12,396 karma · joined October 6, 2010
I understand California had this particular scandal in 2016 and passed some reforms. This is probably a consequence.
Unfortunately, there may be reasons that they assume this. Just for instance: one of every three kids in foster care are prescribed psychotropic medications, gravely alarming the American Academy of Pediatrics. Notably, foster parents taking care of a child on such a medication are paid much, much more than they would if the child is not. The statistics on child abuse in foster care are alarming as well.
Oh yes. I could lose my job and get a new one with zero equity compensation and a 33% cut to base, and I’d still be pretty comfortable paying everything. And that’s by myself, not accounting for any of my wife’s income.
> currently running $1T USD deficits annually, and that after a spike in tax receipts due to asset inflation
Yes. I forecast this means more inflation. Or politicians choosing to actually make hard decisions and pay the price for their policies, which will happen only after much more inflation.
I have locked in the price of shelter for the next 30 years and the more inflation the better this real estate deal looks.
Someone in the comments there made a metaphor about "catching a falling knife." I respect this skepticism, and suspect I may have safely caught such a knife. More thoughts:
- If interest rates rise, the asset price bubble may deflate. This suggests the house's value on paper will fall — but unless the economy collapses, overall rents ought to be stable, and the cost of living on a typical property ought remain broadly similar. In the meantime, prices are still rising substantially in the area where I bought the house, notwithstanding recent headwinds in the mortgage market.
- I expect real rents to rise over the next few years, due to general supply-and-demand issues and the dearth of new construction. I expect this nationwide; I further expect them to rise in the city where I bought. This should mitigate the pressure on the value of my asset.
- I locked in a 4% interest rate. With a conforming loan of $647,200 that's something like $2200/mo in debt that's evaporating due to inflation. This is a substantial portion of the monthly payment. You will not get this good a deal, because rates are already going up. However, at current rates, you will still get free-money financing -- just not as much or for as long.
- I sold stocks to pay for my down payment. The stock market fell a good little bit since I sold. If your equity is still in equities you have already taken a hit that I avoided. (I got lucky, I guess; I also sold company stock at a very attractive price.) And note that even though stocks have fallen, they are by many measures still somewhat overpriced by historical standards, particularly if rising rates brings about a recession, which it might. If my real estate is at risk from rising rates and falling asset prices, it has lots of company. (Even a nice safe bank account is losing value daily.)
In conclusion, a lot depends on the specifics of where you're buying, how you're paying for it, and what you would do with the money instead. If you've got a wad of cash and wanted to make an all-cash offer, I'd preserve as much as you can against inflation, and save it for the recession in a year or two; you'll probably come out ahead.
Look at the price for actual call options at these intervals and you will have an approximate idea of the value of this financial instrument. It’s probably substantial, almost certainly more so than the opportunity cost on your money (unless you must meet critical expenses or pay off credit card debt). And if you always sell the same day you buy, the risk is quite low (if the plan is at its bottom and the stock price falls 15%, basically, but most ESPP dates are just after earnings which limits the types of surprises you’re in for).
Case study: Venezuela. It didn’t go before this specific kind of court that I know of but they totally seized foreign oil companies’ assets. Their tankers, and tankers with their oil aboard, are subject to being impounded in some jurisdictions, to compensate those whose property was taken.
On the far side of these mountains you will find the humid wetlands and the wide rivers of ... Nevada. Perhaps you can try kayaking on Groom Lake someday.
Perhaps it is reasonable to allow the money to remain unspent on topics related to physics! Spending has opportunity costs, after all; if these other experiments are not really the measure of the cost, then something else of value to society surely is.
Avoiding that sort of an error at compile-time is right there at the heart of the core premise of Rust, so Rust should optimize for it.
I made $500k last year (selling 1.5 years' of equity compensation near the top of the market) and I'm celebrating with a brand new mortgage and a car, but my monthly payment on both will be lower than what I was paying in rent, inflation is eroding the value of my mortgage debt. A conforming loan of $647,200 at 4% is an inflation hedge with a rate of return around $2000/mo, or ~60% of the mortgage payment.
The car is going to be used (real interest rate around -4% to 0%, details TBD). Boat? Maybe a kayak or canoe. :)
You are the vehicle by which neo-liberal capitalism fixes the problem. By leaving academia to work for a firm directly, you are responding to a price signal sent by the industry, relaying that price signal to the academic labs.
You might object, this is slower than most price signals! That's because the university environment is somewhat insulated from the ordinary pressures of capitalism (and thus better able to exploit young research programmers).
Because of its centrality and importance, we should be more rigorous about how we approach the economics of the labor market, not less. That's not "neoliberal reductionism". It's the universal laws of economics: the readily-foreseeable consequences of our political decisions and regulations that define the allocation of society's limited resources. When instead we are too-precious about how we treat labor (disrespecting fundamental economics in the name of justice and equity, living in ignorance of the consequences), then we will find stagnation instead of growth, higher rates of unemployment, more inequality, and more poverty.
Your speculation #7 notwithstanding, this kind of scheme is being targeted at retail investors [1] (instead of just accredited investors, sovereign wealth funds, pension funds, and the like) because it is more of a feel-good investment than something that makes financial sense. Firms with similar business models include Rally Road (equity shares in collectible cars). Similarities include the establish-an-emotional-connection tactic of identifying a specific panel or specific car.
This is a step up from Rally Road in my book — there's real earnings, it's not purely speculative — but from an investment perspective, you're only really involved because you're not as demanding as a serious investor (I expect rising interest rates have something to do with the shift away from accredited investors) and you are more vulnerable to this kind of feelgood pitch. Heck, you're competing with funding sources like a commercial loan, and for some reason you're winning?? That's a red flag.
You may see depressingly low returns. Read the prospectus end to end, understand the risks, and figure out how to do the math and properly discount a future income stream in a rising-interest-rate environment.
[1] (Elsewhere in this discussion: "We are currently working with accredited investors, but we are working to launch a product for retail investors.")
Monetary stability makes many forms of investment less risky! Low real interest rates (which often co-occur with inflationary episodes) discourage many forms of savings (which banks could use to invest.) The link between inflation and overall amounts of investment is not abundantly clear in the general case and it is an open problem that remains under study.