Poll: Which is Most Likely to Occur in 2009?

Please vote in this poll using the sidebar.

Which is Most Likely to Occur in 2009?

  • Big layoffs at Microsoft. (11%, 35 Votes)
  • Big layoffs at Boeing. (10%, 34 Votes)
  • Double-digit unemployment in the Seattle area. (11%, 35 Votes)
  • Seattle area home prices fall over 15% further. (51%, 165 Votes)
  • Seattle area population growth drops to zero. (6%, 21 Votes)
  • None of the above. (11%, 35 Votes)

Total Voters: 325


This poll will be active and displayed on the sidebar through 01.10.2009.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

36 comments:

  1. 1
    The Tim says:

    Regarding predictive polls on Seattle Bubble, the plurality of voters guessed the correct range for the Dow in this early November poll.

    Congratulations to those that were correct.

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  2. 2
    Sniglet says:

    In my view, ALL of the above will occur in 2009. However, the definition of some of these items might be important. For example, it’s possible some major employers won’t have “official” lay-offs, but still reduce their work-forces substantially nonetheless through hiring freezes, reductions in contractors, shuttering of unprofitable divisions, etc.

    I have put some of my predictions for 2009 up at http://www.surkan.com, if anyone is interested.

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  3. 3
    Renter of Bellevue says:

    My Prediction on the MICROSOFT LAYOFFS: It will be a “glorified re-org”

    1. Contractors will be 80-90% gone.
    2. Department Managers will be “encouraged” to get rid of those they have been wanting to
    3. Some, perhaps many projects will be put “on hold indefinitely”. This is where most direct layoffs (Full-timers and contractors) will probably occur.
    4. Another thing I havent seen mentioned is: if not layoffs, then many people will have their hours cut(some people drastically) with the semi-direct result of them looking for FULL-Employment elsewhere
    5. Obviously virtually no hiring(which has already stopped), they will just move good people around.

    What do you all think?

    Also, what would you say even a 5% manpower reduction(FT and/or Contractor) at Microsoft would have on the housing market over the course of 2009?

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  4. 4
    Ben says:

    People are talking so much about Microsoft layoffs, and it all seems to be conjecture. I see no hard data about it anywhere. As far as I can tell, Oppenheimer said that they would like to see them and then everybody started referencing this as if it was a done deal.

    I don’t see population growth going to zero because in the worst of times people move to cities to hunt for jobs.

    Double digit unemployment is no impossible, but I cannot see it yet. But then again, I did not see bank failures until Sniglet told me the mechanics of the failures 6 months ago.

    It is easy to see that house prices will continue to fall. There is nothing to hold them up any more, and even the average Joe on the street is starting to figure this out. Just wait six months and even the “my neighbourhood is holding value” people will give up and admit that prices are falling.

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  5. 5
    BanteringBear says:

    I’m with Sniglet in that I believe all of the above are possible if not probable. I don’t see any of the choices as a clear favorite to “most likely occur”. As the greater Seattle area has seen a massive influx of transplants over the course of the past several years, I think the novelty is wearing off for many, and they will soon depart. Absurdly high costs of living have a way of doing that. While I love western Washington, I’m starting to believe that, for many people, a much higher quality of life can be found elsewhere. If money is no object, then a lot of the ills of the area can be avoided, but not such things as high taxes, high traffic, poor schools, etc. The next several years should be quite interesting to say the least.

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  6. 6
    old ballard says:

    I choose: All of the above. That would have made the following scenario possible.

    1) Either or, both Boeing and Mircosoft will lay off people directly from their payroll and/or contracting communities, or one or both of them, put into affect a hiring freeze(s) by only replacing personnel lost through natural attrition. Ultimately, I believe that Boeing, due to delays in production and downturn in air travel, will lose existing orders for the Dream Liner causing layoffs there and Mircosoft will freeze hiring (fewer large corporations will be expanding or revamping their IT divisions.) I challenge anyone to demonstrate a scenario that allows any major employer in Puget Sound to expand their payroll in the next two years.

    2) There is a Nation Wide Mythology that Seattle/Western Washington is the region of endless job creation. As a consequence people who have lost everything will continue to migrate to the region. Most of the people moving to the Northwest over the last year as well as the next two or three years will come here on their last tank of gas and their last paycheck and/or living off unemployment with the delusional believe that all they have to do is show up and a job will be handed to them. If you doubt this, image yourself living in Ohio or Michigan looking at your home state and comparing that to Washington State.

