In yesterday’s Bottom-Calling conclusion discussion, Sniglet asked:
If Mr. Talbott’s predictions were to come true, and we reverted to 1997 prices, what would those be? What percentage of a decline would we be talking about for the Seattle area?
Based on the January 1997 King County SFH Median of $179,500, and using the bls.gov inflation calculator, that would be a bottom median of $236,138 in 2009 dollars.
Total drop: 51% from the July 2007 peak of $481,000 (in nominal dollars).
Obviously that’s quite a tumble, much larger than any of the forecasts presented this week. As I stated in the conclusion, all of these forecasts are basically assuming that the current economic problems are essentially just a “hiccup.” I think there’s a decent chance this is not the case.
Well, Contagion author John Talbott himself decided to chime into the discussion, and stands by the 50% off prediction for Seattle home prices:
You are right, if Seattle returns to 1997 pricing as I predict it will mean a decline of about 50% in home prices from the peak. This is optimistic, not pessimistic, as this only brings homes back to where they were before all this crazy mortgage lending started. Banks are going to be lending 4 times your income for a home, not 8 times.
And my numbers assume that Microsoft, Boeing and high tech in Seattle all remain vibrant growing industries, a bad assumption if we head into depression, Small high tech is dead as venture capital is gone now that there are no IPO exit strategies, MS is acting more and more like a staid old bureaucracy (have you tried to run Vista – a complete nightmare) and will be attacked by i-phone apps and declining international sales and I don’t know anyone who is going to buy an airplane in the next ten years.
The situation is really much worse than you hear on the news because the guys that got us into this mess, big corporations and banks and Wall Street, continue to bribe your Congressmen to be bailed out now and prevent real meaningful reform necessary to turn around the system.
Thanks for joining the discussion, John. So what do you all think of Mr. Talbott’s prediction? Optimistic? Pessimistic? Realistic?
David Losh » Feb 21, 2009 at 12:30 pm
My question is and has been why consumers continue doing business as usual?
Paying back the money you borrow seems to be a hard concept for consumers. Fair lending also seems a hard concept for banks, lenders, and investors. The interest and fees seems to be the prize rather than getting a loan paid off or at least performing well.
Why do lenders think that by making it harder for consumers to pay off debt that it will add some how to thier own profitability? I would think Cogress would tell corporations to go clollect the money they have outstanding rather than giving them tax dollars.
It all comes down to the consumer because they are all effected. I would think the voters could figure out that it is the banks problem and vote for the people who hold the banks accountable.
EconE » Feb 21, 2009 at 12:37 pm
If 1997 prices would be a 50% fall from the peak…then why do I see SOOOOO many houses listed at 3-4x their 1997 purchase prices?
It’s the granite…right?
singliac » Feb 21, 2009 at 12:48 pm
RE: EconE @ 2 –
I knew I should have bought my wife a piece of granite for her wedding ring instead of that diamond.
ella » Feb 21, 2009 at 1:00 pm
Here it is… On QA at 201 Galer, Auction of 14 luxury condos. Just drove by and the address in the old QA high school. Last I heard they only had 1 condo left to sell.
Beth » Feb 21, 2009 at 1:29 pm
FWIW, according to zillow, the house next door to me just sold (last month) for $237k. Zillow claims it thinks that house is worth $354k (zillow doesn’t know about the delayed maintenance or that the last tenant left because they could rent a nicer, newer place for less money ;-)). The price at peak (again, from zillow) was $425, the sale before this Jan was in 01 for $240 and before that in 97 for $140.
In short, it looks to me that for this particular house, the prices are rewinding pretty quickly. Hopefully, that will affect my property taxes … ;-)
Beth
Scotsman » Feb 21, 2009 at 1:35 pm
It’s an eventful day on our street. After literally years of the same houses being for sale, half a dozen of them all priced in the $750-$850K range one seller has taken the plunge and dropped to $699K (from $850K). Since it is arguably the best house on the street, everyone else has just been knocked out of the game. My neighbor responded by taking her spec house off the market and deciding to rent it for a year instead of cutting the price. This is a huge mistake in my opinion, as the house is brand new, never lived in, and never going to be one of the prime properties on the street. I figure it will cost her $150K and certainly erase any chance of selling it for more than break-even.
On a square footage basis, adjusting for new verses older construction, this takes prices back to 2003/2004.
Matt » Feb 21, 2009 at 1:43 pm
RE: Scotsman @ 6 –
Sctosman,
what neighborhood are you in?
Thx
jon » Feb 21, 2009 at 2:09 pm
$236K? Dream on. Only if there is massive, snigletian deflation, and that isn’t going to happen because the federal deficit for this year will be $2 trillion by September. People are starting to realize that treasuries are not a good place for money long term, and everyone is afraid of the stock market now that Obama has announced that he will be balancing the budget on the backs of the people who run the businesses that actually hire people. That leaves real estate, which is why inventory is heading down as people buy up properties and rent them out for whatever they can get.
Kary L. Krismer » Feb 21, 2009 at 2:13 pm
Are we really supposed to value the opinion of someone who can’t “run” Vista? ;-)
David Losh » Feb 21, 2009 at 2:22 pm
RE: jon @ 8 –
The buying part is where things will be interesting. If you carry a mortgage there is no cash flow. As rents decline the cash flow declines even if you own the property free and clear.
Properties will need to be bought for cash. There are ways to owner finance or wrap financing that is already in place. This is where the longevity of the mortgage becomes of value.
After fifteen years the principle of the loan begins to amortize. At that point there is a finite time frame of taking a negative on the mortgage. Time is what will determine value.
If people would stop taking mortgages the price of property declines. The closer we get to cash the lower the prices need to be.
So there will need to be some bullet biting for many years, but the credit bubble is reversable.
Scotsman » Feb 21, 2009 at 2:34 pm
RE: Matt @ 7 – Matt, I’m way out in Preston/Fall City, country homes on acerage.
Caleb B » Feb 21, 2009 at 3:06 pm
Sorry – slightly off topic – ” (have you tried to run Vista – a complete nightmare) ”
Have you? I’m not counting listening to what they say on Slashdot.org or CNET.com. Have you actually used it? My applications (Photoshop CS3, Visual Studio 2008, Office, etc) load 100x faster in Vista than XP due to SuperFetch… (i.e., instantly… these apps are pre-loaded into RAM vs. XP which has to load the applications from a relatively slow hard drive)
As far as his theories on housing prices: “Reasonable” is the word I would choose.
Ben » Feb 21, 2009 at 4:11 pm
I am wary of listening to anything about technology from somebody who says “i-phone” instead of iPhone. He could be an expert on it for all I know, but in general people who write about things in this manner have barely more than a passing knowledge of the item involved.
As for his statements about Microsoft and Boeing I see no analysis of financials, just broad statements about how much he dislikes Vista and that he thinks people will buy less planes.
Overall this person did not build any credibility to me with these statements.
Nick » Feb 21, 2009 at 4:30 pm
Personally, I agree with the macro-economic sentiment. Much less consumer and business money is going to be spent during a recession (consumers are trying to pay off debt, save, and be cautious, or are not working, while businesses are trying to survive instead of expand), and nothing the government is doing will change that (for better or worse). Microsoft will probably be big enough to survive (they have reserves, talent, and their fundamental business is strong), but Boeing may not be so fortunate. In either case, no business will not be struggling, unless you’re on the government gravy train of new agenda spending, and most of that money will go to bigger government or people with political connections.
Everything that’s happening and all the government responses point to or help steer us toward a long, painful, drawn-out recession, and that probably means an over-shoot of “normal”. I’m betting at least 50% off peak, and even more in previously more bubbled areas.
PublicEnemy#1 » Feb 21, 2009 at 4:39 pm
50% off? I completely agree….
Seattle is not as special as the San Francisco, LA, Manhattan, name your favorite true US world class city.
I predict 1997 prices when all is said and done…
Reno had an arguably bigger bubble and they are getting beat into the ground.
Ray, when he talks about Fallon, has it spot on. Military base makes for good renting and investing, but that’s it.
The place I bought in 1996 in Reno is about 30K away from what I paid for it in 1996.
Coming to the nearest PNW city near you…
Objectivity » Feb 21, 2009 at 4:54 pm
50% seems reasonable: it really comes down to 2 issues:
1) Income/ Home price ratio should be 3x to 4x rather than 8x.
2) We don’t know just how bad this will get. I could make a strong argument that we are in the next great depression…and we’re in the equivalent of early 1930 right now.
Bottom line: best case scenario: down 35% to make up for increase due to creative financing. Worst case: Sniglet style deflation/ depression & a banking system collapse that would lead to 75% – 80% drops.
If I had to make a prediction: we bottom out in about 2012 at about 65% off the peak. Leading banks are essentially nationallized by the beginning of 2010, and unemployment continues its climb through 2012.
meadows » Feb 21, 2009 at 4:58 pm
It isn’t unreasonable to expect 50% decline from peak. This is no normal recession, there are numerous factors on the deflation side. The bubble will not reflate no matter how much money is “pumped” into the system.
Here in Bellingham rents are coming down, there is a housing surplus due to overbuilding. Sales are down, house prices are down, condo sales have tanked and jobs are dear…
We have a young man living on our porch who goes part time to community college and works part time… we have an old bachelor friend living temporarily in the wife’s workshop area who is an economic refugee from Chicago.
Hey, it’s time to “buddy-up!”
Sniglet » Feb 21, 2009 at 5:26 pm
I think Messr Talbott’s prediction of a 50% decline from peak prices is on the optimistic side. Things will get much worse if we factor in an outright global depression, that decimates local employers, as he rightly points out. Unfortunately, I believe this is PRECISELY what is going to happen. Just read about how the wheels are coming off the economies in Asia and Europe. Demand for software and aircraft is dropping like a rock.
I will stick by my long-standing predictions of an 80% decline in average Seattle area prices by the time we hit bottom, and that is at a minimum. Of course, some neighbourhoods may do a bit better, and others a bit worse (real-estate is local, didn’t you know).
As many of you have heard me say before, I’ve spelled out why I think massive price declines are inevitable with an in-depth podcast.
http://surkanstance.blogspot.com/2009/01/deflation-101-podcast.html
rent for now » Feb 21, 2009 at 5:40 pm
I like the 80% off theory. Seems that bubbles reach this point or beyond…1929 bubble dropped the Dow to nearly 90% off, the Nasdaq 100 dropped 80%. Nikkei is now more than 80% off its peak. Crude is almost 80% down from its bubble top.
