With the rates at 4.7% and $8000 tax credit for people with income under $75,000 why not buy now?

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And especially if your monthly is lower than renting!

What if you can pick up a REO at pre-bubble prices and 4.7%? Factor in the $8K to cover another 5% to 10% drop. Factor in the savings over rent. Factor in deductions.

Consider that the Fed is printing money and rates will have to rise to counter inflation. Consider that the $8K goes away December 1st.

Renters: Buy now but buy smart! This is one great opportunity

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March 20

lrryjrry
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According to the NAR, only 16 markets out of 154 currently have median prices over $300,000. Housing has NEVER been this affordable. Unfortunately, fear of job loss and declining value, and greed, waiting for houses to get even cheaper, will keep people out of even this affordable market.

That's the stupiest thing I ever heard.. so the buyers waiting for cheaper price is gready, and the seller selling $700k for a condo in 2005 is what??

You must be a realtor or desperate investor who bought in buble years.

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April 08

nvchaz
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Yes interesting times.

Significant that China mentioned "a new international currency".

Currently, US and China are joined at the hip... much to the detriment of the Europeans.

What happens when China feels compelled to repatriot capital to fuel domestic consumption?

Welcome to the third world!

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March 26

NTETS, "Caveat Emptor"
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NTETS, "Caveat Emptor"

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Zillow All-Star

Since January 2009

wow, i never knew nvchaz had ever picked up a book. good for you!

MB wrote:
Randy_H - Increase money supply will lead to inflation eventually. Whether it is stagflation or 'mere inflation' will be determined with how many crooks, v/s how many legit folks, end up getting 'enriched' at the end of this cycle.

i just wanted to point out that until the money supply has a net increase, and that the fed so far has failed to create one, there are many other factors that will influence "eventually"

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March 26

nvchaz
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What a way to dodge the argument:

"I'm done with your trolling. I will not reply to you further unless and until you decide to engage honestly."

What's dishonest? I'm asking you directly, oh economics guru.

What's the historical precedent of the trade flow between US and China?

You, who seem to know it all, must have an answer. Do you? What vulnerabilities do you see in this relationship, if any?

Quit being a coward and answer the question.

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March 23

Randy_H
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You have yet to answer my half dozen questions, grasshopper.

But I'll give you a clue about your little wiki-pic. Go look up the global share of value-weighted manufacturing by nation. You'll be quite surprised at who produces the most global manufactured goods by value.

I'm done with your trolling. I will not reply to you further unless and until you decide to engage honestly.

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March 23

nvchaz
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Ok Randy_H awake now?

Riddle me this:

What historical precedent foreshadows this:

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March 23

nvchaz
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Yes, the track to nowhere.

You might like what you see.

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March 23

Randy_H
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I'll answer your question when you answer the half dozen of mine you ignored. You were going good, then seemed to lose focus. As for what you think I am, it brings a smile to my face. I usually get accused of being not academic enough. My blog articles on Capitalism 2.0 are regularly criticized by real academics for being inadequately referenced, not peer reviewed, etc.

That I seem to rub you and them the wrong way tells me that I'm exactly on the right track.

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March 23

nvchaz
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randy, randy, randy,

Who's hiding? I've been here, where you been?

And how is my anonymity different from anyone else on this board? Yours for example. All you do is crow about what a great genius you are. Ha!

As far as the argument is concerned: it is in your lap, dude, answer the last question posed. I think you're a little shell-shocked when I showed you up on the stagflation issue. Little genius can be wrong.

Your cherished theories are in the process of being blown to bits and you can't quite handle it. Those who do best these days have no theories and respond to current events. You bookish types will lashed to your toilets defecating useless theory.

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March 23

Bette Defarm
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Randy,
He obviously hasn't bothered reading many of your posts, has no idea who you are and how off he is. Those of us who are familiar with your posts (here and elsewhere) can only laugh at his pathetic reaching.

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March 23

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chaz, chaz, chaz

I normally don't usually blog over weekends. Check the history of my posts if you don't believe. I prefer to spend that time with my family.

I'm sorry that I apparently struck a nerve so much that you feel the need to lash out. I guess when you can't hold an argument the only resort is to make insults.

Just keep in mind, you're a anonymous coward who has already enjoyed more of my (and others) attention than you ever merited. If you wish to debate further, step up and come out from hiding in the shadows. Otherwise, everything you say is just so much prattle. Yea yea yea, I was born on planet Krypton and was a troubled youth also...

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March 23

nvchaz
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elldee or is it LyndieQ?

You seem to hide behind both.

My response to Randy_H was immediate, whereas Randy_H had to consult his books. No Wiki for me.

Randy_H has been quite wrong in his/her analysis, and has been very quiet of late.

