[Jazzman]

[quote=flu][quote=Jazzman]^^^I think you’ve given very good reasons for why things could go pear-shaped, but your conclusion seems more influenced by lost hope.[/quote]

And I think you will be wrong (again). But we’ll see. I’m not doubting there will be a correction, but you folks thinking of a massive correction I think will be disappointed (again), in as much some of you were trying to second guess the RE correction here in San Diego and thinking that the best coastal parts of SD would fall 30-40% during the RE meltdown, despite prices had already gone down 20-25% in those parts of town. Wrong there too. I find it funny you guys are so convinced of a doomsday scenario, it’s almost comical. Do you really think there won’t be some intervention if things start to do south (again)?

‘Lost hope?’ I don’t personally care either way, because personally my cost basis there is so low and I don’t care since I don’t plan on selling, ever.[/quote]
It is more rational to judge the size of a possible correction by the size of the bubble that precedes it. When prices are very high compared to historical norms it is reasonable to assume a commensurate correction. Don’t be fooled into to thinking that the previous correction was somehow to do with fundamentals of value. There were so many factors that prevented a bigger correction. It was the explicitly stated aim of the government to prevent house price falls at any cost. The reasons were considered justified at the time, but the consequences not fully realized.

Unlike you, I do care. Not about SF per se but about the consequences that follow and the perpetual resumption of conditions that seem determined to repeat themselves.

[Jazzman]

[quote=The-Shoveler]IMO any crash were it to happen would not be near as severe as the last time

Everyone keeps thinking we are doomed to repeat the last crash when there is almost none of the conditions that really caused the last crash occurring right now (that was truly a once in a life time event).

what we have going on now is more like what happened in the 1980’s when the boomers were coming of age to buy homes, only this time its millennials.

and Please STOP BLAMING BOOMERS, look across the Aisle at you old classmates.[/quote]
Are you referring to just the housing crash, or the credit crisis that led to the recession? There were three distinct, albeit interconnected, phases. The problem is that even last time we didn’t know exactly what the causes were until after the event. At the time it looked like lending was out of hand and irrational behavior had taken hold. All you need to know is that prices are very high. I don’t believe that prices have to be as high as the last bubble to qualify for a bubble.

What is common between now and then is high prices, monetary and fiscal policy aimed at buoying prices, conveyor belt collateralized mortgages, a sophisticated lending market, and government policy aimed at increasing home ownership. On top that you’ve had tax credits, mortgage interest deductions, a distorted property tax code, government guarantees, low deposit requirements, and schemes such as HAMP. So what subprime did for the last bubble you can find plenty that took its place. On the other hand, credit is tighter and investment banks are (hopefully) not stuffing toxic loans and concealing them in investments. But, you also have very low supply, a lot of speculative investor activity, and a market that was distorted by distressed properties. There is still a back log of REOs in some states. Pile on top of that the very low labor participation rate and anemic economic growth. Now throw in the Fed’s hesitancy to raise rates.

Now please explain to me what is good about our current situation? Your home has increased in value? Well, that doesn’t make you richer unless you sell it and downsize. You can borrow against it, but we know where that leads. No. Houses do not substitute for stocks and bonds and should not be a retirement plan. It doesn’t work. We need to get back to a normal market based on historical averages. Savings should be put to better use and people worried about having enough to retire on should be concerned about all these asset distortions, not relying on them.

[Jazzman]

^^^I think you’ve given very good reasons for why things could go pear-shaped, but your conclusion seems more influenced by lost hope.

[Jazzman]

If you look at the Case Shiller chart for the same period as the chart above, it doesn’t look as dramatic. What is interesting is that prices have been increasing exponentially even since the 2006 peak build up.

1980-1996 = 7% pa
1996-2006 = 12% pa
2012-2015 = 24% pa

Total increase = 593%

Mortgage interest has gone in the opposite direction.