I expect the super bubbly areas to hit 80%-90% off like Miami, AZ, etc. before the trough.
And renters are losers.
Nick » Feb 21, 2009 at 6:46 pm
By Objectivity @ 16:
One could make a plausible argument that some leading national banks are already essentially nationalized: the FDIC is managing several mortgage portfolios to the detriment of taxpayers, and how much have we given to AIG already ($120 billion?)? That’s before the secret, yet multi-trillion, Fed “support programs, and TARP “capital injections”. I’d call the banking system effectively nationalized already, just without any downside [yet] for the stockholders or upside [ever] for the public.
As for unemployment, the numbers will be skewed for a while due to short-term public spending, but I’d say 2012 is a fair estimate. Remember, though, last time we had this exact situation and government response, unemployment was high for roughly 10 years, and it took WW2 to get the government away from their idiotic big-government policies and putting money back into the private sector, so I’m not exactly betting on a swift recovery.
Bird » Feb 21, 2009 at 7:30 pm
I fully agree with the 50% theory, for several reasons. The most compelling is that it would bring buying prices in line with comparable rental prices. Anything less and it’s still a better deal generally to rent- I am renting here although I could easily buy a place (and have elsewhere in the past).
Second- I work for a government agency on budget matters and let me tell you- the problem here is big and not going away anytime soon (I mean years). It is structural- revenue steams are trajecting downward, and increasing job losses accelerate the revenue reductions. This is pretty simple but people retaining any hope for 2009 just don’t see the facts.
Not only can home prices not recover, they shouldn’t. THEY ARE GROSSLY OVERPRICED, still. Remember, a median price in the mid $200,000s includes the whole city, with less desirable areas- there will still be more pricey places. But these so-so neighborhoods with crapbox homes asking $650,000 are out of their mind, considering the people who want to live in those places in those areas are either likely fairly low paid or may be laid off soon. A bank should NOT be lending them more than they can afford and never should have. Those small boxy houses that are mostly basement with no views aren’t worth even half of many asking prices- I’d say in the $200,000s at the most. Yet, Redfin is full of them for $500,000 and up all over the city. It’s bordering on bizarre, the delusional state here. Having lived in NYC and California, it’s kind of funny the sense of exceptionalism people here perceive for no good reason.
I was glad to see this post. Yesterday’s averaging of the bottom with a floor of 40% below peak was surprising to me- I assumed this blog at least would allow for a more realistic potential bottom. Sure, some homes with views, etc. could maintain better value in micro markets, but overall Seattle’s housing correction has barely begun and frankly is far overdue.
b » Feb 21, 2009 at 7:56 pm
RE: Nick @ 20 –
WW2 got us away from big government? The country effectively nationalized pretty much every industry for WW2 and set about rationing many things for consumers so the government could use them. If that isn’t big government, I don’t know what is.
Scotsman » Feb 21, 2009 at 8:44 pm
Oh boy, Obama is going to cut the deficit at least by half by raising taxes on the wealthy. Details of his plan will be coming out Monday.
http://www.politico.com/news/stories/0209/19124.html
This will be the final nail in the coffin. Watch the markets tank hard next week as the wealthy pull out their money and run. Hello, depression.
Mark » Feb 21, 2009 at 8:46 pm
John Talbott is selling a book. One method people use to sell books is to dream up a scary doomsday scenario. It has to be plausible sounding, but also totally impossible to prove either way. When I moved here in 88, the book shelves were full of titles like “The Depression of 1989″. Then of course a year later they had to change the title to a few years out. These guys come out of the wood work every time we have a recession.
Where the local market lands and when is impossible to predict. The only thing rational people can do is wait for it to happen, then act in their own best interest. No offense to readers of this blog, but I find this whole discussion a boring waste of time. I like this blog a lot better when folks are analyzing news stories and calling BS on industry press releases or biased news.
Chris » Feb 21, 2009 at 8:55 pm
Why your home’s value will keep falling??
http://articles.moneycentral.msn.com/Investing/MutualFunds/why-your-homes-value-will-keep-falling.aspx?page=1
Tim » Feb 21, 2009 at 9:18 pm
I think we can all agree that Vista sucks and is a 100% uncompelling upgrade. And I say that as someone who makes his living supporting an MS enterprise environment.
economist » Feb 21, 2009 at 9:55 pm
Run where? And put their money where? If Richie Rich moves from the US, to, say, Monaco, why would that cause him to sell his US stocks? They are either a good in investment or not, regardless of where he lives.
FYI stock markets are global. Someone can buy a share in MSFT or Boeing, etc no matter where they live. Stock prices are determined by what investors are willing to pay given their estimate of a company’s future earnings. Not by how many rich people may or may not leave the US.
It is a complete fallacy that a country has to pamper rich people to get investment. Companies that offer an attractive ROI will attract capital from around the world. It’s corporate taxation policies that matter, not individual income taxes. Most stock market investment is from non-taxable vehicles such as IRA’s and pension plans. Giving rich people in your own country a break on personal income taxes does not encourage investment in your own country.
Ray Pepper » Feb 21, 2009 at 10:36 pm
Anybody else jump in BAC on Friday? I did! Good Lord it hit 2.50. I was late to the party and jumped in at 3.43 ……4400 shares!. Gamble up! Still holding my ABK at 1.11!
http://seekingalpha.com/article/121694-eight-reasons-bank-of-america-is-going-to-20
Aaron Cooke » Feb 21, 2009 at 10:41 pm
By Tim @ 26:
I disagree. Well, with the part about it sucking. I’ve been running Vista for the last year and a half (granted I’ve got the business flavor) and have had absolutely none of the problems that I’ve seen other people complain about. Even friends of mine that generally have nothing good to say about the OS are at a loss to explain why it runs so well on my laptop. Lot’s of memory or something, I suppose.
Getting back to the topic at hand, while I’d like to see prices in the Puget Sound drop by 50%, I doubt it will happen. I just don’t smell the same level of speculation here as seems to be prevalent in places like Phoenix, Miami and Las Vegas. If the rate of price declines in those areas remains the same for the next two years, all bets are off. 50% price reductions might seem like were getting off easy.
Mikal » Feb 21, 2009 at 11:44 pm
RE: Sniglet @ 18 – Thank you. I didn’t realize you had a podcast.
Shin'ichi » Feb 22, 2009 at 12:13 am
Folks,
In Tokyo, where I lived, as well as most other Japanese cities, median home prices in 2002 fetched 10% of their 1991 peak- a 90% decline over 11 years. If such things can happen to the largest cities throughout the world’s 2nd largest economy, it can happen to Seattle. And per-capita, our bubble is bigger than Japan’s. A 50% decline is therefore optimistic- my money says it will be larger.
The harder thing to forecast is when. If all goes well, it could be 2011-2012. If not, like Japan, 2020ish.
Mikal » Feb 22, 2009 at 12:30 am
RE: Shin’ichi @ 31 – Last I checked, we aren’t Japan. You should have a podcast.
Herman » Feb 22, 2009 at 12:44 am
Snigletian deflation. A new term is coined.
I am one of the Seattle middle class. My job is really hard – I travel all over the world and put in long hours and I don’t see my family more than half the year. My wife works too which just about pays for day care. I live in a 900 square foot home on a small parcel in Seattle. It’s a bad lifystyle so I intend to get out of it.
Yet I do not fall into Obama’s definition of an American “worker”. I have not received any of the benefits, rebates, or tax cuts that target “working families”. I do, however, fall under Obama’s definition of “wealthy” and I’m liable to see tax increases.
I resent the implication that I am not working, therefore idly wealthy, and that I deserve to be targeted by this administration’s policies as the one to pay for the others mistakes.
I could work far less. I am closely watching the tax code to decide when enough is enough, there are diminishing returns, and I can walk away from my job. I can let my income fall to a level where I keep most of it, cash rebate checks, relax, see my kids, and live off savings for a few years and I don’t have to pay taxes.
I hope this effect is factored into the new tax code.
Regarding the Seattle price adjustment, I think that 1997 prices as adjusted for inflation are close but probably a little low. There has been immigration and job improvement in Seattle since then, as well as investment in housing quality. Other factors that have been discussed do counter that to a degree, but I think there is some residual positive impact on prices.
I’ll go with a 35-40% decline rather than 50%.
Esol Esek » Feb 22, 2009 at 12:47 am
When Paul Volcker says industrial production worldwide is collapsing FASTER than the Great Depression, and George Soros looks he wants to cry as he says we’re screwed, and Warren Buffet’s top fund is down 50% in the last six months, you’ve got to wonder just where we are headed. Is this all just an extra-scary dive that we’ll resiliently bounce out of, is it a grinding pain for three years, or is it Armageddon (no pun intended)? NOONE has the answer to that question. A home is space and hopefully comfort. It is not longer an investment. Maybe Seatte is special because we have water, and aren’t next to Mexico and all the turmoil that brings (gangs, huge disparities in wealth and race), but yeah, homes are coming DOWN in price. They’re the majority of the boomers retirement….
This was the first week I really heard the collective scream getting unbearable…
wreckingbull » Feb 22, 2009 at 5:42 am
RE: Herman @ 33 –
My thoughts mirror yours.
The last year has caused a paradigm shift in how I plan to live out the rest of my life. The upcoming tax liabilities to pay for this Sunday morning booze binge are going to be staggering. Our own state, one of the more responsible states in the union, is already looking at a 8 billion dollar hole in its budget. My plans go something like this:
1. Continue to rent until the massive collapse finishes.
2. Pay cash for a modest home. And I mean modest. The cheaper the home the less I pay in taxes. Let some other fool pay the $700/month in property taxes.
3. Using my position gained from #2, change career to a lower-paying, less stressful, more rewarding one.
4. Use the barter system. It is already making a huge comeback.
5. Remember that the best things in life are free or cheap. One can cruise the same San Juan Islands in a $2K sailboat as a $200K yacht.
In my opinion, this is the best strategy to ride out the nasty years ahead. It is just not worth it to work as hard as I do and hand over so much of my paycheck to pay for these disgusting government programs. Yes, all these things are good for me and terrible for our local and national economies. Too bad. This is what happens when big government gets out of control.
I don’t think I am the only one thinking along these lines.
Kimsie » Feb 22, 2009 at 7:40 am
I think the 1997 prices make a good optimistic forecast, but if we experience deflation as we appear to be heading into, it would put the nominal bottom lower than $236K.
