bostonbubble.com

[john p]

I am glad to have bumped into someone with your view because I'm curious to hear how you think this games out.

I think that if you add that much liquidty into a market that quickly it will quickly saturate the market and money will just sit on top of all the fundamental values of things. I think that there was so much money out there that people didn't scrutinize, the money had to find a home and be invested which is why you saw derivatives and investments in bogus subprime paper, how high can P/E ratios go? I think a lot of invested wealth went into emerging markets, and lots of the derivatives was just fantasy money, kind of like how the $50,000 in your credit card account exists but doesn't really exist. So, I think that lots of the money supply will just evaporate and burn off. The equilibrium is that a portion of the surcharge of liquidity could raise the water level on one side and on the other, some could burn off and evaporate. If the M3 doubled since 1990, do you see 100 percent of that surcharge evaporating or something more like 40-50%?

The Economist had a great article last month that showed how the US Dollar is gaining in value versus many other currencies. I wonder if you think that the US Dollar might be a global product now and can be valued not by only fundamental value but by foreign influence of value?

http://www.cfodailynews.com/ask-the-economist-what-drives-the-dollar-part-ii/

I think that understanding the behavior in the evaluation of the Dollar might help us understand things.

Oh, another thing, in my view, if the FED prints out way too much money, it will most likely be the rich that get more of the value of that surcharge in printed money while the poor might have stagnated wages. The increase in the money supply might have fattened up the rich and given them earnings to serve as reserves giving their house prices more stickiness. They may have a higher boiling point, but I think they do have a boiling point.

Think about the water level of the ocean, if you believe in global warming, you can believe that the water level is rising and accept that things won't go back to the prior water level because the climatic condition of global warming has deformed the fundamentals which set the water level. \

Hell, if you took a 18 years since 1990 wouldn't a three percent inflation rate add 70%. If house prices have gone up, say what, 300% since 1990, we have a range, 70% to 300%. My perspective is that for the market of homes where people work in industries that have wage growth tracking the inflation will revert back to the inflation percentage growth line, while other industries that can consume that added wealth from the new money supply might be able to sustain a higher growth buoyancy level.

[balor123]

[admin]

[balor123]

city-data.com has this kind of info, though it isn't always up to date

[admin]

[mpr]

[john p]

I think the middle approach is the "responsible" path. I'm thinking along the lines of the people who feel like they are "playing by the rules". This to me means staying within historical guidelines of financial responsibility i.e. buying a home within 3.5 times household income versus say 7 times. If people governed themselves with these rules of thumb when we got asset bubbles people would not overextend beyond reasonable limits. Without responsibility we have runaway capitalism with no brakes, it just runs away until it crashes.

[balor123]

Maximize production and consumption is what causes bubbles and depletes this world's resources. What really need is to produce just the right amount of what is needed. Forcing car manufacturers to build more cars and forcing people to buy more cars when they don't need them only results in cars being produced that don't add to the value of life but deplete resources, increasing the cost of those resources in the long term.

[mpr]

[balor123]

Not hard to define basic needs: food, water, shelter. But it's also not hard to define waste: cars that get 1mpg, clothing that you never wear, houses with rooms you've never been into. Mostly you just want to make sure that consumers are making informed decisions. When they become so wealthy that they don't care much about money anymore, the free market breaks because it depends on consumers to regulate prices. When that regulation is lacking then other parts of the economy are affected because they are no longer competitive. Hence, the surplus of real estate agents and mortgage brokers and lack of scientists and engineers.

[balor123]

The basic problem here with Keysian economics is that it was conceived before globalization. Everything consumed that isn't a service is borrowed from Asia. Very little is sent to Asia in exchange. By stimulating consumption you are stimulating the rate at which we are selling this country's wealth to Asia. For example, cash for clunkers largely resulted in the transfer of wealth from the US Government to Japan, in the form of Toyota cars (the number one car that replaced the clunkers). Hopefully we'll also reduce the need for Middle Eastern oil as well but I'm guessing what will happen is people will start living further from cities now that they get better gas mileage (and cities will encourage it to maintain home prices).

[mpr]

[john p]

this is worth a read:

oh, shoot, I'm using the wife's darn Mac and I messed up the copy and paste. Also does anyone know how to keep the text from scaling up and down if you move the cursor while the computer is thinking?

Anyway the pearl was "Say's Law".

You might be surprised, but I am a huge Ted Kennedy supporter.

During the coverage on Fox News Ray Flynn, a former Mayor of Boston described Kennedy as someone who could "Bring home the bacon". He said he got City Hospital, Deer Island Sewage treatment Plant, the Big Dig etc.

