OT - follow up to another thread.

w writes:
sdtfs writes:
I'm guessing we're not talking pesticides; more like bT=Bacillus thuringiensis. A bacteria that attacks the mosquito larvae and is relatively safe for the environment, non-toxic to vertebrates and adult insects. It kind of works, I haven't gotten much benefit from the blocks, but the granules work fine, just need periodic re-application

Actually, I work in the pesticide industry. BT's are not a bacteria that attacks mosquito larvae. They are a stomach poison that is grown in a bacteria and processed into a fairly safe insecticide. many BT products are registered organically. If a poison can be made from a "natural" source it can be registered organically. I spray my organic crops much more than my conventional ones because the pesticides are not as effective or do not last as long. I do live in Ventura County and the County Vector Control has the mosquito fish available for free. While I am proponent of responsible pesticide usage I think the less we use and the safer the products we use the better for everyone. Homeowner usage is probably not as important as food production. I think it is funny that someone worried about putting oil into the ocean is not concerned about using a pesticide unnecessarily.
w | 02.19.08 - 5:50 pm | #

It's really quite amazing to see the lead NAR shill trying to paint Shiller as a shill. Geez, he basically accuses him of being un-American (quote, an approach that flies directly in the face of the American sense of democratic values.)

The NAR comedy keeps coming!

The CS index is a tool. NAR is a marketing spin machine. The MSM is a hype machine. None of them knows exactly what, when and where.

There just is not as many qualified buyers now. As the market for a given neighborhood drops from 700k to 600k there will be a few buyers. Some people will point to these new purchases as the new value for these homes. But with these buyers out of the market the neighborhood homes will fall to 500k. Then there will be another pool of buyers to buy a few homes. Again people will point and say that the market is stabilized and the homes in the neighborhood are worth 500k. Then the search for qualified buyers will start again.

Markets will drop slowly and give a lot of false signals to be taken as hope until markets stabilize at a reasonable multiple of local incomes. Everything else is wishful thinking.

"A wise man said never argue with fools 'cause people from a distance can't tell who is who..."

CR.
Don't you think that appraisals tend to smooth price changes?

CR - I believe that even areas with relatively tight supply could see price declines as credit continues to tighten.

Boston is one market I have been following for years. The decline had started earlier (price overrun) and the market appeared to be leveling out and perhaps moving up a tad when the crunch hit this summer. Since it has resumed its downward march.

The extremely loose underwriting creates a constriction of demand relative to supply when standards rise again. I am by no means implying that your excellent work on supply isn't relevant. Of course it is.

I'm just suggesting that we have multiple downward escalators at the current time.

PS: Everyone used to complain about Lereah, but to me Yun seems infinitely less connected to reality.

It almost seems hard to believe that is possible....

-ck- Is it because of inflation concerns? Dollar weakness?

There ought to be a law: Some dude named Armando was just on the radio pitching his real estate flipping system, by which I too can build my own real estate empire. Isn't this guy a little behind the curve?

No Jas, its the PHD's. Let's burn them and their books!

"You will never recover your reputation for competence. You are politically a dead man walking and if the Prime Minister could actually make a decision he would move you."

Northern Rock deal could cost us each £3,500 - Telegraph

sorry to repeat someone elses post but i couldn't resist highlighting this quote.

don't anyone believe this doesn't have consequences for US banking.

I have no crystal ball, - CR

So, um, ebay never delivered?

I dont make this stuff up, and yes i hand my license with the Sotheby's outlet here:

"An epic downturn in the residential real estate market? Somebody should tell the buyers and sellers of the priciest houses in the Washington area.

The average price for the region's 25 most expensive home sales increased by 21 percent in 2007, according to Washington Business Journal research."

International buyers drive sales of D.C. luxury homes - Washington Business Journal:

I'm just suggesting that we have multiple downward escalators at the current time. - MOM

Its vector math with all the arrows pointing down right now.

i have a feeling we're going to have a big move in the market very soon.

"What happens when California prices drop 50%, and all the people who left CA because of the high prices start coming back?"

They'll file for unemployment?

A lot of jobs left because of the high prices too, particularly production. Some went out of the country, plenty others just went out of state.

You have to have something to come back to, besides sunny skies and traffic. I'd like to think lower prices would bring manufacturing jobs back eventually, but there's no guarantee.

