Thursday, December 29, 2005

MTV Cribs, Bling, and...the housing bubble?!?!?

GOT BLING???


I got an e-mail from a reader today that posed the following question to me:

Do you think there is a direct correlation between MTV Cribs and the housing bubble?

I have thought about the very same thing on many occasions...how the MTV Cribs, pimp-my-ride, bling-bling attitude IS having an affect on society. I was talking with a title rep friend today, and they mentioned the "bling factor" that everybody is striving for and I said the same thing: that everybody wants to "live" like "mtv cribs" but they don't have their albums on the charts yet, movies in theatres yet, or play for a pro team yet. On a side note: the title rep didn't like the financial situation that many people were getting into, but they said the same thing that soooo many others say "if we don't do the deal, somebody else will".

I don't think MTV Cribs or any of those things CAUSED the bubble, but they are definitely influencing the perspective of generations of Americans. I think it extends to way more than housing though...it's the cars, big chrome wheels, tv's in the cars, Crystal in the fridge, etc. It is a "look" that you have to have if you want to be "somebody". MTV Cribs even has their own line of home furnishings...for those who want to "live like a celebrity".

I enjoy watching Cribs, as I enjoy flipping through a Robb Report. There has always been an interest in "lifestyles of the rich and famous" and there always will be. The difference is that living that "lifestyle" has become more "attainable" through lax credit standards. Years ago, if you wanted a TV, you saved your money, and bought a TV. You didn't make buying a TV a 4-5 year process. I happened to be in Los Angeles recently and heard an add on the radio where you can lease and/or finance wheels for your car! Call me crazy, but if you have to lease the wheels to put on your car, then I think your priorities are slightly out of whack. But hey, at least you are living a "pimp-my-ride" lifestyle!

Almost every single person in MTV cribs...says "you ain't a playa without a plasma on the wall". I just happened to be at Best Buy this week, and EVERY lcd and plasma tv has a little sticker with a bow on it "take me home for $47/52/77/120 a month" "no interest for 18 months on TV's $299 and up" etc. Sure, many of those MTV Cribs were done by a professional designers, for millionaire sports stars, actors, or recording artists. They can actually afford to pay cash for the TV, and not finance it over 3-5 years. Debt is what happens when people try to live a life they cannot afford today. Everybody wants to live like a millionaire, but does anybody really want to do the work, or wait the time it takes to REALLY be able to afford these things?!?!? Why wait until tomorrow, when you can finance today?!?!?

It is even having an impact on childrens toys. I happened to be in Target the other day to get some detergent and other necessities. There was a display in the toy section for remote control DUB cars. If you don't know what DUB Magazine is, here is the link. Anyway, these cars are all "pimped" out with big chrome wheels, lowered, and all the bling you can imagine. Check the 2 links I just highlighted to see what is showing up in the toy section. There is nothing wrong with the cars, bling, etc. in and of itself, it just becomes a problem when people make it a priority in life, and will go into great debt to "look" like they are a "baller".

Been to Vegas lately?!?!? All the young people "ballin" with their expensive clothes and jewelry, pimped out cars, and thowing big money down on the tables and $400 VIP bottle service in the "hot" clubs. Heck, a drink at most bars now is $8-16 bucks! I know there are a lot of young people that are making lots of money (especially after the stock boom, and now real estate boom), but I have a feeling that a majority of people in their 20's are not millionaires. I have seen some of my brokers that have made a big montly check, and head to Vegas to drop 3-5k in a weekend of partying. The problem is that they don't have health insurance or a long term plan. I know this, because I'm starting to sense some desperation with some brokers (mostly the younger ones) that thought 20k a month was going to go on forever. Some are wishing they had 5k back in their savings accound, instead of memories of a great weekend.

If you haven't read or heard of the book "The Millionaire Next Door", I suggest you check it out. Here is a shameless plug on my part...but I have a link to the book on the right hand side (scroll down a little bit). I think people should check out that book if they want to see how people become REAL millionaires. Here, I'll give you a big hint: it involves living beneath or within your means, and not taking on needless debt for things like "bling".

I guess the way I was raised, is that you buy all of the "stuff" after you have taken care of the "important things" i.e. savings, insurance, investments, retirement, risk management, etc. I know that isn't popular, doesn't make for great television, but it makes for a responsible member of society. Don't get me wrong, I like all that "stuff", I just don't think it is prudent to go into high levels of debt to put on a "show" or live a lifestyle beyond your means. I am by no means perfect, and there was a time when I was younger that I financed an TV/surround/DVD system because it was at 0% interest for several months. I had the money to pay for it up front, but since it was 0%, I ended up spending a bit more than I had planned and paying for it over several months. So yes, even I was guilty of doing this...albeit when I was younger and on my own for the first time.

How are you going to feel when your taxes go up because the government decides to bail-out all the people that wanted to live an MTV Cribs lifestyle on a Gomer Pyle income?!?!? How much are you going to wish that there were more financially responsible people in this country.

So that is what I think. I don't think any of those things CAUSED the bubble, but they are definitely influencing the perspective and consumer spending of generations of Americans. Several months ago, one of my brokers was telling me that their daughter thinks she is getting an H2 when she turns 16. The thing is, she thinks she is entitled to it, and that you are a nobody without it. It seems that many children in their teens see the lifestyle, but they have no comprehension of how hard it is to really earn the 50k needed to buy a Hummer...and how old it gets spending $500-1000 a month on gas to keep it running.

I know there are many responsible parents and children out there, but I have a feeling their numbers are falling behind those of the MTV generation. If the number of people overextending themselves to finance homes, cars, and consumer "lifestyle" items is any indication, I think we will be in for trouble in the long run if we keep extending credit for everything in the world.

I know this wasn't a totally housing related post...but I think that people chasing a lifestyle is definitely contributing to the consumer spending that is being financed through this housing boom. Debt, and living beyond your means, whether through housing, lifestyle, or a combination of the two can certainly make somebody an FB.

What do you think?

I look forward to the comments...

SoCalMtgGuy

82 Comments:

Blogger FinanceDork said...

Very well stated. I agree with your analysis. I call it the "I deserve" plague

12/29/2005 12:37 PM  
Blogger passthebubbly said...

The problem is that investing, as it turns out, is BORING.

Seriously, it is. I've been doing it all my adult life. I have a CFA charter. I helped run a hedge fund for a couple years. I know what I'm talking about. If it were more exciting, I wouldn't have enough time to respond to a blog right now. The Bloomberg terminal would be more interesting.

If you buy a $20 stock because you think it's worth $40, it might get there... in three or four years.

The stock market really does return 10-11% a year, but that gets spread out over 250+ trading days and oodles of little ups and downs. Real estate *does* mostly only go up and everyone does need somewhere to live, but in the long run it pretty much tracks inflation.

Boring, boring, boring. To the average American, how can that possibly compete with a house, or a Hummer, or some shiny new spinning hubcaps?

12/29/2005 12:42 PM  
Blogger WArenter said...

I think I am really out of it as I don't even know what bling or MTV cribs are! Furthermore, I don't own a plazma tv, as a matter of fact I don't own a tv at all.

Your thoughts about the whole credit bubble are right on. Good thing for the internet so that we have sources of info other than tv. Thanks again for the blog.

12/29/2005 12:56 PM  
Blogger passthebubbly said...

Thinking about it more: The instant-gratification mentality really has ramped up in the last few years. A lot.

Reality TV. American Idol. Who Wants To Be A Millionaire. $300 million Powerball jackpots. Pimp My Ride, Flip My House, Swap My Wife, Fill My SUV. Sex In The City, or its slightly more PG-13 version, Desparate Housewives. You're fired, and so are you, you, and you, but you over there, you get to work for Donald Trump. Not that that's a privilege, but hey, everyone knows who you are now.

You can sure throw in Cribs or whatever MTV is showing instead of mucis videos, but at some point there's a blur of cause and effect.

You didn't have any of this stuff before the mid-1990s or so. The stock market was part of this, too. Then it crashed.

So will real estate. The mentality will live on, however, and morph into something else, leaving RE behind like it was Ashlee Simpson at the Orange Bowl or something.

12/29/2005 1:16 PM  
Blogger AmaDablamDream said...

Good post and a fascinating topic. The baby boomers get a lot of flak for their wanton consumerism--and they deserve it--but the generation coming up makes the boomers look like misers in comparison.

