End of the World As We Know It

sechs

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There's a reason for keeping money in a relatively low interest account-safety.
From what? A good interest rate? Maybe you like losing value to inflation?

The FDIC/NCUA will insure your deposits up to $250,000 at even the most unsafe institution. Are you scared that the government will come in a keep its promise? Scary, I know. No one has ever lost a single penny of insured deposits, so why not keep worrying about?

This is why some banks fail and the large money-center banks can give a pittance on a deposits. People scared of nothing.

There are plenty of reasons not to deposit your money in any particular bank, but "safety" isn't one of them.
 

jtr1962

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The other banks aren't giving enough of a difference to make the switch worthwhile. As far as insuring deposits, if enough banks fail the FDIC won't be able to cover it. And 75% of those banks don't even have branches local to be anyway. Besides all that, I feel sooner or later there's going to be a major class action lawsuit against the large banks for underpaying their depositors over the last 10-15 years. These banks charge people 30% on credit cards. They could afford to pay depositors with large balances (i.e. $25,000 or more) a paltry 6 or 7 percent.

Show me where I can make 10% or better on my money with no risk and I'm done with Chase. Other than that, I'm not going to fart around moving my money between banks just to get a percent or so more than I'm getting. I'm still seriously thinking of getting into precious metals at this point.
 

CougTek

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If gold was worth less than 500$/Oz, that could be an idea, but at ~800$/Oz, it's pretty stupid. You don't buy something when it's close to its historical high (which must be around 950$/Oz IIRC).
 

jtr1962

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If gold was worth less than 500$/Oz, that could be an idea, but at ~800$/Oz, it's pretty stupid. You don't buy something when it's close to its historical high (which must be around 950$/Oz IIRC).
Who said anything about gold? I know gold is too high right now. So is silver. Platinum is ridiculous. Palladium right now is only about $180 an ounce. It's been over $1000 an ounce back in 2000 when gold was $300. Maybe that's something to get into.

As for gold, I suspect it will fall under $300 an ounce within a few years, and probably pretty much stay there.

The truth is right now there don't look to be any great places to put your money. Here's the short list:

1. Savings/CDs/money market. The best of these don't even give 4%, most are under 1%. Historically, regular savings accounts usually paid 5.25%. The only reason to stay in them is to keep your principal safe.

2. Stocks. Look at the market the last six months. Enough said.

3. Bonds. Not much better returns than savings accounts or CDs, unless you want to look at stupidly speculative things like bonds issued by Third World countries.

4. Precious metals. Highly speculative, may end up going down, even in the best of times you're lucky to match inflation.

5. Real estate. Requires a large amount of money to get into, and still headed down. Might be good to get into when prices drop to half what they are (yes, that will happen despite what the naysayers tell me). But now, real estate is a losing proposition.

6. Collectibles. Highly speculative, usually collectibles are big money losers unless you're lucky enough to pick the right one. We still have ~$200K (purchase price) of baseball cards, figurines, stamps which my father thought he was going to make a killing with. I think we'll be lucky to get 20 cents on the dollar, if we can even find buyers.

7. Mattress. Well, it's safe.

8. Illegal enterprises (gambling, hookers, drugs). Might be lucrative as use of these things goes way up during hard times but the downside of doing hard time, or getting capped by a gang banger, makes the risk not worthwhile.
 

sechs

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As far as insuring deposits, if enough banks fail the FDIC won't be able to cover it.
Basically, you're saying that the government doesn't know how to run a printing press. You know how much *more* ridiculous that sounds? Are you clinging to your gun and bible, too?

These banks charge people 30% on credit cards. They could afford to pay depositors with large balances (i.e. $25,000 or more) a paltry 6 or 7 percent.
"These banks" don't work for depositors. They work for shareholders.

Depositors are a source of cash. They take your money and then leverage it to make a lot more. They send you a little thank you note, then pay the rest to themselves and the shareholders.