Scotsman » Feb 22, 2009 at 8:30 am
RE: economist @ 27 –
Maybe you should have read the article first. Obama’s plan to effectively increase capital gains taxes will cause money to leave the market now while lower tax rates are in 4effect. There are plenty of other places to invest besides U.S. stocks that offer long term growth and security. And yes, politicians to plan and modify policy to attract and or retain capital, they do it all the time. Bloomberg just killed an idea to increase taxes on the wealthy in New York because he found out only 40,000 people pay half of the total revenue to the city, and he didn’t want them to leave and move across the river to New Jersey. For an “economist” you seem to miss much of the total picture.
Angie » Feb 22, 2009 at 8:42 am
I do, however, fall under Obama’s definition of “wealthy” and I’m liable to see tax increases.
If by this you mean your family’s AGI is over $250K/year: cry me a freaking river. That’s more than 95% of the people in America and in Seattle make in a year. More than average Americans (median household income is $42K) make in 5 years. Lots of people have it way worse than your “bad lifystyle”. "licking" whiner.
If you feel like you work too hard and it’s not worth it, boo freaking hoo. If you’re so brilliant with your money and have a big nest egg, go ahead, coast for a while. If you’re so hot at your profession I’m sure you can make or find lots of opportunities to work less and still make more than 90% of Americans (90th percentile of household incomes is $90K).
Not seeing your family for half the year is brutal, I agree. Life is too short and it sounds like your priorities have been out of whack. Maybe you should thank the President for getting you to rethink what is really important.
Herman » Feb 22, 2009 at 8:50 am
Angie you’re right. In fact that’s my point. I’m taking my tax-paying work off the table. Someone else can pay to rebuild the country.
Angie » Feb 22, 2009 at 9:33 am
So what’s the marginal tax rate up there in the stratosphere? 35%? Not worth it to earn an “extra” 100K to take 65K home? In my family 65K still goes mighty far.
emohnwo » Feb 22, 2009 at 9:48 am
RE: Herman @ 39 –
Maybe you can donate some of your free time to charity. There are many great organazations that would love a man of such character by their side. On the other hand maybe you should just head out to sea on your wee little boat.
wreckingbull » Feb 22, 2009 at 9:51 am
Angie, this is a apparently a very emotional subject for you and I am sure there are valid reasons for that. I have noticed a the tone of your posts have been escalating over last six months.
To me, Herman makes very valid points. I am not as worried about today’s tax rates as I am about the rates that will be raining down on us in a year or two, as we try to fill the massive budget holes that out of control government spending has caused.
I don’t have children, but I watch in disbelief as we destroy any chances of a decent quality of life for future generations. We need to take the pain now so they can at least have a fighting chance. The federal government using tax dollars (wait, scratch that, I mean borrowing money) to prop up home prices is sickening. We should be ashamed.
PublicEnemy#1 » Feb 22, 2009 at 10:20 am
By Angie @ 38:
Angie,
Class envy much?
If he elects to work for less because he doesn’t want to pay more taxes to the government, why do you care?
I have taken the last two years off from regular work and just enjoyed time with my family. The Feds haven’t seen a dime of money from me recently.
I would rather not work or work for less pay than let the government confiscate any more wealth from me.
It’s all about priorities…
DaveyDave » Feb 22, 2009 at 10:26 am
RE: Ray Pepper @ 28 –
Here’s a very good interview with Roubini from the WSJ on bank nationalization:
http://online.wsj.com/article/SB123517380343437079.html
A good quote amongst many in the article:
And as a side note to Mr. Talbott, you make some reasonable points about the downside of our local economy. You did neglect to mention that Griffey is now back and the tremendous upside that has for public spirit. We may only trace back 48% or so now…
Potential Buyer » Feb 22, 2009 at 10:41 am
Getting back to a less emotional aspect of bottom spotting:
When the market does reach the bottom, what will the interest rates be? Will houses be more or less affordable then? Am I correct that the Affordability Index looks at median home price versus median income? Interest rates moving from 5% to 12% (a wild guess, but they will undoubtedly head up) have a huge impact on payments and affordability. For somebody planning to stay in the house long term, the inflated prices now may actually be a better deal than purchasing once the prices do come down, but interest rates have gone up.
I worked up some hypothetical numbers (sorry the columns don’t line up):
House Price 600,000 550,000 550,000 500,000 500,000 450,000
Loan Ammount 400,000 350,000 350,000 300,000 300,000 250,000
Interest Rate 5.0% 5.5% 6.0% 8.0% 10.0% 12.0%
Mortgage payment $2,147 $1,987 $2,098 $2,201 $2,633 $2,572
Taxes & Insurance $800 $800 $800 $800 $800 $800
Total monthly payment $2,947 $2,787 $2,898 $3,001 $3,433 $3,372
Interest paid over life of loan $373,014 $365,405 $405,423 $492,451 $647,756 $675,726
Total paid for home $773,014 $715,405 $755,423 $792,451 $947,756 $925,726
Ray Pepper » Feb 22, 2009 at 10:42 am
Roubini? Nahhh. Just a little to out there. I listen to Meredith Whitney. She doesn’t include BAC in any of her dark forecasts. However, I have never been a Buy and Hold investor. I will most likely be out of BAC at mkt open. I always sell too early…………..but a profit is a profit!
DaveyDave » Feb 22, 2009 at 10:50 am
RE: Ray Pepper @ 44 –
I kind of figured you were more of a trader than investor — at least during this market. But I wanted to shoot that quote to you as it included a time line for nationalization. Granted, it’s just his opinion, but that’s basically all that’s out there right now… Good luck!!
yeslerhill » Feb 22, 2009 at 11:24 am
Angie’s comments are not class envy. The joker whining abt working too hard and being rich, and having society get in the way of his ability to be as rich as he wants, is bourgeois whining abt the loss of entitlements. The entitlement to join in the pirate economy and accumulate as much wealth as they can, and *darn* the social consequences.
I suspect that the economy will fall much further, and a vast, angry underclass will develop, and that won’t be pleasant. Especially not for the bourgeois whining abt how they are entitled to so much more.
I’m all for snigletian deflation. It would do Seattle good, make this place more affordable.
PublicEnemy#1 » Feb 22, 2009 at 11:39 am
By yeslerhill @ 46:
Ahh, but how will Angie feel then, when her Georgetown/South Park home suddenly plummets to $50,000 and she is completely underwater with no chance to ever get out from under it, short of bankruptcy?
Will she be charitable towards you then, when she is rallying against those with money who chose not to pay her overinflated home price?
b » Feb 22, 2009 at 11:46 am
Herman -
Obama is proposing some increases that get us back to Reagan era tax rates. I am sure everyone remembers how all of the rich, productive people fled the United States in the 1980’s or sat on their savings for many years because of those terrible onerous taxes. Did you ever think that maybe your taxes have been, historically, extremely and artificially low for the last 10 years, which is the same government handout you want to vomit over giving to people without your level of wealth? Since it sounds like you have just been banking those payments into your don’t-need-to-work-for-years-on-end account, just think of it as a partial repayment of a gift. But really, just hope we don’t revert to the 1950’s tax structure with 90% top rates for all. Most people I know think of the 1950’s as a living hell of a decade where the rich hid in underground bunkers or fled to better tax havens to escape the terrible punishment of our sickening tax happy government. The country hardly functioned as most productive people decided to quit working as it was not worth it anymore, and everyone else was living on government cheese. The 1950’s were an awful time in this country, lets hope our tax structure does not return to that terrible era.
Foreclosed » Feb 22, 2009 at 11:54 am
Thanks for all tax-payers helping government to pay my debts and taking the load out of my shoulders. I will still be able to drive my 08 Aston Martin and don’t need to sell it anymore. Maybe I should not attempt to buy a 5bedroom house in Lakefront anymore! But hey – as long as we have such helpful citizens – why not!!! ;)
Jonny » Feb 22, 2009 at 12:02 pm
i expect 3-5 years of falling RE prices, but i think that’s fairly optimistic. it’s possible for things to fall for so long that when real estate “hits bottom” there will be few people left thinking about it at all. if this mini-depression catches hold and takes 5-10 years or more to sort out (with enough screw-ups it could take 15 or 20 like Japan), real estate may revert to its long-term historical role as something of a non-investment in which far fewer people are interested. the stock market will be a caricature of that. an entire generation of people is going to stop putting their money in stocks. honestly, that’s not such a bad thing as 99% of them have no idea what they are doing as investors.
AnoneMouse » Feb 22, 2009 at 12:03 pm
I am always amused at the comments of whiners like Angie complaining about people that make good money relative to themselves. The implication is that these people come upon relatively good incomes through luck or exploitation. Generally, the whiners elected to get low value degrees, work in low value occupations or for the federal/state/ non profit sector.
In reality, most people making $200k incomes spent years in school pursuing tough degrees while the whiners went to part schools or enjoyed easy liberal arts degrees.
The reality of the situation is that high income people make sacrifices and work in hard jobs that generally add value to the US economy i.e. they are value creators not value consumers. People like Angie and other whiners strike me as value consumers. They fail to understand that the economy needs people incentivised to create jobs and economic growth. Obamas policies reward reckless stupid people at the expense of people that have lived within their means and tried to do what is right. And the “cry me a river” arguments are irrelevant. And no, $250,000 is not a lot of income. My income has not increased over the past 3 years. In fact it is down 30% this year while my taxes increase every year to subsidize the least productive segments of society. At some point people like myself don’t feel the extra effort is worth the time and I like a lot of people feel we are close to this point.
Herman » Feb 22, 2009 at 12:27 pm
Well here’s the subtext of my point:
For some reason Americans feel sympathetic towards overconsumption, but heap scorn and punishment on overproductivity. I just don’t understand that.
In my first post I pointed out that I live a very modest life. My home is very small, my car is 13 years old. My job entails hard work and brings in a lot of tax revenue to the US, and it will most likely go to a foreign national if I leave it, so it will not be replaced by another US worker.
But Angie was all about punishing the AGI.
In contrast, I think there was a post a few weeks ago from someone who got in trouble on her mortgage and was facing foreclosure. This person got a lot of sympathy.
I think this exchange is representative of the direction of the country – punish overproduction and reward overconsumption. Our policies rescue overconsumers and shift the burden onto overproducers. But overproducers don’t HAVE to overproduce. We can stop that at any time, and under the right conditions we will.
I think Americans are going to live in the America that this attitude creates, and they’re not going to like it.
jon » Feb 22, 2009 at 12:36 pm
RE: b @ 48 –
From http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm
“The economic benefits of ERTA were summarized by President Clinton’s Council of Economic Advisers in 1994: “It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth.” “
Herman » Feb 22, 2009 at 12:49 pm
RE: Angie @ 40 – To answer your question, yes it’s 35%. I don’t need or even spend the extra 65K. My family lived on $32,000 of spending last year, including trips, food, mortgage, insurance, & everything. I simply put the excess in the bank.