    3) Because of the growing number of people laid off locally and the migration of the unemployed from other states to the region all employers will see a dramatic increase in applications per job opening. With a glut of applicants, these employers with the hope increasing profits, will take the destructively short sighted action of lowering entry level wages for new hires causing a continued drop in aggregate demand (consumer buying power), forcing a continued downward spiral of deflationary pricing (especially in the non-essential goods, retail.) There will be a circular component to this as employers lose profit to falling sales/orders and look for reasons to discharge existing employees in order to fill the vacated positions at a lower pay rate (we’ll see an increase in out-sourcing), or simply demanding that employees take pay cuts to make up for loses.

    4) My guess is that the unemployment rate is already at double digits. If you add the official numbers of people collecting unemployment insurance and the number of long term unemployed whose unemployment has run out, with the number of people under employed (either part-time employment or under paid), my guess is that the aggregate rate of all unemployed/under-employed is at best 12 to 15 percent, at worst something over 15 percent.

    5) It may seem counter intuitive, but I believe that is will ultimately lead to a drop in population growth if not a drop in the overall population by the end of 2009. The most employable people search nationally for employment. They have greater access to employment information and agencies which increases their ability to make good choices. The less employable individuals are more likely to make rash decisions, move to a new region without any forethought, and then are unable to get themselves out of the bad choices they make. For this reason I think the region will see a drop in the number of highly skilled workers as a percentage of population as it becomes clear that the country is in a depression.

    6)All of the above points to continued drop in housing prices (including rents.) For the foreseeable future I see nothing but a declining number of people with incomes that can support the housing market at any level. Fifteen percent is a best case scenario.

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  7. 7
    Dave0 says:

    As most, I would choose all of the above if that was a choice, but Tim probably didn’t give that as a choice for a reason (or else all of us doom & gloomers would have picked it). If I have to pick one, I’d say Boeing layoffs, simply cause I have a friend working on the 777 freighter which is about to finish up, and there is no new project in sight for him. I wouldn’t be suprised if a large chunk of people working on that project get laid off when it finishes.

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  8. 8

    How come these were all grim choices?
    How come no ” house prices will hit bottom in ’09, and you better buy now before they start going up again”? or…” Greg Nickels will get elected to an unprecedented fourth term as Seattle’s mayor, bringing glory and prosperity back to the Emerald City.” or ” A new major employer will emerge in the Seattle area, due to the specialness of the area as moisture and gray skies inspire innovation”

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  9. 9
    Thomas B. says:

    I think layoffs at Microsoft are a possibility.

    First, Windows Vista has been a total bust, and will cost MS a lot of cash. Additionally, the next version of Windows probably will be introduced into a soft market, which means costs will have to be spread over a longer term. Again this will mean cash to cover the gap.

    While MS has a lot of cash, it is not an endless supply. Look for continued R&D on high margin products, but reduced spending or no spending on high risk projects. Although I think MS will buy Yahoo… but MS will layoff the majority of workers at Yahoo once they are bought.

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  10. 10

    Why are you still inciting a boycott of our industry? Do you want real estate agents to lose their jobs so you can buy a cheaper house?

    You ought to add Real Estate related layoffs to your poll. Its not just us that have the potential to lose our jobs either. Bankers, brokers, escrow workers, and the people working under them will lose their jobs if people don’t start buying.

    We need things to be the way they were from 2004-06. We need people to buy real estate, we need Microsoft and Boeing to be hiring, we need a lot more people moving here to buy real estate and generate tax income and to keep real estate prices where they are at. But apparently people on this site just hate that fact. They want housing to be what they call “reasonable”. They want a 2000 sqft house to cost $165k.

    Well, if real estate agents, and those tied to their industry start losing their jobs, we can thank people like the ones who post on here to thank.

    And by the way, for the 3rd time. MICROSOFT IS NOT LAYING ANYBODY OFF!! Bill Gates DOES NOT fire people for no good reason.

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  11. 11
    The Tim says:

    EastSideRealEstateAgent is my new favorite commenter.

    Rate this comment: Thumb up 0

  12. 12
    singliac says:

    Yeah Tim, you may need to hire him as a naked loon reporter.

    Rate this comment: Thumb up 0

  13. 13
    Sniglet says:

    MICROSOFT IS NOT LAYING ANYBODY OFF!!

    It’s all a matter of definitions. Microsoft is DEFINITELY slashing budgets for contractors and all manner of expenses. Hiring has also been greatly reduced, and many groups have been told they can’t fill many vacant positions.

    You should read the comments that Microsoft employees have been posting here on SeattleBubble (of which I am one). There is a palpable fear of job insecurity on campus these days. Everyone knows contractors who have been laid off, groups that were disbanded, or the loss of head-count they were hoping for. And all this has happened in just the last couple months.

