Warner Trades Down at New Ruskin College
www.NewRuskinCollege.com
Lecture Notes: 07-20-05
What is a bubble?
It occurs to me that despite my best efforts you still think that “housing bubble” is an objective question. That is why you consult economists, real estate experts, and the like.
Once again you fall back on the easy: “objective”. And again my sad friends you are wrong. A bubble is a subjective decision, an opinion.
When we say real estate prices are in a bubble what we mean is that we do not believe the prices are sustainable.
But what do we mean: sustainable?
For example, as only 16% of Californian households can afford the median priced home, (see WSJ) then we might think that this is not sustainable. However, and to demonstrate the supremacy of the subjective, suppose now it is argued that in a world of 6 billion people, even if we focus only on the wealthiest ½ of 1 percent, that still leaves us 30 million people, 30 million potential customers, buyers, and many of these potential customers might consider purchasing a home in California?
Consider that in all of the United States we sell each year approximately 7.5 million homes.
That is less than ¼ of the top ½ of one percent of the world’s wealthiest! And what percent of the 7.5 sales need be bought to influence the price and keep it ever upward? If only a fraction of the world’s potential buyers were to decide to purchase a home in the USA, if only as a hedge against the world economy, all homes sold in that year could conceivably be sold to foreign buyers.
So this means that though only 16% of Californians can afford the median priced home, there were tens of millions of potential buyers around the world who could. As we have just seen if only a fraction of this small group were to buy in America not only could all California homes sales be bought up, but all homes sold for the entire year throughout America could be bought!
But now see the point, even though the price of homes could thereby be maintained one might nonetheless conclude that prices are still in a bubble.
Why?
Because one might conclude that the situation is not sustainable. One might consider what effect shutting out the bottom 84% of Californians from purchasing the median priced home would have on the California Republic? (see SFGate ) Consider the China bid for Unocal.
Do you need a degree in Economics to see a bubble? No! Indeed the economist is more likely to think that the bubble is an objective question rather than seeing the deeper issues.
We might say the price is not sustainable because a society which excludes 84% of its members is not sustainable!
There is more to say. I want to go on about the oligarchy. I want to describe how the oligarchy hides its venality behind liberalism. I want to hold Ms. Warner up to ridicule as an example . . . The rats and the sinking ship . . . leaving the people in the dark . . . and Mr. Bush’s open borders policy, and his support of racial quotas as another example . . . how left and right, Democrat and Republican join together . . . the easy answers, the avoidance of the real issues . . .
And here I want to talk about all of this as examples of our failure to respond to changing situations because of our dishonesty in our appraisal, our unwillingness to be intellectually challenged, our preference for the easy answers which our politicians are all too willing to provide us . . .
And quote Thomas Friedmen: “You can not make it as a B+ student in Brooklyn anymore.” (I think quoting Bill Gates approvingly.) That the reader can not see in Friedmen’s words the same dishonesty proves the point. This intolerance for the B+ barely conceals the utter disdain for the B, and the C, and what of the others? To say, almost joyfully, “can not make it,” is dishonest because it is easy, because it avoids the really serious questions. Like the Rush Limbaugh, Sean Hannity, Bill O’Reilly, Glenn Beck, Michael Weiner, pap, and mental popcorn . . . with its focus on “excellence” and “success” and its repeated “this is what makes America great . . .” pomposity.
For example, California accepts the top 12% of its high school graduates into the UC system and the top 25% into the CSU system. Yet in a world of 6 billion people accepting only the top 3% would produce a potential entering freshman class of over 45 million students of college age, more than the total population of California. (There are a little over 2 million students in California colleges.) Why reach all the way down to the twelfth percentile? Why not just the top 3%? Why not the best? (From around the world? Don’t you believe in meritocracy?) Indeed, due to Mr. Bush’s open border policy, and California’s rule never to ask the legal status of students at its universities, the only thing preventing the rush on the colleges is the cost of the air faire to get to California.