But no matter how far it would go in your family, you can’t have it.
Scotsman » Feb 22, 2009 at 1:50 pm
Wow, this is great. The last 10 posts or so pretty well summarize why socialism has no future. Eventually the producers just give up as the balance shifts. After all, why work hard when you can live a lifestyle that on average, offers just as many benefits for a fraction of the effort. As health care, housing, transportation, and food costs shift toward favoring the public verse private sector more people will switch roles until there aren’t enough producers left to carry the load.
The comment was made above that an unruly underclass may develop. I actually think an unruly middle/upper class may be more of a threat. If you never worked for something, and lose it, it doesn’t hit you as hard as when you bust your butt only to have the fruits of your labor confiscated. To have those gains given to someone who could have worked but didn’t only adds to the insult.
Intellectually this would be fascinating to watch as it plays out against the background of U.S. history and cultural norms. Unfortunately we’re all in the same boat, and its hard to watch when you’re busy paddling so hard!
Sniglet » Feb 22, 2009 at 1:54 pm
I think it is more likely that interest rates will be low if we see massive asset price declines. This has certainly been the case in previous sitations with massive asset price crashes. Japan, for example, has had very low mortgage rates for the last 20 years, even as real estate and stocks tanked.
That said, I think we can expect to see lending requirements tighten still further (40% down payments, anyone?). The spreads between “risky” and “safe” loans will likely be enormous. For example, someone just putting 10% down on a property may find they are paying 2 or 3 times the interest rate as someone who puts 50% down.
b » Feb 22, 2009 at 1:56 pm
Scotsman -
You are right, however a 4% increase in the top tax bracket for high income earners is so far from Socialism that comparing the two is ridiculous to the extreme. I seriously doubt that many “producers” are going to give up because, hey, earning $150k instead of $160k is just as good as living on $18k in welfare.
DaveyDave » Feb 22, 2009 at 2:15 pm
RE: Sniglet @ 58 –
Tim provided that excellent link on deflation (what a month ago?) where the author made the good case that what happened in Japan is not a good analogy for what is happening here. The major difference is that they are a nation of savers and we are a nation of leveraged spenders. So it was not a viable policy option for the Japanese government to significantly inflate the money supply as that would devalue all of those savings yielding a very unhappy populace. Since we have a debt-laden society, the increase in money supply does not have that adverse effect.
There is just no way we’re going to avoid inflation and higher interest rates in the future. There are just basic fundamentals at work here. We are going to reinflate this economy whatever it takes. And printing money is a part of that. The Chinese, Japanese and other US government debt purchasers are going to demand higher interest rates in order to make up for the devalued dollar.
After we get through this deflationary cycle and flight to safety, we are going to have a weaker dollar, a slower economy, greater national debt and higher inflation. Defaltion is too destructive for our government to allow…
Angie » Feb 22, 2009 at 2:36 pm
Herman, I entertained myself this afternoon imagining how that conversation was going to go with your wife. “Honey, I’ve decided to get a lower-paying job because that "golly"ed Obama is going to raise our taxes!” “Oh no! How much more can they ask of us, Herman dear?” “Well, I make $100K, and Obama wants us to pay $2,000 more in income taxes ever year. So I’m going to quit my job and go work as a greeter at Wal-Mart for minimum wage! If they hire me full-time I”ll make $17K a year–that’ll teach that "golly" socialist!” “Good thinking, honey! That’ll teach that "golly" socialist!!”
Good luck with that, man.
I love what you guys are projecting about my education, income, profession.
AnonyMouse: In reality, most people making $200k incomes spent years in school pursuing tough degrees while the whiners went to part schools or enjoyed easy liberal arts degrees. Most of the people I know making $200K/year are either salespeople, engineers, or MBAs. These are hardly intellectual powerhouses (you heard me, engineers). The rest are physicians, which is marginally better, though mostly they’re selected on the basis to memorize and regurgitate.
b says: really, just hope we don’t revert to the 1950’s tax structure with 90% top rates for all. Most people I know think of the 1950’s as a living hell of a decade where the rich hid in underground bunkers or fled to better tax havens to escape the terrible punishment of our sickening tax happy government. The country hardly functioned as most productive people decided to quit working as it was not worth it anymore, and everyone else was living on government cheese. The 1950’s were an awful time in this country, lets hope our tax structure does not return to that terrible era.
I take your point, b, but you may need to try it again without the sarcasm–the reading comprehension level around here is a little subpar.
yeslerhill » Feb 22, 2009 at 2:49 pm
Socialism fail? LOL! Dude, where do you think your electricity and sewers come from? The notion that a non-rich person should have sewer hook ups and electricity were considered revolutionary and socialist a hundred years ago, but capitalism (which has no ethics; or the ethics are all abt profiting off the backs of those further down the economic ladder), always uses socialist policies, and then claims they’re not, and denounces any further social progress.
I think if Obama falls victim to his Clintonian neo-liberal economics economists, and the economy collapses further, we will see continued growth in interest in democratic and ecological socialist ideas.
“Growth” as the central impetus for the economy is unsustainable. And with the environment collapsing almost as fast as the globalist economic system, we need smarter ideas than just trying to pump in more consumerism to try and refloat this current debtor economy. Won’t work. Can’t work. Isn’t working.
If the government’s policies continue to be focused on keeping the banksters afloat, then we will see class conflict burgeon in the US. And because we almost completely lack any political culture in the US, desperate people in this country will reach for their bibles (I’m so so on bibles), their guns (I’m not anti-gun by any means) and look around for a “strong leader”.
You all can go back to daydreaming abt a year ago, when it was still fun (and credit affordable!) to be a vulgar consumer! Because all that is never coming back.
Angie » Feb 22, 2009 at 2:50 pm
My family lived on $32,000 of spending last year, including trips, food, mortgage, insurance, & everything. I simply put the excess in the bank.
Huh. If that includes day care costs, too, (a) you need to tell your wife to get a better-paying job–she must be one of those lame-ass liberal arts “value consumers”–and (b) you have no cause to complain about housing costs, my friend!
Nick » Feb 22, 2009 at 3:08 pm
RE: Angie @ 61 – I don’t think many people are under the impression that hard-working individuals who make good money as a result will suddenly take minimum-wage jobs to “stick it to the looters”. However, I’m not sure the looters fully realize that in today’s internationally-connected world, suffocating your own productive class with onerous taxes does not necessarily increase the amount collected by the government, and certainly does not help the country’s overall productivity. I know, for example, that if tax rates on the high end get to, say, 80% (from about 55% in California currently), I’m going to be looking for another country to live and work in; there’s no great reason why I need to be in America to do my job, and there are other countries with less aggressive looters running the government.
If you take that, factor in the fact that historically, raising taxes doesn’t usually raise eventual revenue, add in that raising taxes discourages private industry and investment, and you could be looking at “bad times” for America in a few years. I love the idea of America as a free country, but I don’t love it enough to suffer under the tyranny of looters, especially when there are other options available. I’m just holding out hope that one of those options is provided by a section of the country seceding to re-form a free America, so I don’t have to move as far. :)
Sniglet » Feb 22, 2009 at 3:35 pm
Not true. The Japanese government has hugely inflated their money supply over the last 20 years. I think that a lot of confusion is caused by a misunderstanding between the correlations between money supply and asset prices. You can have significant (long term) declines in asset prices even while the money supply increases. There is no direct correlation between the money supply and asset prices.
I respectfully disagree. I believe we will see a massive crash in asset prices (far more than we’ve seen thus far) and low interest rates. Just look at how the dollar has appreciated in value relative to assets in the last six months, and this has been occuring at the very same time as the government was gorging on ever increasing amounts of debt, and expanding the money supply.
To be fair, I am a little less certain about T-bills than I am about the dollar. It is entirely possible that T-bills collapse as people rush for cold hard dollars themselves. After all, a hedge fund trying to meet a margin call ultimately needs dollars not bonds.
As I outlined in my in-depth podcast on deflation, there are reasons why I think the government just doesn’t have any choice. They’re hands are tied.
http://surkanstance.blogspot.com/2009/01/deflation-101-podcast.html
Munster » Feb 22, 2009 at 3:37 pm
Ah, yes. Government spending on things that make life better for most = socialism. Government spending on things that go “bang” or blow up = God fearing rich-man good government.
Libertarians and the pseudo-wealthy are idiots. Most genuinely wealthy people good give a rat’s "lick" what the actual tax rate is.
DaveyDave » Feb 22, 2009 at 3:56 pm
RE: Sniglet @ 65 –
We shall see… We shall see.
Mark » Feb 22, 2009 at 4:05 pm
Taxes are terrible! Once the government starts taxing some people will end up contributing more than they consume and others will consume more than they contribute. The fairest way to conduct our business is for each of us to pay for what we consume.
Lets eliminate all taxes! Shut down the public schools, eliminate gas taxes, no social security taxes, no medicare taxes, no sales tax, no property taxes – let the libraries fend for themselves – get rid of the police and fire departments – no military spending. Get government out of the way and let the private sector take over. See how that all works out.
For all of you whiners complaining about taxes – go ahead and quit you jobs. In the real world someone else will just step in and fill the void. You don’t add anything to this world that someone else can’t do. If you think that you can’t be replaced just go to any cemetary to get a view of all of the people the world is getting by without.
It’s disgusting reading comments from people high up the food chain in one of the richest countries in the world complaining that there is never enough. You ingrates should be grateful for the system that provides you the opportunity to live so well.
b » Feb 22, 2009 at 4:12 pm
Nick -
Good luck, your choices are basically: New Zealand, Mexico and Korea if you want any meaningful difference in tax rates (taxes by country). For high earners I am pretty sure the results are much worse. I would be interested to see if you can find more than one affluent country with meaningfully lower top-tier tax rates than the US.
EconE » Feb 22, 2009 at 4:21 pm
Isn’t a $250k annual salary in the top 3 or so percent? Even here in Seattle?
http://seattlebubble.com/forum/viewtopic.php?f=1&t=470&view=next
How does that not go far? How much does one need? What do they need it for? A yacht? A Medina waterfront mansion?
And what’s wrong with being a “minimalist” (not buying a bunch of stuff) or a “value” shopper?
Like Herman…I drive a 13 year old car also (1996).
I bought it 3 years ago.
At the time I could have had a 2000 or 2001 with similar mileage/options for the same price.
