Sunday, January 11, 2009

BUBBLE THOUGHTS

LITTLE NUGGETS OF WISDOM I CAN'T STAND TO NOT PUBLISH ON MY OWN BLOG.

Because I can't stand to have my little gems of wisdom (or as I tell Bilbo about plastering his words all over the place, 'turds of wisdom') and because I know that not everyone here goes to BB2, I'm repeating a series of comments I made over there about the creation of Bubbles:

HE SAID THAT I SAID THAT HE SAID THAT I SAID....

It started with Bilbo saying that I had said that one couldn't stop a bubble from happening. (Earlier, he had accused me of not reading Popular Delusions and the Madness of Crowds.) Because it involves good old anonymouse Bilbo, the language isn't for the faint-hearted.

I ANSWERED.

Of Course, you COULD stop a bubble. It's just that no one ever does. Too many people making money.

What I said is, you can't START a bubble. (Shit, Buster, they're trying ALL THE TIME! Every new business, every new product, thinks they are going to take over the world.)

What it comes down to, people think they can CONTROL a bubble, manipulate a bubble. The other guy will always be the last fool, not you.

And bubbles ALWAYS end badly, lower than where they started, with everyone at death's door.

Only a lucky few will escape before it all collapses, and a few others will get out intact.

And yes, I've equated fads with bubbles, that's my premise, if you don't buy it, I understand.

I've read POPULAR DELUSIONS. A more boring and dry book would be hard to find....


And.

You and I are never going to agree on this, Bilbo. We have different world views. You see Evil Genius, and I see Chaos.

Ordinarily I'm a great believer in cause and effect, but when it comes to bubbles, I'm an agnostic.

I think they're a mystery.

I could be wrong about this, but even if it's true that bubble are created, who decides what becomes big and what doesn't?

So it becomes a moot point.

I'll give you this much. It is possible to recognize a bubble early, to promote it, to be part of the TIPPING POINT, and making it really happen.

The biggest benefiters to the bubbles, are people who were accidentally (on purpose? Luck goes to the prepared?) positioned.

In Bend, you have the Hollerns, the Coats, the Wards, the Miller, sitting on what had been, up until 15 years ago, fairly worthless property.

The other people who can profit are the few survivors of the last bubble who have no consciouses and are willing to screw people in the new bubble.

And you have a few survivors like me who are just trying to survive with their businesses and integrity intact.

But as Tim said, we'll be buried under fetid corpses....

To Which, Bilbo answered:


"Bullshit dunc, you haven't read the book, and if you did you skimmed, you were bored, ... you don't like reality.

Your a sci-fi guy, you like fake worlds truth bores the fuck out of you."

BORING BOOK.

I just told you, Bilbo, I did read the book.

Must be nice to ignore everyone else's reality.

I gagged my way through it.

The only interesting parts were the South Sea bubble, and the Tulip Madness.

It was like reading The Gangs of New York. You force your way through because there are some fascinating elements.

But you wish a modern writer would update the info in a more entertaining fashion.

BILBO'S WORDS:

Jeebus dunc, just let go, I could start a fucking bubble anytime I wish.

HEY, KIDS, LET'S START A BUBBLE!

Ummmm, go right ahead?

Spend a fortune of time and money trying to create a bubble.

If you succeed, you will be hailed a genius. If you fail, we'll never hear from you.

Like I said, it begs the point -- why do some things take off and not others? It can't be just brains, and money.

It's something more mysterious.

In your view, I'd have to say that the housing bubble inflaters were awfully nice to wait for the Nasdaq bubble inflaters to burst first.

One bubble at a time? Benefiting only one element?

Accident explains it more, fertile ground, maybe, but the EXPLOSION (not just 'hot' product, that can be created by advertising, but BUBBLE magnitude is way, way bigger.

Unaccountably hugely delusional.

If ten thousands monkeys set out to create a bubble, and one succeeds, is he lucky or a evil genius?

You could write a book about how this one evil genius monkey figured it all out, and find all the reasons in hindsight.

I guarantee you there are ten million monkeys out there right now, trying to create wildly successful, delusionally profitable trends or product.

