[Rhodes22-list] Bill...expertise expose

Sat May 31 19:55:44 EDT 2008

Bill,

Everyone forgot Herb Stein's (Ben Stein's father) dictum, "If something
can't go on forever, it wont".

The same holds true for our current "oil crisis".  We do in fact have a
serious issue to face, the supply is limited, the demand is rising, and all
the alternatives have serious environmental side effects.  In the short run,
the markets are behaving just as they are supposed to, American consumers
are figuring out that it doesn't make sense to drive a full-sized pickup to
work everyday just so you can haul one sheet of plywood every other month.
Suburban housewives don't need a Suburban to fetch a quart of milk, etc.
You can drink just as much beer on a sailboat and enjoy the same amount of
sunshine as on a powerboat.  What we don't need is for the government to get
involved in a short term price fixing scheme, ie, temporarily suspending
fuel taxes, and so on.  Every service station here in China has a long line
of trucks waiting for diesel.  Diesel is in short supply worldwide and
anytime you fix the price, availability will be limited.

You are correct, Europeans aren't hurt by high oil prices nearly as much as
we are because their alternatives to driving are more available, but more
importantly, they buy oil in euros.  We've milked all the benefits there are
to milk out of a weak dollar and the Fed will be forced to reverse course
sooner or later.

Housing, oil, tulips, Cuban cigars, bubbles, bubbles, toil and troubles,
we've seen this all before. The fact that our kids can't work their way out
of a McDonalds is more worrisome than the marketplace.  As I said to
yungsuntoo after I kicked him out of his free apartment and he was washing
dishes in a cafeteria, "not having an education or employable job skills
really sucks, doesn't it?"

BTW, he's on his way back from his boat in the Philippines (don't ask me why
the CG is there) and on his way to a six month assignment before going off
to rescue swimmer school.  It wouldn't have been my first choice but he's
young and brave (or stupid).

Brad

On Sun, Jun 1, 2008 at 3:15 AM, Bill Effros <bill at effros.com> wrote:

