Posted by: 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.

83 responses to “Declines in Home Prices & Consumer Spending are GOOD THINGS”

  1. tomtom

    Yay! Common sense!

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  2. Scotsman

    I agree we’re headed for a reset, but it will have to be forced upon us, as I can’t think of a single entity, institution, or individual that benefits in the short term from accelerating or endorsing the necessary actions that would work to minimize, let alone preclude, a reset. Politicians are elected on the basis of what they can get for their constituents, not for telling them to “suck it up.” Businesses will have to endure a drop in profits, and perhaps bankruptcy. Individuals will lose net worth, government benefits, a sense of security, etc. Everyone will have to accept a decrease in lifestyle while continuing to work as hard or harder. Who wants that?

    Too few understand economics, let alone the power of compound interest and how it can work for or against us. Fewer still understand, let alone practice, the idea of delayed gratification and the eternal conflict between short term pleasure and long term happiness. The last couple of generations know nothing but short term pleasure and “me, me, me.”

    We will reset- the die is cast, the mathematical limits on future choices in play. But we will hit the wall with our collective feet on the gas, not the brakes, making the inevitable crash all that more spectacular.

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  3. WestSideBilly

    The media is so focused on “reviving” the economy that it is now seen as a negative sign when saving increases and spending declines.

    The media (along with the NAR and various other agencies) also believe that high housing prices are a positive thing. It’s nearly impossible to convince most people that lower housing prices is a good thing for nearly everyone (except, of course, those whose income depends on a percentage based transaction fee).

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  4. TJ_98370

    ….Fewer still understand, let alone practice, the idea of delayed gratification and the eternal conflict between short term pleasure and long term happiness. The last couple of generations know nothing but short term pleasure and “me, me, me.”….
    .
    Wow Scotsman, I think you just described the majority of American society.

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  5. Joel

    No. Overpriced houses are the backbone of our country. Even the Declaration of Independence claims that “…the pursuit of happiness” is one of our inalienable rights. How can you pursue happiness if you are renting and saving? If you’re saving then you aren’t buying new cars and large HDTVs. How could that possibly lead to happiness? The answer is that it can’t, which is exactly what the terrorists want. Every deposit into a savings account is a deposit straight into the pockets of Al-Qaeda.
    What President Obama needs to do is create a new department called the Department Of Homeowners Security whose mandate is to protect homeowner wealth and compel idle renters to contribute something to America by buying a condo.

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  6. aman

    Serious question, not trying to be confrontational –

    For most of the time over the decades before the over-leveraged period, unemployment was lower than today, and unemployment is expected increase as we continue to de-leverage. Is it possible for unemployment and leverage to be low at the same time? Was 1982–with 10.8% unemployment–what a “real” economy looks like?

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  7. victorchai

    This is a waste of your time TIM, Obama messiah will never let the home price fall…He is still up there enjoy his election and handing out free $$$(tax credit)…See all he has to do is print and the inflation will take care of all the problem…

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  8. TJ_98370

    I should have said, “I think you just ACCURATELY described the majority of American society.”

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  9. What The H ?

    I’d be interested in how people think the $15,000 tax credit for purchasers would impact the areas housing market if it makes it to the President’s desk.

    Does anyone know if this applies to rental property – purchasing a SFH and renting it out ??

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  10. James Lupori

    Victorchai – Spare us your back-handed, sophomoric use of the term messiah with regard to the current President. Only intellectually dishonest critics from the political right have “annointed” him this way. The fact is, Americans have indulged themselves in voodoo, trickle-down economics since the days of Reagan. Now, the current adminstration get to bring some adults to the party and clean up the mess. And it stinks.

    For those of you who are interested in an excellent book regarding this discussion, I invite you to read Matt Miller’s “The Tyranny of Dead Ideas.” In many ways it speaks to all the issues people have raised in this post.

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  11. jcricket

    I dunno. Each of the last 12 recessions the same kind of talk (we were on an unsustainable path, the future looks grim/smaller) was suddenly in vogue, the logic inescapable, and each time such prophecy was proven spectacularly wrong, usually within a couple of years.

    I know, this time is different, leverage is totally out of whack, no one is saving any money, there’s no manufacturing base. Last time was different too. And the time before that. Each recession and recovery is caused/solved by different things. Seriously, read your history a little bit.

