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Old 09-02-2011, 09:50 AM
 
2,515 posts, read 1,818,320 times
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Quote:
Originally Posted by treasurekidd View Post
I would suspect that it has more to do with the weak dollar compared to foreign currencies. When the dollar weakens, it costs more dollars to buy the same amount of house.
The ratio of income to price is what was mentioned. The money the fed is printing has to go somewhere.
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Old 09-08-2011, 03:03 PM
 
Location: Backwoods of Maine
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Quote:
Originally Posted by newonecoming2 View Post
The ratio of income to price is what was mentioned. The money the fed is printing has to go somewhere.
Exactly. Each country prints its currency at a different pace, and sets its interest rates differently. These two items make up "monetary policy", and are the determining factor for real estate bubbles forming.
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Old 09-09-2011, 08:28 AM
 
Location: San Diego California
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Quote:
Originally Posted by Willy702 View Post
Long term values mean little. Housing prices are driven by incomes which at times get somewhat led by housing costs. Long-term values don't reflect current incomes or interest rates. When most markets see affordabilty up into the 80% range I can only conclude housing as a whole is undervalued in the US and overvalued in many other markets. Canada is a pretty obvious one, loans cost more and have no locked in rates. Incomes are about in line with US levels yet most Canadian markets see higher prices. It seems a clear reflection of Canadian consumers having more confidence than US consumers. Fair enough, but over the long haul these are times when the most marginal customers overpay to get into a market while the most suitable customers in the less confident market stay out. Guess which make for better long term investments?
Real inflation adjusted income levels have been dropping for over 30 years.
Real unemployment (employment participation rate) is near 40%.
The only "good times" the world economy has seen has been based on ponzie scheme bubbles. If you want to invest your money on those false levels, go ahead. IMO it is a blueprint for failure.
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Old 09-09-2011, 09:06 AM
 
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Quote:
Originally Posted by Nor'Eastah View Post
Exactly. Each country prints its currency at a different pace, and sets its interest rates differently. These two items make up "monetary policy", and are the determining factor for real estate bubbles forming.
I'd say that if you had reasonable lending standards then you wouldn't get housing bubble at all. You can just barely pay for a house that is three times your annual income (for the household). It doesn't matter if you can make the payments or not, it takes too much out of the economy to try to buy more house than this on average. If you don't write loans for more than this amount then you don't get real estate bubbles. The bubble stops here. So what the OP said was that the real estate in other countries was where Japan was at the peak of their bubble more than twenty years ago. When you have falling house prices and falling wages it takes a long time for the lines to cross on a graph. If you have falling house prices and rising wages it takes a short time for them to cross. World wide we headed into a long term economic slowdown that will last for decades. This is why I'm pushing for a 4X on the minimum wage.

Tax the principle on debt. Stop the bubbles.

"Exactly. Each country prints its currency at a different pace, and sets its interest rates differently." Over the last ten years we had an increase in the world's monetary base from $3 trillion to $10 trillion with that increase used to buy debt in the US. That is what drove the US's housing bubble.
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Old 09-09-2011, 05:07 PM
 
Location: Conejo Valley, CA
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Quote:
Originally Posted by jimhcom View Post
Real inflation adjusted income levels have been dropping for over 30 years.
No it hasn't:

Nonfarm Business Sector: Real Compensation Per Hour (COMPRNFB) - FRED - St. Louis Fed

Though real wage growth has slowed since the early 1980's. Gee...what ideology gained popularity then?


Quote:
Originally Posted by jimhcom View Post
Real unemployment (employment participation rate) is near 40%.
Calling the participation rate "unemployment" is totally dishonest, the two are very different things. Anyhow, participation rate is still a lot higher today than it was in the past:

Civilian Participation Rate (CIVPART) - FRED - St. Louis Fed

Of course this is all about women joining the work force....


Quote:
Originally Posted by jimhcom View Post
The only "good times" the world economy has seen has been based on ponzie scheme bubbles. If you want to invest your money on those false levels, go ahead.
Why wouldn't you? You can profit from the boom and the bust...
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Old 09-09-2011, 06:33 PM
 
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Originally Posted by user_id View Post
Why wouldn't you? You can profit from the boom and the bust...
Because you are profiting at someone else's expense. I would personally rather profit from someone building people's live with good products made.
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Old 09-09-2011, 11:36 PM
 
Location: Conejo Valley, CA
12,470 posts, read 18,188,668 times
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Quote:
Originally Posted by newonecoming2 View Post
Because you are profiting at someone else's expense. I would personally rather profit from someone building people's live with good products made.
On some level you are profiting some someone else's expense...but so what? Its not like you're taking money from grandma, instead other investors.
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Old 09-10-2011, 01:37 PM
 
2,515 posts, read 1,818,320 times
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Quote:
Originally Posted by user_id View Post
On some level you are profiting some someone else's expense...but so what? Its not like you're taking money from grandma, instead other investors.
OK if you are making a good useful item then it is across the board win win win. The workers win because they get useful work to do, the consumers win because the get a useful item to buy, and I win because I get some well earned profit.