I live waaay below my means and as a result live in an apartment surrounded by people who make a lot less than I do. It just blows my mind that amongst people who make a fraction of what I do, nearly everyone has a better car. And they buy them new. I've always believed that only suckers buy new cars because you pay thousands of dollars to drive it off the lot; why not wait a couple of years for the resale price to settle down to its true value.

They have the big screen TVs, the furniture, all the material trappings of success, but it is all bought on credit. I can console myself by looking at my bank and brokerage account balances, but it honestly gives me somewhat of an empty, unsatisfying feeling. I keep having thoughts of taking a year and living like everyone else does, spending every penny that comes in the pursuit of material goods. I am actually too financially timid to go for it, though.

My brain, of course, says such thoughts are stupid; but when society has gone mad and everyone around you is partying like there is no tomorrow, it pretty hard to not give in.

12/29/2005 1:20 PM  
Blogger Arioch said...

You've just described 1/2 of my neighbourhood.

I'm the only one without a v10 hemi powered cadillac escalade Hummer H2 cobra viper with ultra-chromed bling tires, a tv in every headrest and visor with every imaginable chrome widget bolted onto it. They all have the same custom license plate too "RICHLIKEGOD" or "I WIN" or some sort of crap implying that they are a Rockefeller.

They're not sweating yet (externally), but I am waiting for the block party to end and that financial hangover to kick in.

Maybe they can hide the bling-mobile in their HELOC funded swimming pool from the repoman.

Hmm....next goldrushes will be:
Repomen, bankruptcy lawyers, divorce lawyers .....must be more...

12/29/2005 1:21 PM  
Blogger wtHell said...

.... and credit counselors for the BK courts

12/29/2005 1:26 PM  
Anonymous Anonymous said...

I'm not gonna deny that there's a lot of pathological consumerism out there, but remember, American history is littered with spasms of excess. Roaring Twenties, the Gilded Age? Hell, in my own lifetime, I don't recall the Reagan Eighties as an era of thrift and deferred gratification....

12/29/2005 2:06 PM  
Blogger SoCalMtgGuy said...

passthebubbly,

I know that investing and planning for the future is boring, but that doesn't mean we should neglect it as a country.

Again, it just goes to show that Americans must always be entertained. They need a tv at home, in the kitchen, in the car, on a phone. And the content there is delivered in short choppy cuts to keep the eyes moving and the brain "entertained".

Ever since the "get rich quick" stock market, and now RE market, you have thousands of people that are becoming accustomed to getting rich quick.

Buy a stock...wait a few months...be set for retirement. Buy a property, wait a few months, make 6-figures.

I just have a hard time believing that will continue forever. Becoming a millionaire for most of us, is going to involve a long and steady plan.

I know that isn't cool, popular, or sells lots of "stuff", but it is what truly works.


amadablamdream...

I hear you. I too have cash stashed. I could go buy the biggest plasma TV for cash...I just can't imagine doing it. It doesn't make sense. Until you are really making huge dollars on a consistent basis, and you have the "boring" stuff taken care of, I don't think it makes sense to spend 5000 on a tv set.

The main thing that helps me keep my sanity is that I have had a few people confide in me that they aren't doing as well as they "lead on". They ask me about the market and "what is going on?". They have big lifestyles, but very little savings.

I might be wrong, but I figure if we keep doing the right things right, we will be OK in the long run.

SoCalMtgGuy

12/29/2005 2:06 PM  
Blogger Tom DC/VA said...

SoCalMtgGuy - Good analysis. I've been thinking along similar lines, with the change in behavior being driven by the media coming up with ever more outrageous 'wealth porn' every year.

To bring this back to the housing bubble: when was the last time 'bling' was in? The 1920s. Then what happened...

12/29/2005 2:12 PM  
Blogger Tom said...

This is true and I see a lot of people making this mistake. I also think people feel richer since refinancing into an exotic mortgage and having a lower payment. They think, oh well I have some extra money, I can spend it before the payments rise (many don't even figure the payments will rise)

Also, people have gotten too comfortable with housing prices rising and they have tapped into the phantom equity they have. Many think their houses will only keep going up.

True Story:

Friends of mine bought a house back in 2003. The houses were around 130k in this niehgborhood 6 mos before and the realtor says if you don't get in then you may be priced out. So they heeded the advice and bought. At the time housing prices had gone up 30k and it was a new subdivision so they bought. They didn't do too bad, but this neighborhood has the smallest lots and you can reach out and touch your neighbors house. It's one of those small 2 story homes.

Fast Forward 2 years later. She had some health issues and stays home to take care of the 4 kids. Hubby works making about 60k a year. So they decide to refinance and get a good rate. They instead get talked into an ARM. The appraiser said their house 2 years later was now worth 260 GRAND! So what do they do? They take out the equity, she gets a gas guzzling SUV and he buys a boat. They maybe have 5 grand left over. They think prices will only go up and they can always get out. In the meantime they now have higher taxes, higher insurance, and if the value in their home drops, they will have to treat the equity they cashed out as income.

I think many Americans are making these same mistakes and have no idea what they are doing. They are living beyond their means. When this catches up with everyone then we will be in some serious trouble.

I'm saving and I don't buy anything unless I need it. There is no "I Deserve this or I am entitled to that" If I do something that I set out to do, then I might modestly reward myself.

But not with a Gas Guzzling SUV (Does not make economic sense with gas prices). The Chrome Rims. The EXPENSIVE Clothing and hundreds if not thousand dollar suits and outfits. I don't live in a 6000 sq ft house that will cost me a fortune to heat and cool and maintain.

No, I live within my means, and even when this bubble pops (as it is doing now) I will not buy the bigger house because I can afford it.

12/29/2005 2:16 PM  
Anonymous Tim said...

Nice post.

Thrift will be back in style in the U.S., it's just a matter of the timing.

It is a fascinating cultural issue and begs the question of what, if anything, a government should do to influence behavior. Our current leadership has set a horrible example regarding debt (fiscal and monetary policy), and that is reflected, to some degree, in what ordinary people are doing today - the degree to which people have become comfortable with debt and speculation is really astounding.

The Millionaire Next Door was a great read - like my grandfather actually - he waited until they he was in his seventies until he bought a Cadillac, then he died two years later. I guess being in your thirties in the 1930s will scar you for life - the exact opposite of what it must be like for many thirty-somethings today.

12/29/2005 2:19 PM  
Blogger r patrick said...

Socal-

I'm 26 got a job when 23 and everyone had nicer cars. BMW 5, Lexus E300, Acura RSX, the list goes on. I was making about the same as these guys.

Trips wiht the GF, eat out every lunch, starbucks every morning, I felt like a pauper.

THen around the end of 03 they all decided they wanted to stop renting. And they all got 200-250k condos with various schemes 0% I/o, bank of mom and dad ( worth 300-350k now ) and I got a 40k starter place with a 15 yr fixed and 20% down.

I was jealous then as I am buying at the clearout rack to save pennies for my downpayment ( you try saving 15 grand out of 36K gross in NJ in one year ) and they got to have all the fun and the nice condo.

If they get a bailout, I feel like in Aseop's fable all of us are the Ants and there are so many Grasshoppers. And thus they will be placted. We saved for the future and the grasshopper will claim famine and the government will take care of it. Thus our hard work was for nothing.

I said sarcastically elsewhere I should go buy the biggest place I can so that I can get the biggest bailout.

Why bother having a 780 credit score? Today it was proven anyone with a pulse can get a mortgage. People right out out of bankrupcy get credit card offers.

I should have taken all the credit card offers and the 200k total lines of credit bought an uber house mcmansion in florida or texas with a no equity loan instead of this place, spent all the money at home depot lived it up with trips and things you can't take back. And then right before I declared bankrupcy sold the cars and anything else and built an extension or a pool or something.

Delared bankrupcy gotten to keep the house, then sold the house and pocketed a cool 500-700k and gone to med school.

Stupid me for actually wanting to pay my bills. But then saving for a rainy day makes me a Chump

12/29/2005 2:20 PM  
Blogger Tom said...

Let me also add, that by taking out their equity the Broker got a big FAT COMMISSION!

12/29/2005 2:23 PM  
Blogger NYCGuy21 said...