My neighbor told me a friend of his just bought the same car (1996) last week. He paid the same price I paid. He could have bought a 2003 or 2004 for the same price (similar mileage/condition/etc) now.
So what was that about “value” shoppers?
98115_Renter » Feb 22, 2009 at 5:26 pm
If you don’t like to pay taxes, you are selfish, simple as that. Taxes overwhelmingly pay for schools and roads and the MILITARY.
Trust me there are plenty of very productive middle class workers like myself that have no ideological issue paying their taxes, and remember that high income earners overwhelmingly voted for Obama.
Those that think that progressive income tax will sink this country typically are idologically biased towards the right wing, rather than actual high income earners themselves.
98115_Renter » Feb 22, 2009 at 5:38 pm
By 98115_Renter @ 71:
Editing my comment to remove the word “overwhelmingly”.
I confused higher education with higher income. Still, a majority of those earning over $200k/year voted for Obama.
vermillionsky » Feb 22, 2009 at 6:16 pm
By Munster @ 66:
That’s probably because most “super-wealthy” find ways to get around paying taxes by hiding their income off-shore. Also, why would they care about earned income tax when most of their wealth is generated by capital gains?
By 98115_Renter @ 71:
Hey, watch what you say about Obama’s cabinet! ;)
PublicEnemy#1 » Feb 22, 2009 at 6:29 pm
By 98115_Renter @ 71:
So, people that don’t like to pay taxes are selfish?
That’s a pretty stupid statement to make. Say, your name’s not Joe Biden, is it? Weren’t you the guy that said that paying taxes is patriotic?
You are implying that because I don’t like to pay taxes, I am selfish.
Somehow, I don’t think the orphanages that I support in the U.S. and around the world would consider me selfish.
Just because I think the government SQUANDERS my tax dollars on Medicare, Social Security and all sorts of other entitlement programs doesn’t mean I am selfish.
I think if you truly believe that taxes are good thing, then why don’t you donate ALL your money and time to those less fortunate? After all, then you can work 40 hours a week, give ALL your money to the government and you can live in subsidized housing with free meals from the government. Wouldn’t that be utopia?
You would be helping your fellow Americans and being SO unselfish at the same time.
Oh wait, you don’t want to give ALL your money to the government to pay for things they think are necessary? Then you apparently are selfish too, but it only kicks in at a higher tax rate.
Maybe your tolerance level for government squandering is just higher than mine.
David Losh » Feb 22, 2009 at 6:38 pm
What a day of discussion about making money, paying taxes, and where my tax dollars should be spent.
The fact is that no one should be paying taxes. If you are paying taxes you don’t have enough expenses. Social Security is a different matter.
Your expenses should exceed your income, You will hear that a thousand times. My company makes money and as the company makes money it expands into new expenses.
Now my employees pay taxes. The more employees I have the more taxes that get paid. In that way the system is stacked in my favor.
By raising taxes on the top producers in America the government is giving an incentive to expand. The government has already shown it will spend the tax money on commercial ventures so it is kind of a trade off.
Obama as opposed to Bush is presenting a circular pattern of give, which the government is doing, and take.
To put this back on topic, you all have described a way to stabilize the economy closer to where it left off rather than tank further.
dailyt » Feb 22, 2009 at 6:41 pm
Some thoughts to chew on:
http://www.nakedcapitalism.com/2009/02/martin-wolf-rethinking-lessons-of.html
There are a lot of interesting points raised in the comments for this thread. I’ve read the comments spanning socialism’s place in American society to the original question of the scope of the current downturn.
To argue whether or not we should be spending is moot. There is a complete lack of private sector confidence in the economy. The layoffs are a key indicator of private sector sentiment. Government spending is imminent and will dampen the immediate fall; the hope is that these spending programs will smother the impact so that we do not have a full scale social upheaval.
At any rate, instead of dwelling on the bursting of the bubble and the guestimating of where the bottom will be, why not focus on ideas which will generate demand?
To those who argue against government spending, I pose the following question: Who will buy the products our companies produce? Keep in mind that this current downturn is not limited to just Seattle, or even the US. It is GLOBAL in scope. This means that unlike Japan in the 90’s, (which managed to create a trade surplus by exporting to China / US), there is currently no private demand anywhere in the world. No demand = continuing worldwide deflation.
And to those who support the government spending, how will we repay the public debt? This can only be accomplished by increasing public revenues, which in turn means one of three actions: 1) Higher taxes on the existing tax-payers, 2) Increasing the tax base by encouraging growth, 3) Lowering government expenses.
David, just out of curiosity, if no one paid taxes because their expenses are negating their income, then who is going to repave your street? Or pay the police so that you’re not getting mugged downtown?
Obama just announced his plan to cut the Fed deficit to $500bil by 2013. Has anyone read up on the details? Sorry for the long post, but again, some thoughts to chew on.
vermillionsky » Feb 22, 2009 at 6:51 pm
By dailyt @ 76:
The best way to generate demand in the Seattle housing market is to drop prices to a level people can actually afford.
David Losh » Feb 22, 2009 at 7:07 pm
RE: dailyt @ 76 –
Read it again, my employees pay taxes.
Should they opt to be business owners they would need to keep expanding in order to avoid paying taxes.
It’s when businesses stagnate that taxes are due.
Tim » Feb 22, 2009 at 7:12 pm
a lot of self-important jerkoffs in this thread wrongly equating a high income with “hard work”.
Andy » Feb 22, 2009 at 7:58 pm
Nah, Tim Dogg,
High incomes usually equate to hard work; degenerate social emo hippie liberals are feeding you too much crap..
AnOneMouse is very correct.
Have nots will usually want people that earn more to pay their way. Extra taxes on folks that earn over $200K are a way to steal from others..
If I make more than you, we should pay the same taxes percentage wise….
Jeremy » Feb 22, 2009 at 8:19 pm
I think the Fed is secretly hoping that printing the trillions they’ve already done and the trillions more to come will cause inflation and asset price stabilization if not outright increases. Of course the victims will be the people who actually saved and were responsible.
Our country needs a higher savings rate in order to restore solvency to the banks and get delevered. If anything the government should suspend taxes on interest income for the next couple years to encourage good behavior. Otherwise the average family that is two missed paychecks from bankruptcy (read: The Two-Income Trap by Elizabeth Warren) will be screwed even more by inflation destroying their (admittedly small) emergency fund.
Herman » Feb 22, 2009 at 8:34 pm
I’ve had a job since I was 13 years old – paper route. I’ve had just about every job in between – grocery store, garden work, office clerk, active duty military (my idea of public service), lots more. I think I have a pretty good perspective on “work”.
My wife would be fine if I quit and spent more time at home. We could take a nice step down in income and still meet our needs. I don’t have to head to wal-mart, I could work part time for example.
I support taxes for the things the constitution specifies – that’s “the system”. But the constitution does not say that taxes are to be used to create a floor for housing prices, bail out banks, create jobs, or supply health care. Or pay eternal interest on the debt for wanton expenditures. (As I recall, federal taxes were supposed to be excise on import/exports, not income)
I suppose a small increase in marginal tax rate will drive a correspondingly small number of people out of the tax bracket. Just the people that are at the tipping point already.
My expenses are low because I bought my house in 1997. $700 mortgage.
Some of you have not had similar priorities, perhaps you have not aimed to be so productive or so conscious of expenses. Maybe you’ve spent more time walking in the park or relaxing.
If our government could tax your free time and distribute it to me, I would not support that either. I would allow you to have the lifestyle that you choose. But if you choose to confiscate the benefits of my choices and leave me only with the costs, well that’s what I call selfish.
Dave Lincoln » Feb 22, 2009 at 8:37 pm
“a lot of self-important jerkoffs in this thread wrongly equating a high income with “hard work”.” Yeah, two things that you would know nothing about.
For some reason, the commies have come out of the woodwork tonight (or out of the closet, in Angie’s case). It’s not even a full moon, I mean WTF?
People, remember the sin of envy. It is not your business how much money Herman has been earning, so long as it’s legal and as a private citizen, not as a government apparachnik.
I can totally understand the disgust with how our tax money is being spent these days, and I support Herman all the way (well, I mean I’m not giving him any money or anything, not that far). You all are correct who say that if you pull away the incentives for the producers, enterpreneurs, folks who create the jobs, the economy will grind to a halt or to something resembling Cuba or the former USSR.
I really wondered one thing, though, Herman – if day care takes up your wifes (after income, I assume) salary, why not have her stay with the kids at home? I think it’s a better life, and it will also not result in your little ones being raised to be Munsters, or Yeslerhills. Perish the thought!!
gameboy » Feb 22, 2009 at 8:43 pm
Man, you need a whole NY Philharmonic violin section here to go along with all the whining around here.
I wasn’t planning on posting here, but Angie needs some support.
I am in the tax bracket where it would likely will hurt the most, but I am not going to start whining about how unfair it is. Just look around the world!!! US would have the lowest tax rate for the richest citizens even after the tax increase among the most developed countries in the world. You guys have no idea how good you have it.
To pay tax means to be patriotic. We may not be young enough to server in the military or dedicated enough to enter politics, but we can all afford to pay our share to make sure that our country can function. I am sick and tired of these whinny lapel flag patriots who waves a flag at every opportunity but shrink away when the bills are due.
And if the higher tax rate is pissing your enough to contemplate going to another country, go AHEAD, LEAVE!!! This country will be better for you leaving. Don’t wait, take the plane and go now.
As long as the true visionaries and architects of economy like Warrent Buffett and Bill Gates stay around (they are calling for much higher tax rate for the rich), I think we can “afford” to lose some of your yellow patriots.
gameboy » Feb 22, 2009 at 8:50 pm
And what the hell is this with “I am only willing to pay tax for things I agree with”???
Look buddy, I know it has been awhile since you have studied Social Studies, but that is not how this works. You ELECT your representatives and you go along with how they govern. If you don’t like it, you elect someone else.
I vehemently disagreed with the Iraq War. Does that mean I had the right to not pay my tax over last six years? NO! It means that even though I don’t like where my taxes are going, I pay up because it is what a citizen of this great country should do.
Seriously, if you don’t like paying taxes, go to another country where you pay less. Most of them have dictators who may share your same belief so you may fit right in.
Man, stop the whinning already…
98115_Renter » Feb 22, 2009 at 9:16 pm
RE: Dave Lincoln @ 82 –
Actually, it’s the anti-tax republicans who have come out of the woodwork. Calling someone who disagrees with your tax opinions a commie is about as immature as me calling you names such as fascist or telling you that Jesus has a wonderful spot for your greedy ass in hell.