Show me where I can make 10% or better on my money with no risk and I'm done with Chase.
You're being ridiculous. If there was someplace that anyone could that, Chase would beat you to the punch, using your own money to do it.

Other than that, I'm not going to fart around moving my money between banks just to get a percent or so more than I'm getting.
If you enjoy getting the shaft, that's fine. The question is, why do you enjoy it?

If you don't take your business elsewhere, they're just going to keep giving you as little as is possible. Frankly, you're their perfect customer.
 

udaman

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Mortage meltdown pt2
http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

According to this Tilson guy 60min interviewed, "Alt-A" and "option ARM." , are the next wave of foreclosures coming up this upcoming year and into 2010-11. Asset bubble will last 3-5yrs, with risky commercial real estate failures showing up later.
"We had the greatest asset bubble in history and now that bubble is bursting. The single biggest piece of the bubble is the U.S. mortgage market and we're probably about halfway through the unwinding and bursting of the bubble," Tilson explains. "It may seem like all the carnage out there, we must be almost finished. But there's still a lot of pain to come in terms of write-downs and losses that have yet to be recognized."


The trouble now is that the insanity didn't end with sub-primes. There were two other kinds of exotic mortgages that became popular, called "Alt-A" and "option ARM." The option ARMs, in particular, lured borrowers in with low initial interest rates - so-called teaser rates - sometimes as low as one percent. But after two, three or five years those rates "reset." They went up. And so did the monthly payment. A mortgage of $800 dollars a month could easily jump to $1,500.

Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.

Tilson is also bullish on the stock market, saying it's dropped 50%, and is forward looking, lol. So he claims it's a bargain market. If the economy is going to get worse, the SM is going to go lower before it heads back up.

Earlier Barney Frank said he thinks the problems will be over by the end of 2009 or 2010.
 

ddrueding

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I'm still thinking that the bottom will be about Dow 7400 in mid-2010. Of course, the climb out will be painfully slow (5%?), and then we'll do another bubble.
 

time

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Might be time to update this thread, I feel.

Ddrueding's bubble happened more to CougTek's timescale, we're almost at mid 2010 and the DOW is currently above 10650.

Two years ago, I (like Warren Buffet) was expecting the Euro to stay strong and the USD to sink. Two key causes that changed this that I can see:
  • China (and others) continued to prop up the USD, which enabled the US to print more money.
  • Euro banks were just as much in the same boat as US banks. On top of that, they were busy lending to dodgy countries like Greece (which cooked the books to get into the Euro club).

I'm not sure the right decisions are being made; once again, the banks' problems are being offloaded to the public to keep them solvent. So far, about a trillion USD has been committed.

There are two schools of thought:
  • The Euro will collapse completely, presumably sucking the world financial system into the resulting vortex, or
  • Europe will ride this one out for the moment, although god knows how they accomodate Greece et al long-term.

Much has been made of government debt in the Euro states, however I'm beginning to doubt that the percentage of GDP is the be-all and end-all. Ability to service the debt is surely the important question?

Doesn't a country's Current Account have some bearing on it's overall ability to carry debt? For example, in repeated efforts to keep their economy moving, Japan has run up far, far more government debt than just about any other country (nearly 200% of GDP). But their Current Account continues to be in healthy surplus, so surely their ability to cope with public and private debt is better than just about any other country?

Australia, on the other hand, has very low government debt but near world-leading private debt (per capita). The current account is perpetually in deficit, so this debt just keeps on increasing. From memory, the US is geared much the same except for much higher government debt.

Countries like Germany (in particular) and France just make us look really sick in comparison. I don't see how their government debt is of any real consequence at all and their private debt is heaps better.

Greece actually has a relatively piddling amount of debt but no way of servicing it; hence the crisis. I really wonder if there is a sound basis for the Euro to be under threat or whether this is just like a run on a bank? Unfortunately, in the end, it probably doesn't matter.
 

