By The Tim on August 24, 2009
Here is your open thread for Monday August 24th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Posted in Open Thread | Tagged open_thread
Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.
Scotsman – Would you be surprised by this scenario:
1) The debt of the US grows but so the revenues from taxes and GDP in the future. At some point the govt spending is cut so that the GDP grows more than debt. As such the debt issue becomes smaller and smaller.
2) Because the US economy is based on innovation – innovations start happening creating more GDP growth. The velocity of money increases.
3) The US expands monetary base so that to keep finances and banks healthier
4) Developing countries such as China or India get richer and as such generate some demand for US goods. US exports also go up. Companies such as google start exporting like crazy to those countries.
Overall health of world economy goes up. And we do a big milestone in pushing 3rd world countries to become industrialized nations. The world then becomes a better place to live in general without privelaged and non privelaged countries. The only issue left to tackle will be African countries where govts do not allow economies to grow and rouge states like North Korea or Belarus.
And then Seattle as a desirable place to live – keeps real estate high and brings nice rewards to home owners. But to correct mistakes from the past it will still bring a bit of losses to current home owners but if home owners plan to stay in Seattle for the next 20 years then it will not be a biggie anyways.
Whoa Trigger that may be a little much for a Monday morning that has a chill in the air.
I agree. The factor that most people in this country over look is developing economies. They just want to look at European markets. They look at Hong Kong as the market place of Asia and Asia is a huge sprawling cash economy.
In all the excitement I forgot that I was looking at foriegn economies before the credit crisis. Credit crisis, credit crisis, what does that really mean? Does that mean some body gave me money? I forget how that works. Some body gave me money, I spent it, it’s in the economy, but when I pay them back I’m supposed to give them more than I borrowed. It’s the more than I borrowed part that gets confusing. If a lender gets the money back why do they need more than I borrowed? Is it a givesies no take backs kind of rule? What says you get a return on your investment? I think it says there are risks involved. Let’s just leave this little block of wishful thinking alone.
Global economies, in most countries, deal with goods that are sold in the market place. All the investor dollars are what the Europeans are hoping for.
So it begins- It’s hard to have a recovery when incomes are shrinking.
Social Security announces that there won’t be any cost of living increases for the next two years. Seniors should love that.
http://news.yahoo.com/s/ap/20090823/ap_on_go_ot/us_social_security_smaller_checks
RE: Trigger @ 1 –
Complete fantasy, starting with your first point. When has that ever happened? There are no incentives in our political system for representatives to even balance the budget, let alone cut spending. And if they actually did, the first response of the economy would be to contract, reducing tax revenues. We need a different system with new incentives and restrictions before any of your scenario can come true.
The only “innovation” that would turn this economy around would be an endless supply of low cost energy, say, something like nuclear. And that isn’t going to happen. Let me know when we can even begin that discussion without everybody freaking out.
RE: Scotsman @ 4 –
Building on the point about energy and innovation, there can only be so much innovation the primary sources of energy become constrained. Like people leveraging money to buy houses, there is also leverage in energy. The phrase is Energy Return On Energy Invested (EROEI). Early oil fields were close to the surface on land and under pressure. For those, it was common to extract 100 barrels after expending just one-barrel’s worth of energy. 100:1 is a sweet return on the investment.
Today, conventional crude production is in terminal decline because the big oil fields are going dry. The replacements are things Canadian oil sands with a 6:1 EROEI or deep-sea oil with an 8:1 return. The reason that oil and gas are generally becoming more is expensive is the declining production of conventional sources and the worsening EROEI for substitutes.
I am convinced that turbulence in the energy markets over the next few years will dwarf the problems that housing has created in finance. Innovating new software or airplane design will only take the economy so far as the cost of daily needs like food and local transportation escalate to reflect the increasing cost of energy.
BIG!
Let’s talk big because that’s what America wants, they want big companies, BIG, I tell you, the bigger the better. BIG companies like Wal Mart bring us everything at a reduced cost. Big is better. The bigger a bank gets the better. The bigger energy gets the better. Nuclear is big stuff and we like big. Nuclear is really big so it must be better, like big oil is better.
Why do we have three auto companies and two airplane companies, oh wait, we only have one airplane company because the other one is in France. The one big airplane company bought the other airplane company in this country so it must be better.
I have a question about home heating. Why do we buy boilers from Germany, and why are they so expensive? Why can’t we heat for less? Why is electricity so expensive? Why are solar panels so expensive? Do we have to have wind farms to have wind turbine technology?
Can we operate smaller more efficient technologies that require less personal investment?