I think all of these comments are off base. While I do find the bling mindset of people distasteful myself, we are talking about an impersonal economy, not a moral agent. The greed and foolhardiness of people is more or less a constant. We now have a bubble that will break, slowly or quickly, not because people were suddenly more greedy for better housing. What changed was not human psychology, but the credit bubble provided by the FED and other central banks. Most people, their atrocious taste aside, did what home buyers have done successfully since WWII, which was to trade up to the max of their buying power. This strategy has usually been rewarded since housing has usually, but not always, appreciated especially when enhanced with leverage. However, with the lenders flush with cash and seeking ever diminishing returns, it was economically predetermined that lending standards would deteriorate and that borrowers would overburden themselves with debt to achieve the house of their dreams.

The wicked are not punished. People do misjudge risks, extrapolate unreasonably from recent trends, and get caught in the resulting economic changes. It is more useful to regard the bubble and its aftermath as a meteorological event than an avenging agent.

12/29/2005 2:35 PM  
Blogger Roastbeef said...

At the beginning of December I got rid of my old tube TV and bought one of those big neat DLP HDTVs. Because the model I wanted wasn't carried by my local mass retail stores, I ended up in a high end HiFi store.

So here I am, getting ready to pay for this $4k TV in a fancy store and the salesdroid tells me that they've got 0% financing for 9 months. "Thanks," I say, "but I'm just going to write a check." And then the look of confusion on her face was priceless. It almost seemed to say "Check? Check? I vaguely remember hearing about such things."

After I'd handed her the check she starts remarking to her fellow clerk about how that check would pay off one of her cards. The other clerk asked her "how many do you have?" And she quite openly told him about $35k to $40k in credit card debt she had.

I was shocked at:
1) No shame about (I'm guessing) one-year's gross income worth of debt.
2) That in a high-end store selling multi-thousand dollar stereos and audiophile equipment that they'd be so shocked at someone actually being able to *afford* their equipment.

SoCal: I too used an 0% interest for 9 months deal for my first sofa and coffee table right after college. Never touched those deals since. I've got friends that use them and then pay them off right before they come due, but it's always seemed like more hassle than it's actually worth (of course, I've got the short term memory of a fruit fly which probably effects that decision too!)

12/29/2005 2:46 PM  
Blogger mtnrunner2 said...

I think our consumerism lifestyle has made people forget about saving their equity until retirement cash-out, and spending it instead. My oldest, a high school girl, tries to keep up w/ her friends. Most drive big new cars, take far-away annual vacations, live in big houses, shop only at the best shops in the "the" mall, and of course get long fingernails and die their hair, etc. I'm keeping sensibility in my kids, but the effects of advertising and TV are too strong. This weekend, my 8-yr-old niece proclaimed she wanted to be a Victoria's Secret model! I investigated this, and apparently her mom keeps the catalog around. I hid those catalogs from my daughter until she was 13, but even now when one happens to come in the mail, I quickly throw it away. Our kids are exposed to a superficial lifestyle, and put pressure on their parents to buy into it. I live in a middle to upper-middle income neighborhood, and have several kids, so I see it all. Well-meaning parents want to give everything to their kids, everything except firm discipline and teaching the value of saving and earning your possessions. My friend from the east coast tells me that people there hide their wealth. My mother-in-law says that Iowans would never display their wealth. Just Californians?

12/29/2005 3:13 PM  
Blogger swalloq said...

I have a viewpoint that's similar to what most people here have but with a twist.

This year I did substantially better than last year and found myself wondering around Best Buy. If I had so desired I could have bought the biggest most expensive plasma with cash but I didn't.

That's what bothers me about America even the most abject individuals have a car, cell phone and probably high speed internet access. Yet for some reason people want MORE.

I look at my friends. We all earn decent money yet its frightening to see how much of their money goes out.

They could easily live in a nice and well furnished home yet they all push things to limit and buy the biggest home possible or keep a 2nd home. All purchased care of a serious of interest only or ARM loans.

How much more can you consume? I think its insane.

Well for those who are saving I do have an insightful observation.

If the government can't bail out the airlines, the auto industry and the housing industry simulantenously. Its not possible without massive hyper inflation.

Put your money into something that rises with inflation. Gold is always good during inflation. Commodities/Energy are also great investments.

12/29/2005 3:20 PM  
Blogger SoCalMtgGuy said...

nycguy,

I didn't want this to be a "moral" post, but a financial one. It IS the easy credit that is given for all of these things.

My point is that there is a major fascination with "celebrities" like I have never seen before...and people will go to great lengths to "look" like they are "somebody".

SoCalMtgGuy

12/29/2005 3:31 PM  
Anonymous Anonymous said...

Your post is cool!! I like it!!! You are cool!! I mean it!!!

12/29/2005 4:01 PM  
Blogger Daisy said...

Question: Is there any way to get the nitwits who get themselves 40k in credit card debt to read a blog like this? For that matter, can we get them to read anything without pictures of celebrities on it? Judging by the very adult attitudes expressed in the comments section, I'd say you're just preaching to the choir...not that there's anything wrong with that. I enjoy it immensely, and couldn't do without it.

I just wish there was some way to wake up the rest of America to what they're doing to themselves---and to the rest of us.

12/29/2005 4:23 PM  
Anonymous Anonymous said...

I call it the "I'm worth it" attitude, sometimes displayed by American women.

I feel out of place in places like Circuit City and Fry's. I have the money to buy some of the things on display there if I wanted to, but I don't need them. I always tell my husband there is a difference between "need" and "want".

I am happy shopping at Walmart - for day to day items that are needed, even groceries at the SuperCenter. Groceries are cheaper at Walmart than Albertsons or Safeway, even cheaper than Whole Foods (for organic stuff).

If I feel the urge to buy a new T-shirt or blouse, I buy the fabric(on sale for $1.00 / yard), and stich it myself; I cannot get myself to spend $20.00, $40.00 even $300.00 on a blouse. I cannot understand women who pay so much money for clothes. Even if your work requires you to dress well, you don't need so many suits and shoes.

I drive a 12 year old car; my co-workers make fun of me as they drive their new Honda Accords and Toyota Avalons and minivans - bought by taking out a home equity loan.

I save and save and save. For me, not spending money on unnecessary Christmas gifts gives me more joy than buying more crap at the Box-mart. Buying crap does not give you happiness or true joy.

We did purchase a new 36 inch flat screen Sony TV (I guess the analog TV, not the HDTV or digital) because our old TV died; we paid cash, and the sales guy couldn't believe we didn't buy the HDTV. He tried to convince us that all programming channels are moving to digital version, but stopped short of saying we won't see anything on ours. Guess what, we can see the digital channels on our analog TV just fine, with no convertor box needed. And we just watch the free channels (with a $20.00 antenna). We refuse to pay money to the cable / satallite company each month.

We cook all our meals at home, and rarely go out. The waitress expects 20-25% tip. I feel like asking her - do you know when was the last time someone gave me a 20-25% bonus for a task or project I completed? Never. All I get is a thank you, and here's your next project.

So, it goes.....

12/29/2005 4:29 PM  
Blogger Detachable Cletus said...

"Our kids are exposed to a superficial lifestyle, and put pressure on their parents to buy into it. "

I wish I could remember more of the details, but here in Canada we have a Television network for young children called Treehouse.

About 2 years ago, the President of the company was gleefully describing his "innovation" which was to show Mercedes SUV and other adult themed advertising to the 3-5 year old children who were his networks target audience.

He said that basically most parents are so lacking in self esteem that they seek the approval of their own young children. If a 5 year old child could be convinced to harrangue his mother about how embarrased he is about getting picked up at school by a 5 year old minivan, then the parent would be more swayed to buy the new SUV than if they had just showed the ad to the parent in the first place.

The president was so in love with himself for coming up with this...

12/29/2005 4:50 PM  
Anonymous atx said...

I've always lived way beneath my means--sometimes I feel like a fool for saving $1,000 a month "for a rainy day", but it's nice to know I have a big buffer in my bank account if I need it.

My current dilemna--trying to figure out how to maximize "medium" (3 year horizon) returns. For now, I'm buying I Bonds, even though I hate locking up money for a year. But it's sure nice to defer the interest.

12/29/2005 5:51 PM  
Blogger S Crow said...

Enjoy your Blog. Good commentary and humorous.

A unique "in-the-trenches" perspective:

I can't agree more about previous comments regarding the exorabatant lifestyle people live all the while drowning in debt.

My spouse and I own a small escrow company in Washington State and over the course of the past year or so, we see massive debt only to be exacerbated more by interest only loans, hybrid arms and other loan products.