Will Rickards

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I like Paul Krugman's analysis.
http://krugman.blogs.nytimes.com/
The euro itself and the inability of the countries to adjust their currency is causing more pain in the euro zone than would be necessary otherwise. But you can't just ditch the euro overnight. I haven't got the doom and gloom aspect of this though. Maybe I don't know enough about it yet.
 

time

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In the last week or two, the Australian dollar has lost more than 10% of its value. At one stage today, it had lost 3% from peak to trough.

No-one really knows why, except for global uncertainty about future commodities (minerals) pricing.

Down and down it goes, where it stops, nobody knows.

Good for exports, bad for imported computer parts prices.
 

Pradeep

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From what I understand the latest 40% wealth tax that's been proposed on mining companies has seen several very large devlopments fall thru or be cancelled.

And jesus christ, Tony Abbot may one day become Prime Minister? He's a lying f###ing prick.
 

time

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Not quite, that's what the mining companies are saying will happen.

Bluntly, Australian mining execs are frequently "prominent racing identities". One of the most outspoken recently managed to duck and weave past a "misleading and deceptive conduct" prosecution.
 

CityK

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In the last week or two, the Australian dollar has lost more than 10% of its value. At one stage today, it had lost 3% from peak to trough.

No-one really knows why, except for global uncertainty about future commodities (minerals) pricing.

Down and down it goes, where it stops, nobody knows.

Good for exports, bad for imported computer parts prices.

Ordinarily, currency values are largely affected by interest rate differentials. But what you have in the case of the AUD is largely to due with the unwinding of the AUDJPY, and other YEN related carry trades.

In a carry trade, you borrow in a low yielding currency (like the YEN) and then invest those funds in a high yielding currency. (you pocket the difference between the two rates -- that's the carry; you want positive carry). Carry trades like calm stable markets. When carry trades grow in size, they can start to weigh on the funding currency and boost the investing end. (look at the large, gradual appreciation of AUD last yr). They're nice and all when they work, but when the sh*t hits the fan, everyone piles out at once -- many of the participants are highly leveraged, so small swings in the currencies can have drastic results to the bottom line.

An example:
- pretend you got into the game late, say, Oct 2009
- you borrow mega amounts of Yen at a low rate of, say, 0.2% per annum
- you sell your YEN and buy AUD at a rate of AUDJPY 78
- you bought AUD because you, for the time being, believe that
* the Aussie economy is robust and recovering
* and being a commodity producer, Aussie economy will benefit from Asian (read China) need for commodities, and
* being a recovering economy, and with a growing housing bubble, the chance for Aussie interest rate increases is high (and that these increases will in turn lead to AUD appreciation)
- so you plow your borrowed funds into <insert high yielding risky Aussie dollar denominated asset of choice here>

For awhile every goes swimmingly well. In fact, as more greater fools jump on board this very same trade, the more its success becomes self fulfilling:
- more selling of YEN drives YEN lower; more buying of AUD drives AUD higher
- Aus economy doing well; interest rates start going up .. further boosts AUD
- China/Asia buy commodities .. which Aus is happy to sell to them
- your <insert high yielding risky Aussie dollar denominated asset of choice here> investment appreciates
- you're making a killing/lots of positive carry (both in terms of (a) the difference btw the rate of yield you're getting on your investment and the interest you have to pay on the borrowed funds and (b) because you've probably leveraged on the trade to the hilt and (c) the currency appreciation you've experienced ... AUDJPY now trading at, say, 86.)

Then SHTF
- Eur starts blowing up and uncertainty leads to capital flights to safety .. JPY is a beneficiary of this flight
- crazy Aussie tax on miners
- whole world starts noticing that Chinese mkts are now down 20% ...uh oh, maybe China won't save us all
- uncertainty! uncertainty! its every where! aaaahhhhhhh!.... etc etc...
- and suddenly every leveraged fool is faced with the distinct possibility that their once wonderfully profitable carry will turn negative in a hurry.
- queue the Three Stooges Syndrome ... if this trade really has become popular, then, as everyone rushes to the exits all at once, the unwinding of the carry trades creates large opposite distorting effects -- selling of Aussie risky assets and dollars and buying of YEN ... soon enough, AUDJPY is sitting at 72.
 

