Housing Bubble Deflating: Will The Us Consumer Follow?

LS, before I start,these comments are not directed to you specifically. I'm just adding my $.02, and you're the poster I clicked on.

A prior poster remarked that ex-Californians were buying million dollar homes in Colorado to avoid the tax bite. That poster needs to brush up on his tax facts before spouting such drivel. The tax laws regarding home sales were changed several years ago: a married couple can claim up to $500,000 of the profit of a house they sell, if they meet a few simple requirements. None of those requirements have anything to do with the purchase price of the next house.

Another poster (WillyOne) called 2500 SF houses 'monsters'. I've got a 2500 SF house, and my wife and 3 kids (and I) hardly consider our house a monster. Do we live more comfortably now than when we lived in a 1300 SF apartment? Absolutely! But now, I am enjoying the thrills of home ownership, to include paying for all of the repairs and maintenance on my castle.

As for a housing 'bubble', on the same plane as the dot com bubble? Please, don't make me laugh! There may be a pocket here and there, but it sure isn't happening here in Dallas-Fort Worth! Even in the burb I live in (Valley Ranch), home prices have appreciated modestly over the past 10 years. By modest, I mean 6-8% appreciation per year. For those that bought before '86, it took them 10 years to recoup their paper losses on their properties.

Keep up the good work, LS. Common sense will prevail.

You have a world of "splainin'" to do if you think you are going to convince anyone that China is capitalist, in any sense.

The word I would choose is Fascist. That said, there are pockets of economic freedom in Fascist societies that exceed the freedom available in Western Socialist Mobocracies. My company's life saving technology would have died on the vine if we waited for approval in the States. You literally have to buy a Senator to bring certain technologies to market in this country. Actually your remark : Look at Wm. McNeill's "Pursuit of Power," on how the Chinese ran a mercantilist system---for the good of the government---and reacted strongly against capitalism when it came in. is an apt description of modern Socialist America. Rather than nationalizing the means of production like the USSR did America has nationalized the results of production. Its the same basic idea, its just a more workable implementation of Marxism. Competence is harnessed in America to subsidize incompetence, incompetence results in crisis. Crisis is used to justify more power for the mobocracy and more restrictions upon freedom.Rinse wash repeat.

As for Social Security, no, it does matter how Americans "view" things: If they see it as a contract, which they do, they will insist that it be honored.

Sure, our view matters. Unfortunately, our "view" is divorced from reality. How do you propose to conjure these nonexistent savings out of the thin air? If these savings exist, I should be allowed to opt out without harming the system, right? But obviously, that is financially impossible. The younger generation will be the tax slaves of the Baby Boomers. SS is not in any way, shape or form, savings, it is tax. I pay more in SS than I do in rent (amusingly I pay rent to a boomer who also already receives 15% of salary in Social Security taxes).

But government is natural.

Well, hydrofluoric acid is perfectly natural. I prefer to keep it bottled up and away from me.

What is not natural?

As for a housing 'bubble', on the same plane as the dot com bubble? Please, don't make me laugh! There may be a pocket here and there, but it sure isn't happening here in Dallas-Fort Worth! Even in the burb I live in (Valley Ranch), home prices have appreciated modestly over the past 10 years. By modest, I mean 6-8% appreciation per year. For those that bought before '86, it took them 10 years to recoup their paper losses on their properties.

The NASDAQ bubble vs. Fannie Mae

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FANNIE MAE (NYSE:FNM)

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FNM vs. S&P Nasdaq Dow

Splits: 17-Oct-89 [3:1] 16-Jan-96 [4:1]

Last Trade
4:01pm · 75.33

Change
+0.18 (+0.24%)

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75.15

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75.17 - 76.00

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74.803B

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1.43

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Aug 25

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97.00

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0.89

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Jul 29

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as opposed to artificial (i.e., something men would not do, but have to "create")

Adam, when you say things like COMMUNIST China is "fascist" and that the U.S. has "nationalized production," we have nothing more to talk about. Enjoy life in the People's Republic.

I agree that taxes change consumption habits, including home purchases. I think people, when it comes to homes, tend to look only in their neighborhood, and that is unfortunate because all real estate is Location Location Location.

I have a 2200 Sq. Ft. House. It is not a monster. It is exactly right for our 3-person family. This, by the way, makes a point that I seem unable to drive through the skulls of others here, namely that our "average" houses today are VASTLY superior to the "average" house of 30 years ago---not just in space, but in SOME aspects of construction; certainly in insulation and energy savings; occasionally in plumbing (although I want the "Big FLUSH" toilets brought back; in having central heat and air; in having INSTALLED appliances; and in having garages. Thus, a home today is the equivalent of a Ferrari 30 to the Chevy of 30 years ago.