    It’s very convenient, while you’re in the middle of a bad recession, to forecast permanent doom and gloom, but I would (and am, through my continued investment in my 401k/IRAs/market) bet against a declining future for profits, economic growth, and generally speaking, Americans. I’m not going to argue this will be easy. It will be extremely painful. And on a micro level it might be awful. But on a macro level, we’ll come out OK – just different.

    Basically, doomsayers (like Malthusin the 1800s) are wrong when assuming the inputs/outputs are fixed.

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  12. Scotsman

    ” Now, the current adminstration get to bring some adults to the party and clean up the mess.”

    You’re kidding, right? Be sure to use ” /sarc off ” at the end.

    If you call pushing through a multi trillion dollar pork bill to reward all of Obama’s contributors bringing adults to the party there’s not much we can do to introduce you to reality. Wow.

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  13. yeslerhill

    While I suspect I am far to the left of Victor-chai, they are in large part correct: The core of President Obama’s supporters look on him as a messianic power that can flick some fairy dust around and sort it all out.

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  14. yeslerhill

    The problem is that since WW2 we have been building an in creasing global economy that is structured around an ever expanding horizon of consumption. When in fact there simply is not enough resources in the world to let everyone be as greedy and vulgar as we have the last 30 years or so. IMHO.

    So, I don’t think it’s “doom and gloom”, I think it’s more a matter of sustainablity v consumerism.

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  15. EconE

    Isn’t it a bit of a catch-22?

    Save too much and what happens to the velocity of money?

    In a simple world…if you saved too much from selling your widgets and didn’t spend. How will your money get back to somebody else who might desire one of your widgets yet because you chose to save rather than buy one of his/her widgets then they can’t afford yours.

    I believe that the banks will get us spending again. Why you might ask? Well…I’m of the opinion that the .gov (Paulson, Bernanke and everybody else, who has hinted and hinted over and over that things wont get better until housing prices reach sustainable levels (meaning…non bubble) are getting a bit preturbed seeing so many people that still want 3-5x what they paid for their house in 1997.

    Yet still, everytime I peruse the MLS listings I see dream prices that not only are disconnected from reality, they are completely disconnected from the comp sales.

    I wasn’t able to read the linked Inman story but the L.A. Times blog had something interesting to share.

    http://latimesblogs.latimes.com/laland/2009/01/reos-to-flood-t.html

    Apparently, the banks only have 75% of their REO inventory on the MLS. And the option ARMs are just starting to reset.

    When the big “dump” comes, the price dumps will come also.

    From what I have seen also…they put their POS REO’s on the market first as if the “dogs” had to compete with the nicer homes, they would never sell them.

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  16. b

    OT, but CalculatedRisk had some interesting analysis from a large apartment REIT saying rents are declining, and in particular parts of Seattle (like Downtown) are down 9% from last year and will be falling for a while. I guess the earlier refrain of rents rising a bunch when the housing market collapsed turned out to be a load of chocolate, shocking I know.

    Anecdotally, I leased last July and I am looking again (less than year lease), in my search criteria (2×2/Eastside) I am seeing things probably 10-20% lower overall. That includes large “luxury” apartment complexes and condos for rent, not sure about SFH.

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  17. b

    My hope was that Obama WOULD bring some adults to the party. I voted for him, I liked him a lot. However, his choice of Geithner and now their revitalization of the Super-SIV, Paulsons most quickly discredited idea from last year, has seriously disappointed me. I still hold out some hope that its all head-fakes or trial balloons, but Geithner’s involvement in this mess for years makes me think it will go through as the turd that is leaking.

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  18. b

    This is not a recession. This is an extremely serious financial crisis AND a recession in one. The last time these occurred together was the depression, and there is a reason that when combined they cause a depression.

    In the recessions since the depression, we could use monetary policy as a buffer to keep us from a deadly deflationary spiral. We are at the zero bound now, so this won’t be your fathers recession. Please, read up on deflation. If you aren’t as scared as Krugman, you should be…

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  19. James Lupori

    No, the messiah label is a neo-con construct. I look upon the the new president as a level-headed administrator who, if given an opportunity to start running government in a responsible way, may be able to repair some of the damage done by years of neo-con malpractice. The fact that the stimulus package is so large hardly qualifies it as “magic dust.” It’s a serious attempt to solve a myriad of problems. Of course the opposition believes that giving tax cuts to the rich is the magic dust.