Anyone who beleives that inflation will not follow the current policy decisions in Washington is a fool or a knave. Notice how Randy_H stumbled over my answers to his supposedly scathing questions?

You seem to be a groupie of the most pathetic kind: slathering over the blather on this board rather than getting off on life.

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March 22

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Randy, I think you nailed it with the "WIKI" bit. He was desperately trying to keep up, and did an admirable job for a while, considering his limitations. "I am self-educated," explains a lot.

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March 22

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The first (3) posts said it best!
I'll give Chaz an A for effort with his "pom pom" response but rent vs. buy is still way in favor of rent here in CT.
Kudos to Randy again for his economic overview, though my gut tells me that deflation will be out of the picture by this time next year.

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March 22

Pat Bourgo, "Pat Bourgo"
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Pat Bourgo, "Pat Bourgo"

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View my 12 listings

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amen

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March 22

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Kristen Blanchet, "Massachusetts Broker"

I appreciate your taking the time to write all that out for us, Randy, plus it's also nice that you're giving the little guy (dare I say) the attention he so desperately craves (he's secretly wanted to be you all along.) And, Menudo, I'm glad you were able to word that so well. Good job explaining something that's been bugging lots of us. There's no getting around it since power corrupts and we live in an age of such deeply-imbedded absolute power... but the ways of covering up for the corruption are as old as the hills, even if now abetted by new technology. Not that I care if Madoff spends the rest of his days behind bars, but it is ludicrous how easily our animosity gets trained on one demonized individual "for us". It looks like we're a nation led by scam artists. The trick is which ones can cover for themselves the best. So... what else is new, huh?

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March 21

Kristen Blanchet, "Massachusetts Broker"
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Real Estate Agent

View my 16 listings

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Exactly! It is a fantastic time to buy!

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March 21

Menudo Bongo
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Randy_H - you are indeed a scholar and a gentleman.

I don't know why this thread, more than any other thread, somehow got injected with nuggets of wisdom that are truly profound.

I will add my $0.02.

The financial institutions created this mirage (using complicated and fancy financial derivatives - and a lot of leverage ) that gave the impression that there was a lot more money floating around than there really was (e.g. 1K was magically transformed into 40K).

Folks blame Madoff - he was blatantly running a Ponzi scheme. Reality is, all financial institutions were running a Ponzi scheme.

I guess, the Govt is now trying to fill the gap in money supply by printing money (which was previously being conjured up, out of thin air, by banks and institutions). If this gap does not overshoot, you will have prices stabilizing at the current level.

Bottom line, it depends on how much of the increased money supply goes into "productive" ends, v/s how much goes into waste, that will determine where we end up.

What scares me are the movers and shakers in the economy - the one's who are extremely skilled at one and only one thing - how to present something as extremely productive (whether it actually is productive, or a scam). I am afraid that the scam artists will end up with a big part of the stimulus pie.

I am afraid that a lot of money will be wasted on unproductive enterprises, because the fancy power-point presentations will rule over common sense.

Randy_H - Increase money supply will lead to inflation eventually. Whether it is stagflation or 'mere inflation' will be determined with how many crooks, v/s how many legit folks, end up getting 'enriched' at the end of this cycle.

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March 21

jal74
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BECAUSE PRICES ARE STILL DECREASING.

I realize that this simple answer is still far far too complicated for a used house salesperson to understand. But to anyone who has completed more than a highschool education, it seems pretty simple.

Kind Regards

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March 21

nvchaz
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Randy_H:

Here's a completely new factor, would you not admit:

Any historical precedent? Perhaps France in the 1700s vis a vis the Dutch and emerging Great Britain?

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March 21

sunnyview
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Randy, your reading list must be massive. I always like the recommendations though.

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March 21

Randy_H
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Chaz

This episode is unique in a number of ways, but not so much that we're helpless. I'm a strong believer in general non-predictability myself, but more in line with Taleb (I suggest you read Fooled by Randomness, if nothing else, though The Black Swan is great reading for everyone too).

There were factors in the 1930s that were very different from today which presented differently complicated problems. For example we&most of the world had just recently erected the basis of modern labor laws and worker protections, causing one of the legs of the economy to suddenly take on an entirely different role in the ability of the government to fix things. There was also plenty of leverage in the 1930s, just not modern derivatives. But there were rough equivalents which were appropriately large given the sizes of the economies back then.

The problem is more of a tipping point one. Once things push over that threshold, it's really a roll of the dice how they land.

Also, before you despair for future generations, I suggest taking a look at Strauss & Howe's old book, The Fourth Turning. I'm not a huge cyclical theory sort, but there is something in there to give you hope vis-a-vis generational/cultural stuff.

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March 21

K101
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Wow - calm, respectful economic discussion between Chaz and Randy.