Frankly, republican tax ideals are quite the minority in Seattle proper and most of western Washington in general.
I like to remind everyone that WA has one of the lowest income tax burdens in the country, so you tax whiners really are just that. Move to CA or the upper midwest or East Coast and then let’s hear you complain about taxes.
For those of you who do own homes and complain about the bailouts, I’d like to know how you would feel if the banking system was allowed to collapse, and nothing was done about foreclosures. Will you be happy, Herman et al, when your home is worth 10% of it’s former value and you have no job anymore? You’ll be in love with government cheese and social welfare programs such as unemployment compensation should that occur.
When the income tax rates were higher than they are now for upper income earners, did that prevent people from wanting to earn more money? No, of course not. It’s really just a bunch of huffing and puffing and scapegoating.
98115_Renter » Feb 22, 2009 at 9:21 pm
RE: Andy @ 80 –
Man you’re sick.
David Losh » Feb 22, 2009 at 9:52 pm
RE: 98115_Renter @ 83 –
You kids today don’t remember, but yes that was a common thought and deed that was expressed in th 1970s. Professionals would whine about being overly taxed and why sould they work more if they just had to pay more taxes.
I don’t remember the exact tax burden or the cut off but it was a big topic of conversation.
The Herman guy sounds like one of those professionals. He makes money within a tax bracket and that’s it. He’s a wage earner with the wage earner mentality. You would be the same if the tax burden was on you.
There is a struggle between government and business. Who pays what for who. We already have privitized health care which is an extreme burden on the entire population that pays into health care, but we don’t object to that.
Government pays for roads which directly benefits the trucking industry and that seems to be OK.
It’s the hand outs people seem to object to. I object to corporate welfare. I don’t like paying five times the price for everything so a bunch of college kids can get those good paying jobs.
I resent paying for over educated dilitants who do nothing but come up with complex formulas about nothing that has to do with anything. I don’t like the virtual reality industry because it is a waste of resources. Let’s not talk about the credit, financial, and stock markets that we all pay for.
I would prefer to give my money to elected politicians than corporate raiders.
As far as bail outs, corporations bail each other out every day and we all pay for that. That seems OK , Why? Why is OK to pay $5 for $1 worth of cereal just so a whole bunch of colege graduates can have good paying jobs?
Why is there a junior manager, of the department manager, of the store manager, of the regional manager, of the district manager, of the corporate managers jobs in between that box of cereal and me?
We talk about bloated government and ignore bloated corporate over sight or lack there of because we pay for people to do nothing on the job.
I’d much rather pay my government to work for me than a corporation to work against me.
Eleua » Feb 22, 2009 at 10:08 pm
What makes you think we are not going there without bailouts? I am of the opinion that the bailouts are the driving force to make the situation worse than if the .gov just let the market take out the guilty parties and shoot them.
Anyone, and I mean ANYONE, that thinks any of these bailouts will be a net-positive for the economy is either the direct beneficiary of a bailout, or too stupid to be out in public without adult supervision.
FYI…government intervention started when the DJIA was in the 14000s. We are closing in on half that. The more they bail, the poorer you get.
Get that through your head.
mark » Feb 22, 2009 at 10:09 pm
Taxes by their very nature are unfair to somebody. The only fair way to do things is have everyone pay for what they consume.
If you have x number of kids in school then you should pay the tuition out of your paycheck. Same thing with military spending. This country spends $600 Billion per year on the military. That comes out to $2000 per citizen. You can apply this concept to everything else that that the government provides, schools, police, fire, courts, prisons etc.
This is the way that real life works. We all pay the same price for a movie ticket, car, food from the grocery store, etc. To work the system any other way is not fair. In other words, someone ends up paying more than someone else. Taxes are all about angling for an advatange.
Unfortuantely life does not work this way. Some people choose to have more children than others, some people serve time in the military and others don’t, some people at the bottom of the food chain can’t pay their own way.
And then we have people like Nick and others. This is a very rich country. Our ancestors have provided us with a first world infrastructre. We have schools for our children, courts to uphold laws, a military that ensures our safety and guarntees that the worlds natural resources continue to flow in our direction, homeland security, clean air and water, police and fire, top notch universities, reliable transportation, etc.
In other words we have systems in place that provides for the ability of our citizens to prosper, and prosper we do. We are the envy of the world. It allows for the accumulation of vast wealth.
And what do people like Nick have to offer in return? Nothing! They want the benefits that America has provided them and have nothing to offer in return. Zero, zip, nada, zilch.
To Nick I have the following offer. You let me know when you want to leave this country. I will be more than happy to take you to the airport after you have bought your one way ticket out. You won’t be missed.
In this world of globalization you can easily be replaced. We don’t need parasites that only live off of what society has to offer and have nothing to offer in return. There are many millions of people in the world that can easily take their place. America won’t have any problem attracting immigrants that are smarter, harder working, better educated, and are more willing to contribute to the common good for the opportunity that America provides.
Nick, and others of your ilk, we don’t need you, you can be replaced in a heartbeat and no one will miss you. On your way out of the country you can take George Bush, Dick Cheney, Rush Limbaug, and Bill O’Riley with you. The world and America don’t need you and you won’t be missed!
Eleua » Feb 22, 2009 at 10:20 pm
The idiocy on display here is simply breathtaking.
emohnwo » Feb 22, 2009 at 10:24 pm
RE: David Losh @ 85 –
Hear hear
what goes up must come down » Feb 22, 2009 at 10:34 pm
For once angie I have to agree with you, this one you nailed.
what goes up must come down » Feb 22, 2009 at 10:40 pm
RE: AnoneMouse @ 53 –
Apparently reading comprehension wasn’t part of your great education, Angie didn’t start down that road she just called the guy on it.
Lake Hills Renter » Feb 22, 2009 at 10:44 pm
The nasty turn of this “discussion” has been a real eye-opener for me. I have lost respect for several participants here, and it will be remembered the next time they think they have something important to say.
Dave Lincoln » Feb 22, 2009 at 10:45 pm
Calling someone who disagrees with your tax opinions a commie …
Commie is as commie does, in the words of one Southern gentleman. Just read David Tosh’s crapola…..
here’s an example: “I’d much rather pay my government to work for me than a corporation to work against me.”
Straight out of the woodwork, indeedy!
Mark, can I bring Ann Coulter with me?
“The idiocy on display here is simply breathtaking.” Yes, in a Seinfeld’s friend’s baby kind of way.
Eleua » Feb 22, 2009 at 10:46 pm
Just so I am up to speed…
Are we actually advocating a progressivity feature in the tax code that will target the upper tax bracket so hard that the velocity of money will slow even further, while at the same time putting the majority of Americans in the position of being net drawers of free government cheese?
Please ’splain how this is remotely sustainable.
what goes up must come down » Feb 22, 2009 at 10:48 pm
RE: PublicEnemy#1 @ 74 –
Well if you don’t like paying taxes why don’t you try to pay none ;-)
economist » Feb 22, 2009 at 11:00 pm
You are missing my previous point that the investment merits of US stocks and the taxation of US investors have nothing to do with each other. Whether company X is a good investment going forward depends on company X, not the tax status of investors in the company who may be anywhere in the world and who may be individuals, tax-exempt entities, or entities such as mutual or hedge funds. Capital markets are global. If a US company is a better investment than a foreign company it will attract capital – from both US citizens and foreigners – on its own merits. Capital gains taxation on US citizens has nothing to do with it. US citizens pay the same capital gains taxes on stocks whether they are US or foreign – so why would a change in US capital gains taxation have any effect on where US stock investors put their money? It does not change the relative merits of US versus foreign stocks for the US investor.
You are also neglecting my point that proportionately very few US stocks are actually held by individuals, but rather are held by non-taxable entities such a pension plans and IRA’s, or by mutual funds and hedge funds that are not sensitive to individual taxation rates.
You point about the effects of different income tax policies in adjoining US jurisdictions is a valid one, but has nothing to do with my point that the attractiveness of US stocks as an investment versus foreign stocks has nothing to do with US personal taxation of capital gains
Herman » Feb 22, 2009 at 11:46 pm
Since I’m the original whiner, I’ll add another rant.
For what I pay in taxes, I should get at least a thank you note and a gift basket from the American Taxpayer every year. I’m one of the government’s best (paying) customers. When I get back from a trip, I should be greeted at customs with a “Thank you for your support and patronage of our system, Mr. Herman. We appreciate your hard work and contribution.”
I mean, I get thank you notes from charities when I send donations for far less. And if I gave as much to them I’d get my name on a brick and a seat at the head table at the luncheon.
From the US I get nothing but threats and put-downs. Instead I have to put up with some of you lot with your hands out telling me it’s not enough and I should be thankful, and by the way screw you. We messed up and Herman you’ve got to pay for it.
I can do my work from anywhere in the world with an airport. Many of you have no idea how overpriced the American worker is. You’re going to see global stratification of wages. SoftwareEngineer isn’t going to have to worry about immigrants coming here to take his job. They’ll take it from where they live.
One of my customers said to me, “Regarding our operations in Seattle, the employees there are the most expensive in the world.” If you’re going to ask for five times the wage of an Indian, you have to be ready to prove you’re five times as good, every single year.
America is not in a strong negotiating position right now with its productive citizens and business owners.
mark » Feb 22, 2009 at 11:47 pm
Dave Lincoln, Go ahead and bring Anne Coulter with you, I don’t care, she can leave the country for greener pastures if she wants also, no skin off of my sack.
A few of the people on here complaining about taxes are priceless. They think that they are the one that made America what it is. Ha!
We don’t need them.
There are hundreds of millions of people in this country and world more than ready willing and able to take their place. America has provided these malcontents the opportunity to prosper. They can be replaced in a heartbeat.
America doesn’t need them – They need America.
If they want to quit work or move out of the country then I say so what. We don’t need them. Get out now or quit. In this globalized world there are hundreds of millions of people that will more than gladly take their place. They have nothing to offer and in return they can expect nothing!
mark » Feb 22, 2009 at 11:51 pm
Herman, George Bush urged Americans to go out and spend after 9/11. You know, we don’t want the terrorists to win. Do you think that the country owes you a bronze star for being some kine of hero for going shopping?
Get off of it! Without America you would be nothing! Your hubris knows no bounds. Why do you hate America? Be thankful for what you have. What have you ever done for this country other than going to work and trying to earn a fat paycheck? The only one you are looking out for is yourself!
mark » Feb 22, 2009 at 11:55 pm
Herman, leave America now! We don’t need you. Go work from an airport somewhere. The only thing that you have going for you is a big government to protect you. That would be the government that you despise. Move to India and compete with the populace there!