CityK

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to be clear, the above obviously applies to a forex based carry trade. ... a carry type trade, in of itself, need not be forex based. For example, a US bank borrowing from the Fed for next to nothing and then lending to the US gov't (by purchasing US Treasuries) can do quite well pocketing the positive carry that ensues.
 

time

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I like Paul Krugman's analysis.
http://krugman.blogs.nytimes.com/
The euro itself and the inability of the countries to adjust their currency is causing more pain in the euro zone than would be necessary otherwise.

This is the common explanation, but on reflection I think it's overly simplistic. Greek workers and companies don't need to take a haircut in lieu of the ability to devalue the currency - it's purely the public sector that has a problem.

Workers can freely move in and out of Greece and are all paid in Euro. If their business is profitable, they will still be profitable regardless of the Greek government's situation. I think this actually highlights the slight redundancy in even having a Greek government (you still need public services obviously).

Frankly, the Greek public (government) debt, while huge for that particular country, is fairly inconsequential when compared to all of Euro Land. Two things need to happen: Greeks need to accept a lower standard of public services and Europe really needs to forgive a lot of their debt.

The sticking point is undoubtedly Germany. As lenders, they don't see why they should have to cancel debt (lose money). And yet, they've benefited hugely from the European Union and the Euro, and as a result of the devaluation of the Euro, are likely to experience a massive national windfall due to their phenomenal export power.

I guess it comes down to: people are greedy and stupid.
 

time

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CityK, that's a really excellent summary of How Things Work. It's way better than anything that I've been able to find while scouring the Oz press (depressingly).

The only thing I'd add is from an informed poster's comment on a blog: the Aussie is traded as a proxy for China (the Yuan can't be traded). Apparently the Australian dollar is the sixth most traded currency in the world - out of all proportion to the size of the country - and that's one reason why.
 

Pradeep

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This is the common explanation, but on reflection I think it's overly simplistic. Greek workers and companies don't need to take a haircut in lieu of the ability to devalue the currency - it's purely the public sector that has a problem.

Workers can freely move in and out of Greece and are all paid in Euro. If their business is profitable, they will still be profitable regardless of the Greek government's situation. I think this actually highlights the slight redundancy in even having a Greek government (you still need public services obviously).

Frankly, the Greek public (government) debt, while huge for that particular country, is fairly inconsequential when compared to all of Euro Land. Two things need to happen: Greeks need to accept a lower standard of public services and Europe really needs to forgive a lot of their debt.

The sticking point is undoubtedly Germany. As lenders, they don't see why they should have to cancel debt (lose money). And yet, they've benefited hugely from the European Union and the Euro, and as a result of the devaluation of the Euro, are likely to experience a massive national windfall due to their phenomenal export power.

I guess it comes down to: people are greedy and stupid.

"Egemen Bagis, Turkey’s chief negotiator with the European Union, has criticized Germany, along with France, for seeking to sell military equipment to Greece while pressing the government in Athens to make drastic public spending cuts as a result of its dire financial crisis. The pointed critique of Berlin and Paris was made in an interview last week in Brussels."

http://www.nytimes.com/2010/03/30/world/europe/30iht-turkey.html

Thanks cityk for the overview.

Is it wrong to long for the days when currency exchange rates were controlled by central banks?
 

fb

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I don't think it's the military in Greece that make or break their economy. I can't really see the point in the statement from the Turkish negotiator.

And I can't really see why anyone should write off any debts to Greece or any country in the EU really, it would be one thing if children were starving and so on, but it's not. They might lose the two extra salaries each year and everybody needs to work until they are 65, not really what I would call a catastrophe. The party is over for Greece and it's time to pay the bill.
 

