Forums | MacLife

Is it Biffco yet?

don't worry. . . [we knew before you knew] that you knew.

I'm with Pariah on this one. I remember talking to my cube-mate 6 years go, when I was looking at buying a house. He predicted all of this crap then as well. He warned me that the housing bubble would make the tech bubble look like a minor fender-bender, and to be prepared. He said this when people were putting in 'sweeteners' above the asking price. (Cash to the seller outside the transaction, so it wouldn't get figured into the closing costs) Real-estate was so tight there were radio programs that specialized in 'hot listings'

I still remember being offered insane amounts of credit as a first time homebuyer. I actually had one guy say I could qualify for $500k or more, despite only earning about $64k at the time. I knew that was a dumb idea, because I could do the math. The mortgage payment would have taken half my paycheck!

That said, I didn't realize that I would be moving before the crap hit the fan, so I bought a condo that I could easily afford on a 30-yr fixed at 5.75%. (My mortgage payment was about 19% of my take-home pay, so I was socking away money into savings at a pretty good clip until I got married...) I saw it appreciate in value 110% in the course of three years. All around me were people making about as much as I was, buying $500k townhouses! Real houses anywhere near a metro area were out of the question. People were asking, and getting, $1M for 3br, 2bth in average middle class neighborhoods. The kinds with fords and chevy in the driveway.

Then, I decided to move my new family to Huntsville, and I wished I had bought a house with an ARM. In my case, I would have been in the money - however; I would have been shaving it close, because the bubble was already starting to pop when I loaded my stuff. I had expected to make $120k on my condo, but settled for $100k profit - most of which I put down on my new house. House prices weren't declining as fast, but they were definitely starting to head south even 2 years ago. I got out about 6 months from the top.

Having seen the handwriting on the wall, and the beginnings of the end in MD, I decided to stick with conservative, and bought a house I could easily afford, with a standard 30-yr, fixed at 5.7%. Since I put more than 20% down, I have no PMI either. The only trouble is that I didn't count on gas nearly doubling - or I would have bought closer to the city...

Sure, being conservative probably cost me in this instance, but I still think it was the wise choice. If the job offer had fallen though, I would have still been OK. Had I taken out an ARM, I would be toast right now.

Jdude wrote:

100K!?! You made out like a bandit!

I got lucky. The DC area was one of those places where home prices quickly reached totally retarded levels, and stayed there for a long time. I managed to hit it almost just right, and did pretty well.

Oh, it helped that I bought my condo before the building had even been started. I got a DEEP discount from the builder for doing that. I saw an instant 20% profit on the day I got my keys.

You have to understand something about business school: it's pure indoctrination--in order to be a business success, you actually have to believe the propaganda being spouted by the elite ownership society.  You don't climb the corporate ladder by bucking the system.  This despite the fact that none of this economic theory has any but the most tenuous basis in reality.  Look at all the dupes screaming for the "free market", yet there is no free market. Not anywhere.  In the world.  Except maybe the black market.  Every successful economy is government subsidized...the most successful are heavily subsidized and severely regulated.

Most education systems are about willfully disconnecting with reality in order to receive a reward.  A mass pavlovian mind control experiment.

Last edited by Metacell (2008-10-11 7:39 am)

Pariah wrote:

I remember posting her those years ago and seemingly smart poster here chided me at my disdain for the whole sub prime thing.
And I listened and was a befuddled because those much closer to the whole financial world seemed to think I was being silly.

I take absolutely ZERO pleasure in being "right" today. I would have been delighted to have been wrong.

So explain to me this:
I barely graduated HS due to partying.
I have about half the credits one would need towards a History AA
I am a skilled Bicycle mechanic
I was a self taught Mac repair tech
First and foremost I am a pressman. If you want ink applied to paper in an extremely fast and very accurate way....well, I am your man.


But Banking? Finance? What the smurf? Thats all cipher to me. Or so I used to think.
Now I feel like a freaking financial genius.

The extra funny thin is that there are several of my coworkers who took the same tack as me.

Why is it that a few dirty handed, machine workers in Oklahoma saw this coming while WallStreet dident?

Quite a few of my colleagues and personal acquaintances [in the SF Bay Area], who have degrees from very good schools and a few with 2nd degrees, bought homes in the past two years.  For the most part, they can "afford" them, but they still paid for significantly overvalued assets.  Of course, a minority saw what you saw, and didn't buy / moved to cheaper cities.

I also know someone who worked in the mortgage industry, who bought a home with the most foolish type of zero-down, negative amortization type thing.



I do see more than a few people here who are very "book smart" but not very "street smart."

(no, there's nothing of value in my post)

dvpierce wrote:

A question for the economists: If the ancient Romans could manage an empire with what is today high school math, what the smurf are we doing? Wouldn't the KISS concept enable people to understand their financial status and encourage personal financial responsibility? Would we still be in this mortgage mess?

It helped that they had a strong government that ruled by decree.

However, they had their problems...I think the 3rd century AD saw pretty severe inflation.