    As I said above: if you can sit down long enough to actually read a book (if you know how), take a look a Matt Miller’s book. The Dead Ideas he discusses transcend party or individuals. Somehow, Americans believe that we are going to remain the most powerful nation in the world. We will not fully recover from this contraction for many years and we will not emerge as the only superpower. The party’s over my friends.

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  20. Dave Lincoln

    James, whatever you’re smokin’ is not gonna help get you a cabinet position – look man, they’re throwing people like Daschl under the bus just for cheatin’ by 130,000 dollars or so on his taxes. Think what they’d do to someone taking the hallucinagenic stuff like you are. Keep your day job, dude.

    You want to know which parts of the goverment pushed this mess on us – yes ,I can’t go through all of it ,and much has been mentioned by some of these posters, but check out Steve Sailor’s comments on either ISteve.com or Vdare.com He gets into detail on exactly what another poster wrote just a bit ago in response to a different of Tim’s blog-posts, regarding why bankers did what they did.

    I know, I can’t spell hallucinagenic to save my life, and I don’t have the wherewithall to look it up on MS-word, due to a lazy streak induced by my pot intake – but I know Obama will make it all better. He will get me off the vile weed, pay off my 1st, 2nd, and hopefully 3rd mortgages, get Eric Holder to beat up my Mother-in-Law, get me my law enforcement position back (long story), fix the front end on my Chrysler Reliant, get me my money back from those cheaters at the Indian Casino, and …. oh, fix the economy ….

    hahaha

    It takes a clear mind to take it, or it takes a clear mind not to take it ?….

    hahaha

    It takes a clear mind to …

    make it …. hahahaha

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  21. James Lupori

    The new administration has only been in office for 2 weeks. It’s too early to crucify them (a spanking or two might do). As some have touched on in this post, Americans are simply impaired when it comes to economics. In many ways, we only have ourselves to blame for the current circumstances. Basically, the nation has been charging up an uber-credit card bill and now the note has come due. Americans must simply adopt more sustainable lifestyles or things will get worse.

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  22. James Lupori

    I’m afraid I haven’t dropped acid for about 32 years and haven’t smoked pot for 30. Perhaps I should start again. Do you think the stuff will be more affordable with some good old-fashioned deflation? I’m just asking.

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  23. Dave Lincoln

    Yes sir, some serious bidness, James.

    Indeed, here’s just a little bit of the seriousness your children and grandchildren will see in withholding from their paychecks (leaving them with a paltry 35 % of their income left to buy that same stuff you’re on ;-)

    * A $246 million tax break for Hollywood movie producers to
    buy motion picture film
    * $650 million for the digital television (DTV) converter box
    coupon program
    * $88 million for the Coast Guard to design a new polar
    icebreaker (arctic ship)
    * $448 million for constructing the Dept. of Homeland
    Security headquarters
    * $248 million for furniture at the new Dept. of Homeland
    Security headquarters
    * $600 million to buy hybrid vehicles for federal employees
    * $400 million for the CDC to screen and prevent STD’s
    * $1.4 billion for a rural waste disposal programs
    * $125 million for the Washington, D.C. sewer system
    * $150 million for Smithsonian museum facilities
    * $1 billion for the 2010 Census, which has a projected cost
    overrun of $3 billion
    * $75 million for “smoking cessation activities”
    * $200 million for public computer centers at community
    colleges
    * $75 million for salaries of employees at the FBI
    * $25 million for tribal alcohol and substance abuse
    reduction
    * $500 million for flood reduction projects on the
    Mississippi River
    * $10 million to inspect canals in urban areas
    * $6 billion to turn federal buildings into “green” buildings
    * $500 million for state and local fire stations
    * $650 million for wildland fire management on Forest Service
    lands
    * $150 million for Smithsonian museum facilities
    * $1.2 billion for “youth activities,” including youth summer
    job programs
    * $88 million for renovating the headquarters of the Public
    Health Service
    * $412 million for CDC buildings and property
    * $500 million for building and repairing NIH facilities in
    Bethesda, MD
    * $160 million for “paid volunteers” at the Corporation for
    National and Community Service
    * $5.5 million for “energy efficiency initiatives” at the VA
    “National Cemetery Administration”
    * $850 million for Amtrak
    * $100 million for reducing the hazard of lead-based paint
    * $75M to construct a new “security training” facility for
    State Dept Security officers when they can be trained at
    existing facilities
    of other agencies.
    * $110 million to the Farm Service Agency to upgrade computer
    systems
    * $200 million in funding for the lease of alternative energy
    vehicles for use on military installations.

