Comments on: Spawning a Mortgage Disaster: The Birth of the Adjustable Rate Mortgage in 1982. California Confidential. A Budget Mess and Massive Cuts. S&P 500 Stock Market Speedway. http://www.doctorhousingbubble.com/spawning-a-mortgage-disaster-the-birth-of-the-adjustable-rate-mortgage-in-1982-california-confidential-a-budget-mess-and-massive-cuts-sp-500-stock-market-speedway/ How I Learned to Love Southern California and Forget the Housing Bubble Thu, 09 Feb 2012 06:16:36 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: compass rose http://www.doctorhousingbubble.com/spawning-a-mortgage-disaster-the-birth-of-the-adjustable-rate-mortgage-in-1982-california-confidential-a-budget-mess-and-massive-cuts-sp-500-stock-market-speedway/#comment-38066 compass rose Mon, 27 Jul 2009 06:24:56 +0000 http://www.doctorhousingbubble.com/?p=2047#comment-38066 Re: 7/21. gael noted that most buyers of her/his acquaintance in the past 10 years have had infusions of family money. That's another ugly facet of the indirect inflation of housing-via-bubble. Affordability for younger people increasingly hinges on family resources, i.e., yet another form of intergenerational wealth transfer to the banks/financiers. In the 7/24 posting, William notes how new buyers are paying back bubble-inflated "values" with real income/dollars, and these two things are related. Perhaps by design. ~ Doc notes that it's impossible to know what a sane equilibrium for CA is these days after three decades of funnymoney musical chairs, and I'm sorry to agree. But I'm reasonably sure that equilibrium for California will more resemble something Tom Joad saw, than the tech or housing 'shroom visions. ~ Whitehall mentions reasonable employment in Silly Valley being a decent bet. Hm, Cisco just slashed 700 jobs at its HQ (remember those plans to turn Watsonville into a sort of Microsoft South company town/campus?)...while creating I think it was 3,000 jobs in Bangladore. ~ Doc, I were looking to throw some money at stuff, I'd be weighing in on the close-down auction at Twentieth Century Props: http://www.incengine.org/incEngine/?art=hollywood_collections_test_2 ~ rose Re: 7/21. gael noted that most buyers of her/his acquaintance in the past 10 years have had infusions of family money. That’s another ugly facet of the indirect inflation of housing-via-bubble. Affordability for younger people increasingly hinges on family resources, i.e., yet another form of intergenerational wealth transfer to the banks/financiers. In the 7/24 posting, William notes how new buyers are paying back bubble-inflated “values” with real income/dollars, and these two things are related. Perhaps by design.
~
Doc notes that it’s impossible to know what a sane equilibrium for CA is these days after three decades of funnymoney musical chairs, and I’m sorry to agree. But I’m reasonably sure that equilibrium for California will more resemble something Tom Joad saw, than the tech or housing ‘shroom visions.
~
Whitehall mentions reasonable employment in Silly Valley being a decent bet. Hm, Cisco just slashed 700 jobs at its HQ (remember those plans to turn Watsonville into a sort of Microsoft South company town/campus?)…while creating I think it was 3,000 jobs in Bangladore.
~
Doc, I were looking to throw some money at stuff, I’d be weighing in on the close-down auction at Twentieth Century Props:
http://www.incengine.org/incEngine/?art=hollywood_collections_test_2
~
rose

]]> By: whitehall http://www.doctorhousingbubble.com/spawning-a-mortgage-disaster-the-birth-of-the-adjustable-rate-mortgage-in-1982-california-confidential-a-budget-mess-and-massive-cuts-sp-500-stock-market-speedway/#comment-38052 whitehall Sat, 25 Jul 2009 18:31:19 +0000 http://www.doctorhousingbubble.com/?p=2047#comment-38052 I'm in Silicon Valley too. The VC business has milked about all the easy money it can from its usual business lines. That's why they have jumped on energy and supported Obama. They see "green energy" as a huge source of profits due to rent seeking. Al Gore's partnership at Kleiner Perkins is a highly visible indication of that strategy. Frankly, there is nothing new in the energy field worth VC investment without government-mandated markets. However, in the low end of decent housing here in San Jose, investors are paying cash for houses that can serve as rental homes for working professionals. These are like bonds with inflation-adjusted cash flows. The underlying asset price may fail but so long as there is reasonable employment in the Valley (a decent bet) then rents will somewhat follow incomes and hence inflation. I’m in Silicon Valley too. The VC business has milked about all the easy money it can from its usual business lines.

That’s why they have jumped on energy and supported Obama. They see “green energy” as a huge source of profits due to rent seeking. Al Gore’s partnership at Kleiner Perkins is a highly visible indication of that strategy. Frankly, there is nothing new in the energy field worth VC investment without government-mandated markets.

