PeakTrader.com

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PeakTrader:

In the late ’80s, you could buy a mansion in Denver for $50,000, and there were lots of “For Rent” signs in front of apartments in nice neighborhoods. You could rent a spacious one-bedroom apartment with wooden floors and a view of the mountains for less than $300 a month.

Then, beginning in the ’90s, many people moved to Colorado, e.g. from California. The “For Rent” signs disappeared and rents gradually rose (to over $400 a month by 2000). The Denver Tech Center expanded, there was a homebuilding boom, and many impressive shopping malls were built.

In Downtown Denver, government and business worked well together. There was little hostility (e.g. compared to California). Consequently, in the ’90s, a new international airport was built, three new pro sports stadiums, a light rail system, a new convention center and main library (where the G-8 meeting was held one year), lower downtown was renovated to look like the 1920s when it was new, sidewalks were replaced, etc..

The costs of the improvements were shared by government and business, and socialized by taxpayers in the Denver Metro area. I think, most taxpayers were satisfied with paying maybe $10 a week more for the massive improvements in the city.

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And those city improvements drove up property values, causing new construction and improvements, and attracted upper income or affluent people, not only from the suburbs, but also from other states, in the Midwest, California, Texas, etc., and perhaps other countries.

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Ron, around a hundred years ago, there were many mansions within a few miles of central Denver. Today, many of them remain, although some were torn down. In 1990, many of these mansions needed work. Yet, you could still live in them and some were being sold for $50,000.

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There was no bursting of a housing bubble in Colorado. Chart:

http://research.stlouisfed.org/fred2/series/COSTHPI

There was a housing bubble in California. Chart:

http://research.stlouisfed.org/fred2/series/CASTHPI

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The Nasdaq bubble of the late ’90s was from revenue growth rather than profit growth. U.S. tech firms were creating and capturing market share, on a global scale, and the technology spilled-over into non-tech firms. In the 2000s, costs were cut to create huge profits.

The current bubble was created mostly by cheap labor and capital.

Many workers are underpaid or overworked (while a high proportion of the labor force is idle and collecting government benefits) and interest rates (or cost of capital) are low.

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I think, an important question is should a CEO pay himself $20 million, while paying some workers $20,000 (or a thousand times more), just because he can?

However, it seems, workers don’t realize the economic policies of CEOs have generally resulted in lower prices and lower interest rates for every American. So, how much is that worth?

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The economic policies of our politicians have generally resulted in higher prices and destroyed capital, particularly in health care, housing, education, energy, and small business, while they find ways to become rich.

Government has been very effective in blaming Wall Street and Corporate America, while achieving undesirable effects, because the American people want more government.

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