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Charles Mitchell and the 1929 stock crash

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Re: Charles Mitchell and the 1929 stock crash

#81

Post by powerapple »

peteradio wrote: post #72
powerapple wrote: post #65

Earlier quoted context omitted.

That's the definition of value storage. The economy works on greeds, realization of greeds, and creation of new greeds. Scarcity would lead to the greed of owning it.

Intro economics class our teacher posed a question "Would economics exist if everyone had a magic wand that could get them whatever they wanted?" I said "ya, cause someone would magic other peoples wands away then there would be an economy to restore peoples wands or grant wishes on behalf of people." Apparently that wasn't the answer they were looking for, but he said I might have some point. I think people just lik…

In developed world, we already have all the goods we want and need, we spend a lot money on services. It is kind of like the world your teacher described :)

Re: Charles Mitchell and the 1929 stock crash

#82

Post by throwaway290 »

powerapple wrote: post #81
peteradio wrote: post #72

Earlier quoted context omitted.

Intro economics class our teacher posed a question "Would economics exist if everyone had a magic wand that could get them whatever they wanted?" I said "ya, cause someone would magic other peoples wands away then there would be an economy to restore peoples wands or grant wishes on behalf of people." Apparently that wasn't the answer they were looking for, but he said I might have some point. I think people just lik…

In developed world, we already have all the goods we want and need, we spend a lot money on services. It is kind of like the world your teacher described :)

Ultimately though resource scarcity and more importantly scarcity mentality is still here.

Re: Charles Mitchell and the 1929 stock crash

#83

Post by chatterhead »

bruce511 wrote: post #10

The crash didn't happen because of 1 banker, but it did happen because of things he, and his contemporaries dreamed up. Basically bankers make money when money flows. It flows only when "there is something better". So to keep making money there always has to be "something better" and ultimately that becomes unsustainable. 1929 was a re-adjustment, where all the bullshit is cleaned away. It was perhaps the first time…

1929 wasn't a readjustment and the early 2000s weren't about property and no we are not "...notably, collectively, smarter."

Stay in school.

Re: Charles Mitchell and the 1929 stock crash

#84

Post by just_boost_it »

Shorel wrote: post #22
bruce511 wrote: post #10

The crash didn't happen because of 1 banker, but it did happen because of things he, and his contemporaries dreamed up. Basically bankers make money when money flows. It flows only when "there is something better". So to keep making money there always has to be "something better" and ultimately that becomes unsustainable. 1929 was a re-adjustment, where all the bullshit is cleaned away. It was perhaps the first time…

I think it is properties again. And harder this time. Except this time it is worse. It's not about the rising prices of properties, but the idea that there isn't something else more profitable than real state long term that makes me feel the economy is stuck in a bad place. Cryptocurrencies are noisy news-makers, but their total value is still very small compared to basically anything else.

I think when people forget that the crisis in 07/08 wasn't just a dip in property values. The entire financial system had managed to get itself propped up on extreme leverage against the single bet that mortgages would almost never default. That extreme leverage put the whole system in a highly unstable state, and it took just a little stress to pull the whole thing down. It collapsed the entire risk management systems of banks, funds and companies across the entire economy. That meant that there was nobody in the market that could lend, and everyone needed to borrow to try and plug the gaping hole that was ripped in their balance sheets.

The financial system just isn't completely levered to housing that way today. Today, an economic slowdown might lead to a dip in property prices, but to find an event that would cause widespread and long-lasting damage to the financial system I think you're going to have to look elsewhere.

Re: Charles Mitchell and the 1929 stock crash

#85

Post by silisili »

francisofascii wrote: post #69
silisili wrote: post #32

Earlier quoted context omitted.

> Property in desirably places is especially intrinsically limited. Yes...but property values are way up all over. Boise, Phoenix, Nashville...even middle of nowhere Kansas. El Paso is having it rough. They've always had super cheap houses to the point of unbelievable...what most would consider a decked out mansion for 300k or so, and a 3+ percent property tax. Guess what's happening now that everyone's regular ol 15…

Boise, Phoenix, and Nashville are all very desirable, actually. Just not top tier desirable like the Bay Area, NYC, Austin, DC, and Seattle.