My issue with the philosophy of spending as "pork" is that people devalue resources and consume like little piggies in a feeding frenzy. Case in point, the Big Dig. Although it appears that certain people benefit from all the pork, but in the end, they surprisingly don't. Take South Boston, they have all this spending right in their back yard and they really haven't improved over decades any greater than other areas that haven't received as much. This is because the pork is kept from the everyday people and stays in the hands of the politically connected. The politicians in South Boston are polluted with these entitlement, greedy delusions. People from "Southie" thump their chests and brag about how great Southie is yet at the same time almost take pride in all the corruption they see around them. I mean the movie "The Departed" was about a few pearls that lived among filthy white trash, a mother that left a baby sitting in the sun to bake and being coked up all the time and having sex in seedy barrooms. What kind of community prides themselves with such a depiction? I think there is a distinction between gritty and polluted. Portland, ME is gritty, Southie is polluted. Portland lobstermen don't mind getting their hands dirty, the macho men in Southie want to be slothfully lazy and sit in barrooms all day. They pride themselves not in hard work but in how corrupt they can be. It is no surprise that their State Rep, Brian Wallace is the representative who is pushing harder than anyone else for casinos. He portrays himself as a Christian but wants to allow predators to prey on the poorest in our society with slot machines and casinos. I am upset that my ArchBishop, Sean O'Malley doesn't out this corrupt Representative for what he is. Catholic Democrats are supposed to care and protect the poor, Brian Wallace wants to get fatter by helping the predators hurt the poor.

Anyway, I don't mind spending so long as we actually get something valuable. Building a casino is like building a drain, it is like stabbing the poor in the naval and watching them bleed to death. It is sinful. Spending for spending's sake just empowers polluted values.

[balor123]

[john p]

Another thing, think about the corrupt casino industry and think about who they would approach to bribe or sway. Would they choose any person of honor? Of course not, they would choose the most corruptible politician out there. Glen Marshall was the Wampaoag's tribal leader and he was convicted of rape and also lied about Military Service. Why is it that the most polluted politicians come from the areas that never are able to get their act together? I feel bad for the good people of South Boston because Brian Wallace is portraying them as the most polluted and corrupt society that is carrying water for the casino industry. As an Irishman and a Catholic who values hard work, perseverance and one who wants to protect the poor I am disgusted with Brian Wallace because he stands counter to these values, values that would help people in his society. He is playing Judas to South Boston and because some people in Southie see gangsters as folk heros and see hard workers as suckers, they see the world as polluted and admire Brian Wallace for gearing into that polluted reality and getting as much bacon as he can.

Casino gambling for some is a fun night out, but for others, many poor, it is their small hope to get out of their debt. Some poor people are so desperate and have seen corruption and pollution and they know nothing else. They see honorable people as naive fools and suckers. They tolerate corruption because they believe that it is normal behavior. The corrupt leaders tell their followers that the world is corrupt so they don't ever stand up and fight back against the graft and corruption. This is the worst of the crimes, when they take from their followers the believe that goodness is possible. They don't build their followers, they oppress them and the hopeless followers act like an oppressed people. People should take the little that they have to help build a future, not throw it away with long shot odds. Strong people believe that they can persevere and that they are stronger than their challenges, Brian Wallace is feeding the predators that prey on those that are hopeless. Instead of building the strength of the poor he is helping those who prey on the poor.

Basically, people need to save and help build their financial base. People who run up their credit cards and purposely go bankrupt and then look for a bailout are precisely the people that manufacture self created hardships and then look for entitlements. Casinos represent wrecklessness and there is a high with coming face to face with chaos, but it isn't something that we need in a society where responsible people are already bailing out the irresponsible.

So congratulations to South Boston and Brian Wallace for being approached and chosen by the most corrupt industry in our society. We're now finding that Jack Abramoff was linked to the whole Wampanoag deal. Of all the polluted societies out there, they chose South Boston's congressman to back stab the poor and the weakest in our society because he was the weakest and most corruptible. Most people in jail who committed crimes believed that the world was corrupt and polluted and the goodness in them was defeated by the corruption that took away their innocence. Many people leave certain areas that are infested with filth and corruption which is why many unfortunate people have to be stuck with corruptible leaders like Brian Wallace who feeds them to the predators for his own benefit. They don't seek good leaders because they don't have faith that goodness and purity exist in our world. In the 70's this corrosive mentality was ruinous to many cities. You had policemen on the take and dealing drugs, etc. Right now, with this economic storm these poorer areas need strong leaders that will guide them to the rooted values that will keep them from being uprooted in the storm and not allow them to be swept away with a fools bet at a casino.