What in the... I'm Right?

I recently wrote about sustainable asset value. That is, buying things that tend not to depreciate rapidly in value. Gripping, I know. At the end of it I said this:

"Over half of the expenditures in the US are on shelter and transportation ($17,000 and $9,000 making $26,000 of the $50,000 total). More than half of our money goes towards moving you around and housing you."

I always wonder about the accuracy of the numbers I come up with, but then HUD just released this statistic two days after I posted about it. According to them nearly 60% of the average American's income goes to housing and transportation... Hm, so who reads this blog - seriously?

Stuff Worth Reading

Great economic read. This has to do with GM mostly but the main thing I loved was this:

"For the broader markets to bottom and for the economy to bottom, certain cataclysmic events must occur. While the timing or form of these cathartic events are difficult to predict, you WILL know them when they occur. If GM and Chrysler are forced into bankruptcy, that will be the one of the bottom forming events.

Many more, such as the final nationalization of Citigroup (C) and Bank of America (BAC) and the complete unwinding of AIG are still required. Losses must be taken by all stakeholders, not just tax payers. Balance sheets must be purged and legacy liabilities written off. These companies need to be recapitalized and relaunched with pristine balance sheets. Only then can they contribute constructively to the economy and help engineer an economic revival."


The Pirate Bay now has an app on Facebook (not a great read) to allow sharing of torrents. I'm sure that in
many cases it's illegal as hell, but it does beg the question, can't this technology be used to disseminate information freely and legally in some way?

Another money scandal... although this time a company in CA walked out one their expecting (literally) customers who have fetuses growing in surrogate mothers; about 70 in all. Fortunately all of the surrogate mothers seem to be willing to still have the babies even though some of them are no longer receiving compensation. Legally they could abort the fetuses even against the wishes of the donors (biological parents). That's more or less the pinnacle of a moral dilemma.

An internet company works out of a tree house in PA. Just cool. I'd have to imagine that would make you a markedly happier person; at least it would for me. (Hat tip: wired.com)

Interesting Charts

As an odd point of clarification that has almost nothing at all to do with this post; when I took economics classes in college we never really discussed political views regarding economics. Things like "The Chicago School" of economic thought and free market versus socialism were really just never discussed. I suppose we did talk a bit about government intervention. Mostly we figured out how changing one variable in any given situation would trigger a change in other variables. On tests we would be expected to know how to "create an economic story" and show the changes graphically. Most of it was just studying the history of economics which is really like... the last 100-150 years. I'm sure economists will be better prepared for future crisis's in the next 100 or 200 years when they have better data. Then again by that time I'm sure computers smarter than our (current) selves will be running the show (another subject I know).

Here's a typical page of my notes... don't worry, they're confusing to me (now) too. These 3 charts, that are really one, has to do with floating currency.

This is interesting just because I consider myself to be somewhat "informed" in terms of economics and what not yet was unaware at just how much the various indexes have lost in value. Aside: look at the REIT's (real estate investment trusts) in pink!

This is interesting on several levels. The red line in the center gives the inflation adjusted cost of buying a home. Thus, if you purchased real estate in 1979 it's worth about the same as what it's worth today plus inflation... think 3% a year. This of course isn't the case if you bought in a "hot" area where prices increased dramatically. There are positives (tax deductible interest payments, you get to live there, one of the few investments that's protected from inflation) and negatives (upkeep, generally poor appreciation, highly illiquid, and high transaction costs if you sell) to owning a home, but it is worth mentioning that it isn't a crazy idea to rent and invest the excess money you would have been paying on a mortgage. Then again, in a country with a (previously) negative savings rate, who has the will power to do such a thing?