However, in the low end of decent housing here in San Jose, investors are paying cash for houses that can serve as rental homes for working professionals. These are like bonds with inflation-adjusted cash flows. The underlying asset price may fail but so long as there is reasonable employment in the Valley (a decent bet) then rents will somewhat follow incomes and hence inflation.

]]> By: calvol http://www.doctorhousingbubble.com/spawning-a-mortgage-disaster-the-birth-of-the-adjustable-rate-mortgage-in-1982-california-confidential-a-budget-mess-and-massive-cuts-sp-500-stock-market-speedway/#comment-38035 calvol Fri, 24 Jul 2009 22:05:16 +0000 http://www.doctorhousingbubble.com/?p=2047#comment-38035 I am witnessing the RE implosion from NorCal. One of my friend invested in a rental house in the EastBay back in 2005 and held many 2nd mortgages on houses in Stockton. Needless to day he is now talking about "retiring" in Oregon, instead of cushy, comfy Menlo Park. He is walking away from his rental because the bank told him it would be easier for them to foreclose than to alter his loan. He will declare bankruptcy, and the bank will hold $150K of negative equity. I am waiting for Silicon Valley to drop further, Palo Alto has dropped about 10-15% since '05. It may drop another 20% before it's over. Note the VC industry is about to fold-- not looking good for startup gold to fund houses anymore! http://www.mercurynews.com/topstories/ci_12902709 I am witnessing the RE implosion from NorCal. One of my friend invested in a rental house in the EastBay back in 2005 and held many 2nd mortgages on houses in Stockton. Needless to day he is now talking about “retiring” in Oregon, instead of cushy, comfy Menlo Park. He is walking away from his rental because the bank told him it would be easier for them to foreclose than to alter his loan. He will declare bankruptcy, and the bank will hold $150K of negative equity. I am waiting for Silicon Valley to drop further, Palo Alto has dropped about 10-15% since ’05. It may drop another 20% before it’s over. Note the VC industry is about to fold– not looking good for startup gold to fund houses anymore!
http://www.mercurynews.com/topstories/ci_12902709

]]> By: singhace http://www.doctorhousingbubble.com/spawning-a-mortgage-disaster-the-birth-of-the-adjustable-rate-mortgage-in-1982-california-confidential-a-budget-mess-and-massive-cuts-sp-500-stock-market-speedway/#comment-38033 singhace Fri, 24 Jul 2009 20:51:22 +0000 http://www.doctorhousingbubble.com/?p=2047#comment-38033 Well, I went ahead and manually calculated the P/E ratio for the SP500, and it is indeed high (just over 100, but not as high as 134). However, in doing the calculation, I realized that a few big companies are dragging down the earnings (think auto, banks, etc.). Since these large companies comprise a significant percentage of the SP500, they can bring earnings way down for the whole group. Regardless, with a P/E ratio that high, the S&P500 is a poor investment. Well, I already knew that as my total investments in an SP500 index fund using a dollar cost averaging technique over the last 7 years are worth less than my cost basis (and yes I started investing after the tech bust when prices were "low"). I probably should stop saving and just spend any money I make as all investments (including cash $) seem to be in decline. Well, I went ahead and manually calculated the P/E ratio for the SP500, and it is indeed high (just over 100, but not as high as 134). However, in doing the calculation, I realized that a few big companies are dragging down the earnings (think auto, banks, etc.). Since these large companies comprise a significant percentage of the SP500, they can bring earnings way down for the whole group. Regardless, with a P/E ratio that high, the S&P500 is a poor investment. Well, I already knew that as my total investments in an SP500 index fund using a dollar cost averaging technique over the last 7 years are worth less than my cost basis (and yes I started investing after the tech bust when prices were “low”). I probably should stop saving and just spend any money I make as all investments (including cash $) seem to be in decline.

]]> By: ross http://www.doctorhousingbubble.com/spawning-a-mortgage-disaster-the-birth-of-the-adjustable-rate-mortgage-in-1982-california-confidential-a-budget-mess-and-massive-cuts-sp-500-stock-market-speedway/#comment-38031 ross Fri, 24 Jul 2009 20:26:52 +0000 http://www.doctorhousingbubble.com/?p=2047#comment-38031 Ha! the thought of somebody telling "doctor housing bubble" that he's waiting for a couple years for the market to come back. Obviously dude wasn't aware to whom he was speaking... Ha! the thought of somebody telling “doctor housing bubble” that he’s waiting for a couple years for the market to come back. Obviously dude wasn’t aware to whom he was speaking…

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