And I wanted to describe how all of this is part of the bubble economy, for the bubble is not just the price, it is all of this subjective evaluation, critical thinking, of what is and is not sustainable . . . You could be expanding opportunities, using laser disks in education, world wide, you could be building more houses, using modular construction, building nuclear power plants . . .
I used to think that racial and gender quotas caused the deterioration in relations, encouraged the VICTIMs to act out, confirmed them in their false belief of moral superiority, encouraged their hatred and arrogance, etc. , but now I see that a society capable of enacting such a spoils system already had so ruined its human relations, so objectified its prejudices . . .
But as I say, I had a great deal more to say about this and much else . . . here are some links . . .
July 18, 2005 , House prices drop 1%, says Rightmove
http://business.timesonline.co.uk/article/0,,9064-1698783,00.html
International investors play big role in S. Florida's housing boom
http://www.sun-sentinel.com/news/local/southflorida/sfl-zhousing15jul15,0,1483602.story?coll=sfla-home-headlines
Condo crazy at the heart of a boom
http://www.csmonitor.com/2005/0708/p01s01-usec.html
Europe buys more Florida homes
http://www.miami.com/mld/miamiherald/12135106.htm
As the last hours unfold it all seems pointless . . . Farmersinsurance.com, keeps checking waiting for the end, and StateFarm.com, and Travelers.com, and AIG.com, . . .
And it changes nothing for me to point out that Farmers Insurance was about to fall to BBB rating. (Only AAA rated insurance companies can write insurance for mortgaged homes.) Only the transfer of $10 billion from the parent company, Zurich Financial, kept the rating. It means nothing to point out that they have made one bad decision after another. (Previously I reported the $130 million judgment for overtime pay for 2,000 adjusters in California.) But the failure to use computers to track the claims inventory in part resulted from their pushing work off onto their adjusters . . . why invest in computers when you can simply make your staff work an extra 15 hours a week? Free labor drives out technology. See also farming. Building trades. Do you not see this as another example? Don’t you see . . .
Well . . . it changes nothing.
www.NewRuskinCollege.com
Lecture Notes: 07-20-05
What is a bubble?
It occurs to me that despite my best efforts you still think that “housing bubble” is an objective question. That is why you consult economists, real estate experts, and the like.
Once again you fall back on the easy: “objective”. And again my sad friends you are wrong. A bubble is a subjective decision, an opinion.
When we say real estate prices are in a bubble what we mean is that we do not believe the prices are sustainable.
But what do we mean: sustainable?
For example, as only 16% of Californian households can afford the median priced home, (see WSJ) then we might think that this is not sustainable. However, and to demonstrate the supremacy of the subjective, suppose now it is argued that in a world of 6 billion people, even if we focus only on the wealthiest ½ of 1 percent, that still leaves us 30 million people, 30 million potential customers, buyers, and many of these potential customers might consider purchasing a home in California?
Consider that in all of the United States we sell each year approximately 7.5 million homes.
That is less than ¼ of the top ½ of one percent of the world’s wealthiest! And what percent of the 7.5 sales need be bought to influence the price and keep it ever upward? If only a fraction of the world’s potential buyers were to decide to purchase a home in the USA, if only as a hedge against the world economy, all homes sold in that year could conceivably be sold to foreign buyers.
So this means that though only 16% of Californians can afford the median priced home, there were tens of millions of potential buyers around the world who could. As we have just seen if only a fraction of this small group were to buy in America not only could all California homes sales be bought up, but all homes sold for the entire year throughout America could be bought!
But now see the point, even though the price of homes could thereby be maintained one might nonetheless conclude that prices are still in a bubble.
Why?
Because one might conclude that the situation is not sustainable. One might consider what effect shutting out the bottom 84% of Californians from purchasing the median priced home would have on the California Republic? (see SFGate ) Consider the China bid for Unocal.
Do you need a degree in Economics to see a bubble? No! Indeed the economist is more likely to think that the bubble is an objective question rather than seeing the deeper issues.
