Author: s4k

Select Home Prices

Below is the medium home price/ Medium Income for a few select states. I find this one of the best gauge’s for home prices.

To put this in perspective, here is what happened in the Las Vegas housing market during the bubble years.

I consider the 2.5 to 3 ratio a good buy. Above the 6 mark, I consider it overpriced. One of two things will happen. Either no one will be able to afford housing no more OR home prices will come crashing down to reality.
D.C. and California home prices have gone into the stratosphere.

Socialist Paradise Update

In the mid 2000’s all we heard from reputable economist, such as Joseph Stiglitz, was that Venezuela was a model country. Hollywood had a loud mouth about Venezuela also. Unfortunately for them, the internet keeps good tracks of all these foolish statements which I have bookmarked. All of these people have gone quiet since the people in Venezuela are now eating trash. I does not get much worse than this.

Davos Madness

Every year a bunch of fools get together to talk about things they have no idea about. They spend north of 100K to be part of this madness. From previous Davos meeting we have the highlights. I honestly don’t know what some of these comments are even supposed to mean.

A Trump Misstep

Trump apparently wants to sit down with Muller. Pat Buchanan has an excellent analysis on this:

As for Trump, he should not sit for any extended interview by FBI agents whose questions will be crafted by prosecutors to steer our disputatious president into challenging or contradicting the sworn testimony of other witnesses.
This a perjury trap.

Trump is a political novice. He surrounded himself by two types of people:
People who are also political novice.
People who probably voted for Hilary Clinton.
The people around him are probably telling him, “You have done nothing wrong. Do not worry. Just tell the truth.” Prisons are filled with people who have done nothing wrong. Besides, this is not about finding a criminal. This is about politics and power. As Lavrentiy Beria once said, “Show me the man, I’ll show you the crime.”
Trumps best bet is to just ignore it. Muller’s investigation is slowly loosing credibility in the mind of the public. No one even pays attention to it any more. Each week Trump should post the dollar cost of this investigation. Itemize every move they make. Post it on his twitter feed for the world to see.

Entrepreneurship and Being in the Minority

Airbnb sends along the following message to its users (my bold):

I am absurdly lucky even to be writing this email. Ten years ago we started Airbnb. Joe and I couldn’t pay rent, so we created the first AirBed & Breakfast and invited three people we’d never met to stay in our home. People said our idea would never work – “Strangers will never trust one another!” A decade later, people have checked into an Airbnb nearly 300 million times.

People told Mick Jagger that he couldn’t sing. He didn’t have the voice for rock and roll. Rodney Dangerfield was doing aluminum siding. He told people he was going to go back to comedy. “You are to old!” people told him. “Let it go”.
The times I made the most money in my life is when I was in the minority. When everyone told me how wrong I was or how this or that would not work. All traders should have a set of rules. One of my trading rules is this:
Being profitable usually means being in the minority.
People tend to reflect their failures in life onto others when they give advice. I don’t believe this is malicious in most cases, just the way most people work. There is nothing wrong with asking for advice. Just know who you are talking too. Always seek advice from successful people.

Conclusion
If you have an idea and everyone doesn’t laugh at you or tell you how wrong you are than you should reevaluate the idea.

The Fed Vice Chairman

On the short list for the next fed vice chairman are John Williams and Larry Lindsey. The next vice chairman could be influential in policy making since Jerome Powell is not an economist.
John Williams is your typical Keynesian inflationist. He thinks the fed 2% inflation target is too low. He has no problem with negative rates. He is definitely a “dove”.
Larry Lindsey is an odd pick. William McChesney Martin once said the job of the fed is, “to take away the punch bowl just as the party gets going.” Larry Lindsey subscribes to this view. In other words, he is a bubble popper. He is on record saying the fed is behind the curve in raising rates. His mentor is Marty Feldstein, arguable the sanest main stream economist. On a side note, I do enjoy Feldstein’s analysis.
Looking back at the FOMC transcripts from the 90’s, Larry Lindsey was one of the few voices of reason. Alan Greenspan’s ignorance in these transcripts is astonishing.
It is hard to believe Larry Lindsey will get the nomination giving his views. Additionally, Larry Lindsey is the most boring speaker alive.
CAUTION: DO NOT LISTEN TO HIM AND OPERATE HEAVY MACHINERY
I do not see how Lindsey will keep Trump’s attention or impress him. John Williams is a fast in your face talker. Since Trump is a wild card, to say the least, we really do not know. It will be interesting to see who Trump fills this spot and the other vacant spots on the fed board.
I also find it interesting the top picks have totally different views about what the fed should do from here. I am guessing the administration does not know what to do either. Why not hear out both views and decided on the fly?

The Infrastructure Plan and Broken Windows

A six page draft has been released of the white houses new infrastructure plan. Every administration has the same idea. I am inclined to believe David Stockman. It is all a lie.  Put aside the fact that all of these activities should be privatized. Government spending on infrastructure is the broken window fallacy in different garb. Frederic Bastiat wrote about it in the mid 1800’s. Henry Hazlitt used this one idea for his book, “Economics in One Lesson”. Among the economic illiterate, this one idea is a plague. It won’t go away.  The video below has just under 200K viewers. I hope one day it will have 200 million.