[edit: SS will have to guess]

Last edited by JakeTheTall (2008-10-11 11:21 am)

I got 4 hours of overtime last week and today I filled up my tank for $2.55 a gallon. If this is a downturn, so far I like the results.
I am not especially worried about being laid off. It could happen but because I am rather a key man in the production chain there are about a dozen people where I work that would have to go before I did. I produce what they work with and there is no one in the company who could step in and do my job.
Not to brag but I am very good at what I do and being a skilled pressmen is a pretty same job area because the world runs it's business on the product I produce.
I still make my living the old fashioned and durable way. I take raw materials, paper and ink, and add value to them with my labor and skills. People like me are the basis for our whole economy and what makes the fantasy world of high finance possible.
Wall St could be leveled to the ground and I would still be cranking out printing. If you want to run a business you need to come to someone like me for the envelopes and forms you need.
My job can't be outsourced, not with 24 hour turn around demands and can't be done by someone not fluent in English because I am part of the proofing process.
So like old Alfred said "What? Me worry?

Robert B. wrote:

Pariah has The Anti-intellectual quality .

Har!
I am part of a long tradition in trades in general and printing in particular of being a bit of a renaissance man. I keep up on tech to the point of self teaching myself to the point of passing the Apple Cert on the first try with no studying.
I can fix your computer, repair your bicycle, act as Master of ceremonies at your wedding after laying out and printing the invitations, take your wedding photos, edit, print and publish them for you.
After that I can train your dog and in my spare time seduce your wife.

I can do many things and do them quite well

As for the topic at hand, I think it has far more to do with the culture of the times than it does facts and analysis.

There's something to be said for "me too"-ism. Let's face it, not only the real estate market has been ridiculous; the entire consumer economy has been out of control and totally irrational. Credit card debt is off the charts, and people were depending on their home equity to continue shopping. Then of course there were the people who bought second homes they couldn't afford, using subprimes to flip it for a quick profit -- and God help anyone caught when housing values began to drop. In fact I distinctly remember Hank and I agreeing how crazy things were getting.

But I think it was just so big, so widespread, that people just figured it had too much momentum, too much scale to fall apart. The Iraq war was carried out with the same perspective, I think -- it was just to big to be anything but a success, to imagine failure would have been to imagine an apocalypse.

But in both cases, subprimes, housing market, consumer spending and the Iraq war, plenty of people here, myself included, saw how completely ludicrous it all was. I'd love to find out more details about the lives of those of us who felt that way, to see what commonalities there are. I think a key aspect for myself is the deep-seated aversion to joining the herd.

Ribtorus wrote:

I've been self employed with my own businesses since high school. I retired before I hit 40. I have no formal business or financial training. Officially I'm schooled as a biochemist but I've never worked in that field; I just like the subject. The only paycheque I ever got from anyone, that wasn't me, was for my service in the reserves which I consider a paid vocation. I don't own a credit card but I've recently bought a house with cash. I've borrowed many hundreds of thousands of dollars in business loans with no difficulties. I'm debt-free.

I think knowing the difference between aquisition and investment is one key to understanding value. Living within ones means while borrowing to invest, is another. I'm a die hard capitalist who values a fair, regulated marketplace. Capitalism and free market aren't interchangable terms. I don't believe a true libertarian can be a capitalist; they should stick to unregulated barter and leave finance to those who understand the concept of rules.

Wouldn't it get boring be retired at 40?

Some1 wrote:

Ribtorus wrote:

I've been self employed with my own businesses since high school. I retired before I hit 40. I have no formal business or financial training. Officially I'm schooled as a biochemist but I've never worked in that field; I just like the subject. The only paycheque I ever got from anyone, that wasn't me, was for my service in the reserves which I consider a paid vocation. I don't own a credit card but I've recently bought a house with cash. I've borrowed many hundreds of thousands of dollars in business loans with no difficulties. I'm debt-free.

I think knowing the difference between aquisition and investment is one key to understanding value. Living within ones means while borrowing to invest, is another. I'm a die hard capitalist who values a fair, regulated marketplace. Capitalism and free market aren't interchangable terms. I don't believe a true libertarian can be a capitalist; they should stick to unregulated barter and leave finance to those who understand the concept of rules.

Wouldn't it get boring be retired at 40?

I've managed to keep busy. After two rotations in A'stan, I've taken to reading the classics; finished Anna Karenina, a bunch of Somerset Maugham (Of Human Bondage, Cakes And Ale, The Moon And Sixpence), and am currently mid way through the first volume of Gibbon's, "The History Of The Decline And fall Of The Roman Empire".

Boredom isn't possible. Besides that, we are living in "interesting times". A well known neo-con (since lapsed), once declared the end of history. Another example of failed neo-connery; the 90s wasn't the end of anything. He failed to recognise the coiling of a spring in which the potential energies of coming events were being stored. Jammed and compressed, waiting for the trigger.

Last edited by Ribtorus (2008-10-12 7:20 am)