We've closed hundreds of purchases/refinances. I've mentioned in previous blogs that the position people are in has moved from stupid and foolish to down right frightening.

Our country is in for a far different adjustment than in 1990. Folks, we are in a bubble and it's beginning to leak. Although I may offend the real estate community that feeds my kids, I cannot tow the line and listen to the garbage coming from National Association of Realtors anymore.

The market will become ugly and financial ramifications could be far worse than the Savings & Loan scandal of the 80's. I just hope the politicians stay out of it and the government doesn't bale the lenders out. We just need own up to the problem we created and get through it.

Blogging brethren please take my advice: live under your means.

The best to all in 2006,
T.Kane
Legacy Escrow Service, Inc.

12/29/2005 5:53 PM  
Blogger r patrick said...

Look I'm sorry I went on a rant there, let me try explaing some facets of this. I like the show, but I think extravagance is kind of fun to watch. I still want to see the Liberache Museum in Vegas.

The first is alot of the houses the Rappers and the people with recording conrtracts have are owned by the company. Some do own the place, on the show the interviewee usually mentions it.

This is my first house, or I forget who I am the first person in my family to own a house ever. I respect that, they sometimes have like their Mom or sisters livig with them ( Destiny's child ) ect. But they are usually McMansionish but tastefully done. It does have a like 18 foot palldian window in the living room.

Then you have the people over the top. My fav was little romeo who is like 8-12 has a sports car. He can't drive it.

Snoop Doggy Dog(g?) his wife obviously did the place becuase he's like white living room, the boys are'nt allowed in here, then he looks at the dining room and goes basically "same deal" This is a guy who was/is a member of an LA gang going "yeah my wife runs the house" I find this very amusing.

But I am not running out and doing the same...

12/29/2005 6:08 PM  
Blogger SoCalMtgGuy said...

Admin,

Thank you very much for your honesty! I know I'm not the only one who sees how rediculous things have become.

I'm glad to have your input here!

SoCalMtgGuy

12/29/2005 6:19 PM  
Blogger S Crow said...

To SoCalmtgguy-

From Legacy Escrow Service, Inc.:

Thank you for your kind words. I'm really tempted to link your Blog to our site, but I don't know if that is a noose I want around my neck.

Truth and transparency is never easy, but in the long run I know it will reap rewards, both professionally and personally.

In the meantime I'll stop in your Blog from time to time. Let me know if you'd like any commentary from an escrow perspective for future discussion.

The very best to you and your family during 2006.

T.Kane
Legacy Escrow Service, Inc.

12/29/2005 6:43 PM  
Blogger Roastbeef said...

Not to get OT, but....

anonymous,
I have to take a bit of an issue with your attitude regarding tipping the wait staff at resturants.

Those folks make far less than minimum wage and rely upon tips to make any type of living at all. Not only that, they have to deal with the general public all day... a chore you can't appreciate until you've done it yourself. I've always looked at my time in retail during college as a character building experience.

Should they be paid a decent wage without having to rely on tips? Yes indeed. But they don't and if they're going a good job with good attitude, it isn't fair to take it out on them instead of their employer.

12/29/2005 6:44 PM  
Blogger Pinch a Penny said...

I have been hoverring over this and ben's log for about a month now. I Have also seen how the housing bulls have quietly left the arena, and are generally nowhere to be found. Maybe vacationing off of their latest heloc. None of what is happening is new.
I lived through the tech bubble, and saw 20 somethings that could barely type making over 6 figures. The preferred mode of transportation was an M3 or an Audi S4. None of thesse bozos ever though about saving a penny.
I did not either. I got laid off, and am just starting to get back on my feet after about 3 years. I was lucky, or unlucky enough that I did not buy a house.
I rent a cheap place where the cops are called every week by my next door neighbors. Not fun, but saving. as I know that the tech bubble was the tip of the iceberg. We are at the end of the clacking at the top of the economic rollercoaster that is to come. Brace yourselves!

12/29/2005 6:45 PM  
Blogger ocbroker said...

Chekc this link out:

http://calculatedrisk.blogspot.com/

Don't think the Gov will be able to afford to bail out all the FB this time around.

Plus all the Big Hummer & Other SUV or known as (Sh*t Ugly Veihicles) next year Gas Prices are set to hit $3 to $3.50 a gallon again, might be low now but this is known as the teaser season..

Yepp they are all FB's

12/29/2005 6:48 PM  
Blogger annamelbourne said...

The original post and most comments are full of references to televisions and TV shows. A longtime producer at ABC-TV gave a talk at the Annenberg School of Communications at the University of Pennsylvania several years ago. I have never forgotten this statement from him: "The purpose of TV is to deliver the viewer to the advertiser, ready to buy."

Although I know this advice has very little chance of being followed, I have to say it: "Folks, for your own good, turn off the TV."

12/29/2005 6:57 PM  
Blogger moonvalley said...

We just recently (after doing consumer research) bought a 50 inch Panasonic Plasma TV. We shopped around first. Bought at Best Buy for cash, then called the next day and told them that it was 500 bucks cheaper at Circuit City, we wound up getting close to 1k back.I love getting a deal.
We work in the movie industry and live in the country. We only go to LA when we need to be at the studio for meetings. We live a very low key lifestyle, and we pay cash for most everything, or use a debit card. Our Credit Card balances are kept to a minmum and paid in full every month, most everything is done through electronic banking anyway. We bought the TV because watching DVDs is our main entertainment, and it's a write off for our corporation. We rarely see a movie outside the house (we're renting)
I was raised to be frugal.I frequently will pick up an object and carry it around the store, decide I really don't need it and put it back without purchasing . Sometimes my husband thinks I carry it to an extreme. I could of course buy the thing but I don't buy something unless I need it.I believe in a small footprint.
I see many people who really can't afford doodly squat throwing money around, no savings, no health insurance, etc. I wonder sometimes what they're thinking.
There are a lot of "flippers" up here in Sonoma, tossing their paper wealth around, but the people up here who have the real money, and I am talking hundeds of millions from the wine business look like the farmers they are. They know who they are, they don't have to impress somebody.In fact one of our good friends up here buys most of his clothing at a thrift store. We were at a cocktail party at his 2 million dolllar house on Christmas Day and he answered the door in a tee-shirt that read "Happpiness is a Positive Cash Flow"
It's one of the reasons we live here and love it. No pressure, nobody trying to get me into investment condos in San Diego, or Fendi purses. After all, it's just stuff.I love what I do and I like knowing what I've got stashed away. Like beauty it's what's inside that counts.

12/29/2005 8:25 PM  
Blogger blueskies said...

great post !!

schedenfreude theatre writ large.....

12/29/2005 9:45 PM  
Anonymous Anonymous said...

All great comments. I want to add that I believe the government does have one important role in the cleanup of this mess, and I want comments on my suggestion for a law. I think the refinancing industry needs to be regulated such that equity loans can not be greater than the amount paid on the house plus normal appreciation (inflation + 1.5% according to NAR over 30 or 40 years of data). This would prevent excessive and unsustainable credit / paper wealth and a future bubble.

Bryce

12/29/2005 11:54 PM  
Blogger Out at the peak said...

I'll go to a poker game with my friend, and I'll be frugal in some manner. My friend will then complain to everyone in the room that my yearly income is more than everyone's salary combined (in that room), and that I can afford to do x. I always try to explain that wealth preservation is important to me.

Also, many people at these poker parties have a negative attitude. They already know they are going to lose, "I'm going home after I lose $40." I guess they are just their to have fun. I have only lost once in the last 30 games. Maybe it is because I am determined that gambling is only fun if it is a wealth preservation/gain activity (only poker qualifies).

12/30/2005 1:58 AM  
Blogger txchic57 said...

"I'm Worth It" is a great advertising hook. What's sad is that it is so easy to tap into the psyche/ego of the average idiot consumer.

I find that stuff insulting and manipulative but I see how it works on most people.

I have done all my buying of things online for years now. Went into a high end mall this fall (not by choice!) for the first time in probably 5 years and was alternately shocked/overwhelmed by the sheer magnitude of "stuff" being pimped. It was sensory overload to the max. I couldn't get out of there fast enough.

12/30/2005 5:36 AM  
Anonymous tightening my beltway said...

Thanks for discussing an issue I have been thinking about for the past six or so years.

I used to be a professor and I was always puzzled by the fact that my students all drove better cars than I did (okay...let me be really honest...I was puzzled by the fact that they were even driving their own cars as most of them told me that they had massive student loans). They had cell phones, CD players, DVD players etc. They went away to great places on spring break and so on.

