Monday, July 26, 2004

Special Economics And Financial Doom issue

Aug 11- added more quotes. More to come.

Guardian interview with Quantum fund co-founder (with George Soros) Jim Rogers -
The American dollar is a flawed currency and will collapse in value before the end of the decade, taking with it the prosperity of the American nation. Investors should be buying commodities - platinum, lead, wheat, sugar, oil, the sort of assets that haven't been fashionable for a quarter of a century or more. While you're at it, teach your children to speak Mandarin, the coming language of the 21st century. And don't encourage them to do an MBA: Tell them to be a farmer and do a real job.

The irreplaceable, intractable, irascible, irredeemable Mogambo Guru, without whose voice(s) the literary economic world would be a much calmer and duller place -
...for every dude and dudette in the country that has a non-farm job, all 131 million of us swinging our Roy Rogers lunchboxes on our way to work where we slave all day at a job we hate, surrounded by morons, working for chump change, and I can't even leave my lunch in the refrigerator like everyone else because they put stuff in my sandwich when I am not looking, this increase in debt [in a single year] comes to $20,865 each. Each! This is just the damn increase!
What to do? What to do? I suggest that we all run around screaming how the sky is falling, and how we should all be loading up with large-caliber weapons and running for our lives because we are all doomed, doomed, doomed, as that is what I typically do. But Mr. Buckler [Bill Buckler of The Privateer newsletter] has also looked at things, as I have, and has concluded, as I have, that there is nothing that CAN be done, except running around screaming that the sky is falling and that we are all, as I alluded to earlier, doomed, doomed, doomed. As I am too busy wailing and cramming boxes of ammunition into a backpack to continue right now, I will leave it to the clever Mr. Buckley to come up with a simile to beautifully sum it all up. Rising to the challenge, he writes, "There is no 'solution' to this dilemma, just as there is no 'solution' for a man who finds himself in a barrel on the lip of Niagara Falls."

Pimco bond guru Bill Gross agrees, after a fashion -
...bad things can happen in a levered economy. Think of two garages - one with two cars and an immaculately swept floor and the other filled with boxes, newspapers, paint cans and numerous oily rags. Which one do you think has the better chance of going up in flames if a [geopolitical or policy] match or a faulty electrical wire creates Fahrenheit 451? That is an apt metaphor in economic terms when comparing a healthy non-debt ladened economy to one thriving on the creation of paper and artificially low interest rates.

...everything is as it should be. The Asians produce, we consume. The Asians save, we spend. The Asians export, we import. The Asians lend, we borrow.

'This symbiotic relationship has gone on for a long time,' wrote an inquiring Daily Reckoning sufferer. 'Why would it have to come to an end now?'

...U.S consumers have become like a giant leech, sucking up 80% of the world's savings. At some point, we keep warning, the foreigners are going to want to dump on a little salt to get rid of us.

and, veering off toward miscellany...

The Oldman passes judgement upon press coverage of the housing bubble, and finds it wanting.

Brad DeLong summarizes the current U.S. economic state:
It is hard to stress enough the extraordinary contrast in this business cycle between the (lousy) labor market situation and the (good) output growth situation and the (fantastic) productivity growth situation.

from BDL comments -
"Don't worry, your money has not been destroyed. It is only owned by somebody else."

Via Andrew Tobias -
"In finance, decay is more colorful than probity, and the prevailing direction of change in the past generation has only enriched the content of the narrative."

-- James Grant, Money Of The Mind

PQuincy in BDL comments -
perhaps we need to get used to the idea that we can't stay _much_ richer than everyone else forever. And since the overall wealth of the planet is not increasing all that fast, the most likely way we will stop being much richer is not that everyone else will catch up to us (the free trader's model), but that average prosperity in the US will decline.

It may not feel good, but it's hard to argue that this is entirely unfair. Nor does this mean that the average US consumer will be impoverished: but not as many will be able to keep affording big houses and 3 cars and so forth.

Daily Reckoning soundbites -
Apparently, we Americans are not buying quite as many things we don't need with the money we don't have.
Unlike business, which borrows to increase capital investment and employment, nearly every penny a consumer borrows is thrown away; he buys a hot tub for his back yard and ends up poorer and more vulnerable than before.

A veritable plethora of doom-mongering is on offer at Fiend's SuperBear Page.

moving right along, into utter irrelevance -
Armchair analysis of the economies of Middle Earth -
Lord of the Rings...[hobbits'] economic essentially an idealised pastoralism, the middle ages minus disease and famine.

I'll concede though that the economic life of the elves is a mystery. They seem to spend most of their time poncing (sic) around in forests without any visible means of support. Perhaps as the immortal elder children they were all given substantial annuities before going to Middle Earth. Which raises an interesting issue, how do you value an annuity for an immortal being with an average existence of at least 10,000 years?

if you're not recognized as a genius when your work comes out, be patient: (via)
Dr. Tolkien has little skill at narrative and no instinct for literary form. ... Now, how is it that these long-winded volumes of what looks to this reviewer like balderdash have elicited such [glowing] tributes...? The answer is, I believe, that certain people - especially, perhaps, in Britain - have a lifelong appetite for juvenile trash.

John Holbo in here -
Tolkien is so true to himself that he simply can't be untrue to anyone or anything else.

