Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature currently requires accessing the site using the built-in Safari browser.
Toro, the standard measure for real estate is $/sq. ft. It tells you whether to build or buy existing property or rent for a given acreage. That was standard when Granddad used a workout to buy the house I lived in after granny died. And he had been a contractor in the late 1890s.
Two things happened in the 1970s the development of the nail gun and a lighter recipe for building block. The next iteration of Case-Shiller will be build/buy/rent ratios which are much more important than the current index but the current index does create a starting point for more fruitful research. At the moment just a quick down and dirty index does start the ball rolling and is long overdue.
Wrong question. Look at your graph. When did the McMansion trend begin? 1997, 2002?
Pay attention.
And go away.
answer the question and bite me.
Unless of course you are too intimidated to answer the question, in which case, yes you can cower in isolation if you must.
If you bite me.
You continually make the mistake of overestimating your grasp of any topic while assuming the same about others when it isn't always true.
Maybe YOU should pay attention for once!
However, if the price of something stays constant, as Shiller's graph demonstrates, and the quality improves, as you are arguing, that's not inflation, that's deflation. So how can you have a bubble during deflation?
I'm not answering your question because its irrelevant to the OP
Gee, I don't know William. It looks to me like things got out of hand this decade.
frankly looking closely at the chart it looks the discussion of and repeal of glass-steagall ramped it up. (1999)
It had to be an advent in the securitization industry. Glass Steagal was specific to the firewall between investment and commercial banking.
Clinton signed the "repeal" of GS in late 1999. The chart begins it's vertical ascent in 1997. That more closely coincides with the growth of the derivatives markets. Most likely CDOs. But I am just guessing. I have no idea.
In any case the low interest rates that began in 2002 would be the expected cause of such a spike, but somehow the data doesn't match well.
Maybe a combo of the excess dot com liquidity and later the low interest rates had a seamless effect on driving RE prices like a rocket.
Or it could have just been that homes were significantly more value added and larger, like super sized, after 1997 while external factors played minor roles in the escalation of prices.
Toro, the standard measure for real estate is $/sq. ft. It tells you whether to build or buy existing property or rent for a given acreage. That was standard when Granddad used a workout to buy the house I lived in after granny died. And he had been a contractor in the late 1890s.
Two things happened in the 1970s the development of the nail gun and a lighter recipe for building block. The next iteration of Case-Shiller will be build/buy/rent ratios which are much more important than the current index but the current index does create a starting point for more fruitful research. At the moment just a quick down and dirty index does start the ball rolling and is long overdue.
Fair enough.
However, if the price of something stays constant, as Shiller's graph demonstrates, and the quality improves, as you are arguing, that's not inflation, that's deflation. So how can you have a bubble during deflation?
The housing bubble started in 1997 due to Clinton's CRA enforcement, forcing Fannie/Freddie to ease credit standards & The U.S. Taxpayer Relief Act of 1997 that eliminated capital gains taxes on homes & allowed mortgage interest tax deductions enticing people to transfer high interest credit card balances to low interest mortgage for a tax deduction.
This also made flipping homes a tax free business income.
Deregulation, secularization industry & elimination of Glass Steagal did not happen until 2000. Low interest happened even later. These things were not the prime cause. Clinton Forcing Fannie / Freddie to ease credit standards was the prime cause.
Oh I don't know about that. Certainly the policies of Fannie and Freddie were not sound and social engineering did have some very bad side effects. However, that didn't cause the crash. The crash was caused by people buying more than they could afford and "expert" traders acting like they didn't know this when they were selling these commoditized investments, all of which would have quickly been over and done with if there wasn't such a rush to bail out those who lost when they took the gambles on all sides of the equation.
The housing bubble started in 1997 due to Clinton's CRA enforcement, forcing Fannie/Freddie to ease credit standards & The U.S. Taxpayer Relief Act of 1997 that eliminated capital gains taxes on homes & allowed mortgage interest tax deductions enticing people to transfer high interest credit card balances to low interest mortgage for a tax deduction. This also made flipping homes a tax free business income.
Deregulation, secularization industry & elimination of Glass Steagal did not happen until 2000. Low interest happened even later. These things were not the prime cause.
Leon Juglar wrote several volumes on this subject. James Grant tried to popularize the theory and in my opinion failed so here comes my attempt and may God have mercy on your brain as you try to follow me.Toro, the standard measure for real estate is $/sq. ft. It tells you whether to build or buy existing property or rent for a given acreage. That was standard when Granddad used a workout to buy the house I lived in after granny died. And he had been a contractor in the late 1890s.