I taught at a public university where most of the students were first generation college kids. They didn’t come from wealthy families.

It took me a while to figure it all out. Part of it became clear when I realized that the university bookstore used to put credit card applications in every bag so each time the kids made a purchase, they were basically being steered toward easy credit.

The sad thing, of course, is that these kids were graduating from college with $50,000 in student loans and $10,000 in credit card debt. They were walking into jobs which paid roughly $35,000 or so. And now, of course, four years after I left teaching, I have been reading about how twenty-six year olds (my former students) are buying $400,000 condos here in the DC area where I live.

When I think about my bailing out these kids or other people who live above their means, I get pretty tense and angry. I know how difficult it is to live on a fixed income (I was a professor and left because the salary was so bad!). Now I make a very good living but I still live under my means. I still drive my little Corolla although I am surrounded by colleagues in BMWs, Lexuses and so on. I still rent because I live in DC where prices are a joke.

I am always confused by the fact that people who make less than I do and who don’t have family money are able to afford things I can’t. It was an eye-opener when a friend pointed out that most of the BMWs I see are leased and that the people who drive them could not afford to buy them. Ditto with credit cards (I pay mine off each month but I guess that is unusual in the US).

Living in DC, I have seen the most incredible excesses. The killer is that this is a government town where most people are federal employees (on a GS level, the salary tops out at $135,000—it TOPS out at this level). While I know that there are lobbyists etc. who make buckets of money here, the fact is that the federal government is still the largest employer. So, the truth is most of the people I see here driving in their BMWs, shopping at Neiman Marcus (Needless Mark-Up), Whole Foods (Whole Paycheck) etc. really can’t afford their lifestyle.

12/30/2005 7:20 AM  
Blogger Tom said...

txchic57 said...
"I'm Worth It" is a great advertising hook. What's sad is that it is so easy to tap into the psyche/ego of the average idiot consumer.

I find that stuff insulting and manipulative but I see how it works on most people.

I have done all my buying of things online for years now. Went into a high end mall this fall (not by choice!) for the first time in probably 5 years and was alternately shocked/overwhelmed by the sheer magnitude of "stuff" being pimped. It was sensory overload to the max. I couldn't get out of there fast enough.


I went to the mall here and just could not believe the flaunting of wealth. Then I saw a co-worker who makes less than I do! She was driving her BMW X5 and was all decked out in the latest fashions.

I mean, I guess some people are going to live for today because tomorrow is just another day.

Well you know what? Tomorrow is going to be a rainy day and they should of put some money away for it, but many didn't and they will pay.

I just hope we don't have to bail them out.

Also, banks traditionally put money into cash reserves to prepare for a downturn in the credit cycle. But because of Sarbannes Oxley, many are not able to put as much away and have to report it as earnings. This looks really good, but when the sh*t hits the fan, and they have no cash reserves, then the stocks are going to get hammered and some banks, I am afraid will need to be bought, bailed out, or will just go out of business.

12/30/2005 8:06 AM  
Blogger Lou Minatti said...

SoCal, you should submit this to some newspapers to reprint in their editorial sections.

12/30/2005 8:12 AM  
Anonymous Anonymous said...

...
How are you going to feel when your taxes go up because the government decides to bail-out all the people that wanted to live an MTV Cribs lifestyle on a Gomer Pyle income?!?!?
...
Boy is this ever the ultimate question. Personally I really don't care if other people do stupid or short sighted things.

But the thought of being taxed to pay for this bullshit or enduring higher inflation or earning low returns on my money (due to the Fed) really pisses me off big time.

So the question is who is more politically powerful - the blingmeisters and all who serve them or the people who are financially responsible?

12/30/2005 8:52 AM  
Blogger hs64 said...

This message has nothing to do with the current topic now, but related with housing bubble.
I made an offer for a house in Nov.(our first house for living.). The asking price was 499k.(owner needs to move, so he lower the price from 519k--539k to 499k).
In the end, the house was bought by somebody else for around 496k.
Today i saw the same house is for sale again after 1.5 month, asking price is 539900--559900. Obvious the buyer is a flip-flopper. Now people should understand why this housing market is a bubble!

12/30/2005 9:13 AM  
Blogger real estate blues said...

The big problem is that parents are putting their kids on pedastals.
My kid can do no wrong, my kid is an angel, my kid deservers everything.
Few years ago in Chicago there was a group of girls that was caught hazing another group of girls, and it was on videotape. They would put buckets on other girls heads and hit them with bats, etc, I don't remember all the details but it was pretty crazy.
The school banned those kids from attending the prom (they were seniors). Well, the parents first got lawyers for their kids, then they organized a separate prom for the kids that were banned! What is that teaching the kids?? Do whatever you want and we'll bail you out.
I'm sure these kids are all driving benzes and beamers since they are in a pretty wealthy neighborhood.

Another thing is teenagers see Paris Hilton, kids from Laugna Beach, O.C. and all want to be like them. And parents don't have the guts to say no , you are not getting a BMW for 16th birthday, you're getting a baseball glove and that's it (that's what i got btw :-) )

BTW My sister in law (which lives in an average house, average income) rented a limo for her daughter's 9th birthday and put dozen of her 9 year old friends in it and had the limo drive them around town for a while! And we wonder where the kids get this "i'm entitled to it" feeling.

12/30/2005 11:01 AM  
Blogger Eternalflame said...

I just had a great time walking on a 'secret trail' I've discovered. The scenery was awesome, no noise pollution, nothing but wildlife. Cost..$0 and I feel great after the fact. After an hour into the walk guess who appears on the trail? Two flippers! They began boasting about how they bought a new house a year ago and just moved in and caught the appreciation of the new house and are selling the old house for some good appreciation. They were so excited about their smart decision. They had $ signs in their eyes and I'm sure they had chrome wheels to match. They were trying to get me to buy their house I just didn't comment. I know this free ride is coming to a close when you meet someone out of the blue in the middle of no where and they talk about their house flipping tales.

12/30/2005 11:08 AM  
Blogger moonvalley said...

BTW My sister in law (which lives in an average house, average income) rented a limo for her daughter's 9th birthday and put dozen of her 9 year old friends in it and had the limo drive them around town for a while! And we wonder where the kids get this "i'm entitled to it" feeling.
great story, very symptomatic of what's wrong. We were in LA for a meeting with studio execs a couple of months back. We were eating at the Beverly Hills Hotel (their choice..expense account) anyway at a table across from us were a party of two year olds, having an elaborate birthday celebration for one of them. Scads of toys, waiters kissing their tiny diapered asses, they actually were more interested in the wrappings than the crap in the boxes. I'm sure they would have been just as happy in their own back yard at a picnic table..but noooooo..the mommies have to outdo each other. If these kids are partying at the BH Hotel at the age of two what the hell will they do when they're 15?

12/30/2005 12:43 PM  
Blogger moonvalley said...

Alomost forgot has anyone seen the MTV show My Super Sweet Sixteen..starring some of the most spoiled brats one could want to meet..
http://www.mtv.com/onair/dyn/sweet_16/series.jhtml
if you haven't seen it you've got to take a look.
The way these kids scream at their families, and demand demand demand....well no wonder it's all going to hell in a handbasket. Wonder how may parents are pulling $$$s out of their houses to financial these bacchanals

12/30/2005 12:47 PM  
Blogger moonvalley said...

sorry to be so obsessive..but this was the worst one of all...
http://www.mtv.com/onair/dyn/sweet_16/episode.jhtml?episodeID=90356
the crank will shut up now..

12/30/2005 12:51 PM  
Blogger rocketrob said...

"Happiness is Positive Cash Flow" - and debt free. I have been on the "dark" side before. It is not pretty and it lasted for sooo long.

Our 19 year old daughter has the MTV cribs "syndrone", always the best. She needs a really good job after college to support herself.

A Story:

Fred and Elma ( names changed to protect the innocent) had jobs as and auto mechanic and a art store manager. They both quit their jobs and became RE agents, in 2003.

Business was good, and they bought a summer home in the mountains, then they bought another place, fixed it up, and sold it for a $20,000 profit. Bought another place, and sold their old home for a $100,000 profit. Then bought another home which is the model at a new development, plus a new $35,000 truck. The new house can't be sold for 2 years, but it does have granite counter tops.

