tag:blogger.com,1999:blog-2761684730989137546.post5570962127975416385..comments2024-03-29T09:16:03.245-04:00Comments on Mike Norman Economics: Steve Roth — How Do Americans Get Rich? (And Stay Rich?)mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-2761684730989137546.post-50695223244685489792017-01-03T11:21:06.170-05:002017-01-03T11:21:06.170-05:00Agree with Neil with this proviso.
Capitalizatio...Agree with Neil with this proviso. <br /><br />Capitalization is based on marginalism, so marginal changes affect property value and net worth on the balance sheet that an investor presents to a lender. Credit is judged largely on net worth and when the marginal value of RE rises, banks are willing to lend against at the market price, both for home equity loans and property investment. In other words, banks provide the liquidity without the need to actually take the gain by selling. This is how some people I know have parlayed a single investment in RE to finance an array as prices appreciated.<br /><br />For the ordinary bloke, this is the best way to "get rich," although to get rich quick its usually necessary to flip.<br /><br />Minsky's financial instability hypothesis predicts that this will result in property bubbles in the case of Ponzi finance as the third and last stage of financial cycles.<br /><br />Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-88610823671785025522017-01-03T07:56:48.859-05:002017-01-03T07:56:48.859-05:00Iirc the one criticism of Pickettys book was he in...Iirc the one criticism of Pickettys book was he included house price appreciation as income.... so maybe he went back and separated it out....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-69233172496427790942017-01-03T03:07:09.360-05:002017-01-03T03:07:09.360-05:00Steve Roth has taken this one and run with it. But...Steve Roth has taken this one and run with it. But got himself in a terrible mess. <br /><br />But as usual forgets that you can't spend your house. You have to liquidate it before you can. And if everybody liquidates at the same time you find that the 'wealth' number isn't anywhere as big as first advertised. <br /><br />The assumption here is again infinite liquidity. Exactly the same as the 'trade deficit' argument. <br /><br />The elephant in the room is power, not wealth or income in financial terms. <br /><br />NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-85855155890962528222017-01-02T18:38:09.965-05:002017-01-02T18:38:09.965-05:00""If the government absolutely said inte...""If the government absolutely said interest rates are going to be zero for 50 years, the Dow would be at 100,000," Buffett told "Squawk Box,"<br /><br />No mention from Roth here about rates just accumulating stock of retained earnings... <br /><br />Oh, I forgot the MMT elites rote teach that "positive rates are just welfare for the rich!" .... never mind the function relationships....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44987382665501204842017-01-02T15:57:01.055-05:002017-01-02T15:57:01.055-05:00Trickle-up in every respect.Trickle-up in every respect.Noah Wayhttps://www.blogger.com/profile/12012500819097539976noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-22351096010595427812017-01-02T15:27:23.433-05:002017-01-02T15:27:23.433-05:00Wait until they have to renovate... time erodes th...Wait until they have to renovate... time erodes the material... all of a sudden they need a new 10k roof and 30k of windows ...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-89519761624796168142017-01-02T14:34:55.938-05:002017-01-02T14:34:55.938-05:00Does not get clearer than that. Actually it does :...Does not get clearer than that. Actually it does :-), quote from A Haldane, Chief Economist of the Bank of England:<br /><br />«Haldane believes that property is a better bet for retirement planning than a pension. “It ought to be pension but it’s almost certainly property,” he said. “As long as we continue not to build anything like as many houses in this country as we need to ... we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north»<br /><br />Amazing how bonds and stocks are being thrown away to get ppl to buy southern property.<br /><br />That is an actual quote.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10944200030479861392017-01-02T14:30:41.729-05:002017-01-02T14:30:41.729-05:00"even though it results in actual wealth accr..."even though it results in actual wealth accrual"<br /><br />Even better than that: through the magic of remortgages it produces cold hard cash.<br /><br />The numbers in UK are clear: 60%-70% of English voters (those that actually vote) are property owners, and over half of them have fully paid their mortgages, and most still have very comfortable lifetime pensions paying 60-70% of final salary on top, pensions often beginning at 55-60 rather than 65, and sometimes earlier for workers in property-protection jobs.<br /><br />All of them are thinking that they have made in the upper class, and can live well off their pension property and their housing property.<br /><br />Of the 30%-40% that are not property owners, perhaps half are the expectant future heirs of the 70% that are already property rentiers.<br /><br />Thus most voters and the vast majority of the middle class, rather than just a small number of "masters of the universe" in the City, have adopted the politics of "f*ck you, I got mine".<br /><br />A lot of delusional lefties still seem to believe that 90% of people think they are laborers exploited by the property owners; instead a large percentage of voters think they are mostly property owners like the CEOs, only in a different degree, and vote for lower wages for laborers (for everybody else) and higher profits on property (for themselves).<br /><br />The American Dream is "F*ck YOU! I got mine!" and a lot of people, especially women, who started accruing (or inherited) old-style pensions in the 70s and 80s and bought (or more often inherited or got from divorce settlements) their houses in the 70s and 80s think of themselves as property owners living the American Dream, and of laborers as exploitative and lazy losers.<br /><br />Many voters think of the top 50% of property owners as being oppressed and exploited by the bottom 50% of losers, Romney-style.<br /><br />The voters are probably deluded (in part) that they belong with the property-owning elite, that they have got their place in the sun in the plantation economy. They are slowly realizing that at least some of them have got it coming, as here one of the would-be eager lackeys in the journalism trade in 'Merica:<br /><br />www.eschatonblog.com/2015/04/why-didnt-i-get-rich.html<br />«journalists/columnists of a certain age (meaning ones not much older than me and younger) are coming around to the realization that the economy is screwing them, too. There was a moment when a lot of them (we're talking ones at elite outlets, not your random small town paper) thought they'd done everything right, would become celebrities, and get Tom Friedman's speaking fees. The economy sure was working for them, and screw everybody else.»Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-48267634354661507392017-01-02T14:22:26.131-05:002017-01-02T14:22:26.131-05:00Capital gains on property (as in houses, not in ge...Capital gains on property (as in houses, not in general) are usually tax free too.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.com