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‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

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Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#111

Post by dragonwriter »

throwawaycities wrote: post #38

There is no doubt that the entire housing market was exploited to float the US economy and covered up a recession dating from 2000-2001 until the housing market could no longer be sustained resulting in a complete collapse of the financial markets and banking. The housing market didn’t “snap back” rather two unprecedented tax payer stimulus packages totaling just shy of $2T were given to the banks to finance millions…

> There is no doubt that the entire housing market was exploited to float the US economy and covered up a recession dating from 2000-2001

This is false. There is no doubt that, while there was a short recession in early-mid 2001, there was a general economic expansion, not a recession, after that; to the extent that housing market was exploited to paper over something, it was the unusually top-loaded distribution of the benefits of that expansion, where the bottom 3 income quintiles and the fourth quintile was basically flat, with the gains concentrated in a fair small segment at the top, which it covered by (non-sustainably) paying for continued debt-fueled lifestyle improvements for groups that weren't seeing real income gains.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#112

Post by ItsMonkk »

imtringued wrote: post #92
JumpCrisscross wrote: post #79

Earlier quoted context omitted.

This is a broad diatribe against monetary base expansion. The counterfactual for which, post crisis, we have in Europe. (And Depression-era America.)

I find it amusing when people automatically think that an increase in the money supply must result in inflation. There is this inherent contradiction that people are angry that the money supply grows because they save, while themselves demanding high interest rates like 5% to let their money compound over time. If you limit the money supply and demand high interest, that interest must circulate from lender back to th…

Your example is a good example of the Motte and Bailey fallacy. Yes, if he uses that $100 to create something worth more than $5, he wins, you wins, the community wins. That's the motte. But the vast majority of loans are not that type. The vast majority of loans are fighting over zero-sum resources. Think buying land. That's the bailey.

When the money supply increases in that way, while it does not immediately create inflation, as the new money will be stored in investments and those investments rising in value are not considered inflation, as soon as the down-turn occurs, that money, being liquid, becomes inflation.

So when you create money through artificially low interest rates that goes to rent-seeking, you are creating inevitable inflation in the future.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#113

Post by commandlinefan »

ta2234234242 wrote: post #22
greatpostman wrote: post #16

Earlier quoted context omitted.

Paul krugman has been wrong on almost everything

When you win a nobel prize in economics, I will listen to you more.

> win a nobel prize

How long has it been since a nobel prize been anything more than a prize for being an influential leftist?

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#114

Post by monkeywork »

refurb wrote: post #60
monkeywork wrote: post #24

Earlier quoted context omitted.

Canada's housing market is inflated but not a bubble - the fundamentals of supply and demand are still firmly in place in Canada's largest cities (ie population growth is FAR exceeding infrastructure). Canada's housing market will see a roll back in pricing (lets say at an extreeme 20-30%) however that really is only pushing pricing back 1-2 years max (possibly not even that).

A few thoughts: Prior to the 2008 crash, the US' "fundamentals of supply and demand" were still firmly in place as well. It's just that demand was massively juiced by easy money and an expectation that "housing only goes up" (speculation). Clearly not all of Canada is in a bubble (Toronto, but even more, Vancouver, has always been expensive), but when a house in Brampton, Ontario (50 km from downtown Toronto, 45 to 7…

See in the case of Brampton (and to a lesser extent Barrie) they are actually considered essentially suburbs of Toronto. Someone commuting from Brampton is a regular everyday occurrence that no one would bat an eyelid at here, Barrie is less common but still happens all the time (it's a 90 minute commute via train).

The places where people are really going to take a hit in Canada is in places like the Maritimes or smaller cities much further away from the major metros that people fled to during the pandemic and WFH being the fad. Tons of folks sold their Toronto / Vancouver homes and bought homes in these area's for essentially cash and are mortgage free but they drove the prices way up and anyone native to those places who bought a house and had to use a mortgage are going to be in a world of hurt when those prices fall back down hard over the next 2-5 years.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#115

Post by parkingrift »

imtringued wrote: post #93
parkingrift wrote: post #86

Earlier quoted context omitted.

At what point do you think individual adults should be responsible for their own decisions? “No capacity or understanding of the financials” makes it sound like these fully grown functioning adults had a learning disability. These people had access to the internet, books, libraries, financial services, and more. If these people were ignorant of the true costs it was willful ignorance.