They now have $800,000 in IO loans, on 3 homes bought within the last year, no equity, and have maybe $50,000 cash left.

I think they "deserve it" too.
But a 6% drop in the market will not look good on their financial sheet.
Plus lack of sales in the retail side may crimp their cash flow.

12/30/2005 1:22 PM  
Blogger SiliconValley Renter said...

moonvalley,

I stumbled upon that MTV Sweet 16 show and I could not believe what I was watching. $75K spent on a 16-year-old's birthday party??

Jazmin's parents surprise her with a luxury sports car which makes her Sweet 16 that much sweeter.

I remember being ecstatic when I turned 16 for having the privilege of getting to take my parents' old car to the store down the street to buy some milk.

This culture of entitlement and "I want it now" is truly baffling to watch. I just hope when this RE bubble shrinks that people start taking a reality check on what they can afford vs. what they "want now".

12/30/2005 2:41 PM  
Blogger The Oracle said...

Your posts are fantastic! Too bad the mainstream financial gurus are so far behind the curvel.

12/30/2005 2:52 PM  
Blogger blueskies said...

anecdotal story:
are changes in the wind?

we buy the majority of our clothes in consignment shops. yesterday we went shopping there first time in 3 months.... amazing selection, very good prices and a lot of very high end stuff very cheap

we got 12 items for $118 incl taxes... retail for same would have been approx $1800+

are they cleaning out their bling bling closets for cash flow? hmmmm

12/30/2005 4:26 PM  
Blogger r patrick said...

You know I feel sorry for the Guys that have to date these Girls. I mean you better have serious money to roll with these women.

Bergen where I am going to school is full of this. "Daddy said I had to goto school" when asked why they are in college. LV bags, Gucci shoes, nice cars, you name it they got it.

And the guys are the same way. Name brand shirts, suped up cars with big sound systems, chains, ect. As I said must be nice to have money.

We do a lot of 'Boomer Bashing' wiht the housing bubble but the group I'm in we are so spoiled from a "feel good" educational system where "everyone's a winner." No there are losers and the bad news is it's us. This whole "Tweener" thing with 26 year olds living at home. If you have a real job making reasonable money get some of your friends and rent a place.

Ok you went into computers and yout a BS in math and you hated it. NP well then go work part time while your learning a different trade. Yeah it sucks, but you took 6 years to get the BS too, if you bothered to complete and probably not in a difficult major. I have a friend majoring in "Womens Studies" what do you do with that?

And yeah some young people are making good money but most are just putting it on credit. Or of you live at home and pay no rent making 35K on your first job that gives you 25K of play money a year. If I have kids and they are pulling down 35K a year and lving at home and they don't have a damn good reason, out of the nest they go.

Best thing that ever happened to me, and I see so many of my friends back where I used to live my age still at home, not going anywhere. Yeah it sucks, if I was living at home and had not bought my place I would have with the UI, savings, not paying all the bills something like 30K in the bank. But is it fair to make Mom pick up her 25-26 yea old son's living expenses?

Time to grow up. Goals people, where are you going? I ask that of my friends and sometimes it pisses them off. Not to get in their face but to be like "so what do you want to do and how can we get you there." The people that make a plan I help, the people that don't you gotta leave them.

A bachelors degree is not worth much anymore. I'm only at a two year school because I want my RN and they have the program, I don't know why anybody would bother with a non-career specific AS today.

In my generation's perspective though why save? They not being aware of the bubble probably think housing is permanently out of reach.

Investing? Many companies are not offering 401k of if they do new employees are not getting the match. In some places many smaller companies are not offering Medical anymore. Plus they don't teach money in school. I know all this stuff because I put hours into learning it. I also have a math background, but how many of my cohort go "math is hard?"

For those of us not stoned, ignorant, or still attached to the parental teat the future is scary. I know we did'nt want to be the same generation as my Grandfather. Graduating from college in 1929, he got to watch everyone else have the fun and then had to help pay for it.

What can I see happening? The installment plan was HUGE in the 1920's so many people my age have leases, those that own have gimmick or voodoo loans, and we all almost have lots of credit card debt. I seem to have gotten the reputation of the "go to Guy" for fixing people's money problems, and many people I know just don't get it. I explain the rule of 72 ( because I am not teaching what e is ) and how interest works for or against you. But again this is not taught!

So whats going to happen? Well we can have hyperinflation which means all of the jobs here if they do adjust for the cost of living now are even more cost effective to be moved elsewhere overseas.

My generation which has little savings in general if they have assets like houses should get bailed out. If they have debt they should if their pay increases have the burden reduced if they stop spending. Who knows if hyperinflation = ultra high rates but I think there is a federal usry cap though it's very high ( if you know this please comment ) so any advantage might get removed by interest rates adding to the balance.

If we have deflation, then the jobs they can get pay less and the bills stay the same on the stuff they are paying off and they still are screwed.

If they can't get pay it off they get noosed by that Bankrupcy act, and either get it wiped but lose all their stuff and the ability to get a job ( many employers do a credit check on new hires, low scores steal more ) or an apartment. Or they are being broken every month paying off the chapter 11 plan set by the courts.

Even if we have a "FHN interest appeasement 50% tax credit" most of what we are dealing with is unsecured debt so again still getting screwed. I think I am going to go pour myself a drink, I need one now this gets me so depressed and angry.

26 non FHB who figures we will all be FHB's soon enougth.

12/30/2005 4:30 PM  
Blogger real estate blues said...

Oh man that show is great

"Jacqueline and Lauren want their party to be perfect so they need the perfect band. Lauren asks her dad if he could see if they could book Christina Aguilera, Red Hot Chili Peppers, Linkin Park or even Dashboard Confessional. Through Lauren's dad's connections, they learn that Beyonce will do the party for $500,000 dollars. Shocked at the price, Jacqueline and Lauren decline Beyonce's offer."

Maybe there's hope!

"While taking pictures, Pauly Shore asks Jacqueline and Lauren if he could get a kiss on the cheek. Jacqueline replies, "No, way that's bad."

Haha rejected.

"As Unwritten Law begin to play, a mosh pit forms on the dance floor. Hard Rock Cafe's security and even Lauren's dad try to calm the kids down. Jacqueline gets pulled into the mosh pit and gets punched in the face. Finally, the party comes to an end. Jacqueline thinks the party was a great success whereas Lauren thinks it "wasn't anything special."

Spend all that money and get punched in the face! That's awesome!

12/30/2005 5:54 PM  
Blogger Contrary Guy said...

Very good stuff. Reminds me of what Jim Puplava at financialsense.com has typed up as a narrative: The Day After Tomorrow (in a financial sense), http://www.financialsense.com/stormwatch/2005/0222.html

He describes a combination of consumer motivations, political and Fed machinations, and the dark dank world of hedge funds, all in story form. The rest of the site has other relevant commentary.

Sweet 16! The Brittney/Jazmin link is hilarious... at 16, I recall selling my 10-speed and working up gas money to drive the family's 72 Torino station wagon which (thank heaven!) was a stone tank. It could joust with an H3 and come out the winner. The 'blin' car on my block at the time: none really, maybe a few Caddys and Corvettes.

passthebubbly sums it up well: Reality TV. American Idol. Who Wants To Be A Millionaire. $300 million Powerball jackpots. Pimp My Ride, Flip My House, Swap My Wife, Fill My SUV. Sex In The City, or its slightly more PG-13 version, Desparate Housewives. You're fired, and so are you, you, and you, but you over there, you get to work for Donald Trump. Welcome to the 21st century, where past realities are no longer in force.

Good post SoCal, have a great New Year.

12/30/2005 5:55 PM  
Blogger Contrary Guy said...

One more idea: r_patrick, your mention of personal goals stirs a thought. It has long been my belief that in an ever-expanding population, not just in the US but globally, it's harder to be someone special, to 'be' anything, given the demographic competition. Since I graduated from college, the US population has grown by about 60 million, while US business has consolidated and in some cases contracted or disappeared. Add to that all the offshore contract workers, that are in direct competition with me and my peers, and skill sets give way to mere availability (i.e. who wants to be on-call this week? Show of hands?)

Now that's just the working world as an example, but the same applies to the average late-teen going finishing up their K-12 years at a high school with 3000+ students in attendance, or the working parents who find that they're jostling with dozens of others for a day-care slot for the kid.