General Mills right now is expending millions on product development and advertising, trying to create the hottest cereal ever.

Ford is trying to convince you their next model is the new Mustang.

And so on.

It's the "Sam Walton" is a genius school of thought.

If you start with 1000 stores 50 years ago, one will end up being the biggest. Then we can all go back and see why, and give it all kinds of importance.

But to me, it's like asking why Saturday is the busiest day of the week in retail. Oh, because people are off work, or whatever.

But what if the busiest day was Tuesday, then we'd find all the reasons.

And alternative explanation is:

ONE OF THE DAYS OF THE WEEK, BY DEFINITION, WAS GOING TO BE THE BIGGEST DAY OF THE WEEK.

It's simple statistics.

So, yeah, Walton did some things right, but if it hadn't been him, it WOULD'VE been someone else. And we'd be calling them, CHEAP SHIT FROM CHINA, either way.

And Target would be trying to position themselves as the classier Walmart, but it would still be, "WE ARE COOLER THAN WALMART, BUT WE HAVE CHEAP SHIT FROM CHINA, TO

3 comments:

Olde Dame Penniwig said...

I think your pal Bilbo is right, in that bubbles are created. And if he's got money, he's right, he can create one. Bubbles all come down to one thing: Greed. Incredible amounts of greed.

Why do scams work? Greed. Oh, people will say, "Mean old scammer, they took advantage of my 82-year-old grandmother and duped her into sending her life's savings in a Nigerian Scam." What's left unsaid is what only a few will admit to: It is GREED that leads to getting scammed.

If you aren't greedy, at 82 or 52 or 22, you don't get scammed. If you're greedy, you get scammed. And sky-high housing was such a stupid and self-destructive scam for "communities" to embrace. Many communities were too wise to jump for the bait.

Bubbles are scams, and purely voluntary ones, like all scams. People f-ing line up to get in on the idiocy.

If a town is filled with greedy bastards, it's going to develop a housing bubble. And that's how one person CAN start a bubble. Person A goes to Person B and says, "This is such a cool and special town you have here that I will give you $300,000 for a $30,000 house, because the [weather/people/shops/theatre/whatever] is so great I just must live here and to live in such a fab place you gotta really pay up." And then all the other greedy guts start clamoring for outrageous amounts for their homes, too, knowing the whole while that it's bunk.

You took some potshots at the Grate State of Texas in an earlier post (no joaks about my Aggie spellin' thanks) -- but only ONE CITY filled with greedy show-off people engaged in supporting the housing bubble, and that would be...let's see...AUSTIN! They were ripe for that scam, and they fell for it, and too bad for them. People turn up their noses at how hard-nosed people are where I live, but it keeps them from getting scammed in that greediness is greatly feared as the straight path to hell. Whole areas of some states fell for it. Greed, pure greed, and pride are behind those housing bubbles and behind any fad.

My two cents'.

bruce said...

What was dunc's point I never know he says stupid shit then flips the next day.

Some stupid shit like fads and bubbles are same, that a bubble is like a hoola-hoop craze, ... then today dunc said that bubbles can't be stopped.

The classic book on bubbles is "grand popular and delusion madness of the Bend Crowd written in the 1820's". In that book there is a bubble called 'salem witch hunts'. WTF kunts the witch deal was about burning witches? A bubble?

Ok, heres the story the accused died naturally but what they don't tell you is the accuser got a percentage of the estate. So it got wicked everyone was accusing everyone of being a witch, and lot of people died and a lot of people got rich.

OK, ... it was a FULL ON FUCKING BUBBLE.

Then one day some of the foaming at the mouth christians talking in 'tongues' started accusing the 'JUDGES' of being witches, see the accused witch had a trial in a court of law, sort of like here in Deschutes County today.

Well as soon as judges started being accused of being a witch the whole thing ended abruptly.

Imagine that.

Now it could have been the same with our Bubble. Someone could have sternly SAID STOP in 2002, no more zero-down loans to un-employed Mexcians, but NOPE didn't happen cuz everybody was making money.