Adam, when you say things like COMMUNIST China is "fascist" and that the U.S. has "nationalized production," we have nothing more to talk about

No, I said the US avoided nationalizing production but rather nationalized the results of production ie income,corporate, and capital gains tax. Its a more workable form of Marxism.

"Fascism" is my street level impression of China.

Capitalism + totalitarian government = Fascism, right?

It certainly isn't Communist. Get rich quick books line the streets and ever back alley is humming with commerce. The word communist doesn't spring to mind.

as opposed to artificial (i.e., something men would not do, but have to "create")

I always think of "unnatural" as a null word meaning outside of nature.

I see man as an extension of nature. The development of technology & ideas is the most natural thing humans do, imo.

I agree. I was referring to the "Enlightenment" notions---which made it in some forms into the Declaration and Constitution---that government was "not natural." Locke and Hobbes (and later Roussearu) all said this. It is, of course, a complete reversal of the ideas of Aristotle and Plato and Augustine, and every other pre-Enlightenment thinker. That was what I meant.

First, I agree with you that in their purest form, fascism and communism are nearly identical. Read Marx's 10 points in the Communist Manifesto and the 25 points of the 1920 Nazi Party---aside from comments about the Jews, they are virtually identical.

Where you and I differ (greatly) is in which represents the "true" China. I agree there is all sorts of capitalism going on in China as well as occurred in the USSR in the black market (as there is in every society at some level or another) that does not mean it is either "official" economic policy nor is it an indicator of where the society is heading, any more than the fact that there might be a lot of speeders on I-75 is an indication that the speed limit is changing. All it means is that for now, the government is tolerating it.

To me, the most important thing is that the MOMENT the Chinese government suspects that this "capitalist" base is viewed as a threat to the regime, it will vanish in the same amount of time that it took Stalin to eradicate the vibrant Kulak agricultural sector. Remember, Hitler used Jews in various positions as long as they contributed to the ends of Naziism.

A have a textbook at home titled "New Ideas for Dead Economists" that would do the trick. I don;t remember the editor. I hesitate to recommend "The Affluent Society" by Gallbreath, but it is readily available.

I would daresay that a 2200 Sq Ft home is almost too much house for a family of three. Certainly with only one child. My own house is a little over 1900 square foot, and my wife and I plan to have a couple kids. It is more than enough space, even with three bedrooms occupied.

I never understood the need or desire of people to buy or build these huge 3000+ sq ft homes. It's too much house to maintain, much less keep clean!

To me, the most important thing is that the MOMENT the Chinese government suspects that this "capitalist" base is viewed as a threat to the regime, it will vanish in the same amount of time that it took Stalin to eradicate the vibrant Kulak agricultural sector. Remember, Hitler used Jews in various positions as long as they contributed to the ends of Naziism.

Nope, the government is embracing its capitalistic base. Why else would they break down the barriers between A and B shares or strip the military of its control over industry. The party is only interested in political power which can be enhanced by a powerful commercial base. Economic power has a way of becoming political power, and you have to enfranchise the population to create a powerful economy. This is where they are likely to lose control.

Don't believe it for a minute. And, I have yet to hear one single national security expert or China expert agree with this take.

Yah, we have been looking to downsize just a little. It is a lot to maintain. I can't imagine, even with "wage slaves" that rich people keep these monster 50-room mansions. For you and what army???? In my neck of the woods, though, you do have to have a large basement for tornado protection, but I don't think that is measured in the sq. footage, is it?

Don't believe it for a minute.

How do explain what's been going on in Shanghai for the last 10 years?

And, I have yet to hear one single national security expert or China expert agree with this take.

These would be the same "experts" who were surprised by the collapse of the USSR. The same experts who didn't figure out there was a problem with muslim extremists until the WTC was bombed twice??

No that would be the experts in capitalism, like George Gilder, who KNEW the USSR was collapsing, and told everyone who would listen. But fine. You think China is free and a happy Adam-Smithian republic. Enjoy.

But fine. You think China is free and a happy Adam-Smithian republic. Enjoy.

That is a deliberate misrepresentation of my views, and you know it.

I suspect America has more Socialist apologists than China these days.

Einstein had very little to do with the bomb.

My recollection of history was that Einstein's famous equation is the fundamental idea that got people thinking about the bomb. He is also credited with writing a very influential letter to Roosevelt arguing that the Nazi's were working on the bomb and the US should go full steam ahead to develpe the bomb. It has been reported that this letter was very important in FDR going ahead with the Manhatten project. You are correct that Eienstein had little to do with the practical engineering of the design of the bomb.