Pradeep

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It's not that the military budget is solely responsible for their situation (tho they seem to be in an arms race with Turkey).

It's the principle of the matter. When Mekel is pressing for all kinds of cuts in spending, and yet demanding that billions still be spent on weapons, it seems to be a mite hypocritical.
 

Pradeep

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It's not that the military budget is solely responsible for their situation (tho they seem to be in an arms race with Turkey).

It's the principle of the matter. When Mekel is pressing for all kinds of cuts in spending, and yet demanding that billions still be spent on weapons, it seems to be a mite hypocritical.
 

time

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And I can't really see why anyone should write off any debts to Greece or any country in the EU really, it would be one thing if children were starving and so on, but it's not.

It's got nothing to do with children starving - that happens all the time. The question is whether or not the Greek economy can be re-inflated enough to be able to service the debt on an ongoing basis. The major problem with the austerity measures is not children's hunger, but how much that will depress the economy and drive government revenues further into the red, thereby worsening the deficit you were trying to fix in the first place.

Why do you think most countries around the world spent up big to stimulate their economies? To try to stop their revenue streams collapsing over a sustained period, that's why.
 

time

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So what are the markets about to do? Bounce Thursday, crash Friday?

I think it's got to the point where maybe 50% of investors are wondering that.

One in seven American mortgages in arrears or default is certainly an eye-opener. Only a couple of steps from Armageddon if things get any worse.

Or, it's mostly a massive beat-up from bored press and analysts.

Honestly, I can no longer tell. Anyone else have an opinion?
 

ddrueding

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We are indeed all screwed. Bounce today, amazing crash tomorrow. Even more amazing crash next week, and next month. Some resistance at every imaginary boundary, but not that much. Every time my wife asks when I'll move our savings out of cash and back into the market, my response is "not yet".
 

Pradeep

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So what are the markets about to do? Bounce Thursday, crash Friday?

I think it's got to the point where maybe 50% of investors are wondering that.

One in seven American mortgages in arrears or default is certainly an eye-opener. Only a couple of steps from Armageddon if things get any worse.

Or, it's mostly a massive beat-up from bored press and analysts.

Honestly, I can no longer tell. Anyone else have an opinion?


The mortgage situation has yet to hit bottom. There are literally millions of homes that are at risk of foreclosure sale, often becoming owned by the bank, as no one will pay the outstanding amount in a severely depressed markets.

Hundreds of thousands are in a limbo between a potential settlement (rate adjustment/principle decrease or just tack on outstanding amount to the end), and a court judgement. There is a massive backlog in there.
 

jtr1962

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It's actually worse than that

And more to the point

Note the date on the first article-well before any of this happened, and IMO the last half of the article is way too optimistic. The mortgage crisis simply accelerated an underlying trend. The exurbs are dying, while cities are mostly relatively stable, and growing slightly. I expect these trends to accelerate in the future as bankruptcies increase. Fewer taxpayers means higher taxes on those remaining. Add to that now decaying infrastructure for which the funding to repair really didn't exist even in boom times.

I think we're going to have at least another decade, perhaps two, of hard times as the economy adjusts to this new reality. In the end though, we'll be better for it. Populations will be set up in a way which makes walking, biking, public transit feasible. People will have more disposable income by virtue of needing fewer, or even no, automobiles. Our medical system will be burdened with far fewer auto accident victims and cancer cases from auto pollution. Fact is change has always been violent in the universe. Generally though it's beneficial in the end.

Now let's hope China and India get past any thoughts of trying to emulate America in the 20th century. That will screw us for sure. If they see it's not working out well for us, maybe they'll have second thoughts.
 

ddrueding

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I plan on building a house on the top of a completely uninhabited hill miles from anywhere, as self-sufficient as possible, as soon as practical. Within 20 years would be great.