Given that dilution of identity, the individual swimming in an ever-increasing ocean of commoditized humanity, what is the alternative? If you can't be something, then BUY something. That's the mode our society seems to be in right now.

12/30/2005 6:26 PM  
Blogger moonvalley said...

silliconvalleyrenter..
I remember being ecstatic when I turned 16 for having the privilege of getting to take my parents' old car to the store down the street to buy some milk.
Haha...I can't even remember what we did for my 16th..I think my parents took me to a movie or something..obviously not show-worthy.
My husband was saying this afternoon the proper ad saying is "I deserve it" and they certainly will deserve every bit of it.
PS..Flipper City..otherwise known up here in Sonoma as Bel Terrene is flooding tonight.

12/30/2005 6:59 PM  
Blogger Laurafromreno said...

texchic said:"I'm Worth It" is a great advertising hook. What's sad is that it is so easy to tap into the psyche/ego of the average idiot consumer.

I find that stuff insulting and manipulative but I see how it works on most people".

Yes, I know exactly what you mean. To watch all the commercials on TV, it appears everyone is wealthy and can purchase anything they want. Most consumers feel presure to buy into the propaganda advertising machine. If they dont shop at Pottery Barn they are not the "in crowd". It's so sad to think most people let themselves be scrutinized by what they do, or do not purchase.

My favorite brainwashing commercial is the Lexus Christmas commercial. What a joke! I can't believe anyone would even fall for what they are trying to push. Has anyone ever received a car, let alone a Lexus for a christmas gift?
I just have to laugh and maybe feel alittle sorry for the sheeple who believe it.

12/30/2005 8:32 PM  
Blogger r patrick said...

Jag used to the do the same thing
"Decemember to remember event"
I used to watch a lot more TV. Then I got better.

But you know who cares there are more of them than us and my FHB's friends can get out of their shiny new car after leaving their garage at their nice house and pat me on the head for still driving my Little Green Car after walking out to the parkinglot from the Itty Bitty Apartment(tm)

Who was going to be proven right? Well I thought we were. But I am not so sure anymore.

I honestly think there might be a bailout, and then all this saving, planning, and all this learning was for naught.

12/30/2005 9:16 PM  
Blogger betamax said...

socal - great post, you really touched on a near-universal phenomenon, as the replies suggest.

I was caught up in the credit jungle until I met my fiance, who showed me how much I was spending every month on interest payments. It was an epiphany.

Keep up the good work!

12/30/2005 9:59 PM  
Anonymous Anonymous said...

Money, it’s a hit.
Don’t give me that do goody good bullshit.
I’m in the high-fidelity first class traveling set
And I think I need a lear jet.

12/30/2005 10:33 PM  
Blogger moonvalley said...

My favorite brainwashing commercial is the Lexus Christmas commercial. What a joke! I can't believe anyone would even fall for what they are trying to push. Has anyone ever received a car, let alone a Lexus for a christmas gift?
that commercial is sick..a friend of mine bought a Jag last year, it's basically a Taurus with a cat stuck on the front of it and no legroom in the back..he had his fun..now he's about to trade it in.
Keep up all the good work Socal...you brighten my day.

12/31/2005 2:15 AM  
Blogger Idaho_Spud said...

I see we've hit a nerve here ;)

We all are clearly bewildered at the excesses of the consumption society that's sprung up around us. Indeed, what's next?

What does it mean economically and socially when everyone you know owns (or leases, or appears to be able to afford) a 'luxury car', a boat, a huge RV, etc, etc?

There is something much worse however than the 'bling bling' lifestyle these shows are pimping, I think. That is the Machiavellian attitude that programs like 'survivor' embrace and reward. This 'win at all costs' behavior challenges our trust in our neighbors and co-workers, and provides a rationalization for betrayal. It's sick. Society is sick for celebrating and enjoying it.

So.... will the partying on easy money stop in 2006? I have the feeling that it will, and that it will be painful.

On the bright side, perhaps everyone will face economic reality again, stop speculating to aquire wealth and instead start working to aquire wealth. Ha! That one was on my wish list from Santa anyway.

I'm convinced that the Fed will try to inflate (print worthless money) the federal deficit away and those of us who've bothered to save will be punished. Those that have gone in debt up to their eyeballs (and their lenders) will be saved. It'll be a bailout, and the taxpayers don't even get to vote or write their congressman about it.

12/31/2005 6:44 AM  
Blogger 41cadillac said...

Mr. Idaho_Spud:

Not to worry! You are assuming men have control of this earth. The eternal principle of truth will prevail.

Buy some oil and gas stocks carefully selected.

Do not buy on margin as did the 1929 investors. Then hold on for a few years until you find that house of your choice at a reaonable price.

The USA is a great country, not perfect, but never in the history of the world has a nation been so free. Free to go into debt; free to recover. So. Be. It.

12/31/2005 7:19 AM  
Blogger Jim A said...

Well... my closest friend got a (year long lease on a)BMW Z3 on his birthday once...

12/31/2005 8:10 AM  
Blogger San Diego Slide said...

Love this blog.......

Consumerism seems to be most conspicuous in the "inner city" neighborhoods here in SD. For example, it boggles my mind that in North Park, a very modest neighborhood, so many homes which are not even as big as most suburban garages have luxury automobiles parked in the driveway.

One of our neighbors, who own their home, have a roof that looks like it could blow away in the breeze but they have a Mercedes SUV (parked on the front lawn). They park the Suburban on the street. From their front window you can see the big screen TV, dwarfing the 14 x 18 kiving room.....I just don't get it.

So many of these homes here in San Diego look like they're about to fall down. But the owners drive new Mercedes, have large screen TV's and season Charger's tickets. Their kids drive new Jeep Cherokees and Land Rovers. Yesterday, I saw a kid who couldn't have been more than 18 driving a Land Rover with a poodle on her lap and her cell phone tucked beneath her chin. A good candidate for a roll-over. Can you imagine?

It's gonna end badly, here in SoCal and probably in most large cities/suburbs. Nobody can afford all this crap, eventually somebody's got to pay for it, don't they?

1/01/2006 9:50 AM  
Blogger Idaho_Spud said...

41 Caddy:

Yep we live in a great country - no doubt about it. As always we argue over how to make it a better one, but at least everyone on both sides of the aisle agree that is the goal :)

As for the home of my choice for a decent price, I'm reasonably content right now. I used the easy $ Mr. Greenspan provided to get into a 15 yr fixed rate at 4% a few yrs ago. I'm rapidly building equity the old fashioned way (by paying down the principal).

When I'm done working, and no longer have to be close to heavy industry, I'll probably get a smallish house on a river or lake.

We'll just have to see how rough the shake out of the speculators is in the next 2 yrs. No bailouts, monetary inflation or otherwise!

1/01/2006 10:00 AM  
Blogger Idaho_Spud said...

This comment has been removed by a blog administrator.

1/01/2006 4:17 PM  
Anonymous Anonymous said...

hello,
yep... sigh.. that is how things went and are.
What is the matter with some folks these days, dont they know how to think?
Very scary when young ones make tonnes of money and think it is normal. Wonder if they think homelessness is normal too.( Also, is this the kind of people that actually graduate from universities?
It is about serious time they increase the quota of brains into the universities and not rich spoiled and soo deserving young adults.)
Dont they ever stop and ask themselves why they have such desires to have all this crap? It sure isnt instinct.. so, oh.. was that a brain wave?..somebody is influencing you to have these desires. TV? magazines? radio?
Instead of breast implants and retina burning white teeth.. how about a brain implant?

1/01/2006 4:28 PM  
Blogger Jim A said...

san diego slide...
It's certainly possible that the people that you cited have tried to refi themselves into the illusion of prosperity. However it's also possible that they simply choose not to spend their money on their houses and instead spend it on other things. Without looking at their bank account (something our host here actually has occasion to do) there's no way of knowing. I figure if people can actually afford it (as opposed to finance it) it's not a moral issue. At least until they start asking li'l ole me for a handout.

1/01/2006 5:42 PM  
Blogger Jeff D said...

Great post and top notch blog!

As you alluded, the things you mentioned didn't cause the bubble, but rather, I believe, are direct manifestations of the massive credit bubble that's been building for nearly 20 years thanks in very large part to Alan Greenspan's wreckless and grossly expansive monetary policies.....

1/01/2006 5:49 PM  
Blogger iron56 said...

Nothing new about bling--or primate status games generally, for that matter.