    BTW, I don’t disagree on “We will not emerge as the sole superpower” . I couldn’t give a rip. I just want to live in freedom from a Socialilst government, and we got nowhere else to go. Our backs will be up against a wall at some point, and that is not a good position to put people in.

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  24. Dave Lincoln

    All true. Obama is as ignorant or more as the next guy. He never worked at a real job in his life. I’d rather have as President someone who did.

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  25. James Lupori

    What’s wrong with socialism?

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  26. Dave Lincoln

    Well you take the present value of $60 per bag, $1200 per ounce of LSD, look up a future value based on time-series depreciation (1 – i) to the n+1, add in corrections for tax law and ….

    Wait, just why do you think I would know that? Huh? I have no idea of the price of pot and acid even today. What, just saying. No, I’m not paranoid. You’re all out to get me.

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  27. Mikal

    Did you complain when Georgie was borrowing $800 billion a year? I write that while not agreeing with the current stimulus. If you didn’t you have no say. The President had a closed door meeting to dog out the leaders of the House for the pork. We will see what happens, but he still seems to be fairly reasonable. Christ, it took him two weeks to apoligize to the American people. He isn’t perfect like our last President.

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  28. Dave Lincoln

    For one, James, the fact that if you don’t like it, there’s no turning back to freedom. It’s been tried many times. You can read about it in many books I could recommend, but, since I have no desire to read anything you would recommend, I would assume vice versa.

    Instead of reading, you could just ask the 100,000,000 + lives that were ruined by the extreme form called Communism, which Socialism eventually morphs into. Oh, wait, you can’t, those people are dead. Dag. I’ll find something on youtube.

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  29. James Lupori

    Dave – I’m not sure I know what you think a real job is (a $10M a year Wall Street broker? Dishwasher? Welder? Attorney?). I do know this, it seems that anyone who has lived a regular life (e.g. smoked pot, had a parking ticket, fornicated before marriage) can’t even go near public service these days.

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  30. James Lupori

    OK Dave – That made me laugh. Thanks!!!!

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  31. alex

    meanwhile… 15000 tax break approved for home buyers….

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  32. Mikal

    It depends on what. In health care what you lose in efficiency you gain ten times over in not paying the middleman. That is why it is cheaper to build a car in Toronto than in Detroit. How do you compete with that? Government definately does not always know better. But in this it is worth a try.

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  33. James Lupori

    I love Italian socialism.

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  34. James Lupori

    Mikal – Isn’t it interesting that GWB went about breaking government and spending tax dollars like a drunken frat boy for eight years and all he produced is a wusstopia populated by I’m-afraid-of-terrorism kitties and uber-rich that can’t live on $500,000 a year.

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  35. Andyl

    Personally – and maybe pedantically – I’m disappointed in the continued (mis)use of the word “leverage”. Just to make sure I’m not off base (any more than usual), I checked out the dictionary, and here’s the definition that I found (after mechanics and personal advantage): “The use of credit or borrowed funds to improve one’s speculative capacity and increase the rate of return from an investment, as in buying securities on margin.”

    At the consumer level – which is what the original post seemed targeted at – a lot of that big fluffy cloud in the diagram wasn’t “leverage”. The consumers now in over their heads weren’t thinking about “rate of return” – rather they were thinking “more now – let tomorrow sort itself out.”

    Like I said, perhaps it’s pedantics – saying “leverage” doesn’t really change the original author’s point – but when I see the umpteenth pundit tossing the word “leverage” around, the big yellow sign in my head starts flashing: “Warning! Groupthink ahead!”

