New Testament for Homosexuals

You all will like this... a new Bible available called (drum roll....)

Study New Testament For Lesbians, Gays, Bi, And Transgender: With Extensive Notes On Greek Word Meaning And Context

I particularly like the subtitle. Glad that understand the true meaning of the word.

Inflation and willing debt

Today, a short question that may have a long answer; and certainly there are those out there more qualified than me to answer.

When considering the various cultures and lifestyles within America (compare California or Connecticut with Texas or Kansas etc...), how easy is it to explain why home prices are relatively high in one area and relatively low in another? Is it because people in California are more willing to go into debt?

We can no doubt see that "debt willingness" causes extra inflation. For example, the price of a home naturally rises over time (normal inflation), but if the consumer is willing to take on more and more debt to pay for that rising price - then the price never stops rising. So if consumers were NOT willing to go into debt for that house - the laws of supply and demand would stop the price of the house from rising.

Look at this way: Compare the average home prices with average annual income from 1940 and 2000 (according to government census information):
1940: Average home price in CA: $3,500. Average annual income: $4,000 (depending on various sources)
In 1940 a home cost about the same as your annual income.

2000: Average home price in CA: $211,000. Average annual income: $50,000
In 2000 a home cost over 4 times as much as your annual income.
(Not to mention that in 2004 the median home price in SLO county went over $400,000 - 8 times higher than annual income!!!)

So in 1940, you could very easily save and pay cash for a home. And even if you were willing to go into debt, it would take very little to purchase. To help understand better, that 1940 house, adjusted for inflation would only cost $35,000 in 2000. If a home price was that little today, you could easily save for it.

So getting back to my original question, why have home prices gone up to 4 times higher than our annual incomes? Were houses simply undervalued in 1940? Have the prices finally reached their market equilibrium point? No and no. Economic principles applied then as they do now.

The answer is that consumers have come to embrace debt. Instead of saving until we have enough, we borrow before we have enough. And so the price rises until it reaches its new equilibrium when debt-willingness is factored in.

So in earlier cultures where debt was not yet an option, housing prices could NOT rise proportionately higher than income could rise. But only when culture began to embrace debt did home prices begin to leap frog out of sight.

So what would happen to home prices if a huge amount of the culture refused to go into debt for a house? In other words, what happens to the price of a house when there are no able buyers? You got it.

And getting back to my original question: is one reason that houses are cheaper in Texas because the culture is slightly less willing to go into debt than people are in CA culture? Or maybe at least they are more willing to put more money down?

Quotes on giving by Randy Alcorn

Here are 4 quotes by Randy Alcorn from his book The Treasure Principle:

"God prospers us NOT to raise our standard of living but to raise our standard of giving."

"When people tell me they can't afford to tithe, I ask them, 'If your income was reduced by 10% would you die?'"

"You can't take it with you but you can send it on ahead."

(My favorite) "The greatest deterrent to giving is the illusion that earth is our home"

Fortunate 50

Speaking of debt, Sports Illustrated released its annual "Fortunate 50" report - a list of the 50 top-earning American athletes, combining both salary/winnings and endorsements.

Click the link above to read the whole list. Here are some of my favorites, especially those raking in the dough who are not even playing! (I've listed them according to their top 50 ranking.)

1. Tiger Woods - $99,700,000 (down from last year because of his knee injury and the ending of his Buick sponsorship.) $92 mil of that is endorsement money. How great a hold does Tiger have on this list? He has a $50 mill lead on 2nd place: Phil Mickelson.

4. Alex Rodriguez - $39,000,000. $33 mil is salary... remember this is for 1 year! That's about $204,000 per game - or $45,000 every time he goes to the plate. Wow.

10. Peyton Manning - $27,000,000. The NFL's highest on the list. But Peyton has tons of endorsements; his salary is only $14.5 mil.

11. Dale Earnhardt Jr. - $26,600,000 - Not even close to NASCAR's top winner, but easily NASCAR's top earner. $22 mil of his money is endorsements.

17. Stephon Marbury - $24,000,000 - Nearly all of this is salary paid by the New York Knicks as Marbury never played a minute. He was healthy, but NY refused to play him because of his poor attitude - but boy did they have to pay him!

22. Steve Francis - $22,000,000 - all salary, Francis did not play a minute in the NBA and was not even on a team! Portland had the privilege of signing this paycheck.

26. Barry Zito - $18,600,000 - all salary. This is one of my favorites. A couple of years ago the SF Giants signed Zito to a 7 year, $126 mil contract and Zito has been a losing pitcher ever since. Zito is due to make $20 mil a year through 2013.

28. Tom Brady - $18,000,000 - only 8 mil is in salary - what a bargain. However, his supermodel wife, Gisele Bundchen, is set to make $40 mil this year. It must be embarrassing to make less money then your wife! :)

44. Jason Schmidt - $15,750,000 - the LA Dodgers signed Schmidt to a 3 year/$47 mil contract. The Dodgers are glad they are finally in the last year of that deal - when the contract is finished, the pitcher will have played in 6 games. (And the Dodgers wish it wasn't that many, as Schmidt's post-surgery fast ball topped 84 on the radar.