If I make money because the fed blew a bubble then I am participating in the destruction and redistribution of wealth. I don't personally like this. How ever shorting does provide some useful things in the market place. If you make something useful then you build wealth. If you short something then you profit from the destruction of wealth. Both have there place but building wealth just a more positive thing to be doing.


“...but so what?” People confuse the units of exchange of wealth for the real thing. Money has no intrinsic value, that is fiat currency has no intrinsic value. How you get more of it plays a role in what the future value of the money will be. Making money by outsourcing reduces the future value of the units of exchange. Short term gain long term lose. But only if you can't easily move to where the benefit of the outsourcing is held.
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Old 09-10-2011, 03:50 PM
 
Location: Conejo Valley, CA
12,470 posts, read 18,188,668 times
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Quote:
Originally Posted by newonecoming2 View Post
If you short something then you profit from the destruction of wealth
Shorting doesn't destroy wealth. Yes, the media likes to blame "shorting" on declines, but there is little reality to the idea. A short position requires a corresponding long position and what happens with the short depends entirely on the underlying company. A short position doesn't cause a company to perform poorly, instead a short position will profit if a company does poorly.

People seem to feel better about long positions because gains in a long position are usually correlate with gains in the underlying company. But not always, for example in the cause of bubbles.

Quote:
Originally Posted by newonecoming2 View Post
“...but so what?” People confuse the units of exchange of wealth for the real thing. Money has no intrinsic value, that is fiat currency has no intrinsic value. How you get more of it plays a role in what the future value of the money will be.
Again...so what? Businesses accept money regardless of the source and my individual actions don't effect the economy as a whole.

But you are being inconsistent, before you suggested one is profiting at someone else's expense and now you are speaking as if the economy is gaining "money" as a whole from investment activity. My "so what" comment was in response to the former, why should I care that I'm taking money from another investor? Similarly, why should I care that I take market share from another business? I don't....I'm looking at for myself.
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Old 09-10-2011, 04:27 PM
 
2,515 posts, read 1,818,320 times
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Quote:
Originally Posted by user_id View Post
Shorting doesn't destroy wealth.
What shorting does is it provides a buyer of last resort when a stock crashes.
Quote:
Originally Posted by user_id View Post
Yes, the media likes to blame "shorting" on declines, but there is little reality to the idea. A short position requires a corresponding long position and what happens with the short depends entirely on the underlying company. A short position doesn't cause a company to perform poorly, instead a short position will profit if a company does poorly.
Making money on the way down is fundamentally different than making money by being productive. The difference is what I don’t like. I am not saying that it isn’t wrong it just isn’t what I want to put my energy into.
Quote:
Originally Posted by user_id View Post


People seem to feel better about long positions because gains in a long position are usually correlate with gains in the underlying company. But not always, for example in the cause of bubbles.
What I have been saying is that I don’t like the apparent creation of wealth with bubbles, both the up side and the inevitable down side. I do like the creation of wealth by productive enterprise. Bubbles tend to destroy real wealth. Making money on the upside of a bubble is as destructive of real wealth as making money on the downside (shorting).
Quote:
Originally Posted by user_id View Post



Again...so what? Businesses accept money regardless of the source and my individual actions don't effect the economy as a whole.
Are you so sure about your individual actions? Take a look at boombustblog.com Reggie triggered the collapse of Lehman Brother. Bucking the trend and making money here would do a little bit to make things better.
Quote:
Originally Posted by user_id View Post


But you are being inconsistent, before you suggested one is profiting at someone else's expense and now you are speaking as if the economy is gaining "money" as a whole from investment activity. My "so what" comment was in response to the former, why should I care that I'm taking money from another investor? Similarly, why should I care that I take market share from another business? I don't....I'm looking at for myself.
The blowing of a bubble destroys real wealth. As to why you should care. It is in yours as well as everyone else’s best interest to doing things that build real wealth. That is growing the pie. To make money in a way that shrinks the pie is not in your best interest or in anyone else’s over the long term.

Really look out for yourself and spend your money, invest your money in growing the pie. That is playing win win win.
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