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  36. Mikal

    It doesn’t quite sound the same with ‘dog’. The term is FEMALE DOG!. ITCHBA!

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  37. Scotsman
  38. jon

    But the point is that if those bigwig Senators aren’t following the same laws that would send any of the rest of us to the the slammer, then they have to fix the laws. Until then we can’t let them ignore the laws that they themselves made.

    If we let them get away with tax evasion, then they can just accept money under the table to slip all kinds of garbage into bills. And now that they they are throwing away our children’s money by the $trillion, there is no limit to what kind of abuse they can do if they are not absolutely beyond reproach.

    Government has gotten uncontrollably too big and it is growing exponentially with every bailout.

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  39. Mikal

    Scotsman, you solved the healthcare issue with that one. Thank you for your time. You definately met in the middle.

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  40. Scotsman

    Socialism works well… until you run out of other people’s money!

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  41. Mikal

    It grew over 15% every year for the last eight years in the name of security. The way we have borrowed their will be nothing worth securing.

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  42. Scotsman

    Opps, sorry- here’s socialized health care- sounds like fun!

    http://www.dailymail.co.uk/news/article-1135582/Man-pulls-13-teeth-pliers-NHS-dentist.html?ITO=1490

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  43. James Lupori

    As long as you’re winning capitalism is a great system. Witness the results (in this country) of a winner-take-all capitalism. Ain’t pretty, especially if you were one of the 552,000 folks who lost their jobs last month.

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  44. Mikal

    This is a somwhat flawed argument if you nit pick it as I’m sure you will, but I think there is genuis in it. It has to do with cutting taxes or increasing public spending. If it is better to cut taxes or spending then we should cut air traffic controllers. After all, it is a system paid for with fees on tickets, and surly it would be better for the flying public to keeps it’s money than to hand it over to bureaucrats. It might mean alot of midair collisions, but you still have a choice. It is Krugman’s idea, and a good one. That should be the first thing cut.

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  45. Dave Lincoln

    I’m witnessing the results of the government meddling with the banks (forcing them to lend money when they otherwise would not). Don’t know what you’re witnessing, James, but I hope it’s really colorful – do you see Lucy in the Sky?

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  46. Dave Lincoln

    Hey the Tim, James said “kitties” and your software’s not working!!!

    How come he can say kitties, yet I can’t say d a m n ? What gives? Is this a gogolly Vista thing?

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  47. Dave Lincoln

    Uh, yeah, Mikai, the Canadians have a privatized Air Traffic Control system. Get your Canadian stuff straight people. Their health care obviously sucks enought for them to have to come over here for serious care or to avoid dying while waiting for a bureaucrat to approve them, yet I don’t see them flying to American airspace for some ATC love (not anything against the American controllers, BTW)

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  48. Dave Lincoln

    I hate Illinois Nazis and Italian Socialists.

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  49. James Lupori

    They asked for the money. It’s called corporate welfare. A guy named
    Hank Paulson started that ball rolling.

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  50. Mikal

    I may have had a few beers, but WHAT? You are STEWED.

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  51. Hugh Dominic

    DL,

    Obama may be many things, but “ignorant”?

    Like him or not, you can not seriously claim the man is ignorant – did you see the debates? Have you heard him speak? Have you read anything he has written?

    Ignorance and a know-nothing mentality is what got us into the housing mess we are in.

    Obama may or may not make the best choices regarding the bubble (take the medicine of low prices versus strive to prop up the market) – but he has a good shot at being one of the least “ignorant” national politicians in America.

    In fact, I would think that is what many people who voted for him found apealling versus say, Sarah Palin whose ignorance on a host of issues concerned some voters.

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  52. James Lupori

    Dave – There are quite a number of socialized heath care systems
    that work quite well. Most critics of socialized systems roll out Canada
    and GB. These are mediocre compared to others. I would rather have
    a nationalized system rather than the American system on the horizon:
    “don’t get sick.” By the way, my Italian relatives love their health care
    system. Sure, they have to pay for it, but, as you capitalists are so fond
    of saying: there’s no free lunch.

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  53. Dave Lincoln

    I know that a “community organizer” is not one of them, I can tell you that. Any job which, as it’s main job description, entails forcing money from taxpayers is what I’m talking about. Yeah,not a lot of respect from me for attorneys either.