Some people might come back, regardless, but mainly those who already have prospects; ie, they know they can get reasonable work. Nurses, cops, accountants, people who can almost always get work anywhere. The rest, not so much. Not unless some vast opportunity opens up.

still think theres no inflation goin on in China? sorry. have to yank your chain

Oh idoc - if you only knew. I had a talk with a very good friend who has been in mfg in China for a decade - the lid is completely blowing off over there. All of it in the last six mmonths...

The 'dollar sterilization' that worked so well for so long has completely ground to a halt with the US credit markets in reverse. Very hard to recycle dollars back w/out big loses.

That was what kept the visible money creation minimal for so long over there - not any longer.

To give you an idea he said his company sent out an internal memo saying be prepared to exit China & fast... meaning have both other developing market sources in line & also domestic capacity...

He was a little drunk at the time we talked but said "Domestic???" It will be his job to staff those plants.

Should get interesting.

BTW I asked him for a copy of the memo and he said no way he's lettin' me put that out on the internets (even camouflaged) until he's a LOT closer to retirement. LOL. He is a survivor like so many still in mfg.

So ya my chain deserves to be rattled.

Dryfly, today's LA Times:

"A sinking feeling for the dollar in China"

A sinking feeling for the dollar in China - Los Angeles Times

Pundrity..

NAR is paid by a hidden tax on every RE transaction, so its in their best interest to keep prices high....

Nah, their supported by Realtor dues - almost the same thing.

Sippn said: We have a significantly restricted land supply in desirable places to live.... more people are coming and they don't care about other people's income multipliers.

Not true. Middle class is migrating out of CA. Immigrants moving in lead to increase in population.

W - thats what I said. I didn't mean the WASPs were leading the charge, its foriegn investment. Most of the higher end homes I see sold are not native ... even in middle NorCal. Like I said, they don't care about "your" income problems...

Move to India to streach your wealth...

How long does it take to move production back?

Depends on how long it takes to get labor back... I see labor shortages already in basic machining & such.

Specifically I'd say it will take as long it takes Gen Xers to realize they can't all be realtors, investment bankers or mortgage brokers and get happy with the idea they will be married to a machine for the rest of their life. This time period will EXACTLY coincide with the time it takes Boomers to realize they won't all get to retire on the golf course near Myrtle Beach... for exactly the same reassons.

Recollections of Synchronicity...

Cobra driver

Don't disagree with ya, but I'm hard pressed to continue buying Detroit Iron when 20% of my price goes to some retired overpaid auto worker instead of making my Expedition's brakes as large as my mechanic's Toyota Supra's (Ford: "its your driving habits" - yea, I like to stop)

30+ year owner of Detroit products by my favorites so far have been Bavarian...

Nouriel RGE Monitor mentions CR.

"How many households will end up in negative equity territory and will thus an incentive to walk away from their mortgages? The answer to this question of course depends on how much home prices will eventually fall from their peak. A recent analysis by Goldman Sachs suggests that if home prices fall another 10% in 2008 after having fallen by about 8% from peak in 2007 (based on the Case-Shiller/S&P index) about 15 million households will be in negative equity territory. There are other estimates that are consistent with the Goldman Sachs one. Calculated Risk – a very well respected housing blogger – estimated that if home prices decline by 10% in 2008 the number of households with negative equity will be 10.7. But this estimate was based on a partial underestimate of the fall in home prices in 2007 relative to its 2006 peak (as the Case-Shiller data for all of 2007 were not available at the time of that estimate). Thus, the number of households with negative equity could be closer to 12 million. Calculated Risk also estimates that a cumulative fall in home prices of 20% implies 13.7 million households with negative equity while a 30% cumulative fall implies 20.3 million households with negative equity.

These figures are staggering considering that in 2006 the total number of households with mortgages was 51.2 million. So between 20% to 40% of households with mortgages may end up with negative equity in their homes and with a big incentive to walk away from their mortgages. Even the lower bound figure of 10 million households with negative equity (20% of those with mortgages) is huge.

RGE - The Forthcoming “Jingle Mail” Tsunami: 10 to 15 Million Households Likely to Walk Away from their Homes/Mortgages Leading to a Systemic Banking Crisis

I'm in, what classes do I need to take?

I'm not sure yet - things are happening fast, similar to what happened in the 80s.

A good book to read is 'The Machine That Changed The World' about 'Lean Mfg' written around 1990... it is still relevant today. If you have finance background then read between the lines (financial lines that is). Many believe the resurgence in US production will come from a more realistic and intelligent understanding of real cost and risk.

There was an article in Manufacturing Engineering about this recently... costing lean systems and why old metrics are so hard to use in new systems.

