Finally, no bid on mortgage-backed securities
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The US would get explosive growth by not forcing such enormously inefficient car-centric cities.
You get immediate savings by stopping road expansion and cutting fuel demand (close lanes on big roads, replace with bicycle lanes). You get 3-10 years of pain from bicycle/walk-commuting in a city designed for cars. To compensate, let people build supermarkets and stores in single family zoned areas. Subsidize rent-a-bike companies with funds from gas taxes and frozen road construction projects.
This is basically the only sure-fire way to let poor people generate free cash flow to survive the recession without having to helicopter them money. This has worked for developing countries like China. Also, this is a way to keep cities financially solvent by letting the tax revenue to land area ratio increase naturally as people adjust to human-powered commuting.
If you can hop on a bus within a 5 minute walk of where you live, and then hop off withing a 5 minute walk of where you work, life is beautiful and you can probably ditch your car (at least for daily commute). For most, this is not the case.
And I don't want to live in a ultra-urban area.
The only thing really holding back public transport is lack of imagination and ambition. Just because things don't work now doesn't mean they can't if you actually try.
When we have discussions like this, the “normal case” is actually that people live in cities, so that’s obviously what the conversations gravitate around.
I grew up in a small town (4k pop), and there’s no reason bikes shouldn’t be extremely effective in town. It’s tiny! There’s no true need to drive a large, inefficient vehicle .5mi to the rite aid or McDonald’s. Nearly everyone in this tiny town is within quick walking distance of what used to be a passenger train station. It could become a passenger train station again with the right investment.
People living in truly rural areas is an edge case where cars obviously make sense. Even then, the majority of car trips are local. 60% of trips are fewer than 6mi.
0: https://www.census.gov/programs-surveys/geography/guidance/g... 1: https://www.energy.gov/eere/vehicles/articles/fotw-1042-augu...
Edit: meant average, originally put median
It has nothing to do with pride.
Cars are comfortable and convenient. You get a nice seat, air the temperature you want it, and can carry actual cargo. It's easy to run a complete loop of errands after your workday, because you can store stuff in your car.
I went from around ten years of riding the trains in Tokyo to driving a car around a Japanese suburb. Japanese public transportation is excellent, easily best on Planet Earth, and the car wins hands-down.
Cars are a luxury. If you are willing to pay a tax based on engine displacement , give priority on roads to pedestrians and cyclists, and still prefer car-travel, then it is a win-win. If you want city governments to prioritize car-travel over everyone else, then it is a win-lose. The only winner will be car-owners who can spare the cash flow.
The economics on transporting 1s of kgs of food by 1000s of kgs of metal no longer makes sense in the United States for the majority of people as they have poor cash flow and poor balance sheets. I think economically speaking delivery trucks and local supermarkets should take most of the burden.
Currently car owners disproportionately pay for roads that those without cars enjoy. They pay for roads (in their own fuel tax, purchase tax on automobile, and often in registration fees) that allow heavy delivery trucks to bring food and medicine and various goods to local shops and addresses where the car-less can access them. This all despite a car wears remarkably less on a road than the semis that truck in these goods so the car-less (and others) can access them locally.
If anything, pedestrians and bike riders underpay for a road system they take advantage of. In fact one can ride a bicycle and be a near complete free-rider to the road system, if your income is low enough, despite still availing yourself of benefits such as trucked in food/medicine/goods.
Why dont people take the bus? Because the bus is for poor people.
I guess technically it isnt pride - its ego and virtue signalling.
My town actually has a little bus line. But the closest bus stop is a mile and a half or so away from my house. How do I get there? Walk? Once I get there, I have to wait for the bus, which could mean a wait of at least ten minutes or so. Assuming it’s not late. Let’s assume it drops me off exactly where I want to go — the grocery store 5 miles from my house. Now let’s also assume the bus doesn’t make any other stops and takes the most direct route possible. Great, I’ve spent at least 45 minutes each way to make a 5 mile trip. And I’m limited to buying only as much as I can comfortably carry. And oh yeah, I have to walk another mile and a half with those bags once I’m dropped off.
But yeah, my objection is sitting in a bus with poor people.
The argument that someone a country away lives a way because of some sort of pride is plain arrogance. We use cars because there is no reasonable alternative for most people. If we even try to consider alternatives, there simply isn't nothing short of wasting half a day on public transit.
It's not that public transit is superior, or that cars are superior. It's that method A is the most reasonable way to get around nearly 99% of the trips I need to take, and is affordable for me, so I will take that.
In Europe, that tends to be bikes and public transit. In America, it's personal vehicles. It's the nature we're both in.
That in of itself doesn't make one superior to the other.
If I left at 7:09 AM, I could walk 5 minutes, catch a bus, change to a train, change to a another bus, and walk 5 minutes to arrive at 8:18, paying $3.40 one way.
Or I could leave at 8:30, walk 1 minute out to my car, drive 20 minutes, and walk 2 minutes to arrive by 8:55, paying whatever 8.5 miles of car ownership and operation costs me. Is it worth $1.58 (at GSA rate of $0.585/mile) to buy myself 81 minutes at home? Hell yes, it's worth $1.17/hr!
My office is one of the better ones, with a bus stop nearby on both ends. From my prior apartment and office, it would be 7:19 departure, half-mile walk, subway ride, bus ride, and a one mile walk to arrive at 8:32. Or a 24 minute (in morning traffic), 10 mile drive. In both cases, I could leave my house later than I’d have to arrive by public transit and still make that 9 AM meeting.
IMO, to the extent “buses are for poor people”, it’s because they’re terribly inefficient for the riders’ time. Maybe if they were more time-efficient, more people would choose to use them?
But then as an American metro area grows, the car-centric solution is sticky and public transit seems impossible to build later. I one-way commute 55 miles by car twice a week and there is no vaguely sensible public transit option. I'm doing rings around the SF Bay Area. The public transit should be better around here by now.
Car routes (and placement of shops and offices) take advantage of the random route ability of cars to specifically avoid the downtown congestion, enshrining the “quick and convenient to drive from one suburb to the neighboring suburb, but incredibly painful to use public transit for that trip”.
Buses suffer a time penalty naturally along their route, but if you add a “take a bus in a direction you don’t want to go, change buses, take that bus back-tracking the wasted motion, and only then get closer to your destination”, it’s pretty much bound to suck.
In Japan and Europe, I’ve seen more axial service lines and/or more of a mesh covering the areas rather than a bicycle spokes looking transit map.
I wouldn't mind the HOV lane being buses-only and having ramps to bused-only lanes/roads if it also meant busses were faster and highways only needed 2 lanes of travel lanes instead of 4+.
The problem is there's no money in doing it until you get enough ridership, and your not going to get ridership from "tweaking" the routes like most cities try. And no one wants to spend more tax money on the homeless transportation plan.