> Brad,
>
> And we're all partly to blame.  We all got "rich" playing this game.  We
> all knew there was no fundamental reason for the price rise.  The price
> of all our houses was exceeding the rate of inflation--and that just
> can't be.  But we sure laughed at anyone who didn't play along.
>
> The Chinese didn't own our land.  They didn't build our houses.  The
> game was good for us.
>
> Now what?
>
> The Chinese don't get hurt by our falling land prices.  Europeans get
> hurt only 1/2 as much by our rising oil prices.  Our kids don't know
> enough to work their way out of a McDonald's.
>
> Lucky the wind is free.
>
> B.
>
>
>
>
>
> Brad Haslett wrote:
> > Bill,
> >
> > Good point!  Mortgages were supposed to be 'safe' investments because
> there
> > was the underlying value of the asset to back them up (the homeowners
> cash
> > equity plus the real estate).  When there is no cash on the front end and
> > the property is overvalued, the institution is not investing, they're
> > speculating.  When something doesn't make sense, it is probably because
> it
> > doesn't make sense.  Construction costs weren't rising that fast, demand
> > wasn't rising that fast, vacant land wasn't disappearing (but for places
> > like Manhattan) - there simply wasn't any fundamental reason for real
> estate
> > prices to rise as fast as they did.  Then reality hit.  I don't see this
> as
> > a crisis at all, but, there are other fundamentals of the US economy that
> > should give us pause for concern.
> >
> > Brad
> >
> > On Sat, May 31, 2008 at 12:29 PM, Bill Effros <bill at effros.com> wrote:
> >
> >
> >> Flip side of the same coin.  They couldn't get easy and cheap mortgages
> >> if the banks couldn't get high appraisals.
> >>
> >> I think people have the tulip craze wrong.  As I understand it, people
> >> were bidding on extremely rare bulbs that became the basis of a
> >> multi-billion dollar industry that has endured for centuries.  The fact
> >> that those varieties dropped in price when the importers were able to
> >> mass produce them is very different from most of the bubbles it has
> >> recently been compared to.
> >>
> >> B.
> >>
> >>
> >>
> >> Brad Haslett wrote:
> >>
> >>> Bill,
> >>>
> >>> You pretty much nailed it when you said homes were over-valued. We
> >>>
> >> disagree
> >>
> >>> on the effect easy and cheap mortgages had on the market. It was a
> >>>
> >> factor.
> >>
> >>> Over 20% of this garden variety bubble was people flipping houses that
> >>>
> >> they
> >>
> >>> couldn't or wouldn't have bought without easy access to the mortgage
> >>> market.  Not unlike that other garden variety bubble, the tulip craze
> in
> >>> Holland, there were no underlying economic reasons to support the
> run-up
> >>>
> >> in
> >>
> >>> value (as opposed to local market conditions like a gazillion peasants
> >>> moving to Beijing or tens of thousands being displaced by Katrina).
> >>>
> >>> Congress always reacts to these things too late and in the wrong
> >>>
> >> direction
> >>
> >>> when they shouldn't react at all.  Banks and financial institutions got
> >>>
> >> too
> >>
> >>> cute with their accounting and marketing and it will take a whole new
> >>> generation or two of MBA's to try that stunt again.  But, sooner or
> later
> >>> they will in a slightly different fashion.
> >>>
> >>> The housing segment will be back on its feet soon enough.  The more
> >>> worrisome trend is transportation energy costs.  Some of the current
> >>>
> >> price
> >>
> >>> of oil can be traced to a weak dollar and some to speculation, but the
> >>> 'elephant in the room' is Peak Oil occurring at the same time as a
> rapid
> >>> rise in the middle class in India and China. We'll never run out of
> oil,
> >>> just oil at the price we want to pay.
> >>>
> >>> Inflation?  Count on it!
> >>>
> >>> Brad
> >>>
> >>> On Wed, May 28, 2008 at 8:47 PM, Bill Effros <bill at effros.com> wrote:
> >>>
> >>>
> >>>
> >>>> Elle,
> >>>>
> >>>> I know how to sell homes quickly, I don't know anything more about
> >>>> cycles than anyone else.
> >>>>
> >>>> This cycle looks different.
> >>>>
> >>>> Nothing in my view has changed with regard to selling homes.  I still
> >>>> believe you can get more for your home selling it yourself in 5-Days
> >>>> than you can get any other way, and this allows you to time perceived
> >>>> cycles to fit your needs.
> >>>>
> >>>> Most of what you read in the newspapers is silly, in my view.
>  Mortgages
> >>>> didn't create this situation.  Homes were over-valued.  We all played
> >>>> along.
> >>>>
> >>>> We will see a lot of inflation which will allow the paper value of
> homes
> >>>> to increase, foreclosures to decrease, and people who don't own homes
> >>>> will suffer.
> >>>>
> >>>> It's a shame, and it hurts this country, but we really have no one to
> >>>> blame but ourselves.
> >>>>
> >>>> There is no such thing as a free lunch.
> >>>>
> >>>> Bill
> >>>>
> >>>>
> >>>>
> >>>> elle wrote:
> >>>>
> >>>>
> >>>>> Bill,
> >>>>> Good to hear that things went well.
> >>>>>
> >>>>> When we hit a slow patch on the list, it would be
> >>>>> instructive to hear your views on the housing
> >>>>> -mortgage situation. These cycles come & go, but I'd
> >>>>> be interested on your thoughts and if you have changed
> >>>>> anything to conform/adapt/flex with current en=vents
> >>>>> in the market.
> >>>>>
> >>>>> elle
> >>>>>
> >>>>> We can't change the angle of the wind....but we can adjust our sails.
> >>>>>
> >>>>>  1992 Rhodes 22   Recyc '06  "WaterMusic"   (Lady in Red)
> >>>>>
> >>>>>
> >>>>>
> >>>>> __________________________________________________
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> >>>>>
> >>>>>
> >>>>>
> >>>>>
> >>>> __________________________________________________
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> >>>>
> >>>>
> >>>>
> >>> __________________________________________________
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> >>>
> >>>
> >>>
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> >>
> >>
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> >
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