BTW - the key to the 80s resurgence was avoiding excessive fixed cost (especially debt) even if it meant you had to assume somewhat higher variable cost (pay higher wages). That lesson was lost from the late 90s and beyond.

Case-Shiller is the prices of house people actually live in, which is irrelevant... Yun's talking about "the core house price index...

Got it?

O dear, I feel the need to break into song again...

To the tune of Da Doo Ron Ron

I heard him on the TV and my heart stood still
Say screw Yun Yun Yun, Say screw Yun Yun
I knew it right away he was a real shill
Say screw Yun Yun Yun, Say screw Yun Yun

Yes my heart stood still
Yes he was a real shill
And when he hypes them homes
Say screw Yun Yun Yun, Say screw Yun Yun

I knew what he was doin' when he told that lie
Say screw Yun Yun Yun, Say screw Yun Yun
He sold that snake oil, but my oh my
Say screw Yun Yun Yun, Say screw Yun Yun

Yes, he told that lie
Yes, my oh my
And when he hypes them homes
Say screw Yun Yun Yun, Say screw Yun Yun

Say screw Yun Yun Yun, Say screw Yun Yun
Say screw Yun Yun Yun, Say screw Yun Yun

He spun the crashing market, made it look so fine
Say screw Yun Yun Yun, Say screw Yun Yun
Recov'rys round the corner, says the dotted line
Say screw Yun Yun Yun, Say screw Yun Yun

Yes, he made it look so fine
Yes, he drew the dotted line
And when he hypes them homes
Say screw Yun Yun Yun, Say screw Yun Yun

Say screw Yun Yun Yun, Say screw Yun Yun
Say screw Yun Yun Yun, Say screw Yun Yun

I feel so much better now.

cd

Thanks, that helps...

So, do you think this is a blow-off or is it self-sustaining? Meaning, have Chinese manufacturers moved up the value chain enough that they can maintain (or increase) margins in face of higher input costs? Are wages rising?

In other words, have the "decoupled"?

I work with hundreds of small Chinese software companies. So far, none of these companies have been able to either diversify away from the US market (although they have tried) or increase pricing enough to offset declines in the dollar.

Meaning, have Chinese manufacturers moved up the value chain enough that they can maintain (or increase) margins in face of higher input costs? Are wages rising?

In other words, have the "decoupled"?

Kicker you ask the multi-trillion dollar question.

I don't know.

I think it is possible they could in theory at least partially de-couple... but not 100%. No way 100% after they coupled as closely as they have.

From what my buddy tells me he thinks the party over there is trying like crazy to (1) stay in control and (2) continue to find employment for their poor rural masses. Can they pull continue to do that if they turn inward & consume more instead of continuing to export?

I don't know - I sure hope they make a smooth transition 'cause if they don't we got a billion hard working and now very pissed off & disillusioned Chinese. And we Americans aren't the only people who look for scapegoats when shit happens.

I put 30% down on my first house and the mortgage company still made me jump thru hoops to get the loan back in 1991. I got so angry at the time. I screamed at the woman you should hope I never make a payment and you'll make out fine. Well, that certainly isn't the case today. The house I'm in now I put 50% down and the same lady said to me wouldn't you like a bigger house? I said no thank you. When I first moved here a 2 bedroom apartment cost me $485 a mo. 15 years later I pay $522.00 a month for a 4 bedroom 2 1/2 bath 3,000 sq. ft. house. First house loan @7.25%, this one 5.25%. Annual return on first house was 8% a year. It pays to save and always make extra principle payments when possible. I pay $800 a month, very affordable. The bottom line is save. Something most Americans can’t or will not do.

Not only did Case & Shiller start working on their index back in the 80s, but they have an established trail of publications that describe their progress and why certain decisions were made. Finding enough data has to do with it.

First journal article on the index:
The Efficiency of the Market for Single-Family Homes

If I have the NAR and Yun's (il)logic understood correctly, "All real estate is local," except when offering criticism of Case-Shiller. Then, Dr. Shiller is some profit-engineering hack with an agenda, and doesn't take into account broader trends.

I especially love this line from Yun, speaking to folks who've lost money on housing futures:

"I would suggest that they contact Dr. Shiller about price revisions. Their methodology requires constant price revisions. What is reported today will get revised next month — in two months — in three months; theoretically forever."

Laffing my frikkin butt off on that one! The NAR gettin' all snarky about revisions! HAHAHAHA!