It's just a shitshow, and there won't be improvement until the chicken and egg cycle can be broken.
I remember going to a town just north of Boston (Everett) for vacation and every day I took the bus into the main Boston area. It was about a 30 minute ride based on distance but all-in it was a little over an hour when accounting for the time you leave your residence to arriving at your destination -- this was being ~5 minutes from the bus stop too.
That's only accounting for 1 way too, there's that time penalty on the way back as well.
Plus there were times where I watched the bus completely skip stops on the way into the city near the end of the route because it was full, so you could end up waiting +30-45 minutes at the bus stop and this is fully out of your control. I was only there for 5 days and I saw it happen twice (fortunately the route started near where I was) but you could see the the look of disgust on the people's faces when the bus didn't stop for them.
FWIW - I live in Everett and commute to downtown Boston (Seaport), so I feel like I should weigh in on this. Bus (either the whole way, or to Wellington subway station transfer) is slow. Bike to Wellington, then subway is still pretty bad because of which where the subway runs if you don't transfer. Subway transfer is slow. Uber is very expensive during rushhour.
By far the fastest, cheapest and most convenient way is for me to motorcycle from my door to the Seaport office where I squeeze between 2 cars to park (for free... haven't been ticketed yet). So that's what I generally do if it's not winter. And this is in a city that actually does have decent public transit compared to most of America.
I don't know if motorcycling is the future or not. It's admittedly more dangerous than driving and requires more coordination. There are safety advancement (automated emergency braking on some brand new KTM's... although that won't help if you overshoot a turn). There are now auto-clutches or non-geared electric motorcycles that are easier for beginners. It would basically take no changes to infrastructure and I've seen it work in Ho Chi Minh (although, again, crashes do occur and are worse when they do).
In the US, it's pretty rare that any of those three are ever satisfied outside of major urban cores.
For example, L.A. traffic, where because everyone wants to drive (and, to be fair, in L.A. where everything is super spread out and public transport is non-existant, this is understandable), you end up getting a solution that, due to horrific space inefficiency of cars [0], comfort and convenience go to zero.
[0] https://www.danielbowen.com/2012/09/19/road-space-photo/
It will take a long time to get there (bus stops, changing lines).
I have cargo (like groceries).
It's too early/late and there is no bus.
The bus does not go where I want to be.
The world economic situation is not going to be resolved by people drinking fewer expensive coffees, eating fewer avocado toasts or biking more to work, or other bike shed related activities. The effects are negligible in the overall picture.
if said car breaks down you have to pay (and spend time) to repair it. many people live paycheck to paycheck, no savings. payday loans and credit card loans are a problem in the US and it's not exactly a coincidence.
of course people in said European cities who can't afford a car also usually don't frequent Starbucks and don't buy avocado (unless maybe if it's on sale), that doesn't mean transportation as a factor is negligible.
> The world economic situation ...
is a completely structural problem. the world needs to spend less of its economic surplus on unsustainable stuff, and this includes everything with externalities (from things like watering the desert in California on an industrial scale to housing/heating/cooling/moving people and freight around using costly ways) and allocating more to building infrastructure for energy generation (and transmission and storage), healthcare and education.
of course strictly speak we don't need to. feudalism was fine, most people got used to it.
The only alternative to cars in cities is working public transit. And working means available, frequent, safe, and clean. You can't have homeless people sleeping on buses, you can't turn it off at 1 am. Regular people need to be able to rely on it.
It's a perfectly viable supplement to good public transit.
Of course it’s not just Americans. I’ve got southern German friends who love the American car centric lifestyle.
Furthermore, our cities are simply bigger and more spread out. You’ll counter by saying we need denser, more walkable cities even though we obviously can’t just tear down our cities and start from scratch.
It's doable, but it's also the most time consuming and impractical way of transportation, compared to the other options, so therefor it's bad.
Just because you can find a weird amish guys who insists that riding a horse is great, doesn't make that a good way of transportation, or something that we should start doing more.
My connection to the center of Stockholm takes 45-60 minutes counting the time to-from stations, I bike the same distance in about 40-45 minutes. I get some exercise, I get to bike to any street I want to in more-or-less the same amount of time. It's bad for you, so just swallow that as a personal opinion but don't come with sweeping statements that "it's therefore bad", this is totally subjective to one's level of discomfort and/or laziness.
I prefer the bike than the great public transportation here for any trip where I won't be carrying more than what my cargo backpack can carry.
I don't agree with the logic of your statement ("it's not perfect for me so therefore bad"), also coming after biking infrastructure is a very weird hill to die on...
Being forced to do activities that are uncomfortable and strenuous = bad. The whole point of our society is to transcend this. There are a million ways to do exercise and sports, and to spend your life and time and energy. Just because someone doesn't like cycling like you, doesn't make them lazy. That's an unbelievably self centered and arrogant viewpoint.
My logic is that cycling is bad because 1. it's not powerful and 2. it's sensitive to the weather, and 3. most people don't do it. Doesn't matter what you personally like.
> My logic is that cycling is bad because 1. it's not powerful and 2. it's sensitive to the weather, and 3. most people don't do it.
> Being forced to do activities that are uncomfortable and strenuous = bad. The whole point of our society is to transcend this.
Pretty self-centered I'd say.
Think you might find that your biology disagrees somewhat, there. Try sitting in a bathtub 100% of your life and see what happens with your health.
Yes, yes, being forced is bad. But it does help against laziness :)
For heat, it will depend individually. Personally I've biked at +35C and it was fine until i stopped due to the wind/movement refreshing.
The majority of people commute by scooter/moped in Jakarta, so it's clearly doable in climates as hot as those you mention.
> even though we obviously can’t just tear down our cities and start from scratch.
You don't have to. Reclaim the roads/stroads by building in the middle and leaving a single one-way lane on each side.
Yeah and the majority of people in Dhaka where I’m from walk everywhere. The true goal of urbanists and environmentalists is for us to live like we’re impoverished people in the third world.
Nobody wants to walk or take public transit in that heat and humidity. Especially not with two or three kids, or carrying tiffin containers of leftovers after a dinner party. My family members who came over from Dhaka to the US moved to places built around cars as soon as they could afford it. My cousin just moved to Texas (after studying in Queens) and is loving all the open space, the houses with pools, etc.
I can't speak for all environmentalists but I'd like people to live pleasantly wherever they like if they can do so sustainably. Probably most Dhaka residents, like most people anywhere, would prefer to stay in their home city and country if possible, just improved. In any case giving everyone in the world a Texas-sized house and pool is not on the table no matter what until we invent personal fusion generators and matter replicators.
Having climate-controlled walkways or more comfortable transit options specifically for people with kids should be available in every city, "impoverished" or "third world" or not. The world certainly has the resources for it.
Bangladesh has about the same population density as the Houston metro area. So it would be totally possible for most people to have cars and houses if it became an advanced service economy.