1980-2015 = -78%

In 1980, you paid around $3,000 pm for a $250k home
In 2015, you pay $7,000 for the same home now valued at $1.48m

Home prices have nearly sextupled
Interest payment declines nearly quadrupled
Mortgage payments only little more than doubled

The question is whether the inevitable crashes that follow boom cycles will eventually burst from this exponential build up exponentially.

Source: back of cigarette packet calculations publications 2015 all rights reserved

[Jazzman]

[quote=harvey][quote=Jazzman]All said and done, the USSR was enormously successful in some respects. It created a super power, a huge industrial complex, an enviable space program and a secret service that out-foxed even British intelligence.[/quote]

And the USA and Western Europe did all that much better.

Your point?

Anyway, this conversation was a response to a claim above that “we actually are more socialist than capitalist.”

I say that’s not true. And I’m not hearing any arguments to the contrary. The verbal gymnastics around the definition of socialism and CAr’s predictable self-certification of intellectual superiority are not compelling.[/quote]

I don’t recall any country in Europe putting a man on the moon, or becoming a super power for that matter, building a huge industrial military complex, or even producing so many great gymnasts. There was Europe’s colonial past, which even the US fought against. The KGB was very effective and was considered, at least by Mi6, to be a force to be reckoned with. My point, therefore, is about the human experience, the collective wisdom available to us, and how it shapes what we are today. It is not about who ultimately is “better”, however you measure that. It seems there is also a case to be made about cultural conditioning and how that limits our ability to tap into the collective wisdom.

[Jazzman]

That’s right CAR.

Lenin hijacked socialism and used it for a violent revolution. That sent chills down the spines of western leaders. Many considered Russia an unsuitable testing ground for socialism or communism, the term often used interchangeably. Stalin clearly put paid to any notion that socialism was a credible alternative. All said and done, the USSR was enormously successful in some respects. It created a super power, a huge industrial complex, an enviable space program and a secret service that out-foxed even British intelligence.

The negative legacy from the Cold War created an atmosphere of fear that was pervasive. You don’t need to be sympathetic to socialist causes to appreciate the historical backdrop around the world that well preceded the Russian Revolution.

Environmental, humanitarian, charitable are all social causes and I think are generally seen to be forces of good.

The tension centers on striking the right balance between government and business, the latter proving superior delivery but on occasion in need of a straight-jacket to tame its waywardness. Taking the best bits from all human experience strikes me as being infinitely more sensible than ideological confrontation.

[Jazzman]

[quote=harvey][quote=no_such_reality]That’s because today we actually are more socialist than capitalist.[/quote]

That’s not remotely accurate, using even the most contrived metrics and the loosest definition of socialism.

By any economic measure: investment, employment, GDP, whatever — the US economy is overwhelmingly capitalist.[/quote]
Socialism isn’t just an economic system though; it is about sharing (more) equally. Meritocracy came out of socialist ideals. The guy who runs that hedge fund so successfully, or manages that restaurant got there through being good at what he does. Often, those success are enabled by technology, another socialist principal. Marx was all for it if it gave people more leisure time. Public parks, libraries, the right to vote came about from the notion of sharing and equality. Socialism is everywhere. The current debate is not about socialism vs capitalism—except perhaps in school-boy debating forums. It is on a more micro level. So while Mr Saunders may rant on about corporate power and Pickerty about inequality (both relevant BTW), the western world is struggling to repair itself from a damaging recession. The damage wasn’t confined just to the financial or material, it overturned what we had taken as an axiom; that markets self-regulate and are always right. If you follow this debate, you will see that it is not socialists bashing capitalists, but former free market capitalists scratching their heads, and followers of Keynes debating austerity vs more debt. Neither welfare, nor healthcare, nor corporatism and profit are no under threat. The problem is always whether we can bail out the water fast enough while we search for the leak. Whether we list to the left or the right is a side show.