We don’t need you or want you here. Leave now. I’ll drive you and yours to the airport.
ElPolloLoco » Feb 23, 2009 at 12:04 am
By mark @ 90:
Pretty rare to see someone on the Intarwebs who actually needs to read Atlas Shrugged, but…
mark » Feb 23, 2009 at 12:06 am
Herman, so you’re a taxpayer, so what? You want a parade? Up yours!
I gave my country seven years as a rifleman in the U.S. Army and National Guard. I got very little in return. I’ll tell you a little secret, nobody cares! That would be people like you. I didn’t see you at the airport when I came home. The only one that was there was my father. This is America, nobody cares.
When have you ever shown any appreciation? Never! You and your selfish right wing nut jobs can only think about your’selves. Get a life Herman, you’re nothing special!
mark » Feb 23, 2009 at 12:07 am
RE: ElPolloLoco @ 104 –
Never read Atlas Shrugged, can you cover the high points?
Herman » Feb 23, 2009 at 12:10 am
RE: 98115_Renter @ 86 –
Will you be happy, Herman et al, when your home is worth 10% of it’s former value and you have no job anymore?
Are you kidding? I’d love it if home prices declined 90%. I’d buy five more. That is exactly what the government can do to get my money out of my mattress. Let the market correct to bring the investors back.
Since the government needs my money to be spent, and I won’t do it, their plan is to confiscate it and spend it themselves.
I’ll admit that I was bitter during the bubble days because my common sense prevented me from upgrading to a better home. I was locked out of the market by my own sensibility. That’s what brought me to this blog. I think I’m not alone.
Honestly I don’t think the government can arrest the decline, and I’m more likely to move or stop working than pay for the recovery, so I do think it will work out.
Herman » Feb 23, 2009 at 12:43 am
RE: mark @ 101 –
A few of the people on here complaining about taxes are priceless.
I’m here to complain about the attitude and the bailout culture moreso than the actual taxes. I also resent being designated wealthy and excluded from the group known as “working”. $250k is not tremendous by Seattle’s standards, and I work my ass off.
In this globalized world there are hundreds of millions of people that will more than gladly take their place.
Don’t you see? I will be replaced, but not by a US taxpayer. That means a loss of US tax revenue.
When have you ever shown any appreciation?
As I mentioned, I served active duty military for three years (plus five reserves). I did it out of a sense of duty. My grandfathers both fought in US wars and I felt like I owed the debt to them. I made very little money there, but I have always been restrained with my finances and started saving. I started my new profession after that.
Thank you as well for your service, though I think you could be more courteous to a fellow soldier.
Eleua » Feb 23, 2009 at 1:00 am
You guys really need to rethink your globalist projections. They are wrong and globalism is going to get thrown in front of the runaway freight train of economic nationalism, isolationism, and economic rollback.
Enjoy your delusions that are anchored in false premises.
Deang » Feb 23, 2009 at 1:44 am
just had to throw my 2 cents in about taxes…you need progressive taxes in a capitalist society to combat the effect of economies of scale. Take for instance going to costco….you make enough to buy 10lbs of chicken for 5$ whereas someone who makes less can afford only 1lb but due to other costs they pay 75 cents for that pound vs you paying 50 cents. They tried to let the free market reign a couple times in history….that’s how you end up with kings, pharaohs, Saudi Princes, and emperors. At a certain point wealth starts to generate more wealth easier…when I can force my neighbors to work my plot of land in exchange for my protection pretty soon me or my kids will be working on building a little kingdom. It’s a great system that worked for centuries as long as you aren’t a serf, slave, goat herder, rice harvester, or pyramid builder which 99% of us would end up being. We almost had our own version with Rockefeller, Carnegie, and all the early industrial age barons. They started using their wealth to corner markets and drive out competitors and take advantage of the working man in effect becoming financial kings with the power to topple most people. I’m not saying you should pay all you money to the government to help out those who are lazy but you need to pay more as you go. It’s like a video game as you advance in level it gets harder because the rewards are so much greater.
EconE » Feb 23, 2009 at 2:55 am
Herman…
Since you brought up the topic…I’m just curious about a few things.
1. What is it that you do that earns you $250k and has you away from your family for 6 months out of the year? Just curious. It appears to be some sort of commission based job/sales as you say your income is down 30%.
2. You state that you have children in daycare. Where are they going to attend K-12? Will it be a public school or are they already slotted for a New England prep school?
I don’t have children…but I didn’t mind paying taxes when I was a homeowner, of which a portion went to the public school system. In fact, I’d be willing to bet that if more parents took an active role in their child’s education (rather than being gone 6 months out of the year chasing the almighty dollar…or whatever it is parents might do that prevents them from involving themselves) perhaps we wouldn’t be taxed so much for education and the kids might actually learn rather than memorize. (Of course, there is too much pork in education with fancy-shmancy foyers and granite countered reception areas in so many schools across America.)
3. You have insurance. Have you had any claims? If you get into an accident (auto insurance), your house burns down (homeowners insurance), get cancer (health insurance)…did the premiums you paid cover your losses or were your losses borne by the greater group of insureds through their premiums?
What if you or a family member becomes seriously disabled? I guess you can take care of them on a $250k salary…but what about the 97% of Americans that aren’t so lucky? How about the ones at the bottom who need help the most? I guess http://www.Dignitas.ch can take care of that pesky disability problem eh?
Sounds like insurance of any type is a form of Socialism/Communism.
Perhaps you might want to consider canceling your policies? Think of the savings!
Why would your kids need coverage anyways? Doesn’t “an apple a day” work?
Why would you even want to buy into such a nasty socialistic program?
If you ever happen to be hit by an uninsured motorist who doesn’t have two pennies to rub together you’ll be glad there are some things that others are willing to pony up for in order to help you out.
Herman » Feb 23, 2009 at 3:33 am
Sorry EconE, we’re at the end of the line. I’ll leave it to the ghosts to sort out the fact from the fiction.
As for your other question, I don’t think you can equate participation in private insurance policies to government. We do that of our own free will in due consideration of risk vs. cost. Government has its own motivations for controlling, er, I mean insuring us.
I have to say, the bubble crowd really surprised me tonight. I thought this was an intellectual and libertarian-leaning blog. Not so.
Many posts today demanded that we contribute to the level of our ability, and many more demanded that they receive according to their need.
Great discussion, nonetheless.
98115_Renter » Feb 23, 2009 at 8:30 am
By Herman @ 100:
This is where your argument is most flawed. You are given the opportunity to be as wealthy as you claim to be. You are given free education for your children, safe roads to drive on, a police force and fire protection, military protection of the system that allows you to make your money, and far more. Yet you claim that you get nothing for your hard earned tax dollars. That’s becuase you take this country for granted.
Unless you want to live in Antigua or somewhere crazy, your taxes would be higher in almost any industrialized nation.
98115_Renter » Feb 23, 2009 at 8:38 am
By David Losh @ 88:
RE: David Losh @ 88 – RE: David Losh @ 88 – RE: 98115_Renter @ 113 –
Trust me, many of us do complain about the extreme inefficiency of our health care system. It’s a complete drain on the economy.
PS, why don’t more pro-housing deflation people demand an end to the mortgage interest deduction? This is just one more blantant bubble inflater IMO.
Tim » Feb 23, 2009 at 9:12 am
“From the US I get nothing but threats and put-downs. Instead I have to put up with some of you lot with your hands out telling me it’s not enough and I should be thankful, and by the way screw you. We messed up and Herman you’ve got to pay for it.”
Wow, you just come across as a huge tool. But if it makes you feel better, please accept my heartfelt thanks for paying your taxes Herman. I don’t know where we’d be without you.
Tim » Feb 23, 2009 at 9:15 am
Whoops, my comment above was in regard to this statement:
For what I pay in taxes, I should get at least a thank you note and a gift basket from the American Taxpayer every year. I’m one of the government’s best (paying) customers. When I get back from a trip, I should be greeted at customs with a “Thank you for your support and patronage of our system, Mr. Herman. We appreciate your hard work and contribution.”
Jbeans » Feb 23, 2009 at 9:30 am
By Nick @ 64:
Curious — have you ever lived and worked outside of the US? The notion that you are just going to up and leave to work elsewhere is pretty naive. Let’s assume that you want to live in a first-world country, with access to good health care, education, food supply, transportation, etc. First, good luck getting a job — you’d better have a unique set of skills that can’t easily be found in a citizen of that country, otherwise you won’t get a work permit. No work permit, no job. No job, no residency permit. Unless you are independently wealthy (and can prove it), most countries will not allow you to take up residence without a job. And if you do happen to secure a job that pays enough to live a lifestyle similar to what you enjoy in the US, you’ll be paying more tax than you do here (and not just income tax — sales taxes are far higher in many other countries, and some countries have a wealth tax above and beyond income tax).
And then there’s the cultural aspect of trying to work in another country. How are your foreign language skills? How do you feel about it taking three times as long to accomplish anything as you are used to? Try working where workers have FAR more rights than they do here (good luck firing that guy who drinks on his lunch hour and takes a sick day once a week — and if you do manage to get him fired, enjoy paying him six to nine months’ worth of salary for the privilege of getting to do so).
I’m not saying that people cannot and do not successfully expatriate from the US, but to think that you are going to simply decamp for greener pastures is foolish.
I’m sure you’ve gathered that I have some experience living/working outside the US. I’d do it again — for all the stress and frustration, it was still worth it and there is much to love and appreciate (and learn) about other systems of government and other cultures. But perhaps the greatest gift I gained from the years I spent outside the US was a more objective view of what it is like to be American and to live in this country. I don’t believe you would find what you are looking for anywhere else.
Nick » Feb 23, 2009 at 10:14 am
By Jbeans @ 117:
I have not worked outside the US to-date, and I’m sure it’s a difficult process to emigrate. There will come a point, though, where even people like myself will be forced to look for greener pastures. While I don’t want to understate the difficulty in finding and moving into such pastures (if it was easy, most productive people would be gone already), there will come a point where it’s a decision between keeping up the good fight against impossible odds Dagny-style, or striking out on one’s own Galt-style; and I’d like to think at that point I would not continue to provide the sanction of the victim. Or, to put it a less noble way, there will come a point where I’m sick of being told it’s patriotic to give all my hard-earned wealth to the looters so they can squander it and denounce me as “rich scum”, and giving them the proverbial finger will be worth the necessary sacrifices.
