[Novalug] economics (was Re: OT: Re: Remember to vote!)

[Beartooth]

On Tue, 4 Nov 2008, Varol Okan wrote:
 	[snipperoo]
> I see it this way, on average a house doubles in dollar amount every 10
> years. We had a crazy ride the past 8 years. Inflation is certainly
> going to take a bite out of the edge. I do not expect house values to
> drop back to pre-2000 levels or those reasons.

 	Careful! That has been true in greater Babylon on Potomac 
for the last few decades -- but not always, and not in more that 
a few other places.

 	Doubling in ten years amounts to 10% compound interest, 
iirc. (It may be twenty; but I *think* twenty corresponds to 6%.)

 	Even 6%, historically, has been an inordinately risky 
return, and hard to find. There was a reason why traditional laws 
against usury (long since evaded or gutted) set a cut-off at 6%.

 	Part of your Babylonian return, of course, has been the 
Versailles Effect : the minor nobility in Louis XIV's time lived 
in glorified broom closets just under the roof -- but their 
address was "Versailles, Le Palais."

 	But part of it has also been the same house of cards, or 
bubble if you prefer, so commonly inveighed against now. Don't 
count on it any more in your time, not even in Babylon on 
Potomac.

-- 
Beartooth of Bear's End, Squirreler, Historian of Tongues
What do they know of country, who only country know?