I didn't mean to insult those cities per se, I just meant their specific location isn't special. Near-ocean land in California can't really be built forever, nor elsewhere. Whereas, many cities like those I listed (and Austin you listed) don't really have anything inherently special about them, landwise.

Re: Charles Mitchell and the 1929 stock crash

#86

Post by rufus_foreman »

circlefavshape wrote: post #79
rufus_foreman wrote: post #74

Earlier quoted context omitted.

No, society is getting less smart. Average IQ is falling and has been for almost half a century, which has been obvious to anyone who has lived through it.

AFAIK you have this exactly backwards https://en.wikipedia.org/wiki/Flynn_effect

The Flynn effect ended and reversed decades ago. In developed countries at least. It would be pretty sad if it has reversed in developing countries.

Re: Charles Mitchell and the 1929 stock crash

#87

Post by DSingularity »

silisili wrote: post #43
DSingularity wrote: post #40

Earlier quoted context omitted.

Why would they sell? They live there now. Why also would builders not keep prices high buy produce less? 2008 was bad loans coming to head. I don’t think it’s going to be the same.

> Why would they sell In many cases, they don't, they just walk away. Would you stay in a 500k 2000sqft house that you have no equity in, when a 300k 2000sqft house was for sale next door? In a non-recourse state? And even for principled people, when you lose your job or fall behind on something you overpaid for, it's really easy to just walk away.

You will never get approved, unless you have workarounds. Even if you did that 7% interest rate will make it all even out for most people.

Re: Charles Mitchell and the 1929 stock crash

#88

Post by tjr225 »

yawnr wrote: post #61
silisili wrote: post #43

Earlier quoted context omitted.

> Why would they sell In many cases, they don't, they just walk away. Would you stay in a 500k 2000sqft house that you have no equity in, when a 300k 2000sqft house was for sale next door? In a non-recourse state? And even for principled people, when you lose your job or fall behind on something you overpaid for, it's really easy to just walk away.

Because you have a 2.5% mortgage and your monthly payment is still smaller than than 300k house at current rates. This is going to be the main issue to me. People are just going to sit in all these houses with bloated prices because the rates they pay are so low, and prices are going to have a very hard time returning to anything close to what they were with inventory so low.

This is the situation I’m in. I’m in the Seattle metro and the mortgage on my 3 bedroom ranch is less than a 1 bedroom apartment in Seattle. I can commute if I need to but why would I ever give this up? I have 0 other debts which makes it extra compelling.

Re: Charles Mitchell and the 1929 stock crash

#89

Post by lmm »

DocTomoe wrote: post #42
lmm wrote: post #39

Earlier quoted context omitted.

Because housing policy is set up so that homeowners in desirable places are the ones who have control over whether more housing gets built there, and unsurprisingly they vote to enrich themselves at the cost of everyone else. The only way to fix it is to set planning rules strictly at the national level, but who's going to vote for that?

And - in all fairness - enriching yourself only is the side-effect, the major other output being "there now is a (more) desirable place". People want to live at increasingly more desirable places, and that is true even more so for people who cannot afford to: If such desirability was no object in their quest, Detroit would be full of people, the Bay Area wouldn't have so many issues with housing, and housing prices w…

I live somewhere with national-level planning rules and it's brilliant (indeed it's the most populous metropolitan area in the world, and I don't think that's coincidence).

Re: Charles Mitchell and the 1929 stock crash

#90

Post by DocTomoe »

lmm wrote: post #89
DocTomoe wrote: post #42

Earlier quoted context omitted.

And - in all fairness - enriching yourself only is the side-effect, the major other output being "there now is a (more) desirable place". People want to live at increasingly more desirable places, and that is true even more so for people who cannot afford to: If such desirability was no object in their quest, Detroit would be full of people, the Bay Area wouldn't have so many issues with housing, and housing prices w…

I live somewhere with national-level planning rules and it's brilliant (indeed it's the most populous metropolitan area in the world, and I don't think that's coincidence).

Without going too deep in Japanese real estate planning laws, iirc most I am aware of are more a "national guideline" and are frequently overridden by prefectures and cities. That's hardly on the level of actual national-planning, communist-style 5-year-plans.
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