Also it didn't hurt the ruling class, as they were going to make a fortune when all the cheap ARM's did the reset.

... So the bubble went on until it ran out of FOOLS like all bubble's but it could have ended at any time. Had a Judge, or PREZ, or SENATOR came out strongly against, but HELL all were having a good time.

Even the IRS knowing that TIC(1031) was fraud, stayed back, as they knew politically it was suicide to end a good thing.

To this fucking day Fannie&Freddie still refuse to release to the public all the cheap and easy loans they made to politicians and FUCKING JUDGES.

This bubble was a beauty cuz EVERY FUCKING PERSON could play.

Now dunc talks about fad's and hoola-hoops, but those a fad's and MOST of us don't play, but a true BUBBLE everybody plays, like the witch-hunts you were a player whether you wanted to or not.

To me, a bubble we're all players, sure I didn't play in the bubble but the aftermath will effect me, if I hang out at night at a Walmart parking lot. So I'm a player.

A fad doesn't hurt anyone except those stuck with the merchanise, and most don't play.

But a real bubble always hurts all,

Lastly there were no bubbles in human history prior to the printing press, all bubble for the past 500 years were orchestrated by the press, and sustained by the press.

bruce said...

You notice that HBM hasn't said a WORD about 1031? On the SORE, not a word.

He's always bashing stupid Pug's.

Neuman gave the RNC stolen client money, "MAKE THE RNC RETURN THE MONEY", HBM has the story of the year, does he run it?? HELL NO.

WHY?

Cuz 1031 was a major part of the BEND-BUBBLE. These GUYS the ENTIRE TEAM-1031 were brought in all together in 1991, and setup shop, and by 2000 were up and running the 1031 exchange & reverse exchange and did 1,000's of deals, deals that would have NEVER sold all the land on the fringes of the UGB. Strip the water rights, before you 1031-flip with an out of town sucker.

Team-1031 are controlled by some of the BIGGEST players in BEND, TEAM-1031 brought tons of BUSINESS to BROOKS&MOSS.

You'll never see HBM do real reporting or investigation, he is incapable.

Bend-1031 is the fourth leg of the BEND-BUBBLE.

1.) Easy-Bush post 911 money (PUG)
2.) Defer SDC post 1998, hollern smart-growth
3.) taxpayer paid PR&MARKETING COVA, planted storys about BEND#1 in outside mag, ...
4.) Bend-1031, reverse exchange, brought 1031 money in from all over the world to 'invest' in BEND (HOLLERN) land.

(1) was common to everywhere, 2&3 to BEND, and (4) was Bend's secret weapon, this is why Neuman will NEVER spend a day in jail, BUSH will pardon all 1031 operatives nationally or OBAMA.


*


What I said is, you can't START a bubble. - Ned Flanders

*

Jeebus dunc, just let go, I could start a fucking bubble anytime I wish.

Let me tell a story as a kid I saw in EAST LA, back in the 50's at a park.

There was a guy playing cards, and if you picked the right card of three you got back $20 on a $10, and I was watching the winner(s) scream with joy, ... and soon there were 100 people around placing bets, ... when it was all over the card-guy handed a bunch of money to the original 2 or 3 'winners'. It turned out that the entire event had been orchestrated and in a 1-2 hour period they had taken in a ton of cash.

See the whole card game had been orchestrated and the early winners, had brought bystanders into the game.

Bubbles are created all the time in public. If you don't see this you are fucking blind.

Self-Sustained bubbles of an enormous magnitude are pure luck.

But HOLLERN knew after 1986, that there would be another bubble, all of us RE players in BEND know its 20 yr avg cyclic here, always been so, ...by 1991 HOLLERN had everything in place, ... by 1998 'smart growth' was in place, folks saw the high-tech bubble in 1999, a lot of people knew that RE would be the next bubble.

Like I keep saying ... 1,2,3,4

(1) easy-money bush post 911
(2) deferred SDC's, pure profit for builders
(3) COVA: pr&marketing of bend paid by taxpayer
(4) 1031 exchange - reverse brought them in from all over

All of 1-4 above came together at the same time (1) of course was un-forseen but it just threw a ton of money on the table, everybody knew there was cyclic bubble, but nobody saw this magnitude with the easy-money.