We might say the price is not sustainable because a society which excludes 84% of its members is not sustainable!
There is more to say. I want to go on about the oligarchy. I want to describe how the oligarchy hides its venality behind liberalism. I want to hold Ms. Warner up to ridicule as an example . . . The rats and the sinking ship . . . leaving the people in the dark . . . and Mr. Bush’s open borders policy, and his support of racial quotas as another example . . . how left and right, Democrat and Republican join together . . . the easy answers, the avoidance of the real issues . . .
And here I want to talk about all of this as examples of our failure to respond to changing situations because of our dishonesty in our appraisal, our unwillingness to be intellectually challenged, our preference for the easy answers which our politicians are all too willing to provide us . . .
And quote Thomas Friedmen: “You can not make it as a B+ student in Brooklyn anymore.” (I think quoting Bill Gates approvingly.) That the reader can not see in Friedmen’s words the same dishonesty proves the point. This intolerance for the B+ barely conceals the utter disdain for the B, and the C, and what of the others? To say, almost joyfully, “can not make it,” is dishonest because it is easy, because it avoids the really serious questions. Like the Rush Limbaugh, Sean Hannity, Bill O’Reilly, Glenn Beck, Michael Weiner, pap, and mental popcorn . . . with its focus on “excellence” and “success” and its repeated “this is what makes America great . . .” pomposity.
For example, California accepts the top 12% of its high school graduates into the UC system and the top 25% into the CSU system. Yet in a world of 6 billion people accepting only the top 3% would produce a potential entering freshman class of over 45 million students of college age, more than the total population of California. (There are a little over 2 million students in California colleges.) Why reach all the way down to the twelfth percentile? Why not just the top 3%? Why not the best? (From around the world? Don’t you believe in meritocracy?) Indeed, due to Mr. Bush’s open border policy, and California’s rule never to ask the legal status of students at its universities, the only thing preventing the rush on the colleges is the cost of the air faire to get to California.
And I wanted to describe how all of this is part of the bubble economy, for the bubble is not just the price, it is all of this subjective evaluation, critical thinking, of what is and is not sustainable . . . You could be expanding opportunities, using laser disks in education, world wide, you could be building more houses, using modular construction, building nuclear power plants . . .
I used to think that racial and gender quotas caused the deterioration in relations, encouraged the VICTIMs to act out, confirmed them in their false belief of moral superiority, encouraged their hatred and arrogance, etc. , but now I see that a society capable of enacting such a spoils system already had so ruined its human relations, so objectified its prejudices . . .
But as I say, I had a great deal more to say about this and much else . . . here are some links . . .
July 18, 2005 , House prices drop 1%, says Rightmove
http://business.timesonline.co.uk/article/0,,9064-1698783,00.html
International investors play big role in S. Florida's housing boom
http://www.sun-sentinel.com/news/local/southflorida/sfl-zhousing15jul15,0,1483602.story?coll=sfla-home-headlines
Condo crazy at the heart of a boom
http://www.csmonitor.com/2005/0708/p01s01-usec.html
Europe buys more Florida homes
http://www.miami.com/mld/miamiherald/12135106.htm
As the last hours unfold it all seems pointless . . . Farmersinsurance.com, keeps checking waiting for the end, and StateFarm.com, and Travelers.com, and AIG.com, . . .
And it changes nothing for me to point out that Farmers Insurance was about to fall to BBB rating. (Only AAA rated insurance companies can write insurance for mortgaged homes.) Only the transfer of $10 billion from the parent company, Zurich Financial, kept the rating. It means nothing to point out that they have made one bad decision after another. (Previously I reported the $130 million judgment for overtime pay for 2,000 adjusters in California.) But the failure to use computers to track the claims inventory in part resulted from their pushing work off onto their adjusters . . . why invest in computers when you can simply make your staff work an extra 15 hours a week? Free labor drives out technology. See also farming. Building trades. Do you not see this as another example? Don’t you see . . .
Well . . . it changes nothing.
www.NewRuskinCollege.com
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