    About your 2nd sentence: it helps if your vice is not the same as the vice that your job requires you to regulate or prosecute violations of. i.e. Head of the IRS – kinda nice if you are not behind a ways on taxes. NY Governer and former attorney general – kinda nice if you don’t still frequent hookers (nothing in my mind too wrong with it, but not if you’re gonna prosecute people for the same thing, get it?)

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  54. deejayoh

    Paul Kedrosky’s assessment of Krugman’s analysis was pretty funny

    <a href = “http://paul.kedrosky.com/archives/2009/02/04/fun_with_r-squa.html”> Fun with R-Squared

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  55. Mikal

    Hey drunkee, whom are you replying to?

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  56. harbord

    Read the fine print on the $15k so-called tax break
    I think you have to pay it back when you sell
    So much for the free market

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  57. Dave Lincoln

    Called Nav Canada. Pay as you go. OK for the airlines, sucks for general aviation, I gotta admit.

    Look it up and see who’s STEWED, my good man.

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  58. Mikal

    For a sober man you sure seem to have had a few.

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  59. Jbeans

    Have ya lived in any of those “socialist” countries you abhor?

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  60. Hugh Dominic

    Andyl,

    I think its fair to use leverage in both cases.

    A hedge fund places a $2B bet that the interest rate spread between certain economies will grow (or fall). They put up only $100M. Thats leverage.

    A consumer places a $500K bet that house prices will continue to go up. He/she puts up only $25K. Thats leverage as well.

    Its the same thing. The impressive return on homeownership in the 2001-2007 time frame were made even more impressive by leverage. The less people had to put down the more leverage they got. For a while you could make hundreds of thousands of dollars from little and then eventually zero down.

    Until you couldnt. And of course, the more leveraged your are the quicker you get underwater – which is where we are now.

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  61. Jbeans

    From LA Times Blog:

    “The Senate today passed a tax credit of up to $15,000 for anyone who buys a house this year. The proposal was pushed by Republicans who favored targeted tax credits over no-strings rebates.

    There’s currently a $7,500 tax credit for home purchases, but the money must be repaid.

    The Senate measure, if it becomes law, would provide a credit of 10% of the home purchase price, up to a maximum credit of $15,000.

    Real estate industry groups have backed such a credit as a way to spur demand for homes.”

    http://www.typepad.com/t/trackback/816965/39356761

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  62. James Lupori

    Jbeans – I’m glad you asked that question. For the last 50 years American
    economists have been claiming that European socialism “is unsustainable.”
    It’s interesting that the current global problems originated the U.S. which was
    supposed to be the perfect economic system. It’s amazing to me how utterly
    isolated and myopic most Americans are about other countries. It’s easier to
    criticize the French, Germans or Scandinavians when one has never spent
    any time there. As Rick Steves is fond of saying: “They like us, but they’re not
    turning in their passports to come live here in the U.S.”

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  63. TheHulk

    You can bet your bottom dollar, that fine print will be ignored by realtors trying to fool people into buying at today’s prices. Look out for the 15000$ “loan”/great deal to be featured heavily in the local news for a couple of months, until it falls flat on its face just like the 7500$ tax credit fell.

    Next they will say “I see your 15K and raise to 30K”… lol

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  64. Sniglet

    I completely agree that the only way the economy will get back on track is when we have a strong foundation of savings on which to build economic growth.

    This reminds me of a podcast I did a while back, suggesting what the new President could say to the nation (i.e. that they should tighten their belts and save).

    http://msurkan.podbean.com/2008/10/28/my-fellow-americans/

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  65. Scotsman

    Heh, heh. Stay tuned for the next year or two and watch which economies crash the hardest. If you think the USA is a mess, wait until GB, Spain, and France drop to their knees.

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  66. Scotsman

    “You cannot legislate the poor into freedom by legislating the wealthy out of freedom.
    What one person receives without working for, another person must work for without receiving.
    The government cannot give to anybody anything that the government does not first take from somebody else.

    When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the
    other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is
    about the end of any nation. You cannot multiply wealth by dividing it.”
    John Gault/Ayn Rand

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  67. Angie

    What’s that thing in arguing about social issues–whoever invokes Hitler first loses?