Friday, July 16, 2004

Denial is a river in Egypt

Real world depicted here. Anyone who thinks incompetent government (which begets incompetent oversight) doesn't matter needs to read it.
U.S. military officials tell NBC News, the unreleased images, show American soldiers severely beating one Iraqi prisoner to near death; apparently, raping an Iraqi female prisoner; acting inappropriately with a dead body; and Iraqi guards apparently videotaped by U.S. soldiers raping young boys.
Those "God Forgive America" bumperstickers are looking more and more appropriate.

As for me, I'll stay here and talk about real estate and hide my head in the sand, thank you very much. Hey,  I'm an American.

So, about that economy...

SF Chronicle says Sayonara, housing bubble (with nice summary at bottom)

Contrarian? time-shifted? extraplanetary? view from The Union AP article in last week or two, "experts say now's the time to buy"

The Daily Reckoning's advice (?!) on how to Make Money Fast:
See how easy it is, dear reader? You don't have to save, or work, or come up with a new invention or write a hit song. All you have to do is buy a house. And you don't need a penny to do it. Nor even much of an income.

Another gem from the Daily Reckoning -
Having gone deeper into debt to purchase McMansions and SUVs in recent years, how do baby boomers intend to spend their golden years? I predict that we baby boomers will turn our McMansions into bed and breakfasts for the increasing number of Chinese and Indian tourists who will be visiting our shores in the next fifty years. And we will provide complimentary shuttle services to our guests with our SUVs. tourism becomes an ever more important segment of Nevada County's economy...

Salon on great big green monster mansions -
Environmentally correct housing has never been more popular. But even the most eco-friendly home may do more harm than good when it is super-sized.

Sarah Susanka and the Not-So-Big House here and here-
When someone buys a Mercedes Benz or Jaguar, they look for quality, comfort, and detail. Size has nothing to do with the appeal of these cars. If you wanted nothing but space, you could buy a truck. Why is it, then, that some people feel compelled to buy huge houses with empty, cathedral-like spaces that offer few comforts of home
We seek with square footage and ever-taller ceilings our notion of home, when in fact the feel we're looking for has almost nothing to do with size. Instead, it resides in a sense of comfort
Owners, saddled with impersonal, cavernous spaces, sometimes wonder what went wrong - why they feel so profoundly disaffected from the very place that is supposed to nurture and satisfy: home.

The current pattern of building big to allow for quantities of furniture with still more room to spare is more akin to wearing a sack than a tailored suit.

Union article on Hunter Black's rammed earth house out on the San Juan Ridge - hands down the most wonderful house I've ever met. I saw it shortly after seeing a house whose designers followed the "we'll make it TWICE as big!" philosophy. The contrast was huge too.

Not the greatest planning - apartments in the middle of nowhere (think Kingsbury Circle out in Alta Sierra?)

PZ Myers' hometown disappears-
Hometown? Kent, Washington. It was a nice little town when I was young, but visibly transformed during my teenage years into a desert of parking lots, banks, and gas stations. Now it's little more than a congested blot in the north-south traffic corridor to Seattle. In a sense my hometown doesn't exist anymore.

Brad DeLong still says "buy more house than you need" - a commenter responds:
I thought capital was supposed to move at the speed of light these days. I'm a little disappointed to hear that in order to maximize my investments I have to be chained to a big wad of matter whether I want it or not. I find it disturbing to think of orchards being uprooted as Americans who just wanted a little house leverage themselves out to the max...

Facing the ordeal of downsizing, with helpful hints on where to put the plasma TV now that you have a meager 1700 sq ft. Talk about deprivation...

Ah, that country air...breathe deep... ("Foothill roads likely laced with asbestos" - analysis of Placer County gravel roads from airplane show serpentine-rich roads, serpentine tends to? often? always? contains asbestos)
Identifying the region's serpentine-covered roads raises residents' awareness of the potential hazard but may not necessarily prompt paving or other measures to cut the risk. Virtually all of the roads identified are private roads, meaning it's solely up to property owners to maintain them, county officials said.

Today's Sisyphus doesn't roll rocks; instead, he faces an eternity of remodeling. Or perhaps moving -
We have always been moving. We will never do anything else. The remaining stuff that's yet to be moved will keep expanding to fill an infinite number of boxes, an unending succession of U-Haul trucks. Only we will change, gradually growing older and more battered and decrepit, until finally we're used up entirely. When this happens we'll be propped up in front of the yard railing, on offer [to] any passersby who think they have some use for our remains.

Another perspective on housing is here. Followed by some lovely examples of comment spam. If there is an afterlife, the people who spew this stuff will be taking the down elevator.

more from the Daily Reactionaryckoning -
We drove by one subdivision after another, the houses getting bigger and bigger. Each one had a grand entrance and a bucolic address. Usually the place was announced with curved brick walls, iron gates, and an Anglican name such as 'Heathmont Downs.' You feel as though you might be entering the grounds of a private lunatic asylum.
"Some of these places are 6,000 square feet and more," explained a cousin. "And some of them are lived in by older couples without children. They don't really need the space. But it's a way to leverage the housing boom. A lot of people think they should buy the biggest, most expensive house they can...

truth? from fiction -
Many citizens set out to buy a house because of an indistinct yearning for which an actual house was never the right solution to begin with, and may be only a quick fix that briefly anchors and stabilizes them but never touches the deeper need, all the while managing to put them in the poorhouse.

Slate on consequences of Calif's Prop. 13
This creates some perverse effects, similar to those of rent control. People stay in big houses they no longer need because moving to a smaller place will mean a huge property tax hit. With these houses off the market, people who do need a bigger place have fewer to choose from and must pay more to get one.