    I am not saying Microsoft will have a major lay-off (I haven’t heard anything factual that would support this), but it is obvious the company is tightening it’s belt, and if the general economy gets worse, it is inevitable that cost-cutting will go even deeper.

    By the way, although I have long predicted a severe economic contraction, this is not something I am waiting gleefully to see. I certainly don’t want to lose my job! On the other hand, just because I don’t want a depression doesn’t mean that covering my ears and refusing to deal with reality will prevent it. A depression is already in the cards, and the comments by bloggers have nothing to do with the forces driving this eventuality.

    Just as it would be silly to blithly ignore an oncoming hurricane, it is far better to prepare oneself for the depression that is gathering spead rather than rely on positive thinking in the hopes it will disipate before hitting land.

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  14. 14
    G4George says:

    EastsideRealEstateAgent,

    You highlight the problem I have with the real estate industry; that realtors have no basic understanding of the macroeconomic fundamentals which are driving prices lower.

    This is a classic bubble: prices are dropping and yet we are still seeing demand destruction. Prices will not stabilize and demand side equilibrium will not return until prices have fully corrected. The ironic thing is that the longer the market takes to correct the deeper will be the discount from peak because of factors like consumer confidence, inventory build up, illiquid markets etc. As with all bubbles these prices will take many years to even return to the same nominal value (I would guess about 2015 but maybe sooner if we get really unlucky and the Tarp and associated programs cause a serious inflation problem in the near term) and will likely never return to the same point in terms of real value.

    Realtors (along with Bankers, brokers, escrow workers etc) can make a living selling houses now by ensuring houses are priced correctly. I would suggest taking the average of the last 3 or 4 comparable houses to sell and listing 10% under that number based on the drop from peak shown by the likes of the NWMLS and Case Shiller numbers. Realtors will not though be able to make a living if house are ridiculously over priced and nothing is selling. Do not look to buyers to create a market because it is not going to happen, realtors need to be proactive and create a market by ensuring their sell-side customers are pricing to sell.

    Those realtors and sellers who are still trying to get 2007 prices are just as sad as frat boys who go back to the alma mater and try and relive their glory days. Those days have gone and are not coming back. It is time for them to move on and to live in the here and now even if it means they need to move out of their comfort zone.

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  15. 15
    Jillayne says:

    layoffs are a natural part of business cycles. If I were to bet, I’d definitely place my bets on W-2 employee layoffs. Layoffs allow management to thin the herd and to weed out underperforming people. Layoffs are typically political meaning, if you’re on your bosses bad side, chances are he/she has already been asked to deliver a list of possible layoff candidates.

    You’ll know it’s going to be you because your boss will treat you differently when you’re on the short list. It won’t be overt. Intead it’s more covert and subtle. Be prepared, polish your resume, and start thinking about finding other work NOW before all your colleagues are vying for the same job.

    Just my opinion, fwiw.

    I don’t see Microsoft layoffs as negative or bad. Instead I see this as a good move by a corporation to surive and thrive. But then I’m just a stockholder and not an employee.

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  16. 16
    Ray Pepper says:

    Eastside Realtor just earned a 500 Realty T shirt for those insightful comments. Again, they are very form fitting and you will be the envy of your office.

    If I may answer as an Agent. YESSSSSSSSSSSSSSSSS. I want the former 37,000 agents with the NWMLS( now at under 30,000) to come to under 10,000. That will be MORE then enough Agents. Furthermore I would expect a collapse of the NWMLS due to a huge revenue short fall. Then the timing will be ripe for the BIG G to improve Buying/Selling for all Consumers so this farce of 6% will finally end and I will not have to attend anymore Seattle Home Shows and argue with incompetent Agents living in the past…

    Well then…Now that I got that outta my system. My diet starts tomorrow. So watch out I may be getting easily agitated.

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  17. 17
    Jillayne says:

    EastsideRealEstateAgent,

    The real estate industry typically does survive quite well during recessionary times. The trick is to figure out who is buying and who is motivated to sell. Think about becoming an REO agent or consider working with investors who ARE buying foreclosures and short sales. This is tougher work for less commission but it can be done. Consider all the different types of industries that are actually thriving right now. Your homebuyers may be found there. Or maybe your home sellers who may decide to be your move up buyers. I empathize that it’s tough out there for many of us in the industry.

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  18. 18
    Jillayne says:

    Hi Ray,

    Can you share your source for the number of real estate licensees?