> I can't speak for all environmentalists but I'd like people to live pleasantly wherever they like if they can do so sustainably.
It's not really up to environmentalists in the first world.
> Probably most Dhaka residents, like most people anywhere, would prefer to stay in their home city and country if possible, just improved. In any case giving everyone in the world a Texas-sized house and pool is not on the table no matter what until we invent personal fusion generators and matter replicators.
I think that's an accurate reflection of what people's end goals are, yes. Using technology to increase the standard of living, just as in western countries.
We are also predominantly complaining about people in the "first world" disregarding the environment due to minor convenience and unfortunate economics.
(But we only have one planet for now, and as things are, nobody is entitled to a free pass to be environmentally irresponsible anymore.)
Indeed, when you bike to work you're mimicking truly impoverished people like Crown Prince Frederik of Denmark.
Sometimes I wonder if aggressively pro-car anti-bicycle people ever tried using a bicycle seriously...
Similarly, biking to work does not make you impoverished. Having to bike to work, or living in a society where most people bike to work, strongly suggests you are impoverished.
In Denmark at least, most people bike to work, so the latter part is at least objectively false.
In case anyone is curious, the following PDF provides some statistics on this issue: https://trimis.ec.europa.eu/sites/default/files/project/docu...
Tldr: 20% of commuting trips are by bicycle, 13% by public transport, and 60% by private car/van. Of all travel miles, 5% are by bicycle, 10% by public transport, and 77% are by car/van.
The frame of the comment is quite vulnerable to survival biases though - if the transport has taken a step back from cars then the people who stopped travelling will not be visually observable.
Although I do think car-first cities are a plague and it'd be better not to have them.
It’s currently about 95F and humid every day where I live (mid-sized US city). I start sweating the moment I step outside. Add 10-15m worth of physical activity and I’m a disgusting smelly mess for the rest of the day. I hate that I live in a place that is car centric. But bike travel is not realistic here either even though most places I go to are easily within biking distance.
We have to collectively realize that the competition we’re up against is a private, quiet, climate controlled box with a built-in entertainment system that takes you directly from point A to point B reliably and on demand. Oh and a nationwide set of infrastructure built to accommodate it. People will absolutely pay a premium (both in $ and time sitting in traffic) as a trade off for those features. Additionally an enormous chunk of the market does not believe (or at least believe enough to care) that it matters for the climate. Environmentalism as a selling point for public/bike transit will never be effective on ~50% of the market.
The solution has to literally be better than cars in order to win. And cars have a lot going for them, to the point where most people have implicitly built their entire lives around the ubiquity of car availability. Transit advocates don’t seem to “get” this. We’re not asking people to change their mode of transit, we’re asking people to change their entire way of life for an alternative that they don’t believe (and may be right about) is better
I've also biked and seen others on the Maréchaux, through all arrondissements. Same in the Petite Couronne suburbs, and i have friends living in faraway places that have well bike parkings at their train stations.
It should also be noted that many Europeans have cars but bike in medium to good weather. I take the car in hail or snow for example, but bike as much as a car otherwise as I physically and mentally feel better after biking, I reduce pollution and I save money. Wins all around.
Amsterdam https://youtu.be/1twXqpsDUIQ
- but a way, let's go back to what you said: Nor do you get pouring rain all that often.
Have you lived in either of those countries?
It's really complicated to cycle in the rain, especially in cold winter rain. You have to have specialised clothing that will both keep you warm, and be waterproof. Special gloves, insulated rubber boots? And you still get sweaty underneath at the same time.
How do you cover your helmet? Your face? Have fun taking a shower in freezing water three times a week for 6 months of the year, ice bucket challenge on the way to work. I hope you don't mind those extra sick days.
It's really not an issue if you just get used to it, every time I read similar comments to this I can only think of a picky child complaining about relatively minor issues, and mostly they are imagined ones by people who never really had to/tried to bike during these conditions...
> experienced no issues having a change of socks + shoes
Oh so now you have to carry extra shoes and socks all the time, "no problem" lol. You can just go into the subway and all of these issues disappear, and you will get to your destination faster, so cycling is bad in comparison.
It doesn't matter if you can find some person who likes it, the vast majority of people will optimise for practicality and efficiency, because that's what our society revolves around.
Building bike lanes is the easy part, the hard part is coming up with the extra time and patience for people to put up with a longer and more uncomfortable commute.
I already have a backpack when biking, a change of shoes and socks is a non-issue, I don't know why this would be a problem for you but yes, if you are looking for "maximum convenience" instead of a balance of trade-offs.
Again, it's not faster for me to take the subway, the subway doesn't have infinite capacity, crowding during rush hour is a thing. There are issues with any mode of transportation, fighting against bikes and biking infrastructure is definitely the strangest position I have seen someone take.
I don't understand if you are just a contrarian or if you really believe that investment in biking infrastructure is an issue for transportation in dense cities... If so the only argument I read boils down to "it's not super convenient and hence is bad and no one does it". I don't see reality in that argument.
Yup, you want and can optimise for practicality, biking infrastructure is definitely not holding that up. Now trying to argue that biking is "bad" is way out, biking is bad for your constraints, I know tons of people who bike everyday in northern Europe and have no issues with it.
Not sure exactly what your point is... We shouldn't invest in biking infrastructure? Because... It's "bad" for your convenience constraints?
The amount of adult dutch people who cycle to work in the rain is a small minority.
some people do cycle, but most people do not, because there are other options that are easier and faster.
Yes, in places like Montreal they face a lot of opposition from car owners who literally seem to ignore that the only reason you can drive in heavy snow is because the snow gets cleared by pretty major logistics networks.
I've rarely been to a city that couldn't be a good cycling city at least for huge parts of the year, even if not a complete solution - does anyone who is pro-bicycle argue against extensive and effective public transport?
Yeah and how much is this exactly? Even with perfect cycling infrastructure it's something like 12% of trips. Go to finland or sweden in the middle of the winter, observe the bike lanes and see for yourself how much they are used. Hint, they are largely empty, which comes as no surprise considering how obviously impractical and uncomfortable it is. And they cost a ton of money in maintenance.
A lot less than the roads for automobiles, and I regularly use the bike lanes in Sweden during all seasons and have no issues with that despite being originally from a warm country.
What a weird rant to come after bike lanes because "they are expensive and just virtue signalling", jesus.
Bike lanes are like gym memberships, people like the idea and buy into it, but in reality they are too lazy, and don't have the time to actually do it. And it just ends up being a waste of money on duplicated infrastructure, because you still need to cover 100% of the capacity in public transport for the rainy days.
This was me before an ebike. I now use it absolutely every day, when the weather allows.
Or too windy. And more importantly, it's too slow and have limited range. Bonus point for also being the most boring mode of transportation since you can't talk to your friends or use your phone.