Two things happened in the 1970s the development of the nail gun and a lighter recipe for building block. The next iteration of Case-Shiller will be build/buy/rent ratios which are much more important than the current index but the current index does create a starting point for more fruitful research. At the moment just a quick down and dirty index does start the ball rolling and is long overdue.
Fair enough.
However, if the price of something stays constant, as Shiller's graph demonstrates, and the quality improves, as you are arguing, that's not inflation, that's deflation. So how can you have a bubble during deflation?
Oh I don't know about that. Certainly the policies of Fannie and Freddie were not sound and social engineering did have some very bad side effects. However, that didn't cause the crash. The crash was caused by people buying more than they could afford and "expert" traders acting like they didn't know this when they were selling these commoditized investments, all of which would have quickly been over and done with if there wasn't such a rush to bail out those who lost when they took the gambles on all sides of the equation.
But we weren't talking about the crash, we were talking about what inflated the RE bubble beginning in 1997.
You seem to have some insights so please share them.
Oh I don't know about that. Certainly the policies of Fannie and Freddie were not sound and social engineering did have some very bad side effects. However, that didn't cause the crash. The crash was caused by people buying more than they could afford and "expert" traders acting like they didn't know this when they were selling these commoditized investments, all of which would have quickly been over and done with if there wasn't such a rush to bail out those who lost when they took the gambles on all sides of the equation.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people...
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Leon Juglar wrote several volumes on this subject. James Grant tried to popularize the theory and in my opinion failed so here comes my attempt and may God have mercy on your brain as you try to follow me.Toro, the standard measure for real estate is $/sq. ft. It tells you whether to build or buy existing property or rent for a given acreage. That was standard when Granddad used a workout to buy the house I lived in after granny died. And he had been a contractor in the late 1890s.
Two things happened in the 1970s the development of the nail gun and a lighter recipe for building block. The next iteration of Case-Shiller will be build/buy/rent ratios which are much more important than the current index but the current index does create a starting point for more fruitful research. At the moment just a quick down and dirty index does start the ball rolling and is long overdue.
Fair enough.
However, if the price of something stays constant, as Shiller's graph demonstrates, and the quality improves, as you are arguing, that's not inflation, that's deflation. So how can you have a bubble during deflation?
In any major innovation economies of scale, scope and network are found in distribution, production and supply chain. These discovered economies create areas of increasing marginal returns that do not fit into standard micro-economic models nor macro-economic models. Such economies are found again and again in highly innovative industries such as IT, aerospace and so on. This causes overbuilding of capacity as seemingly lunatic strategies pay off again and again until everybody's brain stops functioning and a deflation driven bubble results. Examples would include this era's dotbomb, telebomb and housing finance or in the 1920s cars, radio and film.
The obvious error is in the standard model of innovation which does not permit increasing marginal returns due to the continuous discovery of new economies right up to the point of market saturation and subsequent bust. Add in structural and financial leverage failing safe with dismaying regularity and deflationary bubbles and busts as in the 1800s become understandable. What they don't become is something you can model.
Oh I don't know about that. Certainly the policies of Fannie and Freddie were not sound and social engineering did have some very bad side effects. However, that didn't cause the crash. The crash was caused by people buying more than they could afford and "expert" traders acting like they didn't know this when they were selling these commoditized investments, all of which would have quickly been over and done with if there wasn't such a rush to bail out those who lost when they took the gambles on all sides of the equation.
The "Collateralized Debt Obligation" (CDO) was designed in 2000 to package mortgages together to sell them off & spread the risk. Fannie / Freddie was forced to buy crap loans & created the demand CDO full of crap subprime loans. Mortgage brokers & bankers were all to happy to make money packaging & selling these loans to them. If there was no demand for these CDOs from Fannie / Freddie then they could not make & sell these loans.
NYT Published: September 30, 1999
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people...
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Oh I don't know about that. Certainly the policies of Fannie and Freddie were not sound and social engineering did have some very bad side effects. However, that didn't cause the crash. The crash was caused by people buying more than they could afford and "expert" traders acting like they didn't know this when they were selling these commoditized investments, all of which would have quickly been over and done with if there wasn't such a rush to bail out those who lost when they took the gambles on all sides of the equation.