You are right that living in cities is cheaper once all costs are accounted for, but (IMHO) at a significant loss of quiet, privacy, and independence. All things that I value highly.
 

jtr1962

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I plan on building a house on the top of a completely uninhabited hill miles from anywhere, as self-sufficient as possible, as soon as practical. Within 20 years would be great.
Well, I'm actually seeing something like that. You'll have many ( most ? ) people either in cities or relatively dense suburbs, with those in other areas needing to be pretty much self-sufficient as far as providing their own power, growing their own food, etc. Either way is actually sustainable long-term. What we've been doing, living in suburbs where food must be trucked in, gas in needed for long commutes, and so forth really isn't. Even without the real estate crisis, that way of life was eventually doomed. The spread out infrastructure just costs too much per capita to sustain.

So it'll be a nation of city dwellers and farmers, kind of actually the way it was prior to the age of the auto.

My only concern with your planned lifestyle is that you'll essentially be severing your connections with the outside world. Food, water, power aren't the problems. You can supply all those yourself. I'm thinking, say, medical emergencies. In a far flung place help will be slow in coming, if at all.

This might be of interest to you.
 

fb

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It's got nothing to do with children starving - that happens all the time. The question is whether or not the Greek economy can be re-inflated enough to be able to service the debt on an ongoing basis. The major problem with the austerity measures is not children's hunger, but how much that will depress the economy and drive government revenues further into the red, thereby worsening the deficit you were trying to fix in the first place.

Why do you think most countries around the world spent up big to stimulate their economies? To try to stop their revenue streams collapsing over a sustained period, that's why.
If we give Greece money for free today, then Spain and Portugal are next, probably within a year. And the economy in Italy isn't in that great shape either. Then it won't be long until all € countries are poor and these countries will keep wasting money as usual... But if they are offered high interest loans they will be more motivated to take control over their economies before they get into a real crisis.
 

Pradeep

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It's actually worse than that

And more to the point

Note the date on the first article-well before any of this happened, and IMO the last half of the article is way too optimistic. The mortgage crisis simply accelerated an underlying trend. The exurbs are dying, while cities are mostly relatively stable, and growing slightly. I expect these trends to accelerate in the future as bankruptcies increase. Fewer taxpayers means higher taxes on those remaining. Add to that now decaying infrastructure for which the funding to repair really didn't exist even in boom times.

I think we're going to have at least another decade, perhaps two, of hard times as the economy adjusts to this new reality. In the end though, we'll be better for it. Populations will be set up in a way which makes walking, biking, public transit feasible. People will have more disposable income by virtue of needing fewer, or even no, automobiles. Our medical system will be burdened with far fewer auto accident victims and cancer cases from auto pollution. Fact is change has always been violent in the universe. Generally though it's beneficial in the end.

Now let's hope China and India get past any thoughts of trying to emulate America in the 20th century. That will screw us for sure. If they see it's not working out well for us, maybe they'll have second thoughts.

Well we did see $4+ a gallon for petrol and the surburbs didn't implode.

I would wager that living in NYC as you do, without a car, that high density housing is more commonplace than an "average" area. Don't you live in a detached house, making yourself part of the "surburban problem"?

The fact remains, I would much rather bring up my kids in the surburbs, where they can go outside and play in the yard with their friends. Where I can work on the broken Hyundai in the driveway. Where I can store numerous 2 and 4 cycle petrol powered implements to tame the grass and trim the hedges.

That quality of life is not available once you move into a tall apartment complex. You may be closer to work, but I have bigger priorities.
 

Pradeep

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Well, I'm actually seeing something like that. You'll have many ( most ? ) people either in cities or relatively dense suburbs, with those in other areas needing to be pretty much self-sufficient as far as providing their own power, growing their own food, etc. Either way is actually sustainable long-term. What we've been doing, living in suburbs where food must be trucked in, gas in needed for long commutes, and so forth really isn't. Even without the real estate crisis, that way of life was eventually doomed. The spread out infrastructure just costs too much per capita to sustain.

So it'll be a nation of city dwellers and farmers, kind of actually the way it was prior to the age of the auto.

