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livinincali
Participant[quote=The-Shoveler]Try the US Gov census.
http://www.census.gov/const/uspricemon.pdf
But I think this is missing the point,
It is the strangeness of the lack of wage inflation since 1990.[/quote]
That’s for new homes only. Which is a minority of the overall home sales.
That was my point we didn’t need wage inflation because people we’re perfectly comfortable expanding debt and leverage in a falling rate environment. Home prices could continue to go up without the expansion in wages because the monthly payment fell with the lower rates.
So the question is what happens when rates go up. If wages continue to experience low inflation then home prices will fall. If wages do experience the inflation you seem to think is a solution then you would expect rates to increase even faster. Of course if the rates expand at a rate greater than wages then home prices still fall. It’s going to be a negative feedback loop that will trap people in homes that are purchased now. They won’t be able to get that monthly payment again and they won’t be able to sell at a reasonable profit until they pay down a lot of the debt. We had falling rates as a trend for 30 years. We had a positive feedback loop to expand debt into that environment. When that changes assets that are bought and sold with leverage will suffer.
Participant[quote=The-Shoveler]Average U.S.A. home price went from 29K in 1973 to about 125K in 1990.
[/quote]That’s not what this chart says. Seems more like 100K was the average home price in 1990 and it didn’t break 125K until 1999-2000
Participant[quote=The-Shoveler]You obviously were not of working age during the 70’s and 80’s
or 60’s LOL.I remember getting 30% raises almost every year.[/quote]
Oh really. Let’s see how that compounds.
1960 you make minimum wage of $1.00 per hour. Let’s assume 2000 hours worked for $2000 a year. What does 30% raises every year for 20 years do. In 1970 you’re making $27,571 per year. In 1980 you’re making $380K. I really believe it. I’m guessing you got a 30% raise probably 1 once or twice in your first couple years of working. After that, eh not so much huh. Because if you did by 1990 you’d be making $5+ million per year.
1960 $2,000
1961 $2,600
1962 $3,380
1963 $4,394
1964 $5,712
1965 $7,426
1966 $9,654
1967 $12,550
1968 $16,315
1969 $21,209
1970 $27,572
1971 $35,843
1972 $46,596
1973 $60,575
1974 $78,748
1975 $102,372
1976 $133,083
1977 $173,008
1978 $224,911
1979 $292,384
1980 $380,099
1981 $494,129
1982 $642,368
1983 $835,078
1984 $1,085,602
1985 $1,411,282
1986 $1,834,667
1987 $2,385,067
1988 $3,100,587
1989 $4,030,763
1990 $5,239,991Nice try though. Math >>>>> I remember 30-50 years ago.
Participant[quote=The-Shoveler]I don’t really think much has changed with the entitlement mentality (well for the last 50 years anyway), the only real change is inflation used to have borrowers back to a certain degree. What I remember being told when I was looking for my first house “buy as much house as you could possibly afford, your wages will grow into it”.
The current low wage inflation since 1990 or so is very strange.[/quote]
No. What had borrowers back is the steady decline in interest rates for the past 30 years. You could increase your total debt load for the same monthly payment as rates declined. You didn’t need income growth to increase your total debt load you just needed the decline in interest rates. Everybody that is levered up and plans on re-rolling debt is going to be screwed in the future.
This is the reason why higher than average inflation isn’t a way out. Nobody lends at a loss so higher than average inflation will push short terms rates higher than inflation and most won’t be able to afford the significantly higher monthly payments when they have to roll over the debt. Those that hold 30 year MBS written now are screwed. Of course it’s probably CalPRES and other public sector employee pension funds holding most of that junk but they don’t care because they expect to get bailed out.
Participant[quote=CA renter]
Why did all these women wait until now to come out of the woodwork? The timing of this is very suspicious, IMHO.
[/quote]Why is the timing so suspicious. These type of incidents always work like this. Somebody gets caught doing something. The magnifying glass comes out and people that were in fear of retaliation have an opportunity to come forward knowing that with everything in the spotlight the retaliation can’t occur.
Everybody knew that Filner would eventually get himself in trouble. Maybe not for sexual harassment but for something. He was a bad choice but if you worked or received benefits from the public sector he was the only choice.
