231–240 of 241 posts
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Those are all reasons why I hope the crash is as big as possible. Let's enjoy the show.
This is a stupid response. Remember 2009 when the housing bubble popped and it effected the entire economy? With billions tied up in commercial real estate, it will have a wider impact then just office buildings and retail locations
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Many of today's office buildings are not built to last, honestly. There is a good chance that a glass/concrete tower will collapse in 100 years, while the old brick factories are basically indestructible.
Brick structures, famously known for surviving earthquakes with flying colors.
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Conversion of office property to residential also requires a lot of capital which seems forgotten by a lot of the folks championing this kind of conversion. It's not as simple as building some interior walls and calling it a day
Having remodeled commercial buildings I can say adding plumbing to a finished commercial building is a nightmare.
This is why changing zoning laws is so important. These buildings and their underlying values can be saved by 'going condo' or conversion to smaller unit spaces for the purpose of housing so many who are struggling with massive increases to rent. Most rent does not increase because of increased asset expenses, it increases because of increased owner expenses and that quickly becomes a slippery slope in the face of ad…
> the amount of money rental income sucks out of the economy that would otherwise be used for production and consumption Renting is a service, a productive economic activity that yields net positive value to the society. The building did not fall from the sky and someone "claimed" it. Someone actually had to put in work and time and take risks for it to exist and be rented. Those enjoying the building benefit from th…
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Or we could just be flexible and evolve with any reasonable colloquialisms of the time.
In a ponzi scheme, some actors go to jail for the rest of their lives and in a speculative bubble they do not. There are good reasons to have separate words for these separate concepts. Dishonest people will always use hyperbole when describing the world. That hyperbole is not justification for honest people to abandon technical definitions. And that is what you are proposing. Having everyone "evolve" on the definiti…
At that point did it stop being a speculative bubble?
The reality is, reality doesn't have such distinct boundaries as you are trying to enforce.
At the end of the day, what is the point of a word's definition? To help communicate an idea to other people and society. The US financial and legal systems are intentionally designed to segregate the less educated. Confusion is their primary strategy to make more money! You can either choose to help them continue the segregation, or you can chose to liberate financial and legal concepts to everyone.
How can you help? By understanding what parts of the concept were easy to understand, what colloquial language is most used to describe it, and then realizing the gaps between the coloquial and technical definitions.
Trying to resolve those gaps with "you're using ponzi wrong" continues the segregation and confusion. Trying to resolve the gaps with "Oh.. you think a ponzi scheme is any scam using obfuscated financial instruments. Ok fair enough lets start the conversation there." you would then continue and say "A typical ponzi schema has a single power structure with a single voice and name e.g. Bernie Madoff. However, in this case it is a ponzi scheme with a distributed set of actors i.e. no one is working together, but still there is large scale issue occurring - we typically call this a speculative bubble / coordinated pump and dump - its not always easy to know what exactly is going on".
You could even continue "Realestate in general has actually been a generational pump and dump scheme. Its not that grandma's everywhere meant to harm anyone, but the common advise to 'buy a hose at any cost' is in favor of the realestate owning elderly (i.e. most of them) and as such is difficult for them to say anything else. Additionally, because its been generational, it seems to have been working for quite some time giving it even more credence. At the end of the day tho, it is a distributed ponzi scheme - if you go to withdraw your money and no one is willing to add even more money (i.e. how much you want, and the "processing fees" around it) - you will not get your money."
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> the amount of money rental income sucks out of the economy that would otherwise be used for production and consumption Renting is a service, a productive economic activity that yields net positive value to the society. The building did not fall from the sky and someone "claimed" it. Someone actually had to put in work and time and take risks for it to exist and be rented. Those enjoying the building benefit from th…
Nonsense. There are properties that have doubled in price over the last 2-3 years for no significant reason other than the flooding of cheap money into the economy. Landlords did nothing special or productive to earn this huge share of people’s income. They require little labor or outlay relative to other business markets. Furthermore, housing is a necessity like water and food; such resources cannot be allowed to ri…
Yes, government printing money inflates overall prices. More recently, this happened because governments needed to pay for covid. During inflationary cycles, money flocks to assets like real estate. Simply because they are good protection against inflation.
Property owners don't become richer because of that, since everything else became expensive as well.
There are economic systems where price-setting is controlled and/or centralized. To my knowledge, all of them failed in producing better outcomes than a free market for anyone in society.
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> the amount of money rental income sucks out of the economy that would otherwise be used for production and consumption Renting is a service, a productive economic activity that yields net positive value to the society. The building did not fall from the sky and someone "claimed" it. Someone actually had to put in work and time and take risks for it to exist and be rented. Those enjoying the building benefit from th…
This doesn't apply to the land component of the rent.
But you'll be in the middle of nowhere, with no infrastructure, no services.
The "location" value of a property is tied to what's around it. Having lots of people deciding to develop useful things and services around it.
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Having remodeled commercial buildings I can say adding plumbing to a finished commercial building is a nightmare.
Most major conversions will require gutting out drywall, ceilings, etc back to the main architectural structure, making new electrical and plumbing much easier to accomplish versus a finished space.
And if it is a tension slab, you absolutely cannot cut into it.
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> We have had multiple bank failures this year. that is the whole point. We had a top-10 bank fail, and you know what? our financial institutions did not cascade into failure. There WILL always be failures, ups and downs, the question is how it is mitigated.
>There WILL always be failures, ups and downs, the question is how it is mitigated. Privatized profits, socialized losses.
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In a ponzi scheme, some actors go to jail for the rest of their lives and in a speculative bubble they do not. There are good reasons to have separate words for these separate concepts. Dishonest people will always use hyperbole when describing the world. That hyperbole is not justification for honest people to abandon technical definitions. And that is what you are proposing. Having everyone "evolve" on the definiti…
If a speculative bubble was later found to be a victim of pump and dump, then people also can go to jail. At that point did it stop being a speculative bubble? The reality is, reality doesn't have such distinct boundaries as you are trying to enforce. At the end of the day, what is the point of a word's definition? To help communicate an idea to other people and society. The US financial and legal systems are intenti…
> reality doesn't have such distinct boundaries as you are trying to enforce.
It really does, as defined by law and consequences. A ponzi scheme necessarily involves fraud and a speculative bubble does not necessarily involve fraud. The fact that some speculative bubbles do involve dishonesty and manipulation (a pump and dump, like you mentioned) does not change that!