Housing Mess: Free Markets to be Blamed (companies, work, government)

[evilnewbie]

Originally Posted by chuck22b

I don't think wealth should be distributed equally, but the proportions are currently way off. Upper management and CEOs in some companies make 100x+ more than the peons and probably have way more money than is required for living. Meanwhile, the peons have to have dual incomes to make things work out.

I totally agree that there has to be a "wealth" incentive (capitalism) for people to be proactive and get off their butts, but, at some point wealth incentives don't really do as much (mazlow's hierarchy of needs, being a CEO, etc. with the "Prestige" factor should be a good incentive for those "A" personalities). So, the excess in CEO compensation can be more better utilized by spreading it across an organization.

Don't give up on your country... your voice is still tallied amongst the votes. It's just that the majority wins in a democracy... and the majority at the time of the start of the war agreed that we should go into the war, the majority chose our current Administration... and hopefully the majority will choose the right future administration.

I think the President is the CEO of America Corp. With a good CEO, we can still progress in the right direction. We've just been kind of lost with no direction lately.

-chuck22b

I am curious as to "who" determines wage levels...

1) What should movie stars, singers, entertainers, athletes, movie producers, etc. etc. make?? Some of them are asking 20M to star in a movie.. that seems "out of proportion"...

2) What should patent holders and inventors get or writers and syndicated columnists? They make millions and millions based on patent laws... way beyond what they "require" or even put in...

It just seems strange to me that people talk about CEO pay but the other "million-dollar" jobs are sort of left in the air... Sure the CEOs get paid way too much but who exactly determines how much a person gets... recently the "unionized" writers guild made Hollywood pay them royalty dues, these people already earn six figures, is it a bit "too" much that they get more?

[Wild Style]

Originally Posted by chuck22b

Your right that things snow balled into the mess it did. What the UCI people wanted to do is to figure out when and how it started. It looks like the main culprit is government dropping rates, reducing regulation, Fannie and Freddie not increasing loan limits and letting "Free" enterprise run its' course.

Since the government dropped rates (basically to spur economic growth from the double whammy of Tech Bubble and 9/11), then Fannie and Freddie should have raised their loan limits. If Fannie and Freddie took on the brunt of the loans (like it traditional did) then investors would of had Mortgages packaged by Fannie and Freddie (which have stricter/regulated loan standards). Instead, since their was a financing void, and investors wanted higher returns, free enterprise invented "kooky" lending and financing through "new" and risk-free debt obligations. If their wasn't any "kooky" loans available, consumers wouldn't have been able to get in a house anyways - no matter what they desired (like today - I'm sure lots of people still want homes... but they can't get a loan anymore).

So in short, free markets will find ways to exploit the system to get maximum returns in the short term (ie, profiteering and greed) to the detriment of the long term.

-chuck22b

Yes, my young padawan, yesss. You get it! it is as simple as you have laid out here. Just to expand on your thoughts, we in America have a F.I.R.E. economy (Finance, Insurance, Real Estate). It is driven via debt of the consumer and asset hyperinflation (or Bubbles). The government, fed and industry create these bubbles to keep money pouring into this place (the United States). They in turn keep consumers buying their trinkets via debt serfdom. This model is tired and worn out. They now have to come up with a new method. They will create a series of asset based hyper inflationary periods to get us out of this. People will lose their shirts again BUT their will also be a new system borne from all of this. I don't think our economy will be debt based after this. I should make clear I am not talking about the trillions the U.S. owes, I mean the debt of the average consumer in his/her daily consumption. This entire period we are in will result in debt deflation (this is on purpose)

This is why people from NYC (I am from there too) crack me up. Many are so ignorant about why prices are so high and why they will fall. No amount of "location location location" babble will change that either. Same goes for San Francisco and where ever else prices have risen to Corinthian heights. It is impossible for prices to remain out of the reach of the local economy unless there is wage inflation in that area and that ain't happening at this stage (it will happen later).

