Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

[Polish_Silver]

EJ's last post

One year on and it should be crystal clear that this "relaunch" was never about iTulip. iTulip has been a stunning disaster; hopefully it is gone for good.

Has EJ posted recently ? I really valued some of his analysis during the stock and housing bubbles.

Gold price predictions post 2011 not very accurate. How do you forecast market sentiment.

Now that Dalio is talking about gold, it's about time for the next gold Bull.

[LargoWinch]

Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

One year on and it should be crystal clear that this "relaunch" was never about iTulip. iTulip has been a stunning disaster; hopefully it is gone for good.

[Milton Kuo]

Re: it's the zoning

perhaps it would be interesting to consider the role trends play in this. in contrast, in niseko (another ski town in northern japan) which is very trendy now and undergoing a lot of development, a new condo of 850 square feet goes for north of US $1,000,000

On the subject of trends, sure, Japan has an aging population, negative population growth, and a restrictive immigration policy. Excess real estate not near jobs or busy areas is going to sell for very deep discounts under those circumstances. To a foreigner, the ~$5,000 condo in the original article is really only suitable as a holiday getaway. A person looking to live there day-in and day-out must either be independently wealthy or have a job that allows him to work from home. While the cost of the house seems eye-poppingly low, someone accustomed to the U.S. must also consider what will likely be very high costs for things such as an automobile and the fuel to run it, utilities (especially if one is accustomed to air conditioning), and food. On the subject of food, if one does not want to eat Japanese food all the time, being in the boonies could make it difficult and/or even more expensive to acquire certain food ingredients not commonly used in Japanese cooking.

It should also be noted that the $5,000 place is about 80 miles from the Fukushima nuclear plant disaster. Maybe that, too, has a bearing on the price.

the skiing in niseko is likely better but would also require a flight plus a train ride to reach.

also, just to note, cheap real estate in the japanese countryside is not at all unusual. many towns have implemented various programs/incentives to try and make use of existing/unused housing and attract young people to the countryside.

Niseko is also a few hundred miles away from Fukushima so that can't hurt the price. There was a Bloomberg article a year or two ago about the empty houses in Japan or the towns with only old people in them. It remains to be seen how Japan addresses this problem. I'm not entirely sure Japan is a country that would be willing to accept a lot of non-ethnic Japanese people into the country. Also, there really isn't anything wrong with a drop in population so long as it doesn't become a spiral into extinction. The need for neverending growth is part of junk economics.

[Belvegas]

Re: it's the zoning

perhaps it would be interesting to consider the role trends play in this. in contrast, in niseko (another ski town in northern japan) which is very trendy now and undergoing a lot of development, a new condo of 850 square feet goes for north of US $1,000,000

https://nisekorealestate.com/propert...-niseko-511-2/

the skiing in niseko is likely better but would also require a flight plus a train ride to reach.

also, just to note, cheap real estate in the japanese countryside is not at all unusual. many towns have implemented various programs/incentives to try and make use of existing/unused housing and attract young people to the countryside.

a number of years ago my wife and i spent a weekend in a tiny town roughly 3 hours drive from tokyo. there was only one restaurant and they obviously knew we weren’t from around there. at some point during the meal they tried to sell us on the idea of relocating there. there were financial offers to help us in renovating one of the neglected/idle properties with additional incentives down the road if we were to have children and enroll them in the local school.

i suppose the demographics make this situation unique to japan and less likely in the US.

[touchring]

Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

The kinds of people who use real estate as a store of wealth are often from places like China or Russia. When you look at their history of currency devaluations and government seizures of assets, losing 3% per year looks like a pretty good return. That's not even considering the fact that U.S. real estate is one of the best places in the world to launder large quantities of money and not run the risk of the money laundering agent absconding with your money. That's why housing is expensive in these types of transactions: these people need to move a lot of money and they don't want to have to buy hundreds or thousands of $100,000 homes. A $100M penthouse apartment in NYC fits the bill perfectly.

Sounds more like trophy real estate that you can boost to your friends in my opinion.

Buying a gold or silver mine with proven reserves is a better store of wealth.

[Milton Kuo]

Re: it's the zoning

Very cool Belvegas. Does an apartment like that require expensive annual fees or taxes in Japan?

Per the listing, the monthly management fees are 44,700 yen or ~$500. There's a relatively whopping 700,000 yen one-time cost at time of purchase and yearly taxes of 146,500 yen. One-time registration and real estate acquisition fees add another 640,000 yen to the purchase price, which totals 1.8M yen. Interesting that the site can be viewed in one of four languages: Japanese, English, Chinese, and Korean, which gives some idea as to the potential pool of buyers.

This place seems quite inexpensive from an American perspective especially after a decade plus of housing bubble fun but it is kind of in the boonies. I wouldn't be surprised if the place were kind of like a ghost town when it's not ski season.