My only concern with your planned lifestyle is that you'll essentially be severing your connections with the outside world. Food, water, power aren't the problems. You can supply all those yourself. I'm thinking, say, medical emergencies. In a far flung place help will be slow in coming, if at all.

This might be of interest to you.

You may want to mention that's a 220MB download.

Another show to watch is the one on Planet channel, where they can only eat locally sourced produce. They had a hell of a time getting the supplies to make bread. Even the alcholic wife had to switch to locally produced wine to get trashed.

I would imagine for medical emergencies a sat phone with a yearly barebones minute package could summon assistance. Clear the trees/bushes to create a helipad close in and it won't be a prob if the wheeled ambulance can't make it up the seasonal goat trail that passes as a road.

Or just keep a shovel handy and go 6 feet or more :)

In all seriousness your plan should be doable, providing you or the wife don't end up with a chronic condition needing regular medical attention/services.
 

jtr1962

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Flushing, New York
Well we did see $4+ a gallon for petrol and the surburbs didn't implode.
No, we'll probably need sustained prices over $5 a gallon for that to happen. Also, I should point out the problem isn't one of gas prices, it's one of infrastructure. Much of the infrastructure supporting suburbia was built a few decades ago, at much less in real dollars than it would cost to build it now. It's getting to the point where it'll need replacement eventually, but there's only so high you can raise taxes. That's the heart of the problem. A mile of road or sewer or electrical lines costs the same whether in a city or suburb, but in the suburbs you have far fewer people paying for it. Even if gas prices stayed at $1, the suburbs would have eventually collapsed under the weight of ever rising real estate taxes. It just would have taken longer.

I would wager that living in NYC as you do, without a car, that high density housing is more commonplace than an "average" area. Don't you live in a detached house, making yourself part of the "surburban problem"?
The house sits on 1/10 of an acre, way less than the typical 1+ acres of housing lots in most of the country. Besides, lots of homes like this in the neighborhood are being knocked down and replaced with 2 3 family homes on the same space ( i.e. 6 families on 1/10 acre ). Hardly an example of sprawl. Also, we have 6 story apartments 2 blocks away.

The fact remains, I would much rather bring up my kids in the surburbs, where they can go outside and play in the yard with their friends. Where I can work on the broken Hyundai in the driveway. Where I can store numerous 2 and 4 cycle petrol powered implements to tame the grass and trim the hedges.
We can do all those things. My brother fixes his car in the driveway. Here kids can not only play in the yard, but also go to nearby parks. Once they reach about 10 they can ride the subways and have way more independence than kids in suburbia who need to be driven everywhere by their parents. As for lawn tools, I'd rather use electric implements. The gas powered ones are noisy as hell and stink. I've already written to the City Council requesting that they be banned from commercial use ( as in the neighbor's stupid gardeners who wake me once a week with their smelly, noisy blowers ).

That quality of life is not available once you move into a tall apartment complex. You may be closer to work, but I have bigger priorities.
Big problem with the suburbs to me is they're neither here nor there. I just don't get the quality of life argument often used to justify them. They're not a rural, wild place which might be interesting in its own right. They're not a bustling city. Rather, they're a phony, sterile manmade construct meant to make people think they're in more natural environment than a city when in fact they're not. In short, they have most of the problems of city life, but few of the advantages. You still need to have food trucked in, you need to travel miles to work in most cases, there are often traffic jams despite the low density because of multiple car trips each day. I'd rather either live like I do now where I can walk everywhere, or like Dave plans to where I'm completely self-sufficient.