[baystater]

Originally Posted by Wild Style

This is why people from NYC (I am from there too) crack me up. Many are so ignorant about why prices are so high and why they will fall. No amount of "location location location" babble will change that either. Same goes for San Francisco and where ever else prices have risen to Corinthian heights. It is impossible for prices to remain out of the reach of the local economy unless there is wage inflation in that area and that ain't happening at this stage (it will happen later).

While I agree in theory with you on the location, location, location deal. I haven't seen (unless I missed it.) a tremendous slowdown in Manhattan or Brooklyn and honestly I don't expect a major slowdown anytime soon. This is because of foreign investors there. Also right across the water in Hoboken and some what in Weehawkeen, NJ the area is still growing with young professionals that can't live on Manhattan.

But what is funny is that the Hamptons and vacation spots like this are starting to get hit with the slowdown. Also from what I've noticed in the area, is that it not the Upper-middle class/affluent town getting hit that hard. It more of the working/blue collar class neighborhood that are being crushed by foreclosures. Ex. Patterson, NJ. One last thing you might be surprised to heard that more often than not I run into people that are driving an hour to an hour 1/2 (each way) to get to work in either NYC, or Newark. I know this sounds insane, but I guess alot of people want the NYC pay but the Pennsylvania tax rate. Like I said I don't get it, but I see it alot.


Oh by the way. Becareful who you train WS, remember what happen to Obi wan.

[chuck22b]

Originally Posted by evilnewbie

I am curious as to "who" determines wage levels...

1) What should movie stars, singers, entertainers, athletes, movie producers, etc. etc. make?? Some of them are asking 20M to star in a movie.. that seems "out of proportion"...

2) What should patent holders and inventors get or writers and syndicated columnists? They make millions and millions based on patent laws... way beyond what they "require" or even put in...

It just seems strange to me that people talk about CEO pay but the other "million-dollar" jobs are sort of left in the air... Sure the CEOs get paid way too much but who exactly determines how much a person gets... recently the "unionized" writers guild made Hollywood pay them royalty dues, these people already earn six figures, is it a bit "too" much that they get more?

Totally agree that wages are poorly distributed. Although not all writers get paid the same amount... and we all know that the proportion of underpaid actors is far greater than the overpaid ones.

So, who does determine wages? Certainly governments puts in a floor as to what wages can be (minimum wage)... but, who determines the top? Those in power? An actor can demand those wages if they are "in demand". So, I guess it's supply and demand? There's only one Madonna, one Harrison Ford, one Tiger woods, etc. so they have the command for top $$ as long as they are "In Demand".

In the same strain of thought, how bout CEOs? Are they really in such short supply that the "demand" far outweighs the supply? Are their skill sets so unique that no one else can replicate them (not to mention how poorly they performed recently and how many scandals have been uncovered in the last two decades).

So, who determines their salaries? I don't think supply and demand (there are plenty of strong/articulate/knowledgeable/etc. business people around that would most gladly take their positions). Especially since decisions these days are usually made through round tables vs. authoritative directives. So, I'm guessing, it's all about the social elites, and the "who" do you know (board members) that determines those wages. Is it fair? No. Would people stop wanting to be CEOs and entrepreneurs if their were caps/regulations regarding CEO pay imposed by shareholders or... dare we say... government? I doubt it... as long as their is still considerable pay, but not "excessive" pay, people would still find the Prestige factor a good enough motivator to thrive and compete.

In the most part, I think most company CEOs make the right amount... it's just those handful of companies that are "corrupt" at the top that have those excessive pay scales. What's the big problem with paying the truck driver, DC handler, McDonald's cashier, Walmart Greeting person, etc. just a little more, and trim a little at the top? If the company is succeeding, than those at the bottom should see the fruits of their labor as well.

Trader Joes, REI, and some other companies that are "employee" owned or employee-centric, etc. seem to fair better in the wage distribution and I guess more "socially" responsible.

That's IMHO.