[thriftyandboringinohio]

Re: it's the zoning

Very cool Belvegas. Does an apartment like that require expensive annual fees or taxes in Japan?

[Belvegas]

Re: it's the zoning

speaking of Japan’s infamous housing bubble…

love to ski? want an apartment near the slopes and just a 2 hour bullet train ride from tokyo?

great news! there are plenty of older japanese desperate to unload their holiday home built/bought during the bubble.

1200 square feet
US $5,000 (wonder what was the original price back in the 80s? $500,000?)

https://www.himawari.com/yuzawa/room/25973.html

[Chris Coles]

Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

Now I understand why here in the UK, over centuries past, every village was within walking distance of all the surrounding villages. makes my present location seem like heaven. https://en.wikipedia.org/wiki/Medstead

http://www.medsteadfete.com/what-to-see.html

Right now am off the help set up for our our monthly Lunch Club; three course meal for £4.

[ProdigyofZen]

Re: Economic Crisis Avoidance Deus ex Machina - Part I: Active Asset Price Inflation - Eric Janszen

Hi kbird, do you happen to have one of Easthams previous pitch decks that I may see? Please private message me. Thank you!

[jk]

Re: it's the zoning

loved the rant, dc. sounded like it came straight out of good will hunting. and of course i agree.

[dcarrigg]

Re: it's the zoning

Thanks! As you can probably tell, I hate everything about these places. Even the furniture. It's never comfortable. Ever. Usually it's not as bad as the real apple store, where they make you sit on crates in a wall-less echoy waiting room. But usually it's low-slung couches with steel frames and cushions as hard as a rock.

I appreciate you pulling themes out: malinvestment, banality, income stagnation. And when I think about it all, I think "Is this really what we're doing it all for? This?"






Here's a free peace of advice for Tim Cook:



It's a chair. Standing, disrupted. You can buy them now. Or even build them with your billions. They're not even patented! This one belonged to Hetepheres I, the mother of Khufu, the guy who commissioned the great pyramid at giza.

[dcarrigg]

Re: how much is enough?

They subsidize a lot more for citizens. But having been up there with local kids fleeing, it also occurs that even public universities in the US look considerably more like an investment fund running a minor league sports franchise with associated high-end retail and condos than Canadian universities do. Just walking around it sticks out. The book store's not brought to you by Barnes and Noble. The swag merch shop's not brought to you by Champion. There's no Starbucks franchise in the cafeteria. When the professors are making less than the grad students and the basketball coach makes more than anyone, even the med school dean and the university president, and they just scrapped history for a pharmaceutical sales program, you start to get the feeling like maybe education ain't what the game's all about any more....

[thriftyandboringinohio]

Re: it's the zoning

What a great rant dcarrigg, entertaining an spot-on. I see three neat little topics inside it.

First, goofy mal-investment doomed to fail. The textbooks tell us we should expect that when interest rates are zero or less. $125 knit caps are just the tip of that iceberg.

Second, the soulless global banality you describe is a side effect of globalized business. Many of my friends think one-world government is the scariest thing they can imagine and the worst evil we should be addressing. I see it differently. Like it or not, we've built a unified global economy. When a typhoon strikes Thailand it knocks down the only factory for certain car parts, and causes a Honda plant in Ohio to cancel the third shift, throwing workers into layoffs. Until we get some sort of coordinated planetary governance the hot money capital will continue crashing around the planet damaging local communities. Here at iTulip we take it as established fact that the root problem for the Eurozone is that they have a single unified currency with a unified trading area, but have individual disconnected national governments with separate budgets. The same problem is unfolding at the global level.

Third, you point to wage stagnation and falling income for the 99%. What Joe the plumber calls a "pay raise" is considered "wage inflation" by the central banks, and they work hard to prevent it from happening. They are getting good results driving wages down and keeping them down for a generation now.

[dcarrigg]

Re: it's the zoning

i also live in ct and one year i got curious about the relationship between educational spending and educational achievement. i used what data i could find and identified about 10 communities with housing prices +/- 10% of the town i lived in, as a proxy for socio-economic status. i then looked at per pupil spending and what achievement measures i could find. no relationship for spending. totally dependent on family's socio-economic status.

this little survey was not science by any means, but it was suggestive.

Yup. Well, if the state mandates you gotta teach Shakespeare to a bunch of Sophomores right off the boat, teach can't spend the year getting them up to speed with the USA Today. Aggregate school-wide achievement stats are the ultimate manifestation of tabula rasa philosophy. Everybody knows there are more of these kids in Hartford than Windsor.

Under-investment causes problems in places like West Virginia and Oklahoma. But all that fat Zuckerburg-Oprah-Booker money just wrecked Newark and didn't help.