Of course, if we could just get all the voters to really understand why socialism doesn’t work, and get all the socialist idiots away from the controls of the country, the whole unfortunate end-game might be preventable. It’s my hope that in some small part, blogging about it and trying to educate people, if even a tiny bit, might help sway the country away from that path. Expatriation might be a painful but necessary last-step as the country disintegrates, but as Capt. Malcolm Reynolds might say, “it’s not exactly Plan A”.
Interloper » Feb 23, 2009 at 10:24 am
50% from peak is a realistic possibility for Seattle.
But if 50% is gonna happen, we’ll see it elsewhere first, such as the Case Shiller 10 & 20 city indexes.
98115_Renter » Feb 23, 2009 at 10:36 am
RE: Nick @ 118 –
It’s funny how the minority political viewpoint talks about emigration whenever they are not in power. Many liberals claimed to want to leave (and some did) under republican control from 2000-2006, and now we are hearing about conservatives wanting to leave. I remember hearling lots of conservative voices shouting “love it or leave it” back then. I’m not saying that, nor would I ever, but threats to leave the country because you don’t like the current politics are nothing new, and will probably pass in time.
The same as with current taxation, people seem to have a short-term view of everything, and even less knowledge of the tax structures of the rest of the developed world.
vermillionsky » Feb 23, 2009 at 11:05 am
RE: 98115_Renter @ 120 –
I agree with you there. I think these bailouts are a wasteful debt burden to leave to future generations, but I’m not going anywhere. I’ve traveled a lot outside the US, although I’ve only lived one summer abroad, and I’m extremely grateful for what we have here, even when I think the government is making mistakes.
Who knows what situation we’ll be in if a true depression hits (sorry folks, we’re not even close right now.. ask your grandparents how bad things were during the great depression.. my grandmother hoarded jars of lard for decades, just in case she needed to make her own soap again someday). However, our political/economic situation would have to get a lot worse before I would consider jumping ship.
SeattleMoose » Feb 23, 2009 at 12:04 pm
50% off peak is “in the bag”……
Eleua » Feb 23, 2009 at 1:11 pm
80% off is in the bag. We are just deciding if we are going to get the full 90%
Jbeans » Feb 23, 2009 at 5:28 pm
By Nick @ 118:
Can you name some countries you see as “greener pastures”? Where do you think you can live productively and pay lower tax rates than the US?
I have heard the newest version of Godwin’s law is based on Ayn Rand. It certainly seems to be the rallying cry of late.
cheapseats » Feb 23, 2009 at 5:53 pm
Herman,
I largely agree with most of your Libertarian leaning posts. But I have no interest in bringing it into this blog. Sometimes I get caught up, but I have been trying to limit my interactions here to Seattle RE relevant topics… Just saying that you might not be as alone as you think…
David Losh » Feb 23, 2009 at 6:42 pm
RE: Jbeans @ 124 –
The difference in greener pasture countries is the black money economy. You pay according to who is in control of your little corner of the world. You pay or die. It’s simple and straight forward.
Here in the United States you have the ability to be in control of your little world. We have guns, are allowed by law to have guns, and can use guns according to a specific set of rules. Shoot for the feet or knee caps if you’re wondering.
As Herman points out we can make as much or as little money as we choose. What I was pointing out is that you choose to pay taxes or you can build up your expenses, or buy more hard assets. Amway anyone?
This is a great country to be a maverick. I’ve been a lot of places, really enjoy the Third World, but for fun, excitement, and security I love America.
john talbott » Feb 23, 2009 at 7:56 pm
I was impressed that my posting caused 130 responses, until I read them. Why can’t we all just get along? What is it about blogging that people seem to lose it, while they maintain their civility all day long off line? Is it the anonymity? Is it that the other person can’t punch you in the nose? The definition of moral behavior is doing what is right, even when you know there will be no adverse consequences to you.
It all concerns me, because as long as we fight amongst ourselves we will never get together to retake our country from corrupt politicians and bankers. They are hoping you continue your squabbling and snide comments. While they steal your tax money and go the bank.
EconE » Feb 23, 2009 at 9:36 pm
RE: john talbott @ 127 –
You read every response?
Welcome to Seattle Bubble. We’re pretty good at uh…getting off topic.
:^)
Mark » Feb 23, 2009 at 10:55 pm
Herman, my sincerist appologies for my harsh language.
I do get tired of listening to people complain about taxes, feeling that they are being taken advantage of and that others are somehow reaping some big windfall.
I’ll contrast a friend and myself:
My wife and I both work.
Friend works, wife doesn’t.
Me 1 child put through public school.
Friend puts 3 children through public school.
My wife and I own 3 homes because we have worked and saved. We live in 1 and rent the other 2. No mortgage on any of them. Just got our tax bill a couple of days ago that totaled $9897.
Friend has a home that he is still paying for pays around $2500 per year in property taxes.
I have served in the U.S. Army.
Friend believes in a strong military but has never served.
Since my wife and I both work we also get the opportunity to pay more in taxes to support the military. This concept can be applied to everything else that the gov. spends our tax dollars on.
Friend had a son that passed away a little over a year ago. The 3 grandchildren are now collecting over $2K per month from Socialist Security. They are also attending public schools. The state contributes around $7300 per year, per student, of our tax money to educate them. We’re talking around $50K per year for these children of public funds.
Maybe we can agree that this is a moral failing on their part and all they need to do is work a bit harder and pull themselves up by their bootstraps.
Anyway, long story short, my friend doesn’t consider himself a socialist, and in fact despises that concept. The reality of life is, is that he and his consume a great deal of public resources, and he and his contribute very little.
Most of the low tax, small government whiners that I know fit this profile. I consider them to be little more than hogs at the public trough that are very protective of that trough thinking themselves to be the only ones worthy of feeding at that trough.
I’ve seen that same sort attitude with regards to the military. These people are big believers in a strong military and support the wars. Yet they and theirs don’t serve and are bitter as hell that they have to pay for it. They consider themselves to be heros because they go shopping and might have a support the troops bumper sticker.
Most of the low tax, small government crowd that I know are nothing more than hypocrites.
David Losh » Feb 23, 2009 at 11:20 pm
RE: john talbott @ 127 –
This is what getting along looks like.
I’m grateful to be able to come here and say a little piece or a lot as the case may be.
Ray Pepper was run off other blogs, but found himself a place here and it has turned out alright.
What about sniglet? Or Eleua? Starting out they were way out there and now they seem normal.
It’s a learning curve.
It’s a good and beautiful thing.
lostinballard » Feb 24, 2009 at 12:26 am
So I’ve been lurking for some time now… don’t flame too much.
With the doom and gloom out there… some real and some not, and well some is still TBD, I’m wondering what the best course of action is. I bought a home in Ballard in early ‘05… and have since made numerous changes to the home, i.e. new electr., plumbing, media room, another full bath, laundry, new kitchen, added 800 sq. ft of livable space, etc… list goes on. I’m now of the feeling that should homes prices revert back from 50% off peak, it will be a LLLLLLLLOOOOOOONG time before I might even see a potential return. The home is currently listed; however I’m pulling this week. What’s a guy to do… should I start not making my monthly mortgage payments, let the bank take it… take the foreclosure hit… and then buy back in after 5-7 years, after my credit mends itself, after saving 5-7 years.. and become a renter during those years? I guessing I may end up owing much more than the house will ever be worth for the foreseeable future. I should add, I’m not at risk of losing the house currently… unless of course I become laid-off, and deplete my cash reserves. Am I crazy here?
David Losh » Feb 24, 2009 at 7:55 am
RE: lostinballard @ 131 -
You have cash in the work done.
Hold until something happens. Trying to out think your lender or the market place is a losing proposition.
You already spent the money, it would be smart to pay more now at least until next September. The end of this spring selling season will set the entire market place in stone.
Congress is debating “cram downs” on Thursday and it may change the way banks think about values.
Also see if you can have a roomate in the mean time. Something is better than nothing.
lostinballard » Feb 24, 2009 at 1:21 pm
RE: David Losh @ 132 –
I’m not really at risk of losing the home… just more thinking aloud at this point. This of course assumes I don’t get laid off and or burn thru my cash reserves at the same time. I suppose w/ my above scenarios there are some moral hazards to consider as well.
Ira sacharoff » Feb 24, 2009 at 2:25 pm
By lostinballard @ 133:
I completely agree with David on this ( hey, it happens)..
You bought the house in ‘05 rather than 07, so that protects you to some degree, and you’ve lived in the home for almost four years? Are you comfortable living in it? Does it feel like home? Can you currently afford the payments without a lot of strain? If you kept your job, would you feel the urge to move for any other reason?
If all that’s true, then you have to consider just how bad do you truly think things are going to get.
Like David said, the improvements to your house that you’ve made is money already spent, and likely added some value to your house.
If you think that prices are going to bottom another 10% down from here, then it’s probably not worth it to sell, rent another place, and then buy in a few years.
I’ve been an investor in stocks for 15+ years, and I’ve made some mistakes along the way. One of them has been to wait too long to sell as a stock is falling in price, or sell just before the danged thing rebounds., or trade too frequently.
I’m not suggesting that the housing market is anything like that.
My personal opinion is that we’ve already seen between 1/2 and 2/3 of the total price decline we’re going to see. But I’ve been wrong before.
SandyK » Feb 24, 2009 at 3:08 pm
1. Do you like the house? Would you prefer to live there vs. elsewhere, and you are just worried about getting left holding the bag at some future point?
If you have a job, no trouble making payments and are just worried about the future, then I would say you are part of a large club. Some in your club might be choosing to sell at this time, but they may be being very short sighted. The reality is that as Dave Losh points out, you are quite a bit of money into this thing already. 5 years of 30 down, or 1/6 of the way towards a paid off mortgage.
I know we are not used to thinking in these terms anymore but when one buys a house it’s a long-term proposition. It will always cost more than renting an equivalent home, but at the end of your mortgage term, you will own it outright. There’s benefit to that. You’re paying not just for the value you get out of it today (place to live, etc.) but also the future value of owning it. I think a lot of people are acting kind of hastily worried about today, tomorrow and the next couple of years, and are costing themselves over the long run 5, 10 or 15 years from now. I can’t blame anyone for thinking this way – it’s scary times we are living in – but living and making decisions out of fear means you will almost always be running with the herd, which is the surest way there is of losing money.
Dave » May 27, 2009 at 10:15 am
RE: Kary L. Krismer @ 9 –
Many people cannot run Vista, Word 2003 is complicated and 99 % of users do not use 99 % of the features loaded on it.