You want to spend more time being stuck in traffic? Ok then cycling is a great choice.
> The Western European cities that are oftentimes given as positive examples (I’m thinking about Copenhagen and Amsterdam most)
Cycling in these cities are probably related to tourism more than anything else. When you have time and you are flexible, sure cycling works well. If you are pressed for time and you need to be places regardless of weather, not so great.
I'm from a northern european country, have cycled in all weathers, winter etc, and I think it's one of the most pointless wastes of tax money and inducing unnecessary hardships on people with problems that are already solved much better. All for virtue signalling.
You've obviously never casually biked. In NL you very frequently see teens riding with 3 people next to each other talking, and while you're not allowed to hold phones anymore, you can easily do hands-free phone calls if you wanted. A lot of people have earpods for music or podcasts in.
That's illegal and dangerous.
> you can easily do hands-free phone calls if you wanted
No you can't because of the wind noise.
Have you been to Copenhagen?
Or is your definition of "pouring rain" one that only includes Category 5 hurricane levels of downpour?
A bike is perfectly practical for most business and personal purposes and I live in a city which demonstrates it.
I do everything by bike, except when the weather is really bad or I'm going really far away, when I use public transportation.
On average, Americans like suburbs. They like driving. They like space, a yard, a DIY workshop, and sunlight. They don't like cities. "haha go live in a city and bike to work" is not a fair response to high gas prices and inflation. It's not how people want to live.
We've got a better chance of the USA banning oil exports to lower crude prices, or enacting substantial EV subsidies to get people off gas before we can convince the suburbanite with a 5bd house + quarter acre lot in a good school district that they should move to an urban 2 bedroom apartment instead. Even if we can, I guarantee you that the apartment won't be considered an upgrade.
...to vote you out a replace you with someone who will undo the tax hike.
The US is a very imperfect democracy, at best, but there are some red lines that, if you don't convince people first, will toast you immediately politically, and rapid tax increases related to automobiles or their operation are high on the list.
My dad is a blue dog democrat. Has voted democrat ever since becoming naturalized. Wouldn’t even vote for Larry Hogan. Yet he’s apoplectic about inflation and gas prices, and hates the idea of raising taxes on people making $100-200k/year like himself. At the end of the day he cares more about those things than anything else Democrats care about.
Liberals keep pinning their electoral prospects on people like my dad. Before it was Bangladeshi immigrants it was Irish and Italian immigrants. But these folks came to America for the American dream—two cars, a house with a pool, drive through McDonalds. As a result, liberals take it in the chin every time there is the slightest threat to the low tax consumerist suburban lifestyle. The last time it happened, in the 1970s, we got two decades of Reaganism.
Why is that? Hasn't the opposite (suburbia and car dependency) been forced upon you by government policy for the last 70 years? Yet, there's a substantial population that wants to completely destroy the suburban way of life via taxing it to death. Governments never intended to destroy city living. At least, not purposefully (perhaps via disinvestment).
You'd think you'd want the government to just create conditions for cheap energy since that's objectively good for everyone, and let people live how they want. If people choose suburbia, great. If they choose cities, great too. If the online movement is representative of a larger group, there are a lot off people who will still choose cities!
What I've found when I head down this path with folks on a deeper level they actually don't want everyone to own their life choices. They actually want the status quo of being the most subsidized political cohort the US has.
Suburban living in most areas I've stayed clearly should be far more expensive. The fact my parents live 50 feet off a paved 60mph road 60 miles away from the nearest large city is utterly absurd. That road might see two dozen cars a day. There is no way the tax base can support such a thing.
I think in our lifetimes we'll see prices start to escalate rapidly due to the fundamentals baked in.
However I have very little hope this turns into anything but more subsidy for that cohort, since they are the ones who show up to vote. Anyone not offering to prop up the suburban property bubble will not have a chance in office.
I agree. One of the big risks to future political stability and, honestly, avoiding violent conflict is that these price increases won't just be rapid but immediate. People could adjust if the price of gas went up $1/gallon every year for ten years. If the government keeps the price artificially low all that time and is then forced to raise it $10 all at once, that would be very difficult.
The motte: "There is great demand for dense, walkable, affordable, towns/cities/neighborhoods in the US, and not enough supply to satisfy this demand. A big reason why there is a supply shortage, aside from the relative inelasticity of housing in general, is government restrictions on building/zoning these sorts of developments. There are many coordination failures in attempts to create these sorts of neighborhoods which could be rectified through government action."
The bailey: "Suburbs are a failure of city planning. Car ownership/usage is a net negative on society and should be disincentivized. Government policy should work to eliminate suburbs, replacing them with dense development. Most of those who live in suburbs would surely choose and be happier living in denser developments."
Second, price per square foot in cities is set by demand, and it is several times prices in suburbs. That behavior tells us there are people who would rather be downtown and we aren’t letting them.
But, we already know from the political fortunes of people who have run on those ideas, what they will choose is to replace the people implementing those policies, unless you do a lot of work in advance to convince them of the merits rather than thinking you can just dictatorially change incentives and let that shape behavior without any blowback that undoes the policy.
Banning oil exports would reduce the incentive to pump domestic oil, and, because much of the domestic supply isn't the grades best for producing gasoline, even if it did reduce the price of those grades of crude, it wouldn't do much for gasoline prices.
Maybe we won't see $2/gallon again, but $6+/gallon would be a thing of the past.
Meanwhile, China has a lot of options starting at $5000.
We're currently seeing a Western industrial failure generally, to encourage cheap mass-market EVs. Some of our safety regulations (especially those which force automakers to add heavy or draggy components) should also be overhauled.
The US needs to get as many people off the road as possible. Get them on to bicycles (e-bikes), walking, riding buses and trains.
I am looking at America's balance sheet and the only thing cars do is blow a whole in it. Cars cost too much relative to cash flow generated for families. Cars take up too much space in cities, killing cash flow generated from sales taxes and property taxes. The Return on Assets from a car is just too low, I believe the rate falls below the US gov/state govs cost of capital (hand wavy-speaking).
It wouldn't be a short cut. The long cut would be to change American culture to be able to make big changes like that for the good of the country.
If something like this was proposed, the House that flips the fastest would be the House of Representatives, followed by the White House.
Could you please elaborate on how pride gets in the way of commuting by bicycle? This is alien to me.
> Consider what that means for the home buying market. Those of us fortunate enough to have 30 year fixed rate mortgages at about 3% are about to see our mortgage “debt” give us better returns than our stock holdings.
Does this mean we should have borrowed as much as possible to buy a house when rates were low ?
For example, Having assets on a fixed loan of 3% when you can get a CD of similar duration for 3.5% means you are making money by owing those assets and owing that loan.
It is why deflation is such anathema to the financial industry. They don't want anyone but themselves to benefit from financial conditions.