    I suspect in the next few years a similar rule will become established that whoever invokes Ayn Rand first loses.

    Economy FAIL

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  68. Angie

    Being a law professor isn’t a real job? Academics and public servants have “real jobs”–they just require being smarter and more community-minded than the average Republican.

    Back in the ’90s, the idea that government needed to be run “like a business” got some traction. Ross Perot rode that train and only got as many votes as he did because of that idea, and because he was a very successful business man.

    Fastforward to George W. Bush, the first MBA president. Look what “running a government like a business” got us. Not only is our economic system in free fall, but our standing in the world dropped considerably because those retards didn’t know the difference between PR and diplomacy. Not everyone is as stupid as PR people.

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  69. Eastside Virtue

    A reset has already started…..but many on the Eastside are still drinking “the cool-aid” and thinking their home they bought during the peak will come back in 2 – 3 years. What many folks do not see is that the American economy is heading for a very long recession (15 – 20 yrs)…..like what happened in Japan starting in 1989 and still in recession today 2009. The “housing bubble” was the last American bubble for a while…….and those folks who did not sell and get out with some real cash…..will just have to “suck it up”…..and watch their home equity evaporate. Over the next 2 years….we will see home prices drop in Seattle and the Eastside over 30%…..just like what happened down in San Diego. Seatle is not a “special place” that can avoid “reality”. Just like the DOW…we will see it hit 5000 level as well………hold on…..we are in for a wild ride !!

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  70. Ooops

    But Sniglet – what you propose would be painful to a lot of people. In the past people with no verified income were able to live in nice houses. Are you trying to deprive them of that?

    And then people would spend like crazy on credit cards and just get new goodies. You are trying to deprive them of that?

    Banks made so much money and CEOs were really happy. Are you trying to deprive them of that?

    GM and others were loosing money through the roof in the height of the boom. Are you trying to change this? They could loose money – pay some good salaries to people, paid themselves good money – it was good times. Now you are suggesting this should all chenge?

    And then – the unemployment is close to 17% now if you count it the same way people did 30 years ago. What if it jumps to 30%? What will you tell the Joe that lost the job, has 4 kids that need lots of reloads? Take into account that Joe cannot start any business. And needs reloads to function well. What will you tell them?

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  71. Dave Lincoln

    OK, fixed now, haha. I feel like a liberal – we are now at equal levels of misery, as far as cussworthiness goes. f u c k i n – A, bubba!

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  72. Dave Lincoln

    That was last night, I’m fine now…. but, just letting you know that the Canadian Air Traffic Control system (at least the actual towers, TRACON, etc.) is privatized.

    I can say that while stewed, ripped, wasted, hammered, what have you, it doesn’t change the fact that your post makes no sense when it references Air Traffic Control in regards to your point on Socialism.

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  73. Dave Lincoln

    Yes, community minded, that’s it!! Mmhmmm, means take from the tax-payers and give it out, like a modern -day Robin Hood. Fact is, if I were around during RH’s time, he and his little butt-buddy Friar Tuck would have been stuck at the bottom of the Thames river, tied to concrete-filled tires. Oh, wait, no tires or cinder blocks were around back, then. Well, we’da thought of something.

    No, Angie, GW did not run the US government like a business – a business had to cover it’s bills or go Chapter 7, or 11 bankrupt. I am no fan of that man, don’t gget me wrong.

    But, ,most lawyers are worse than non-productive members of society. I can see a bum say, as represented by, say, a snail – doesn’t get much done, eats nasty stuff from others left-overs sometimes….. The lawyer would be like a leech or a kudzu vine. – lives off of the production of others, eventually doesn’t care even if he kills the one he feeds off of. Shakespeare had it write, but he forgot the include the community organizers in that one line in his play.

    Also, don’t call them public servants. I have tried to get one or two of them to serve me, but they just order me around. If I can’t tell the guy to shine my shoes or wash my toilet bowl, then he is not a public servant.

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  74. Roger

    Love the drivel from people who are “against socialism” who don’t have a single clue as to what socialism actually is We’re actually the biggest socialist nation on earth, only we give the handouts to corporations and the military. Of course, these same people wank themselves to sleep imagining people starving and being blown up, so that should come as little surprise.