And I apologize in advance for being so negative about the suburbs, but fact is from all I've seen of it from relatives who live in it, I'm just not seeing much to like. Trading a little space for auto dependency is like making a deal with the devil. Truth is when you've lived in a city your whole life you learn to create your own little bubble of space around you. Physical space ends up being superfluous in that context. Minor annoyances of city life include air quality and congestion. I only care about congestion when cycling, but I can avoid it by cycling at night. As for air quality, electric cars are trickling in. I'd say within a decade the smell of auto exhaust will be mostly a memory.
 

ddrueding

Fixture
Joined
Feb 4, 2002
Messages
19,742
Location
Horsens, Denmark
Sorry, not that out in the middle of nowhere. Just far enough to not have to see or hear anybody from the house. The hills I'm looking at now are about 200 acres in size and 500 feet tall, surrounded by protected grazing land. The whole thing is about 5 miles from the nearest store and 15 miles from the nearest town.

Self sufficient for power, water, sewer, and wireless for phone/internet. Growing your own food is highly inefficient, but being that far out would certainly encourage me to cook more ;) The helipad is SOP out here...
 

Will Rickards

Storage Is My Life
Joined
Jan 23, 2002
Messages
2,012
Location
Here
Website
willrickards.net
I'm not sure I agree with the taxes argument. Some suburban community taxes are offset by the shopping centers they are built around. These pull in shoppers not just from near the place but from further away too. Upscale shopping and all that. Sure if spending goes down so does revenue from these as well.

And mcmansions aside, suburbs are attractive because of the bigger houses and separation from the other houses. I think similar sized apartments would be much more money to rent.

I find it nice to work in the city but I wouldn't want to live there.
 

jtr1962

Storage? I am Storage!
Joined
Jan 25, 2002
Messages
4,379
Location
Flushing, New York
I'm not sure I agree with the taxes argument. Some suburban community taxes are offset by the shopping centers they are built around. These pull in shoppers not just from near the place but from further away too. Upscale shopping and all that. Sure if spending goes down so does revenue from these as well.
In theory you may be right except for the fact this doesn't work in practice due to the strange way many suburbs are zoned. You'll have a residential area, and the nearest commercial area might be 3 miles away, despite the fact that there is nothing but empty land in between the residential and commercial areas. So the commercial area requires additional infrastructure which it wouldn't if built right near the residential area. Same thing with schools and office parks. For example, where my sister lives they have a bunch of houses on roughly 3/4 acre lots. Right across from them is a HUGE field. Why didn't they stick a mall and school and offices there, instead of a few miles away? You can't use the argument that it would generate traffic. It would be right across the street. The residents in the houses would be able to WALK to everything. You wouldn't need school buses. If it did indeed attract those with cars from other areas, you could have put the access road on the other side of the complex, so the traffic wouldn't be anywhere near the residential area. And the taxes generated would have lowered everyone else's real estate taxes ( some of whom are paying $20K annually ). That's the problem I see. A lot of development is willy nilly unplanned sprawl with no rhyme or reason. And it all looks the same. I could go from Long Island to New Jersey to upstate New York and down to Virginia ( all places I've been, BTW ), and feel like I'm still in the same place.

And mcmansions aside, suburbs are attractive because of the bigger houses and separation from the other houses. I think similar sized apartments would be much more money to rent.
I think the high housing prices in urban areas ( which incidentally haven't crashed as much as in suburbia ) should send a clear message that high demand exists for this type of desireable, dense development. The demand is obviously much higher than the supply or nobody would be willing to pay those high prices. If we continued adding housing in cities, undoubtedly prices would drop as supply met demand, and people could no longer use the argument that living in town is just too expensive. Problem is zoning laws often prevent that. A lot of people actually want to live in attractive developments within walking distance of rail stations, but zoning laws prevent developers from building those developments. Care to guess why? Those whose business is in real estate are often the heaviest lobbyists against changing the zoning because such changes would dramatically decrease the value of the existing real estate they own.

So it not really that more people wouldn't live in cities if they could. Rather, it's that they currently can't afford to on account of mostly artificial inflation of housing prices.

The thing is the suburbs aren't getting any cheaper. Real estate taxes are rising at more than the rate of inflation despite the lower housing prices. Once they reach levels the owners can no longer afford, you'll likely see lots of abandoned homes. And there really is no way to fix it short of increasing allowed housing density.
 
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