The "Collateralized Debt Obligation" (CDO) was designed in 2000 to package mortgages together to sell them off & spread the risk. Fannie / Freddie was forced to buy crap loans & created the demand CDO full of crap subprime loans. Mortgage brokers & bankers were all to happy to make money packaging & selling these loans to them. If there was no demand for these CDOs from Fannie / Freddie then they could not make & sell these loans.
NYT Published: September 30, 1999
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people...
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
You're ignoring the fraud. These mortgages were packaged in such a way that didn't spread the risk, it was to hide the risk.
Everything would have worked itself out had there not been an intervention to "save" those who took on a bad risk.
By then it is too late. AIG got out of the mortgage tranche CDS market in 2005 and still needed a bailout in 2008. Bear Stearns was in deep trouble in 1998 with mortgages and told the Fed so in the LTCM bailout meeting. Thornberg Mortgage the first domino to drop was offering 3% off the marketprice for their stock to DRIP and DSP investors who bought direct from the company in odd lots in 96.Actually, it's not until everybody's brain stops functioning, it's when there is a tipping point where everyone starts realizing that the speculation has gone beyond sustainability. I'd argue that it's where their brains start functioning.
The "Collateralized Debt Obligation" (CDO) was designed in 2000 to package mortgages together to sell them off & spread the risk. Fannie / Freddie was forced to buy crap loans & created the demand CDO full of crap subprime loans. Mortgage brokers & bankers were all to happy to make money packaging & selling these loans to them. If there was no demand for these CDOs from Fannie / Freddie then they could not make & sell these loans.
NYT Published: September 30, 1999
You're ignoring the fraud. These mortgages were packaged in such a way that didn't spread the risk, it was to hide the risk.
Everything would have worked itself out had there not been an intervention to "save" those who took on a bad risk.
Yes there was fraud but that was not as big as the Fannie/Freddie loan defaults. The banks recovered but Fannie/Freddie will not recover & continue to lose money. The criminal bankers were bailed out & rewarded. Why? They were likely told to package & sell this crap by the government who said they would back them. This was a known outcome. Just look back at Long Term Capital bailout & read the 1999 NYT article in my previous post.
Leon Juglar wrote several volumes on this subject. James Grant tried to popularize the theory and in my opinion failed so here comes my attempt and may God have mercy on your brain as you try to follow me.Toro, the standard measure for real estate is $/sq. ft. It tells you whether to build or buy existing property or rent for a given acreage. That was standard when Granddad used a workout to buy the house I lived in after granny died. And he had been a contractor in the late 1890s.
Two things happened in the 1970s the development of the nail gun and a lighter recipe for building block. The next iteration of Case-Shiller will be build/buy/rent ratios which are much more important than the current index but the current index does create a starting point for more fruitful research. At the moment just a quick down and dirty index does start the ball rolling and is long overdue.
Fair enough.
However, if the price of something stays constant, as Shiller's graph demonstrates, and the quality improves, as you are arguing, that's not inflation, that's deflation. So how can you have a bubble during deflation?
In any major innovation economies of scale, scope and network are found in distribution, production and supply chain. These discovered economies create areas of increasing marginal returns that do not fit into standard micro-economic models nor macro-economic models. Such economies are found again and again in highly innovative industries such as IT, aerospace and so on. This causes overbuilding of capacity as seemingly lunatic strategies pay off again and again until everybody's brain stops functioning and a deflation driven bubble results. Examples would include this era's dotbomb, telebomb and housing finance or in the 1920s cars, radio and film.
The obvious error is in the standard model of innovation which does not permit increasing marginal returns due to the continuous discovery of new economies right up to the point of market saturation and subsequent bust. Add in structural and financial leverage failing safe with dismaying regularity and deflationary bubbles and busts as in the 1800s become understandable. What they don't become is something you can model.
Actually, it's not until everybody's brain stops functioning, it's when there is a tipping point where everyone starts realizing that the speculation has gone beyond sustainability. I'd argue that it's where their brains start functioning.
You're ignoring the fraud. These mortgages were packaged in such a way that didn't spread the risk, it was to hide the risk.
Everything would have worked itself out had there not been an intervention to "save" those who took on a bad risk.
Yes there was fraud but that was not as big as the Fannie/Freddie loan defaults. The banks recovered but Fannie/Freddie will not recover & continue to lose money. The criminal bankers were bailed out & rewarded. Why? They were likely told to package & sell this crap by the government who said they would back them. This was a known outcome. Just look back at Long Term Capital bailout & read the 1999 NYT article in my previous post.
I can't accept that theory unless there is some proof.