The path to beating inflation is (a) borrowing at fixed low rates before it kicks in & (b) buying some asset that appreciates at greater than inflation rates (or at least paces it).
Prices were also high. Time will tell.
Sort of. You should have borrowed as much as possible up to the level that, under nearly any circumstances, you could have still serviced that debt(i.e. made the payments). Historically, those were really cheap rates to borrow money and we might not see them again for a few years(or a few decades).
Like, say, a USD$25T federal debt?
Deflation (or even undershooting inflation) isn't an option.
It's wrong though. Home prices are likely to fall quite substantially if you actually look at all the fundamental data and cast it in the light of significantly higher mortgage rates.
Higher inflation also raises the risk free rate which devalues assets. The stronger effect of the two will win out, and with valuations multiple standard deviations above the mean, the end result is pretty clear
This has been attributed to the high cost of housing. [1]
The secretary of HUD was here a month ago taking a tour, talking about affordable housing.
We started a family last year and despite needing to move out of a duplex, we would not seriously consider a purchase.
Prices and terms of sale have been outrageous.
Deciding our best bet was to rent, we found the rental market for single family homes a disaster.
The only way we found something was because we know a postal worker who saw a for rent sign while walking their route.
The place never hit the internet.
The house needs a ton of work and the only way it can be priced the way it is is because the market is so totally busted.
My wife tracked pricing and made a spreadsheet of comparable rentals when we signed the lease. I’d guess our rent was at least $400 under market.
I grew up in Portland. I went to a portland public school and college in Oregon. I had wanted to live here.
However, we need housing to show clear indications it will turn, an unexpected windfall, or we will move away from family here and toward other family in the mid-west.
Regular people are desperate here, valley folks are coming in doing the same thing we would do to wherever we could land in the Midwest.
Housing is broken.
[1] https://www.wweek.com/news/city/2022/05/27/new-census-number...
We need to get a federal level right to build housing on your land. We also need to overturn Euclid v Ambler.
I have also known quite a few people have recently left California. And not a single one of them left a vacant house behind.
Urban offices aren't filling up and essential workers have less money than ever.
Interest rates have gone from 2.75 to 5.4%, meaning monthly payments on purchases have gone up almost 40%. Not all that will transfer to the rental market, but I be surprised if rents don’t continue to go up; barring a general collapse in house prices.
If a significant fraction of landlords have financing costs that greatly exceed rental income, that is their problem. They can't just pass that cost on to renters because they feel like it.
Purely anecdotally, a large proportion of the housing available for sale in Plymouth (UK) seems to be rental property. Tenants are being thrown out while landlords sell up.
I have been wondering if the drive to cash out at a time when holding cash isn't necessarily such a great idea is exactly what you suggest - that those with buy-to-let mortgages are looking at the potential of interest rates rising faster than rents.
Yes, they aren't 100% interchangeable (down payment requirements and transaction costs can change the equation renting all things being equal ) and some markets (the bay area in particular) seem to have a bizarre separation in the cost of renting versus buying, but in general this holds true.
Now that real incomes have been falling rapidly for months, we can expect household contraction and rent stagnation or decline.
FL fell 60% in the 2000s, and I wouldn't be surprised to see 40% this time around
While there are likely supply constraints at the margins, the house price gains have been a result of the amount you can borrow at a certain monthly payment being abnormally high.
Was there a reason to expect it to happen in the first place? Aside from ex post facto reasoning?
Housing is a tough market to crash because people need to live somewhere, so if prices fall people just avoid moving, and liquidity drops. For prices to fall substantially requires that people express a liquidity preference -- they'd rather have the money, even discounted, then keep the house. And the primary way that happens is that people can no longer afford to service their mortgages.
This doesn't happen easily, but when it happens, things can break very dramatically.
Ideally demand will go down because things as it stands are just not affordable to most. The rent also is going way up, so that drives housing prices too.
Where have those properties all come from?
Consider that all properties are either investments or owner-occupied. By definition owner-occupiers don't keep empty (or underutilised properties - assuming second homes and holiday homes can be categorised as investments). Therefore, if there are more investors active (or more correctly, investment properties) in the market, the proportion of empty or underutilised homes is going to be higher. Investment activity in the market has undoubtedly been increasing for some time.
What appears to be happening is that our underutilised housing stock is now being revealed as investors panic. The same thing happened in Ireland during the GFC.
There are many reasons investors will leave properties empty or underutilised during a speculative boom (renovating to flip, on the market, good old fashioned landbanking, a convenient city pad or holiday home, etc). There is much more of this about than people realise.
I am very confident that rising interest rates are going to turn out to be a good thing for renters and first time buyers. It'll just take a bit of time and some economic upheaval.
People used to live a whole family in a one room apartment, and now we have single divorced boomers living in whole houses alone. I think people adjust a lot here depending on the economy
It's interesting that for the past 15 years or so the average household size in NZ has remained at about 2.7 despite a housing crisis with more people living in cars, converted garages, etc. I always assumed that the more crowded households were 'balanced out' by an increase in the number of smaller dwellings with fewer people (specifically apartments) but it could also be an increase in the number of people living just 1-2 in larger dwellings.
People touting supply issues don't understand the difference between number of housing units and inventory.
The number of housing units per person is at an all time high
During the past 25 years the number of residences relative to the number of households has increased substantially from roughly 3.5% more residences to something like 6.5% more. All while the number of people per household has declined slightly and prices have increased astronomically.
Very frustrating this past decade to have the entire debate framed around building more houses as the only solution to deal with this 'undersupply'.
In my opinion a speculative boom has created excess demand and increased the number of underutilised properties. Thankfully rising interest rates appear to be dampening that excess demand (to put it mildly).
Divide columns B7 on sheets 2 and 3 in the NZ data (https://www.stats.govt.nz/information-releases/dwelling-and-...). The all-time high of 1.06 happened in 2012 and the ratio has since fallen back down to around 1.043, just a bit above the 1.04 value from the 1990s.
My prior is that there is an undersupply, signalled by prices, and I’m afraid this method tends to underestimate it. First, household formation (as in, moving out and starting a family etc.) depends in part on housing availability. Second, internal migrations due to urbanization cancel out in national level data – for every move to a city, there may now be an empty rural unit, and a crowded urban unit.
PS Remember too, that there’s a natural churn to housing – people sell/renovate/etc. on average once every X months – therefore we need at least 1/X of excess housing to smooth it out. This is an absolute lower bound that assumes people don’t differentiate between any two houses, but are willing to randomly swap e.g. a 120 sqm in the central business district for a 30 sqm in a rural area. This assumption is obviously wrong.
I notice that they have revised some of the more recent household estimates. I had 1991 at 1,307,000 private dwellings and 1,252,600 households. A difference of 4.16%. And 2017 (or rather Q4 2016) at 1,855,500 private dwellings and 1,734,800 households. A difference of 6.5%. This - at least a few years ago when I first looked this up - was the most recent period where both figures were available.