-chuck22b

[Wild Style]

Originally Posted by baystater

While I agree in theory with you on the location, location, location deal. I haven't seen (unless I missed it.) a tremendous slowdown in Manhattan or Brooklyn and honestly I don't expect a major slowdown anytime soon. This is because of foreign investors there. Also right across the water in Hoboken and some what in Weehawkeen, NJ the area is still growing with young professionals that can't live on Manhattan.

But what is funny is that the Hamptons and vacation spots like this are starting to get hit with the slowdown. Also from what I've noticed in the area, is that it not the Upper-middle class/affluent town getting hit that hard. It more of the working/blue collar class neighborhood that are being crushed by foreclosures. Ex. Patterson, NJ. One last thing you might be surprised to heard that more often than not I run into people that are driving an hour to an hour 1/2 (each way) to get to work in either NYC, or Newark. I know this sounds insane, but I guess alot of people want the NYC pay but the Pennsylvania tax rate. Like I said I don't get it, but I see it alot.


Oh by the way. Becareful who you train WS, remember what happen to Obi wan.

you have not noticed a slow down?

Brooklyn home sales fell 44% year to date

Manhattan home sales down 34% year to date

I will let you look into the rest. As I have said MANY times on these forums, NYC is showing the EXACT same pattern Miami did when it fell off. Anyone who thinks it cant happen in NYC is either not from there originally, young, has a short memory or just doesn't know anything about economics.

Some people are still trying to ask for idiotic prices in NYC, that's because they didn't get the memo yet, but when they do. Look out!

Read through this for a play by play of what will happen link

All this foreign magical money just isn't going to happen, im sorry. There is a global slow down underway headed by the United States. For those who don't know much about economics, its to late to sort out whats going to happen or even trying to truly understand. Just put your seat belts on.

I think once they finish with that north east corridor bullet train you will see more people coming in from Boston, DC and Philly to work in the city and vice versa too, depending on how bad things get in the city. I think its going to get REALLY bad. I suspect many will leave, probably negative population growth. The population growth is already stagnated, we shall see how it plays out.

As for me claiming a apprentice. I have to pass the saber over, im retiring soon.

[flobro]

Tough conversation. This experiment we call the American government was based on peoples ability to govern themselves. As people cease to govern themselves this America fails. It becomes a bureaucracy that must control our lives. We are after all we can get and spend as much as we can cause we want it all.

[jimmyP]

The amount of leverage Fannie and Freddie were allowed to carry is nothing less than criminal.

But they always know the taxpayers can bail them out - or can they ?

[rcarrillo]

Originally Posted by jimmyP

The amount of leverage Fannie and Freddie were allowed to carry is nothing less than criminal.

But they always know the taxpayers can bail them out - or can they ?

The real question is, will foreign nations bail us out?

The US taxpayer is not paying for the mortgage industry bailout, the war in Iraq or anything else. Foreign countries are... the US government is writing IOUs to them (backed by us taxpayers) that we likely can not pay back.

As long as no one asks to look behind the curtain we can keep the game up, but sooner or later the US will be in foreclosure as well.

[jimmyP]

You are correct about "behind the curtain"

US has been running a giant ponzi scheme for years and the final act is getting closer. Can't say a lot of good people haven't been warning for years but we always put it off to the next generation.

[chuck22b]

Why leave it to the next generation? Everybody complains and believes they can't do anything. We all have a voice... albeit small individual voices... but together we can vote, help a neighbor, make smart purchase decisions, talk on boards such as these to inform, talk to our kids about finances, spend time with family, etc.

Small behavior changes, participation/awareness of what people we vote in and what they believe in makes a huge difference. Why just dilly dally and wait... when things can occur/happen to make a difference now? Focus on businesses that leverage American skills to sell to foreigners instead of tired consumers.

Invest with principle, buy smart, vote intelligently, educate children, help/talk with a neighbor, turn off the TV sometimes.

-chuck22b