ParticipantHere’s a local company (right here in san diego) that used kickstarter to build 3d printers for about $500 each.
http://www.kickstarter.com/projects/1682938109/robo-3d-printer/posts
Participant[quote=The-Shoveler]
But I don’t think it will be in the average home
anytime soon making replacement parts for your car.
But I can see these being used in just in time manufacturing big time (Automation anyone?).
[/quote]Maybe not car parts but they’ll be in the home. This latest kickstarter campaign is one for less than $300.
http://www.kickstarter.com/projects/pirate3d/the-buccaneer-the-3d-printer-that-everyone-can-use
Here is somebody using one to 3d print his way to an aston martin.
Participantdup
Participant[quote=CA renter]
The only thing privatization does is expand the wealth/income gap and concentrate power into fewer and fewer hands. It does NOT save taxpayers or consumers money. It will NOT result in more or better paying jobs for workers. Learn about the people and organizations behind the privatization movement to see why this is being pushed.[/quote]That’s because of the way it’s done. It’s almost always done as a transfer of a public service monopoly to a private service monopoly. We’re taking bids to select the new single provider of x service. It’s never we’re opening up this service to all business that would like to perform the task. I don’t expect the practice to change. I’m just saying that privatization could be successful if done in the manner I described. I’m well aware that there would be concerns and some pains associated with that type of change at first but eventually it would be a better system.
Obviously that’s not practical for some services but it’s the monopoly aspect of many government services that leads to inefficiencies and high costs. There’s no incentive to change or be more efficient if you don’t have any competition. The only thing the taxpayers can do is leave the city if the city doesn’t want to improve efficiency, witness Detroit.
Schools are a great example. Eventually somebody is probably going to figure out a better more efficient and cost effective way to do K-12 education in a charter school (maybe even online, who knows). The public school system (teacher unions and especially administrators) is desperately attempting to protect it’s monopoly of K-12 education because they know when somebody figures it out they are done for. Privatization of education is eventually going to happen and the costs will come down. The only question is when? It should be interesting to watch the educational complex fight this inevitable change. The medical system will likely see the same fight.
Participant[quote=SK in CV][quote=SD Realtor]Sounds like there should be no private entities then because any service industry that has multiple providers is less efficient then a single entity.
Hmmm curious logic.[/quote]
I was specifically talking about residential trash pick-up. And yes, it’s perfect logic. Everyone gets almost identical service, differing only in the number of trash cans. You tell me, which would be more efficient, one provider stopping at every house once a week or 10 different providers driving the exact same route every week, but stopping, on average at every 10th house?[/quote]
Why is weekly pickup at every house the most efficient method of trash disposal. The problem is you are assuming that is the only and most efficient way to remove trash from residences. Maybe having a large bin at the end of the street where each house drops off their trash and then the bin is serviced on demand is a better way to do things. That’s how apartments do trash removal.
There’s obviously some weeks that go by when I didn’t generate a lot of trash and don’t need my trash picked up yet the garbage truck drives by anyways. That’s not necessarily the most efficient way of doing things.
My point is that competitive forces drive efficiency. Obviously companies that figure out more efficient ways of doing thing enjoy a competitive advantage over their competitors. That’s what drives up their profits and lowers cost to consumers.
We often complain about government being inefficient and I think one of the major reasons they are efficient is they don’t have any competition. What drives them to deliver better service for lower cost. Absolutely nothing, other than a shortage of tax revenue, which is usually solved by increasing revenue rather an innovative efficiency improvement.
Participant[quote=SK in CV]
The only way this change would result in a net creation of jobs is if the private sector was LESS efficient than the city. All the current city waste employees would lose their jobs. The private sector will only do it if the work is profitable. I would assume that many current city waste workers would pick up work in private industry, probably at lower wages. But I doubt the cost to consumers would be less than the current cost to the city. A single provider will always be more efficient in providing service than multiple providers. (A single truck in each neighborhood v. multiple trucks from competing services in that same neighborhood.) Personally, I’d rather have the higher wages going to the city workers and cut out the profit.[/quote]My assumption is that many different competing providers would eventually figure out a more efficient process than the current weekly pickup. Initially it might be more ineffecient and fuel the creation of jobs but as various competitors figure out better processes those that cannot compete will fold.