They have indicated the revision to the household data and I am almost certain that they have revised the dwelling data as well.
The long and the short of it is, we still have a higher ratio of dwellings to households than we did before this price boom started to take off.
If I am reading you correctly, and you are indeed saying that rising prices are enough to assume an undersupply, I would have to both agree and disagree. I think it is only enough to indicate an undersupply relative to total demand, but that demand is both for homes and investments. As interest rates fall, monthly mortgage payments stay roughly the same while the size of mortgages rises as people are able to bid more for a house. With rising prices comes speculation and extra demand. We are about to find out what happens when that type of demand is removed or at least severely curtailed.
Your point about churn is definitely true. I mentioned in another comment in this thread that 'on the market' is one of many reasons that a house can be empty. I take your point but also believe that turnover is more frequent when speculation is at play.
If you are interested in measuring supply/inventory/utilisation of residential property, I'd recommend that you look up the 'Speculative vacancies report' published by Prosper Australia, a Georgian group based in Melbourne. They have an interesting methodology whereby they gather water usage data and use that to determine if a property is underutilised/vacant.
[1] Total US Households: https://fred.stlouisfed.org/series/TTLHH [2] Total US Housing Units: https://fred.stlouisfed.org/series/ETOTALUSQ176N#0
Shortage narrative is propagated by people who don't look at the data
What matters is the fundamentals relating to number of dwellings vs number of people
Fewer developers will build new apartment buildings because financing is getting much more expensive. Fewer new apartments with a growing population means rents will not be getting cheaper unless we have a deep recession and lots of people lose their jobs entirely.
Same goes for housing -- fewer houses will be built by builders.
Existing housing prices will probably go down, but the people buying them with mortgages will pay just as much, if not more for them each month because debt is getting more expensive. But instead of that money going to the old owner, it'll go to the lender.
I couldn't handle moving that often, but there are folks who do.
However if you look long term then housing inflation out paces interest rates. This is always the case. So taking a 30 year loan with low rates is a pretty safe bet that you will come out on top over this long term time period.
Wait, what? Americans can fix for 30 years?!! The longest I've seen in Australia is 7 years fixed, but the usual home loan is 3-5 years fixed and then a renewal at the new market rate.
It might have been a pretty good deal for the people who bought homes with 25 year 0.7-0.9% interest rate mortgages these last few years.
https://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=304.RAI.M....
Another question - with a normal fixed interest loan for 30 years, does that normally include paying off the principal? I.e after the 30 years, the loan is paid off?
Here, fixed interest usually don't pay down the loan whereas a variable loan pays down 100% of the principal after the 30 years
Also you always own the home as long as you are meeting the terms of the mortgage contract.
Fixed for 30 years plus paying down the principal is genuinely mindblowing to me, especially at the fixed interest rates of last year.
Of course the reality is that the 30 years aren’t over and it’s all about risks, this is a gamble where the buyer was lucky.
I refinanced my morgage in spring 2020, up to the maximum allowed at the lowest interest rate bracket. The main reason was to ensure that I had liquidity, in case the economoy would crash much harder than it did in 2020, the secondary motive would be to take advantage of investment opportunities that might show up even if the credit market would crash (potentially making it hard to borrow).
Until now, I've been paying about 1% over the floating interest rate, but made a good profit from the money, most of which was put into index funds, even if half the profit has been lost this year. I've moved half my index fund holdings into index funds focusing on commodities, hoping that these will hold better than generic index funds if inflation stays high.
I don't belive central banks will be able to bring inflation under control on the first attempt. Instead, I predict that interest rates will go up until a moderate/strong recession causes people to enter the streets, and that QE and lower rates will follow for a time period, causing drawn-out stagflation, which is why I dont want to have too much in cash. I do have about 30% in cash, still, in case the market falls much further than it already has.
Because the money supply is in some sense linked to house lending by the banks these days (not the entire source, but a lot of it), house prices will increase in tandem with the money supply, that is fairly guaranteed.
For the rest, look to the latter part of the 1970´s, which is what happens in the US, when following a long period of low inflation, inflation and higher interest rates kick in to create this situation. TLDR, it isn't pretty for the lenders (banks, savings and loan, pension funds) who get stuck with the low interest rate long term loans. But that's prequelling the next financial crisis, not the current one.
Taking on as much debt as possible is rarely the best idea, especially if your income could at all have been at risk at any point. But yes, with interest rates as low as they were for years, more than average was probably a pretty good idea as long as it was within one's means to support. The Fed lowers interest rates as a means of stimulating the economy, and as the old adage goes, "Don't fight the Fed."
This is such a good idea. Remember the old police shows where there were always 2 partner cops in the car? That doesn't happen anymore. Now every cop gets his own personal car that they drive home at night. If there is a wreck - even a small fender bender - about 4 cop cars show up with sirens blazing, completely disrupting traffic. It's crazy.
Edit: Wrong fixed interest rate.
Meanwhile in Germany, I don't see this option at all, and banks have now started pushing* for fixed rates for 30 years at 3% or save/loan accounts where you save for 10 years and they will give you a house loan in 10 years for 1,8% interest.
* we've got letters from all the banks where we have accounts promoting this
And people buy MBS because they have a higher yield than treasuries.
Also, I saw an article the other day where the Fed is no longer buying MBS as part of QE <mark whatever> as of last month (I believe, could have been march) so a major buyer has left the market. A buyer who bought for no other reason other than to prop up the market I might add.
if they use a sampling (basket of goods as proxy) method like other statistical agencies then why do we think the stats agencies are worse?
And even if you have to buy at 18% interest like in the 80s, you can refinance if rates drop.
I wonder how much that is already contributing to the pullback in listings that is driving price increases; I suspect investment firms turn over property a lot less (at least, as individual sales) than owner-occupied.
I have two coworkers looking to buy. They both keep “waiting for the crash”. But I’ve tried to explain to them, they’re getting beat out on every place they look at with over-asking cash offers. If there “is a crash” they will be at the same place they are now.
They need new construction to improve availability, or they need a scenario with there is mass unemployment that doesn’t effect their jobs.
IDK anything. But I’m not sure I see how they get into a house.
You can argue that people just will stay put, but that assumes they have the ability to service the debt on their home in the expensive area. It doesn't take many forced sales in an illiquid market to drive down prices. It can also drive a panic rush for the exit as folks think they're missing the last chance to cash out of their expensive home.
I saw a couple of open houses today in the south SF Bay. Ghost towns. I can't say if that's representative of the overall market, but I think the pipeline is already draining.
> I saw a couple of open houses today in the south SF Bay. Ghost towns. I can't say if that's representative of the overall market, but I think the pipeline is already draining.
The houses sit empty because the owner would rather maintain a (fictious at this point) valuation than realise the loss. That panic sell dynamic you mentioned doesn't seem to happen in housing, and foreclosure sales etc. can always be dismissed as unrepresentative.
