours. Until I saw that property value line going straight down, month after month, while every other property in the neighborhood went up, month after month. That’s a pretty weird algorithm.

At first I thought maybe a foreclosure sale had dropped values in the area. But nope, only value that dropped was mine. (One second while I put on my tin-foil hat).

I emailed Zillow and got the boilerplate response: We use an algorithm which takes into account many factors…yada yada yada.

Looked around at their website, and found that a ton of people are complaining about Zestimates not making any sense. One guy had two identical lots – one with a house on it, the other empty, and the empty one was the one with the higher Zestimate. Go figure.

I don’t want to beat this horse to death. Thanks everyone for your thoughts.

[HenryPP]

Well, I’m going to try to reach someone at Zillow, see if they can explain it.

I can already guess they’ll say it’s their black box algorithm and yada yada yada.

This might get interesting next year, since I might be selling at that time.

[HenryPP]

The other homes in the neighborhood are very similar. Same square footage for the houses, with minor variation in land area. All were built at the same time, all look very similar. Basically a neighborhood of cookie-cutter mid-sized family homes.

As for prices cooling, why would only my house be cooling, according to Zillow? Zillow doesn’t have the prices on any of the others dropping. And a 30% drop in a few months is not “cooling” – it’s a crash.

And Trulia shows all the houses, including mine, rising.

Maybe it’s as livinincali says. Maybe Zillow just doesn’t like me. 😀

I’m treating it all as a bit of a joke. Except I have this nagging feeling that someone is manipulating the price for this particular home, and I don’t know why.

[HenryPP]

From time to time, I check my home’s value estimate on Trulia and Zillow. Over the last few months, something odd has been going on.

Trulia shows my home’s value increasing relatively steadily. That seems to follow the general area trend.

Zillow shows something COMPLETELY different. It shows a steady rise in the first half of 2013, and then a steady (and rapid) drop since mid-2013.

The rise according to Zillow mirrored the rise according to Trulia. But then there was a complete disconnect in mid-2013.

The strange thing is that the drop, according to Zillow, has been very substantial (over 30% since mid-2013). In fact, it now shows the value as being BELOW the 2011 price bottom. That’s just weird.

None of the other homes in the neighborhood have any similar drop, according to Zillow. In fact, Zillow has them all either holding their value or increasing. So it’s not area-specific. Rather, it seems to be home-specific (and, specifically, my home).

Anyone have any idea what’s going on?

[HenryPP]

OK, that’s why our numbers are different. We used different tax rates. To account for the Mello Roos, I used higher tax rates than what you used. For Del Sur, I used 2.2%. For north 4S, I used 2.075%. For south 4S, I used 1.525%. Those are all based on what I could calculate for the Mello Roos taxes from Redfin.

For example, I looked at a random house in north 4S. Here is the link from Redfin:

http://www.redfin.com/CA/San-Diego/17173-Ralphs-Ranch-Rd-92127/home/12153594

It’s been sitting for a month at a price range of $850,000 to $875,000. So lets assume they accept a bid slightly below that range, at $835,000.

We see that the HOA is $85/month. Meanwhile, under Fee Information, it shows Total Monthly Fee as $658/month, so I kluged it and said $658-$85=$573 a month in Mello Roos taxes. (The $573/month might include something other than Mello Roos but I didn’t dig into it). $573/month X 12 months = $6,876/year in Mello Roos. Assuming this house sells at $835,000, that is 0.825% Mello Roos tax. Giving total tax = 1.25% + 0.825% = 2.075%.

I went back and redid the calculation on the mortgage calculator you linked to. I assumed excellent credit and a 4.25% interest rate, to get a best case scenario. For an $800,000 house with 20% down, I got the following numbers:

Del Sur: $4,615 Principal+Interest+Tax. Add $85 for HOA and $200 for Home Insurance gives a total of $4,900/month.

North 4S: $4,532 + $85 + $200 = $4,817/month.

South 4S: $4,165 + $85 + $200 = $4,450/month.

Now add to this the various costs of owning a home. To me, it looks like the homes in 4S and Del Sur are relatively low maintenance, so that cost should be pretty low. (Relatively newly built homes, small lots, etc). But it would still add up over time.

I do agree that when you count the mortgage tax deduction, especially for the type of people who live there (i.e. upper middle class professionals with kids and very interested in tax deductions), it is likely to be cheaper than renting. I just doubt that it would really be $1,000 less than renting there.

I myself looked at a lot of homes in 4S in 2011, back when they were about $150,000 less than they are going for now. I liked the homes and the schools were highly rated. Plus it’s a very convenient and pleasant area. What I did not like was the high Mello Roos, the small lots, looking right into neighbors windows, and most homes lacked a decent view. I ended up buying elsewhere.

I keep an eye on 4S, however, since I can practically walk to work from there. My plan is to keep my current place and rent it out, and move to 4S if I can find the right home at the right price.

[HenryPP]

I think you are leaving out several important costs from your purchase calculation.

For example, 4S has quite high Mello Roos (especially for north 4S). Unless you plan to pay that off early, you have to add that in (in addition to the HOA, which is reasonably low in 4S). Also, the various costs of home ownership.

I looked at 4S pretty extensively a couple of years ago (I work in one of the tech companies nearby and I like the area). I ended up buying elsewhere, but I might still buy in 4S in a couple of years (good schools, etc).

But I seriously doubt that I would be able to find such a deal on a purchase that it would be $1,000 less than renting.

[HenryPP]

The question I have is this: Would HP still be collapsing and skirting with single digit stock price if Hurd had never been fired?

I remember Oracle’s Ellison writing that by their decision to fire Hurd, HP’s board had made the second worst personnel decision in corporate history (the first, he said, was when Apple’s board fired Steve Jobs).

Could Hurd have kept HP rolling, or was it inevitable. Normally, I would say that one person cannot save a major corporation with so many problems. The counter-example, of course, is Steve Jobs turning Apple around just weeks before it went tits up (according to the legend, at least). But then again, Steve Jobs WAS Apple, while Hurd was just a very talented spreadsheet guy.

Whattcha think?

[HenryPP]

I remember someone on this site mentioning that when they inspected 4S homes, they noticed the potential for structural problems. Actually, I think it was Early Retirement who said that. ER, if you are reading this, good catch!

What’s strange is that from the pictures this home doesn’t look like it was built on a steep slope. Anyone know the story here, why the slab cracked?

[HenryPP]

Interesting, we are in VERY similar situations. I also looked at 4S because I work very close by, and it looks like I’ll be saying nyet. The MR was just too high and frankly the prices themselves are still a bit high. But frankly, all the relatively new homes in that whole general area are quite expensive, unless you go out to Ramona, Escondido, the shadier parts of Poway, or Mira Mesa.

Your budget looks fine – I did a very similar budget. But your Discretionary portion seems too small, and I’m not sure what Living means and why it’s so large.

Congrats on having 30% to put down. That’s pretty unusual unless you had a big score from something earlier.

[HenryPP]

And if you exclude short sales, inventory looks even smaller, especially in the areas I’m looking at (4S, Carmel Valley, etc).

So I’m just sitting here watching and waiting.

[HenryPP]

Got it. Thanks SDR and sdr. Very helpful information (if not quite the news I was hoping for).

[HenryPP]

Sorry, not sure what happened. I was replying to SD REALTOR.

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