> At what point do you think individual adults should be responsible for their own decisions? The problem is that those lenders weren't responsible, tax payers and defrauded home buyers were cleaning up their mess.

Defrauded home buyers? Come now. It isn't as if lenders were submitting fraudulent paperwork with fake rates and then sticking homebuyers with the "real" rate after the fact. Home buyers were willingly signing documents with plain English terms, and this was happening in the information age.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#116

Post by parkingrift »

Beltiras wrote: post #101
parkingrift wrote: post #88

Earlier quoted context omitted.

If it takes several decades for the bubble to pop then it isn’t a bubble.

If it's being artificially inflated by policy it's a bubble, even if it takes a very long time for the inflation to pop it.

An economic bubble, by definition, is a scenario where asset prices are significantly divorced from underlying fundamentals. It is not possible to have a thirty year bubble. A thirty year "bubble" means the fundamentals were wrong and we were never actually in a bubble.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#117

Post by gregors »

chrisjc wrote: post #87
Andaith wrote: post #9

Earlier quoted context omitted.

Which is crazy, because you would think that Australia was mostly Flatland! It's the size of the continental US, with a population lower than Texas. Everyone here lives in the capital cities, and last I looked there were almost no tech jobs at all further up the coast between Sydney and Brisbane. I wonder if pandemic working from home is going to change this, some of our devs have already moved up the coast...

> some of our devs have already moved up the coast... How do they do this and stay connected? I remember seeing a guy that did this in a van while subscribing to multiple wireless providers. But as far as I am aware Australia still doesn't have the best coverage, service and technology. Moreover, if you're going out more remote locations, I'm sure your connection options start to dwindle. I'm sure Starlink (maybe one…

Here's an interesting RV internet set up.

https://wa9ace.net/2021/08/01/rv-internet.html

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#118

Post by JumpCrisscross »

ThunderSizzle wrote: post #102
imtringued wrote: post #92

Earlier quoted context omitted.

I find it amusing when people automatically think that an increase in the money supply must result in inflation. There is this inherent contradiction that people are angry that the money supply grows because they save, while themselves demanding high interest rates like 5% to let their money compound over time. If you limit the money supply and demand high interest, that interest must circulate from lender back to th…

> There is this inherent contradiction that people are angry that the money supply grows because they save, while themselves demanding high interest rates like 5% to let their money compound over time. When's the last time a high yield savings account made 5%? Or even matched inflation? People are angry that they are punished by thr fed for trying to save money for a rainy day.

> People are angry that they are punished by thr fed for trying to save money for a rainy day

Rainy day funds should approximately track inflation. There are plenty of assets that have been good havens over the past decade. It’s odd to expect real gains on a rainy day fund.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#119

Post by Arrath »

refurb wrote: post #12
sien wrote: post #3

Paul Krugman described the effect memorably in 2005. https://www.nytimes.com/2005/08/08/opinion/that-hissing-soun... "Then there are the numbers. Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone. In Flatland, which occupies the middle of the count…

This theory doesn’t work for one of the biggest bubbles of 2007, which was Las Vegas. It has nothing but surrounding land to build on. They built like crazy and still had massive price inflation followed by a bubble popping, prices dropped almost 50% and vast swathes of empty houses remained for years and prices only recovered to the peak in the last year or two.

>..Las Vegas. It has nothing but surrounding land to build on.

Not to focus on one single point of your post, but Vegas is in fact nearing the point of having developed the easy area in the surrounding flatland of its valley, and is now beginning to abut the surrounding mountains (and federally owned land). Vast tracts of surrounding uninhabited land does not necessarily mean it is easily developed and habitable.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#120

Post by modeless »

parkingrift wrote: post #116
Beltiras wrote: post #101

Earlier quoted context omitted.

If it's being artificially inflated by policy it's a bubble, even if it takes a very long time for the inflation to pop it.

An economic bubble, by definition, is a scenario where asset prices are significantly divorced from underlying fundamentals. It is not possible to have a thirty year bubble. A thirty year "bubble" means the fundamentals were wrong and we were never actually in a bubble.

You don't think it's possible for underlying fundamentals to be defied for 30 years, huh? Depends how you define fundamentals I guess. If your definition of fundamentals is "something that lasts 30 years or more" then you'd be tautologically correct.
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