Who can afford to let a > $1 million USD asset sit idle? There is an opportunity cost to that. You also have to service any outstanding debt on the property and pay the property taxes. There are also life changes(i.e. retirement, illness, children, etc) which force relocations. The owner could try renting the unit, but that involves risk and still has issues with opportunity cost. What if the home sits idle and the owner relies on the income to afford a rental in another market?
People that own >$1 million USD assets. Some of these folks have multi-million dollar properties that they only actually use for a week or two per year.
They have no connection to tech and work in a niche industry.
This happens for a while, and volume collapses except distressed sales. Then there’s a gradual recalibration where sellers adjust to a new normal and properties come back on the market.
Take a look at post-2008 crash behavior and you’ll see this dynamic: volume collapses, then a gradual normalization of volume, all while still far below the previous peak.
One example scenario: if you own a home but want to upgrade, the new home you want got a lot cheaper too. So you might take a loss on your current place to get into the new one.
California’s prop 13 was found to have this effect. So too will the prior low mortgage interest rates.
Prop 13 has a big effect but more so in downsizing (eg empty nest / retirement) than in upsizing.
But you can’t get that backstopped loan until the house exists.
Likely you could pull out and lose a deposit (and a good lawyer might even get that back because of delay) but you’re still without a house.
I'm expecting house prices in my country to drop at least 30% in the next couple of years and I'm only expecting interest rates to get to around 10%, 18% would destroy the housing market.
If you can get a job as a liquidator and have lots of cash as it’ll be hard to borrow at all.
The last black swan like that was probably before my time (1980s) but maybe the ERM debacle in the UK was close.
Eventually they’ll have to or people will be spending 100+% of their income on basic food and shelter with no way to afford getting to work.
If home prices dropped 50%, very very few homeowners with rates in the ~5% range would be willing to sell even if they could afford to do so without bankruptcy.
Housing has been so high for 3 years
All of people’s wealth was tied up in housing before then too - if they sell they’ll just get less for it now
Hell, if you're far enough underwater, youd be smart to declare bankruptcy rather than pay an $800,000 mortgage on a $500,000 home.
Some people were perfectly able to continue paying their mortgage, but due to life circumstances and / or some sort of psychological refusal to continue to pay for a house hundreds of thousands of dollars worth less than the loan, they simply defaulted.
It was called jingle mail because they just sent the keys back to the bank and walked away (sometimes taking the appliances and copper on their way out the door).
In most of the remaining parts of the world (speaking for Germany myself, for example) you can't just drop a houses' keys into the banks' mailbox and be done with the entire mortgage. Instead, you are bound to a mortgage that's suddenly not backed by sufficient securities anymore and it's up to the bank to decide whether they just ignore this situation, attempt to somehow mitigate the additional risk by raising rates or requesting additional cash from you, or whether they try to liquidate the security in order to limit their losses and then come after you to cover the outstanding balance.
So if you want to do the bankruptcy play in case the bank requests your last shirt, you actually need to go on full personal default, with all the negative side effects that has on your credit rating everywhere else and all the subsequent obligations like the necessity to show good financial behavior for X years to have your debts be deleted eventually.
For example, only 2 provinces in Canada are "non-recourse". Default on a mortgage, they lender takes the home and absorbs any loss that remains. Most of the US is like this.
"Recourse" provinces mean the lender takes your home, recovers what they can, then comes after your other assets to make up the difference. Not sure the exact laws but usually primary homes and retirement funds are protected, but they can take other property and auction it off.
https://www.forbes.com/advisor/loans/recourse-loans-vs-non-r...
> Mortgage interest rates will rise. We can't be sure exactly when rates will begin to climb or by how much, but we know what's coming.
11 years later it finally happened
A friend of a friend just sold his condo in a Bay Area at a loss. Prices have dropped from their highs.
Cause the transaction costs alone are about 10% on a home sale, so it's not something you want to treat like switching apartments every year when they jack up the rent 10%, even if the general rental market doesn't call for such an increase (they know most people won't want to deal with moving, deposits, etc).
Cause the transaction costs alone are about 10% on a home sale, so it's not something you want to treat like switching apartments every year when they jack up the rent 10%.
Condos took a big hit in SF during Covid. Starting to recover, but now with increasing interest rates, it may be a while.
(not investing advice)
Not necessarily, especially if valuations go down, as well, and especially if the economic conditions leading to lower rates/valuation—low rates being, after all, a monetary stimulus policy—also adversely effect your own earning potential.
Right now it sucks in the US because not enough houses were built for a number of years after the financial crises - then that got exacerbated during covid. It's never been easy to buy a house - looking at prices from a generation ago makes it seem easy, but they were facing high teen mortgage rates.
What many in this thread fail to realize is that there's a larger dynamic to housing right now than anything related to prices and rates. It's purely supply and demand. The demand is just too high for the prices to come down. Having 20% interest rates will curb some of that demand no doubt, but it won't clear it out completely. That means a few dips here and there, but generally, I don't see demand for housing decreasing enough for prices to go down.
Housing starts are trending up. It will take a few years, but supply is coming.
I would be relatively happy to see inflation drop while interest rates are above 10%. I could secure my financial future at much lower risk in that world.
I'm not ideally positioned for that eventuality, because I didn't (and still don't) predict that outcome, but it would certainly be an opportunity-filled moment were it to occur.
Honestly, "enjoy" is overstating the situation. The macro economy around such a circumstance would probably be miserable, so I would probably be unhappy. But, I would be happy to have the opportunity that such a moment would produce.
If I was locked into some 8% loans now there are worse places to be. Yes I'd take a bit of a hit, that's life.
> And you can get ≈50% putting money into Argentina Government Bonds
For a few months until they default, sure. There's a reason they're so cheap.
Also, the market would not react well if the Fed signalled they'd go any higher than 5%.
If I knew 11% was happening, I think I'd liquidate to cash now, then go 60/40 when it happens. (Currently I'm 100% equities.)
I’m 90% in equities, with a short position in German Bunds (their treasuries) as a hedge. I’m also borrowing against those equities (at a 2.18% rate), so you could say I’m 137% in equities. This feels risky, but I don’t know what I could do otherwise.
I hate the idea of sitting in cash with a guaranteed negative real rate of return of about -10% per year, even if it’s for a short period of time.
Also, what happens if the Fed doesn’t stamp out inflation in that case? Wouldn’t that force people to buy equities like crazy?
Obviously no one knows the future so I'm heavily tilted to small cap value and equal-weight large cap value funds, which seem to do well in inflationary times.
Are you getting 2% margin loan from something like IB or M1?
With what vehicle are you short those Bunds? I'm curious.
I’m in Sweden so I’m getting it from my broker: https://www.avanza.se
> With what vehicle are you short those Bunds? I'm curious.