A single provider is not always better because a single provider has no incentive to innovate. That’s like saying if Microsoft could be the only operating system provider everything in software would be more efficient. Do you really believe that?
Participant[quote=CA renter]
Believe it or not, my mind is open about this issue. If you (or anyone else) can prove to me that there is a net benefit to society when we privatize government assets, cash flows, and services, I will gladly change my mind. Until then, all anyone has ever offered is the same old rhetoric and propaganda from the privatization movement (who stand to benefit greatly…at the expense of taxpayers, consumers of government services, and workers), without any actual evidence to back up their arguments.
[/quote]I can envision a scenario where privatization of a government service would be more efficient, but most privatizations are not done in that manner. For the most part a privatization is a transfer of a government run monopoly to a private run monopoly. It’s the easiest to implement and the less disruptive to the people receiving the service.
Suppose the following scenario. City of San Diego gets rids of free trash pickup and opens up trash pickup to whoever would like to do it. Citizens would be responsible for picking and paying for a trash pickup service based on their need. You might see some people elect to drop off trash at the city dump themselves or they might elect to have somebody do it for them. You create quite a few low skilled jobs in the process and quite a few entrepreneurs that want to run trash hauling services.
After the initial disruption and turmoil this system would likely function at a lower cost and more efficiently than the current city system of picking up trash once a week on a scheduled day. Of course that disruption would be a painful process. Trash would likely pile up at some homes, illegal dumping would rise and other negative consequences would come out of it initially, but after a few years we’s likely find a nice balance.
Of course we’d never privatize in that manner because of those initial disruptions. Instead we’d likely hand a contract to one of the big existing commercial trash haulers and they would likely cost about the same. In their case the owners would likely get rich and the employees would suffer. But on the other hand if you opened it up to all comers and let the market figure it out you’d likely find cost savings and efficiency.
Participant[quote=The-Shoveler]Kind of why I think all the Central banks are desperately inflating the markets in unison, they have no choice. They can’t afford another crash (at least or a while).
Can you imagine what a 50% decline in the market would do right now ?
[/quote]You tell me. What would a 50% decline in the stock market really do to the average person on the street. The housing bubble pop seemed to effect the masses much greater than any stock market crash. I can think of a few things it does.
1) It shrinks the wealth gap. All of those wealthy people invested in stocks would see their fortunes decline.
2) It would give opportunity to people that recognized the feds easy money policy isn’t creating growth but instead creating bubbles.
3) In blows up a bunch of pension promises that are likely never going to be fulfilled and really what’s the harm in recognizing that now versus later.
Participant[quote=CA renter]
Because of their long-term horizon, they’re able to get into long-term bonds. They have the flexibility to buy longer-term bonds when rates are higher, and shorter-term bonds when rates are lower. Only fools would be buying long-term bonds right now, IMHO.
[/quote]I don’t think they have that much flexibility. In the past 5 years CalPRES has probably received about $25 billion in net contributions which makes up about 15-20% of their total portfolio. They obviously can’t have 20% of their portfolio tied up in short term bonds earning close to zero and also assume a 7.5% rate of return. They can’t just wait for better days if they assume 7.5% returns. They have to invest so they are investing out on the risk curve.
Remember the people making the decisions aren’t really worried about bad investment decisions because it’s somebody else’s money. You personally wouldn’t make that choice but they don’t care. Wouldn’t you rather have control over your money then a promise that somebody else is going to manage a pool of money so that you can get paid someday.
[quote=CA renter]
Of course, this is also where the Fed manipulation comes into play. If not for the Fed keeping interest rates well below where they would be without the interference, returns would be much higher and asset prices would be less volatile, IMHO. Less volatile booms and busts are far more preferable for institutions like pension funds (and people who prefer investing based on fundamentals instead of trying to time the next bubble).
[/quote]The fed’s manipulation has actually been good for the total asset value calculation for CalPRES. Remember as rates go lower, older bonds with better yields go up in price. The 30 year bonds that CalPRES bought back in 2000 or 1990 are being held at values far greater than the face value on the bond. So when CalPRES says they have 150 billion in assets with maybe 50 billion in treasuries the face value of those treasuries might be 40 billion.
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