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  75. Scotsman

    Thank God Obama and his magic skittle-sh*tt*ing unicorns are coming, complete with iridescent rainbows, ready to make everything perfect. If he can ever get his cabinet to pay all their taxes, he’ll be giving the money to…. yes, his friends in giant corporations! But don’t worry, I’m sure there’ll be some crumbs left over for the little people who supported him. What a farce. In 6 months there are going to be some very disillusioned folks out there.

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  76. David Losh

    Hello Roger and yes it is all drivel.

    This thread had great promise. It’s obvious that we all want things to go back to normal. We are looking to make sense of our current situation by looking back at what we learned from last time.

    What’s missing here is the anarchy that is sure to come from what just happened to credit. I don’t see why people are making fun. Our economy, our global economy has been stopped by corporations who are counting there money.

    Leverage is a good thing as long as it is making money, creating jobs, and working for the greater good. Yes, business is for the greater good. It’s good to have happy healthy consumers. It’s bad to cut jobs, make people nervous, and stop the economy.

    A lot of people here want to blame the consumers. Many people talk about being responsible. Why aren’t you outraged? You were smart, you lived within your means, you saved moneny, and now what?

    Even if the price of Real Estate falls through the floor. Even if the stock market comes roaring back. Even if your retirement account, or Social Security were to magically reappear, are you going to trust that, or take your cash and stash it?

    Why would any of you trust our corporate based economy again? Corporations, unless for pure profit, are socialism. There is no such thing as corporate culture.

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  77. mukoh

    Harbord, you have to pay it back if you sell less then two years post purchase.

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  78. mukoh

    Another well structured post from David to clear up any misunderstanding of how everything works.

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  79. David Losh

    I did read through your comments to get a clearer picture of your resentment.

    You hope I’m wrong because you bought in.

    Of course if you did come here from another country this is paradise, I agree.

    Anything is possible here. You can make as much money as you want. To be rich is simple, compared to other places.

    My problem is, and it is a problem for me, is that the earning is more fun than the having. Once you have it you have to protect it. You have to continue to be smart.

    A lot of people have lost huge chunks of thier fortunes. If my calculations are correct your group has been buying REOs for ten years, from the bank.

    If you paid fifty cents on the dollar the entire time you’ve done well. I buy and sell. Most of the time other people buy and I equity share. I drive the beat up truck and show up with a bunch of people of Hispanic descent.

    My resentment is that even though I sold in 2005, 2006, and the last in July of 2007, there hasn’t been a decent deal since. The market is going down and even if I get a steal of a deal it is a high risk.

    OK, let’s take those long term hold rental units. Guys I talk to sense there is a softening in the rental market, I believe that. Again that is risk.

    No, I’ve worked on properties since I was fifteen. From 1974 to 1984 I worked at the direction of some of the top Real Estate agents in Seattle. In 1984 I got a license and worked at Advace Properties. I went throught the Coldwell Banker training, Dale Carnegie Sales Training, The Dana Institute on the Taxation of Real Property, met Tommy Hopkins on several occasions, still see Mike and Mathew Ferry from time to time, trained with George Hawkins, and am certified to teach real estate classes.

    My license is at Windermere/RNT in the International District. My Real Estae web site is at http://www.davidlosh.com and my blog is http://www.FixerFixer.com

    I read this blog because it works. Real Estate blogs and the “new” web 2.0 Real Estate business models are just boring. I like zillow and hate radfun. Zillow seems the best Real Estate model and this seems like the best blog.

    Helpful? Not helpful?

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  80. 98115_Renter

    Best post in this thread…(@Roger)

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  81. Dave Lincoln

    Not you, Commie.

    You’ve got to look at the indentation to see who is replying to whom.

    Got it?

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  82. Bottom-Calling: So Where’s the Bottom? | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area.

    [...] at least flattens out. If things continue to deteriorate, or if we really are going through “The Great Reset,” all bets are off when it comes to any of these [...]

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  83. NPR: Searching for the "New Normal" in the NW Housing Market | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area.

    [...] Despite it being only 70-some pages long, I haven’t made the time to sit down and finish reading Reset yet, but so far I’m appreciating the outlook presented within. It feels similar to the topic we touched on back in February when we discussed the “great reset.” [...]

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