    I’d like to track this number along with you.

    Also, I would like to add that MANY real estate agents who are currently holding a license have already found other full time work and are only keeping their license active “just in case” they need it.

    I’d guess the real numbers of full time agents are less that the numbers show us. Happy New Year and good luck on your diet. Remember exercise is the other piece of weight loss!

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  19. 19
    patient says:

    BanteringBear wrote, ” I think the novelty is wearing off for many”. That’s for sure, I had two different collegues telling me today that they had it with the snow and being to scared to go anywhere, including work and the grocery store. They are both transplants from warmer areas with very poor skills to drive in snow. Their wifes are up in arms and have halfway packed their bags…

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  20. 20
    jonness says:

    “We need things to be the way they were from 2004-06. We need people to buy real estate, we need Microsoft and Boeing to be hiring, we need a lot more people moving here to buy real estate and generate tax income and to keep real estate prices where they are at.”

    Unfortunately for “we,” the banks are no longer lending half million dollar home loans to fruit pickers. Thus, housing will continue to plummet until prices reach historical levels of affordability again.

    In short, the bubble has burst. My recommendation is to stop blaming others for your downfall and instead use the time and energy to help yourself get through these tough times. The boom is over, and the quicker you can make the psychological adjustment necessary to accept this, the better off you will be in the long run.

    Obama Clause is not going to save you. You have to do that for yourself. The way forward is to restructure your lifestyle to match your surrounding economic conditions. It won’t last forever. This too shall pass.

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  21. 21
    Jillayne says:

    Its’ been snowing for several hours now in Edmonds. We must have over an inch now. My kids are thrilled hoping for another snow day.

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  22. 22
    Ray Pepper says:

    Thx Jill. I’m 5’10 215. My wife lost 50 pds with diet and exercise in the last 4 months. I chose to watch her do it. I used to work-out daily (15 years ago) but 3 kids later I stopped. Tomorrow is day 1. I knew it was time when I saw myself with the 500 T Shirt on and I looked bad.

    Yes, many agents have found other work. My number of under 30k came from the NWMLS office about 3 weeks ago when I called to check on an Agent. I asked and I believe they stated it was 28k from a high of 37k. I will find out tomorrow the Actual #. I cannot find the Info on Discover or Locator on the NWMLS.

    Jill, you should advise Agents to get creative and if they desire to proceed with the 4-6% insanity. They should at least develop a catchy jingle like this one. Montgomery just draws me into his mall with this.

    http://www.youtube.com/watch?v=FJ3oHpup-pk

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  23. 23
    Voight-Kampff says:

    seeing people thoughtfully responding to eastsiderealestateagent is making me lose some respect for this site.

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  24. 24
    Jillayne says:

    Hi Ray,

    In terms of the standard commission, it is my opinion that the reason it’s still up so high is because of the brokers. The brokers need a cut of that commission and without it, how do they pay their own overhead? There are other companies with different business models that are going to do just fine in this market. For example, Preview Properties, Executive, Skyline, and other desk fee offices that provide part to full time agents an option of paying a lower fee to their broker. I believe offices like this will do very well during the recession. Yet the big guys look “down” upon the brokerages with different business models. I’m sure your overhead is also way lower than the big guys and I wish you well for 2009.

    eassiderealestateagent needs to adapt and so will the brokers. I’m sure we’ll see branch offices close and fold into main offices during 2009.

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  25. 25
    Jillayne says:

    Hi Voight-Kampff,

    Sometimes people get stuck in a part of the cycle of grief and need to be coached out of it. There are MANY people, real estate agents included, who have their heads in the sand for various reasons. Maybe they’re being fed propaganda from their broker in order to get them out there motivated to sell, sell, sell! They may be facing their own financial hardships and were hoping for a fall or end of year bounce.

    Many people have found Seattle Bubble at various points in the current cycle. Perhaps folks are starting to realize that they can find statistics here that they can’t find from their own company website or are not given by their own brokers. (I put this website up on the board of all my classes.)

    Knowledge is power. I say let’s welcome them so Tim and the gang can give them the other side of the story. At least that’s what I thought SB was all about. ;)

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  26. 26
    Ray Pepper says:

    Jill you are right on target when you guessed our overhead is way lower then the other guys. In fact, our overhead is get this…………..zero………………Our office, for those who wish to meet an Agent in person/ or to pick up a lock box is believe it or not just above the John L Scott office in Federal Way. They most likely don’t even know we are there right above their heads. Each moring I walk in and see the “AGENT ON DUTY” A board in the lobby and grin.