That said, and I REALLY THINK THAT YOU BEING A DUMB FUCKING LIB, miss the point.

That HOLLERN lobbied the PUGS for easy money,

That NEUMAN lobbied the PUGS NOT to regulate 1031 ( allow commingled funds )

All these players in BEND that run the show MOSS,HOLLERN, COSTA, they're all PUGS they ALL lobbied for deferred or free SDCs, easy-money, non-regulated 1031's (TIC). None of this was a fucking accident or FATE.

*

Yes, but blame the PUG's for lobbying the SHRUB to de-Regulate 1031, and MTG to the point that a hair-lip could buy 4 homes for nuttin down, where every hair-lip in Bend was a 'retired' flipper in 2004.

I remember 2004 like yesterday, and everyone at deschutes brew-pub had quit their job, and everybody was buying houses and selling them the next day for $50k profit, and it was going to happen forever.

But let's NOT forget it was Bend-1031, HOLLERN, and MOSS that lobbied BUSH post 911 to OPEN THE FUCKING easy-dumb-money floodgates.

*

On the housing bubble, you also have to remember Bush ( good christian ) basically stopping all regulation and the constant push for more and more shakier and shakier mortgages to create all those derivatives that were being traded back and forth, along with the sidebets on them. That enabled the entire mess. And made a lot of Wall St. folks incredibly rich.

*

Don't BLAME SHRUB PUSSY, DUMBYA was only doing what the RNC told him to do, and MOSS, HOLLERN, NEUMAN all paid the RNC well to do gods work, and de-regulate 1031 (TIC) and MTG.

It's no fucking accident that Moss&Bend-1031 are all jeebus freaking bible thumps.

The lord in Bend works in strange ways.

*

What was dunc's point I never know he says stupid shit then flips the next day.

Some stupid shit like fads and bubbles are same, that a bubble is like a hoola-hoop craze, ... then today dunc said that bubbles can't be stopped.

The class book on bubbles is 'grand pop and delusion'. In that book there is a bubble called 'salem witch hunts'. WTF kunts the witch deal was about burning witches? A bubble?

Ok, heres the story the accused died naturally but what they don't tell you is the accuser got a percentage of the estate. So it got wicked everyone was accusing everyone of being a witch, and lot of people died and a lot of people got rich.

OK, ... it was a FULL ON FUCKING BUBBLE.

Then one day some of the foaming at the mouth christians talking in 'tongues' started accusing the 'JUDGES' of being witches, see had witch had a trial in a court of law.

Well as soon as judges started being accused of being a witch the whole thing ended abruptly.

Imagine that.

Now it could have been the same with our Bubble. Someone could have sternly SAID STOP in 2002, no more zero-down loans to un-employed Mexcians, but NOPE didn't happen cuz everybody was making money.

Also it didn't hurt the ruling class, as they were going to make a fortune when all the cheap ARM's did the reset.

... So the bubble went on until it ran out of FOOLS like all bubble's but it could have ended at any time. Had a Judge, or PREZ, or SENATOR came out strongly against, but HELL all were having a good time.

Even the IRS knowing that TIC(1031) was fraud, stayed back, as they knew politically it was suicide to end a good thing.

To this fucking day Fannie&Freddie still refuse to release to the public all the cheap and easy loans they made to politicians and FUCKING JUDGES.

This bubble was a beauty cuz EVERY FUCKING PERSON could play.

Now dunc talks about fad's and hoola-hoops, but those a fad's and MOST of us don't play, but a true BUBBLE everybody plays, like the witch-hunts you were a player whether you wanted to or not.

To me, a bubble we're all players, sure I didn't play in the bubble but the aftermath will effect me, if I hang out at night at a Walmart parking lot. So I'm a player.

A fad doesn't hurt anyone except those stuck with the merchanise, and most don't play.

But a real bubble always hurts all,

Lastly there were no bubbles in human history prior to the printing press, all bubble for the past 500 years were orchestrated by the press, and sustained by the press.