Does this mean that there won't be any swords in the desert? I had my pom poms all ready to go...

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March 21

cmv138
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"WHY NOT BUY NOW?"

Because people are not sure that they will wake up and still have a job to pay for the house!!!

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March 21

nvchaz
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Randy_H,

I don't entirely understand what your saying but I can understand your point of view.

What has perplexed me since Sept. of last year has been the widely divergent theories, explanations, reasonings, suppositions, all spinning wildly around in the air.

That leads me to believe, and my study bears this out, that this economic downturn is absolutely unique, and even the guys in the bow-ties are stumped.

Humans typically search past experience to understand current events, indeed this is the essence of learning. To my knowledge, there were no credit default swaps in 1929; no leveraged buy-outs by hedge funds, (no hedge funds for that matter), there was plenty of greed (but that will be eternal) but no bets on bets on bets.

Also the greatest surge of human prosperity in history is gasping to a close: the post-war baby boomers are laying down their weary bones, wallets and purses. I look back at not the next generation, but the one after that and it looks like a scene out of "A Clockwork Orange". I'll probably be the old drunk in the tunnel that gets the crap beat out of him.

All these demographic, commodity, geo-political, and, dare I say it: pyschological cycles are coallescing in 2009-2010.

Interesting times and I'm up for it. Can I predict anything? No! But I got some ideas and so far I'm beating Greenspan by a wide margin. (That poor SOB - what a way to end a career!)

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March 20

Randy_H
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nvchaz

Your description is a good one for monetarist theory which calls for monetary expansion in excess of real growth to result in inflation.

There's a problem, however. If that theory is true, then stagflation cannot exist (and thereby didn't ever happen). But, as we know, it did. Not just some temporary deal either, but years of sustained stagflation.

See, if you increase the money supply and create inflation, then everything must inflate, including wages and eventually GDP. Maybe a quarter or two of lag, but not years.

Perhaps you and the other inflationists will be right, and the 2nd half of this year will be nothing but up up up. That means salaries too. Up up up. And probably houses. Up up up.

I rather doubt it. The amount of money being destroyed is so much bigger than anyone is grasping. Think of a gigantic upside-down pyramid called "the leverage pyramid". At the top is some two-thousand-trillion in derivative value. Layers down are different forms of levered assets. At the bottom is commodities. Barely even 1 trillion at that level.

Well, most of the top is being wiped off the face of the earth. Now, how much money do you have to print to inflate in excess of all those thousands of trillions lost? (So far the entire worlds' central banks have printed up maybe 10-15-trillion, by the way).

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March 20

nvchaz
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Randy_H:

I shouldn't get into logic-chopping with a well educated man such as yourself - you seem to be post-grad and I am a high-school drop-out. I am self-educated but lack a certain amount of discipline and rigor and and am mostly ignorant of theory.

I think that we all can agree that employment is a lagging indicator, right? I also think that deflation is a lagging indicator, and when monetary policy spurs inflation there will be a cross-over period that can be characterized by the term "stagflation", I think this will be relatively brief in 2010.

Prior to this, in late 2009 and into 2010, there will be a commodity squeeze due to capacity reductions started in 2008 and cancellation of capital projects. We are already seeing this: that feeble Castro wannabe, Chavez, is getting his wells shut down right and left. "Nationalize this :!: you mo-fo!".

Now my rather plebian understanding of inflation: when you artificially enhance the value of an object without regard to its underlying "true value", (and I admit that's the rub), at any given time the value of the object will be established and generally accepted as somewhere between its "true" value and that imposed upon it. Of course. confidence and market forces are strongly at play in pegging values at any given moment. When the disparity between imposed and "true" value widens beyond the capacity of market forces to appreciate or understand, it causes the mechanism imposing those values to react, at least temporarily, by enforcing and increasing those challenged values. The mechanism will feed itself first. The market always ultimately wins, however, and inflation inevitably results.

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March 20

K101
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"It's not being picked up in the lagging indicators yet, but unemployment and underemployment is going to dramatically punish real incomes in the coming 2Qs, probably much further out."

On that note:

"WASHINGTON (AP) — Battered by the economy, the post office is offering early retirement to 150,000 workers, cutting management and closing offices, the agency said Friday.
The Postal Service lost $2.8 billion last year and is facing even larger losses this year, despite a rate increase — to 44 cents for first-class mail — scheduled to take effect May 11.
The agency said it will reduce management staff nationwide by 15 percent, with more than 1,400 processing, supervisor and management posts at 400 facilities being eliminated.
And another 150,000 postal workers will be offered early retirement." ...

http://www.orlandosentinel.com/news/local/breakingnews/sns-ap-postal-cuts,0,40797.story

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March 20

Randy_H
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