Monday, August 25, 2008

"The Abyss Stares Back" - Kunstler

James Howard Kunstler was especially vivid today (August 25) in "The Abyss Stares Back":

As the political conventions descend like the soggy forces of nature they have become -- the tropical depressions of politics -- the Republican party will be seen, with growing clarity, as the party that wrecked America. So many shoes are about to drop, and so many dominoes lined up to fall 'out there' on the financial landscape that the thump and clatter of crashing institutions will sound like the percussion section of the renowned USC marching band as the nation tramps toward the general election.

... I'm rather convinced that the carnage on the money scene will be so extreme this fall that the nation will seem to have been transformed from a superpower to a basketcase before November 4th, and that the blame for this state of affairs will be blindingly obvious: the people in charge for the past eight years looted the treasury, destroyed the currency, and left the machinery of capital a smoking wreckage.

Even if it's not that bad, think Santa Monica real estate values will hold?

If you're up for more gloom, read the Market Ticker, especially 8/23 and 8/20.

19 comments:

Anonymous said...

Anyone that can write that the “the Republican party will be seen, with growing clarity, as the party that wrecked America” must be a retarded Democratic party monkey doing back flips to the cymbals of "the renowned USC marching band". If you don’t see that the Democrats have an equal hand into everything that has been going on then you are a fool.

Anonymous said...

The "retarded" Democrats don't hemorrhage money by funding wars (pointless or not) while simultaneously cutting the taxes that should be funding said war.

And let's not get started on the BS that our soldiers our coming home to: no job, no physical or mental health care, and a house that's probably being foreclosed upon.

No, the f-tard in the white house is not the only one responsible. The lemmings in Congress and Republican party that followed him are responsible as well.

It's time for Change™.

Anonymous said...

Barack voted to fund the war plenty of times.

How can we hit inflation when we've destroyed trillions of $? Simple supply and demand of dollars. Right now there is no supply, less supply and more demand, that'd point to an increasing currency valuation, which if you look at the price of oil is starting to take place.

Anonymous said...

I think it's cute that Anonymous 11:25 posts about lemmings and then closes the post with "It's time for Change™".

Anonymous said...

*Yawn*

Bye bye, boring blog. Your content is so stale I just can't take it anymore.

Anonymous said...

So was Bush responsible for all the people who made a lot of money selling real estate? Or how bout the equity pulled out for other "WISE" investments.

What about the cost of gas in Europe? I hope he didn't make that go over twice what US pays!

Oh, he better not be responsible for making sure we didn't have more attacks on US soil.

Yeah, it's better to close all our army basis so we have surplus. (of sitting ducks)

Did he also make people over extend themselves and do adjustable mortgages? What a jerk!

I am not a very wealthy individual but my portfolio hasn't done too bad.

Oh, and living in a smaller house on the westside , riding my beach crusier to the beach with the kids on the weekends is worth the investment.

Anonymous said...

I agree. This blog has unfortunately lost its way and offers little new or interesting. Thanks for the fun while it lasted.

Anonymous said...

Yeah, kinda bored. But that is a pretty picture of a canyon. Is that in Santa Monica?

Richard Mason said...

Kunstler seems like the kind of clueless idiot who gives doomsayers a bad name.

To take just one point, does anyone believe that by November 6, 2008, America will no longer be a superpower? Would even Kunstler stand by what he just said?

If by some chance we get to November 6 and America is still the world's most powerful country, is Kunstler going to issue a retraction? Or rethink any of his views? I predict that he will not, and instead will issue more blather about the imminent collapse of civilization.

rosebud said...

To answer your question, Westside, yes, they'll hold (at least in Northern SM). Inventory for sale is still tiny, and average Adjusted Gross Income continues to keep pace with average home prices. That's really remarkable considering just over 120 homes change hands in a year (compared to the 4000 tax returns filed).

Anonymous said...

Look, there is an old libretarian tactic: If you can't undermine the social safety-net through the ballot, you can undermine it by bankrupting the government.

Conservative principals are being forwarded even by our current spendthrift administration. They've essentially bankrupted the federal government, which will allow cuts in social programs that they democrats would have given their life blood defending. Now that the dollar is collapsing, the energy sector is pricing itself outside the reach of the average American, and income growth has been flat for nearly eight years, the American people won't allow the democrats to use the same tired old arguements to defend their policies (look at the offshore drilling issue).

So before you walk around deminishing the current administration as a bunch of war mongering radicals who bankrupted the nation, think of the good that they've done by eliminating potential arguments against cutting social security and drilling in ANWR!

Westside Bubble said...

average Adjusted Gross Income continues to keep pace with average home prices

What is your source for AGI, Rosebud? I've just been looking at plotting income lines on the latest Case-Shiller, and AGI for 90402 (or so) could be interesting.

Westside Bubble said...

Conservative principals are being forwarded even by our current spendthrift administration.

Sell out our country's future to win a petty political fight? 'Nuff said.

rosebud said...

No problem. You can get Federal AGI stats by zip code on the IRS.gov site and on melissadata.com. You can get CA state AGI from the FTB site (state AGI will be lower than Fed, but will still show the same growth %). And I meant 6,000 returns filed, not 4,000, sorry.

dwr said...

rosebud-
this is the data you believe supports your position?

90402 Average Adjusted Gross Income (AGI)
2000: $270,488
2001: $233,551
2002: $222,891
2003: $217,176
2004: $270,778
2005: $317,899

So in 2000 when the median in 90402 was maybe $1.2MM the AGU was 270K, now the median has doubled to somewhere between $2.5 and 3.0MM, while the AGI has increased less than 50K, and somehow in your mind the incomes are keeping pace with house prices!? Thanks for the laugh.

The price to income ratio is approx. 10:1 in 90402, just like everywhere else in California.

rosebud said...

Yes, and you can go further back to '98 when it was $184,491. Putting these on a graph, you can then see that the one year you cited looks like an anomaly, not really fitting the trendline. It also looks like it will be up again in 2006.

Where did you get the average home price in 2000, and the price to income ratio? I'm guessing you made these up without real data? The average sale price to AGI in 90402 is about 6.5 to 1. Again, this is remarkable, considering the number of homes sold in a year versus the number of returns filed. i.e. there are only about 120 new households (based in sales, not potential renters), but there are 6000 returns.

So, I could be wrong, but why else so long to crash? Why no inventory build-up here? The data supports that there are fewer transactions...granted. And there are a few other outliers that show reduced prices, but there are still outliers that show increased prices. Please let me know about the data for this area that I'm missing, though. Or if you can, get sales price info for 98 or 2000. Or tell me what 120 new households have to be making to drive up the AGI like this when there are 5850 others filing returns (even assume they received 5% raises).

dwr said...

"The average sale price to AGI in 90402 is about 6.5 to 1."

Based on what? The cheapest SFR in 90402 is what, $2.2 million? The median is approximately $3.0 million. Much closer to 10:1 based on the $317K median income than your ratio.

dwr said...

"Or tell me what 120 new households have to be making to drive up the AGI like this when there are 5850 others filing returns (even assume they received 5% raises)."

I think it's pretty clear from the data that much of the income is passive income, which seems to track pretty closely to what the stock markets are doing.

rosebud said...

dwr, no offense, but again not sure where you're getting data... it looks like interest income is only about 12% of the value of wages. I agree that it looks like there was a spike in passive income in 2000, but it also looks like wages (and AGI overall) have been on a fairly steady upward trend.

For your other question, I compared average sale price for a year to AGI (since AGI is an average as well). Average sale price would also include condos... but then again, those folks will be affecting the AGI too. Happy to see other data, though.