I bought a bit of this: https://www.avanza.se/borshandlade-produkter/certifikat-torg...
Do you think that applies to all equities, and if so why?
I’ve mostly bought equities that I think will do relatively well in an inflation environment, e.g. because they have a lot of fixed assets and pricing power. For example I’ve bought nuclear power in France, uranium mines in Canada and Amazon. But admittedly I haven’t had time to really research their financials.
Why would stocks like that loose 40% though? If the Fed really stamps out inflation by drastically raising rates then shouldn’t the market see the end of it pretty soon and be willing to bet on stuff that will survive (as a store of value in real terms)?
At a very rough level, no. Stocks are valued based on discounted cash flow (in general and over the long term. Plenty of short-term exceptions, i.e. Tesla future earnings costing 18x more than Fords future earnings).
A higher interest rate, i.e. inflation, lowers the value of those future earnings.
Stock prices today represent an extreme historical outlier in terms of the price people are paying for future earnings. This might make sense if we assume low inflation for the next 30 years. It does not make sense in a high inflation scenario.
Reasonable scenarios allow the market to fall another 30-50% over the next year or two.
Reasonable scenarios allow the markets in 10 years to be roughly where they are today in absolute terms (i.e. before adjusting for inflation).
Not necessarily. A company with pricing power can raise prices in an inflationary environment.
But if the risk free interest rate goes up then it will be tempting to park money there instead of course. That requires the Fed really stamping out inflation though, which I’m not sure they will do.
I would not be surprised to see equities doing worse than -10%. Sometimes there are no good investments, only loss mitigation, and cash is not necessarily a bad idea.
I wouldn’t be surprised by that either, but it’s the wrong question. As long as the expected value of the future price (in today’s USDs) is higher than -10% I’m interested in buying (but the actual decision is a bit more complicated).
But I agree cash is not necessarily a bad idea.
I’m originally from the Bay Area, as were my parents, and the family who still live there are sitting on valuable houses. My dad’s parents bought a house in San Jose in the ‘50s, my uncle’s wife ultimately ended up with it an sold it for multi-millions. My step father’s mother has a house in San Leandro that was bought in the ‘50s and is worth maybe $700k — maybe, totally guessing here.
Other family left the Bay Area over the years and bought houses which are nowhere near as valuable because the local markets don’t support that kind of price increases.
In ‘90-91 my stepdad’s work closed and some of the people transferred to South Carolina where they bought literal mansions from the difference in housing prices between the Bay Area. A few years later that place closed and they couldn’t sell their houses because nobody could afford them in the local market.
Long story short, it depends.
Most of the current debt will have to be refinanced.
Hell, AFAICT I’m still living off the money I got from unemployment insurance two years ago and have just been banking the cash for the job I’ve had for the last year (and a day, yesterday was my anniversary apparently).
Inflation is now moving increasingly towards these two categories, which indicates that it could be around much longer even if supply chain issues get resolved.
So if a transient spike lasts long enough to be considered "inflation", then it gets baked into wage increases, which leads to higher prices, which leads to higher inflation, which leads to wage increases...
Unfortunately, the govt thinks of monetary policy as their only tool to fight inflation, when in fact they have a much stronger, better one: public policy.
The govt should be passing emergency legislation to vastly increase supply of the three main contributors to family spending: housing, healthcare, transportation, and education.
Make it MUCH easier to build housing.
Vastly incentivize cheap car replacements (ebikes, etc).
Loosen drug import laws from Europe & CA like, yesterday.
High energy costs are also not here to stay. There's very clearly the post-pandemic supply shock which has spilled over into high energy costs due to a bullwhip effect. And there's the war in Ukraine, which will not last forever. There's also a buildup in inventories now (the bullwhip is coming back around) and there's no huge demand for container ships from China right now. High energy costs didn't stick in 2007, they didn't stick in 2014 and they won't stick this time. Commodities/Energy inflation is cyclical.
Instead we're going the demand side route: keep making everyone poorer until people stop buying things.
The article is saying that if inflation is at 8.6%, no one would want to lend money for a lower rate. The real return (which takes into account the purchasing power of the dollars lent) would be negative.
The author gives evidence that there was a “no-bid” to buy debt at 5.5%. Buying debt is in effect another way of lending. Therefore, the author shows that no one wanted to lend at 5.5%, but were willing to lend at 6%. He concludes that this shows mortgage interest rates will go even higher.
That’s not to say that anyone is born knowing these terms, just that they are not particularly exotic among all the acronyms floating around.
This is always thrown out as a rule but it's definitely not the only possible outcome. Housing can still massively drop without civil unrest but with hard times due to unemployment. 100 years ago the US was still desirable.
Surprise comes from data that violates your expectations. I guess it’s mostly a matter of expectations here.
Also, ETF buyers are probably less knowledgeable / professional / sophisticated than buyers of the underlying asset.
It's like inferring the health of the commercial real estate market in the bay area by quoting Google's share price.
Maybe this is one of those little cracks before the dam? This (coming? ) recession might not give us a bang like 01 and 08 kinda did.
Like if the Treasury issued a bunch of new t-bills and nobody showed up to the auction, that doesn't impact the repayment of existing t-bills. But it is still a really bad sign.
If the Treasury issued a bunch of new T-bills and no one bought them, the price of existing T-bills would crater. And also the financial system would collapse, but that's a different story.
Here’s a choice line referring to O&G prices from the post this one is discussing:
> In a rational world, if the party in power in DC were not encumbered by climateers, we would turn on the hose, take every step to unimpede production and delivery.
Watch out for FUD. Economic forecasting is extremely political.
In the irrational world we live in today, because of sentiments like what you've quoted, we're heading straight towards a climate catastrophe. The cheapest time to avoid it was by taking action 20 years ago, the next cheapest time to avoid it is today, but unfortunately irrational people aren't very price-conscious.
That doesn't mean half the homes are now owned by these corps, just half the homes purchased in last year or two were by corps. But in some cases they've bought whole subdivisions in one shot, so it's not too far from reality depending on the area.
There is 900 million farm acres of farmland in the US. Bill gates owns about 270K acres of farmland. So even though he is the largest private owner of farmland, he owns less than 0.1% of all farmland in the US.
Ref: https://apnews.com/article/fact-check-bill-gates-blackrock-7...
Blackrock doesnt have any 30 year debt (they have a very debt-light business model). Microsoft has 30 year bonds and theyre trading at around 4.5% right now. But of course, the default rate on AAA corporate debt is much lower than on Joe Schmo's mortgage.
This is incorrect. That's only if house prices go up along with inflation, which I don't think it will. House valuations have been sky high, like the stock market was 6 months ago. There's a lot of room for valuations to pull in, I would say at least 33%, if not 50%. So we could see deflation in house prices, and a net loss even though "real" rates are very negative.