[Jazzman]

[quote=FlyerInHi]Isn’t life on the spaceship enterprise like communism?[/quote]
I often wondered that. No government to speak of but a federation so presumably a world government. No medium of exchange except roles (jobs/careers) for the betterment and furtherment of humanity. A clear leadership hierarchy and legal system so although we evolved away from capital markets, presumably because we used up all resources, we still can’t agree on many moral questions. Racial problems continue but are inter-planetary, and social commentary is the same as it is now. So we haven’t evolved much expect in respect of markets and the medium of exchange. Maybe a stronger, more united, global sense of purpose. Cosmic communism.

[Jazzman]

Obviously not the kind of “fluff” that is going to cushion a hard landing …looks inevitable. Any predictions on how this one will play out?

[Jazzman]

You’d think many of those tech companies must be considering relocating if they can’t pay their employees enough to service extortionate RE prices.

[Jazzman]

This could be the trigger for the next crash. I recently saw a “bubble” post that attracted +600 posts so the bubble noise is getting louder. When prices relative to perceived value get so seriously out of whack, it trumps all stats. It will be interesting to see what tips the apple cart, and how the crash plays out. For example, how will lenders be effected this time, and will there be bailouts again. It will also be interesting to see whether a crash follows in other high end markets, or the RE market as a whole. This is all the evidence anyone needs that prices are so ‘stupidly’ high that you have to be a complete moron to be paying them. It, of course, plays into the hands of the vultures who largely hope and prey for the big event. This could also be good for buyers who show patience and wait.

[Jazzman]

If buyers are becoming more savvy it’s about time, but I don’t think that in itself will effect prices much. I’d watch price reductions and if they comprise over 25% of listings, a buyers market may be emerging. Institutional investors probably need more evidence that the market has reached a peak and is about to turn. The risk they face for getting the timing wrong is a long term sentence in ‘cash’ jail. But once they do move it will signal a downturn. I still see quite a lot of investor activity in some areas. If the last few years are anything to go by, inventory is unlikely to increase significantly without some trigger, and for interest rates it’s the same story. I think the more likely scenario is that a combination of factors such a recession, small interest rate hikes, and perhaps a slowing China would trigger wholesale sell-offs and start a panic in residential RE. If we get a bigger correction than we’ve had recently in stocks, and bonds provide better fixed income alternatives, that might tempt some to switch out of RE. It’s very hard to see further than a few months down the road, but there certainly appears to be no shortage of wishful thinking in both directions. The collective will, however, is (naturally) stacked in favor of higher prices. So I see a recession as the biggest, surest threat and history shows they are an historical inevitability every six years or so.

[Jazzman]

You need to be on the right side of prices not rates.

[Jazzman]

I have seen dozens of incidents like these. They are all over the internet. Cops are being made to look very bad. This is very clearly justified is some instances. Other times you’re left wondering what’s been left out of the story. Whoever is to blame, it is all ugly but I guess has always been there. Its just much more visible with cameras and the internet everywhere.

[Jazzman]

[quote=flu][quote=joec]

Wish I could go swimming actually now.[/quote]

Sigh…I have the opposite problem. I wish I was a strong enough swimmer so that I could take advantage of the ocen that is 10 minutes walking outside of work.

[img_assist|nid=25533|title=outside of work|desc=|link=node|align=left|width=772|height=600]

Thanks for the suggestion of alternating different areas. I think I’ll alternate between upper and lower body every other day.

Dumb question. What’s the best way to shape up triceps? I think I’m spending way more effort on biceps and front, and less so on back, and I don’t want to end up lopsided.

I can almost fit in my old clothes I wore freshman year in college..which was (XX censored) years ago…[/quote]

For triceps, holding a comfortable (5lbs) weight raise you arm above your head, while supporting your elbow with the hand of your other arm. Lower the weight behind you head and them raise it slowly until your arm is straight again. Bench presses also work the triceps. If you want to attack your waistline, Pilates is the way to go. It focuses exclusively in building the “core” muscles around the center ie you tum. While it won’t get rid of fat, it will strengthen your mid-section and pull it in. Mat exercises are available in most gyms. I recommend these before progressing onto the full blown routine. I was an instructor many moons ago and worked in the weight loss industry.

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