    Its a mausoleum in there. They will be gone from there soon. Its not a matter of “if” just when. But, then again we may also. 500 Mortgage in 2009 is almost here.

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  27. 27
    Alan says:

    Sometimes people get stuck in a part of the cycle of grief and need to be coached out of it.

    For a while, I thought of Seattle Bubble as a therapy group for people bummed out about not being able to afford to purchase. Now maybe it is turning into a therapy group for people bummed out about their purchase losing value.

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  28. 28
    Herman says:

    G4George has it right. Realtors need higher sales volume – not higher prices. The way to do that is to stop trying to force a phony market to exist, but rather, work with the one that’s here. Selling in today’s market demands realistic home pricing, and undercutting the competition (other homes on the market). You guys need to coach your sellers better.

    Finding the bottom means cutting prices until we find equilibrium. Once that happens, buyers will stop waiting for more price drops and will get off the fence. That will re-activate the market volumes that realtors need to pay for their hairspray and other vital goods.

    I keep seeing these new listings where the sellers think they can just declare the price they want. If it was a purchase within the last 2-3 years, that price is generally whatever they paid +10%. (They want to cover their selling costs I guess)

    But it’s just irrational. On what basis do they think they can ask for +10% when the overall trend is -10%? Maybe they’re hoping for that 1 in 1000 chance that some chump will walk in and fall in love with their house and overpay for it. Or maybe they think they got a great deal and underpaid when they bought it so they have room to ask for more now. It’s “Seattle is special” to the extreme – “MY house is special.”

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  29. 29
    Objectivity says:

    Eastside Realtor-

    Its not a birth right to have a real estate boom every year so you can go buy a new Mercedes. Get over yourself and get educated.

    When prices come down, your business will pick up again. Until then, enjoy having delusional sellers.

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  30. 30
    b says:

    Herman –

    A lot of these people HELOCed their homes immediately and need that 10% to get out of them even. I know several people who bought late in the game but were still able to extract 10%+ “equity” within a year or two before the credit crunch last fall. Much like every other market, they will hold on until they can’t anymore and it will either be a short sale or a foreclosure. I expect to see foreclosures rise dramatically here this year when all of the people who tried to sell last year at inflated prices and gave up go down in flames.

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  31. 31
    voight-kampff says:

    jillayne,
    that is a point well taken.
    Thinking back, When I found the site, I had sampled a little of the koolaide ( just a little ).

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  32. 32
    Joel says:

    Do you want real estate agents to lose their jobs so you can buy a cheaper house?

    Sounds good to me. Two birds with one stone.

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  33. 33
    mukoh says:

    All this jumbo about how bad realtors are is funny.
    If you had a bad realtor it is not his/her fault. YOU CHOSE HIM.

    My realtor provided only deals with investment/multi properties has earned every 6-8% that he has gotten.

    Stop the realtor blander IMO just like there are bad title reps/escrow reps, mortgage brokers, lenders. If you chose one then live with it.

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  34. 34
    Jonness says:

    “seeing people thoughtfully responding to eastsiderealestateagent is making me lose some respect for this site.”

    As much as he is a troll, he still represents a majority mindset in the RE industry. Thus, IMO a response is deserved for the benefit of the uninitiated.

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  35. 35
    darth_s says:

    There is one more thing – It’s fine to go back to the boom of the past if it doesn’t impact my burden – meaning I have to pay tax to bail out those speculators – this is exactly that the government is doing right now with massive bail out programs.

    For me, the whole real estate boom/bubble is massively fraud – I say MASSIVELY fraud – The level of CHEATING is incredible. I know at last 2 people who did the following things:
    – Use equity extraction to buy multiple homes – one to live, the rest are for rent. One person has such 9 properties. As they know that the tide is turning, around early 08, they began to HELOC to the max on these houses and took out the CASH! and put it under the mattress (entrust it to very close relatives like parent and children). They they begin to STOP making payment on all the loans – morgatges, HELOC, etc. and just wait for the banks to foreclose them. Wit the current load, it may take 6 – 7 months for the bank to do this. So, they continue to live free and collecting rent free, again for free as long as possible. Eventually, when they handed over the keys to the banks, they already have ~100K in cash that can let them live here for a while or just go to another cheap place like Asia or Mexico where the money can last a lot longer…

    Who are left holding the bag?- the banks with our tax money, the investors, and the government… I feel so angry when I heard these stories. And now, some REALITORS want to back to this ponzi scheme – This is all BS!

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  36. 36
    deejayoh says:

    From today’s PI:

    Report: “Massive layoff” unlikely at Microsoft

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