I'll even go farther back than Tom Wolfe’s "The Bonfire of the Vanities." John P. Marquand is an almost forgotten author now (he died ca. 1960), but he wrote some scathing and witty novels on the shenanigans of the newly rich back in the 1950s and before. Check out (e.g.) "Sincerely, Willis Wade."

And you thought infatuation with The Right Brand Names was new :)


On another note, I've heard that some 40% of Americans pay off their credit cards in full each month. I was astonished that it was that high (and if someone here knows differently, say so). Evidently the credit-card industry calls us "deadbeats."(!)

So apparently not everyone has bought into the "spend now and let tomorrow take care of itself" attitude.

1/01/2006 6:18 PM  
Anonymous Anonymous said...

This is a huge problem. We (as consumers) are constantly bombarded with messages shouting "BUY ME OR YOU'RE A LOSER".

I'm 27....have an older truck and a nice late-model Mustang GT 'vert for nice days (both paid off), rent, not much in student loans and a couple credit cards I'm trying to pay off (from stupider days). I'm the exception among my friends - most of them own houses, drive fancy SUVs, don't think twice at spending $100 for dinner, are making payments on RV, boats, second homes, tvs, computers, granite counters at Home Depot, etc.

I often get chided by them because "I make good money" and I'm "entitled" to a new truck because my old one is old. Nothing wrong with it, it's just a piece of junk because it's 10 years old and not in style anymore. They just stick up their noses when I reply that I paid cash for it and am really happy about it; one of my friends went so far to ask to see the title for both my cars (she's 38 and has never seen a title and was curious what it looked like). I'm also "stupid" for renting because I should be buying a house, never mind that they seem to think my desire to go to graduate school is stupid because "you'd be quitting a well-paying job and not be able to buy a new truck".

I will say that lately most of my friends who are up to their necks in debt payments have finally shut up about the old truck and boob-tube 25" TV and stereo that I've had for 10 years that "looks like it came from a pawn shop". I let many comments roll off because I'm able to spend 5 weeks a year on fishing trips and visiting family across the country. I'm able to fly somewhere once or twice a month for a weekend trip watching sporting events. Of course the concept of having disposable income is also foreign to them because of all the debt payments trying to show their neighbors up.

So what - I missed out on the housing boom. I'm not worried about paper wealth. I've got over $30k in my retirement accounts and it's growing by $10k+ a year. Some of my friends cannot even contribute to a 401k because of house/car payments. I've also got 6 months of living expenses in a savings account. I'm getting to the point where I can tell my boss to fly a kite if I get pissed off. That's real freedom that no 4-bedroom house can provide.

I'm still young yet the older I get the more I'm becoming turned off to consumerism.

1/01/2006 7:56 PM  
Blogger B. Durbin said...

I have had the pleasure of actually owning the car I drove— for about four months. Then a hit-and-run driver took that out, and now we have a new car. It's new because it's exactly what we need, there's no other comparable model, and it's a new model/style.

Oh well. This delays our buying a house for a few years. However, given the trends, that might well put us at the bottom of the market. Here's keeping our fingers crossed.

1/02/2006 8:12 PM  
Anonymous Anonymous said...

Lived in my mom's basement during my 20s. People laughed. I didn't care. Stacked up over $500,000.

Paid cash for my car.
Paid cash for my Master's.
PAidcash for my apartment. (And gutted it to brand new for $15k)

My remaining $400k gives me about $20k-$30k a year in interest..

Now, I only work parttime and take my summers off. I play in a band, run marathons, and have become a good cook. I also write a lot. My friends are all wage slaves.

Bling bling you cubicle monkeys...!!! I'll be at the swimming poool.

Mu-hu-hahhaha

1/03/2006 7:19 AM  
Blogger Karen said...

I've been accused of being sanctimonious at times (on this blog, in fact!), but I still think Americans have a real problem distinguishing between what we want and what we need.

The other day, my husband and I met with our new financial advisor. It was an eye-opening experience.

We're a one-income family, but it's a six-figure income, and by the time we had committed to maximizing his 401k contribution, funding the 529's, paying for additional life insurance, and paying off our $100k mortgage in 7 years (it's a 5/1 ARM, and, yes, before you ask, we knew what we were doing), there just wasn't much left for luxury cars, fancy vacations, private schools, and designer clothes.

Granted, we're a pretty conservative couple, but it made me question how many people are foregoing retirement contributions and adequate insurance in a desperate attempt to achieve the American dream of home ownership.

Just my two cents.

1/06/2006 7:29 AM  
Anonymous Anonymous said...

It seems that many children in their teens see the lifestyle, but they have no comprehension of how hard it is to really earn the 50k needed to buy a Hummer...and how old it gets spending $500-1000 a month on gas to keep it running.

If I had to shell out five figures for low fuel consumption, it wouldn't be a Hummer. It'd be a fully-restored Sixties classic muscle car or sports car. GTO, Charger, 'Cuda, Mustang, 'Maro, Cougar, Firebird, Challenger, 'Vette, Cobra...

I live (well below my means) in Da O.C., SoCal, and the only Hummers I've ever seen off pavement or in less-than-bling-bling condition are the genuine military models.

4/25/2006 2:54 PM  
Anonymous Anonymous said...

Regarding the word "Crib" (or "Kribz" as it's spelled these days).

Isn't a crib what a baby sleeps in, not where an adult lives?

Think about it...

4/25/2006 3:05 PM  
Blogger Hapto said...

Right on. There's a metric fouqueton of useless crap being used and consumed.

But the thing I've learned while fixing credit scores and such is that CreditCards/Lenders want you in debt -- its how their investment makes money... and without rampant consumerisim, there woudn't be debt, so they offer you more money. As my credit score has increased the number of 'free creditcard offers' has declined.

Now consider the cultural applications... the Dub/Cribs aesthetic is largely appealing to the young african american. ( http://www.elyrics.net/read/c/coo-coo-cal-lyrics/my-projects-lyrics.html ) Which doesn't seem to trust the debt for houses and education (major cultural generalization, true) but does trust the debt for tangible items. When I lived in Mil-Town (thats Milwaukee for all y'all) my neighbors had a washer and drier (not hooked up) in their diningroom (no diningroom table), three TVs 2 VCRs, 6 portraits of Tupac, a couch from the 'lease to own' - you know the type gold laminate and valour - Tommy Hilfiger clothing, and not much else.

Now at the heart of it, is that life sucks... completely and utterly, and this 'stuff' is kind of the new church. You walk in and you feel proud, you feel a part of something. And I wish that lenders weren't taking advantage of that... but if it ain't broken, how can they come offer to 'fix it'?

4/27/2006 11:31 AM  
Anonymous Anonymous said...

The gov't bails anyone out for excessive spending I will be very pissed off. medical - their problem. Bankruptcy keeping them down - their problem. Can't buy another house because they lost the one they had due to being too deep in debt - their problem.

There will always be poor uneducated people in society. These will be the ones. The hard workers should NOT have to pay for the excesses of the fools.

As to saving $500K by living in mom's basement, nice. I don't believe it, but nice.

Hey, here is another symtom. How poor is the spelling and grammar of some of these posters? Will a real employer find these people to be worth the money they seem to "need"?

5/10/2006 2:16 PM  
Anonymous Anonymous said...

If you buy a $20 stock because you think it's worth $40, it might get there... in three or four years.

The stock market really does return 10-11% a year, but that gets spread out over 250+ trading days and oodles of little ups and downs. Real estate *does* mostly only go up and everyone does need somewhere to live, but in the long run it pretty much tracks inflation.

wow gold oppotunity.

Boring, boring, boring. To the average American, how can that possibly compete with a house, or a Hummer, or some shiny new spinning hubcaps?

7/17/2006 8:12 PM  
Anonymous Anonymous said...

If you buy a $20 stock because you think it's worth $40, it might get there... in three or four years.

The stock market really does return 10-11% a year, but that gets spread out over 250+ trading days and oodles of little ups and downs. Real estate *does* mostly only go up and everyone does need somewhere to live, but in the long run it pretty much tracks inflation.

wow gold oppotunity.

Boring, boring, boring. To the average American, how can that possibly compete with a house, or a Hummer, or some shiny new spinning hubcaps?

7/17/2006 8:14 PM  
Anonymous QUALITY STOCKS UNDER 4 DOLLARS said...

interesting subject.

1/09/2013 11:40 PM  

Post a Comment

<< Home

Google
 
Web www.anotherf@ckedborrower.com