Where does this fantasy come from that there is an infinite amount of resources and energy to have the world population living the lifestyle we so take for granted?
RE: Slumlord @ 5 –
Agreed- great points. While I’m sure they will come, I don’t see any innovation “saving” us or the economy for some time. Industrial revolutions, computers and communications technology, these sorts of things only come around every couple of hundred years or so. Applications for nanno-tec may be the next thing, but it’s a long ways off, expensive, and probably best put into play in an economy that already has excess capital to fund it. That’s not now.
RE: Scotsman @ 3 – It seems that keeping SS flat for two years won’t really lead to seniors having less purchasing power, though. With contraction, the prices of many goods/services are either flat or dropping. They don’t need cost of living increases if the cost of living isn’t increasing =)
Sure, we can run national health care better than the current system. Trust us. Or is this the latest ploy in cost containment? Who wants hemlock!?
http://jammiewearingfool.blogspot.com/2009/08/more-government-efficiency-1200-vets.html
RE: Scotsman @ 10 – It’s not like private providers never make mistakes.
That said, I’m not really liking any of the health care proposals. For one thing, putting them though based on claims of future cost savings is rather unconvincing.
The only proposal I’ve liked is to make health insurance mandatory for everyone, while not allowing the insurers to adjust rates for age but perhaps allowing people to go into medicare at a slightly earlier age. That system would be a great benefit to those who are older right now, sort of like how SS was when it went into effect. But if the system was maintained into the future, those younger who would pay more now would eventually pay less. The only people to lose out would be those who die early.
RE: dancingeek @ 9 –
Perhaps- but I’d bet the average “market basket” of purchases by seniors may not be accurately reflected in the current CPI calculation. Since medical services/products and additional private insurance are typically high on senior’s priorities they may be hit with more price increases than we know. I’ll admit to not being able to state that with any certainty though.
I do think it’s interesting/positive that the government is willing to take this cost control step. A plus for the administration.
RE: Scotsman @ 10 –
Oh yeah! The free market can handle it! The private sector runs like clockwork!
http://www.tgdaily.com/content/view/43559/181/
RE: Kary L. Krismer @ 11 –
The government will never be able to control costs by increasing efficiency. It will control costs by refusing to pay them- setting a budget line and sticking to it. That will in turn force rationing and a host of related distortions.
Where in the constitution does it say I have to buy health insurance? Where does it say I even have to take care of my health? It’s curious how “far” we’ve come.
I noticed just now that Zillow has stopped listing a “Zestimate” for a house in Seattle that I’ve been watching as something of a bellwether, and has added a new item called “Tax Assesor’s [sic] Value” that wasn’t in the display last Friday.
The “Zestimate” is now listed as “N/A” (not available).
For this particular house, the Zestimate had been sinking gradually, and on Friday it was about $510,000.
According to the Zillow display today, the tax assessor’s value is about $545,000.
Any ideas why Zillow might have made this change in their display?
Thanks,
dydx
RE: Scotsman @ 14 – The Constitution is only relevant if it says (someway) that the government cannot force you to buy health insurance.
As a practical matter, those without health insurance are just as big of a burden on society as those without auto insurance, because if they get sick, the rest of us have to pay.
By Kary L. Krismer @ 16:
Which part of the Constitution gives the federal government the power to make us do anything it wants, except for a few explicit prohibitions, which are mostly ignored anyway? The whole purpose of the Revolution was to prevent that kind of power.
The Constitution says Public Welfare.
The health care debate is over. Your dinky little private insurance company will fold at the first sign of trouble. Disease is global. Swine flu is now a global issue in a matter of a year. Private health insurance is the next bail out waiting to happen. As a matter of fact you are talking about banks having toxic asset, private health insurance is ten times worse. They can not pay for an epidemic or pandemic. They have too few resources.
The research and development will have to be done by governments anyway. It is a matter of global importance rather than national security. That’s a dead discussion, let’s move on to energy.
NUCLEAR! It’s got to be big I tell you!!!! Energy is a BIG issue. We will never survive without oil. OIL is BIG business so we have to pay attention to the OIL industry. We need it, have to have it, there are no alternatives unless we have government controlled NUCLEAR energy. It’s so BIG we have to have the government build it. So it’s really BIG!
Here’s what I like in this debate. We can’t trust government to handle health care but we can turn over control of nuclear energy.
The point is that in 1974 a guy remodeled a house, one of seven projects, so that it’s energy bill was $60 a year. Energy can be as small as a wind mill in the back yard. Every little bit helps.
By David Losh @ 18:
We remodeled our old house in 1996. It had baseboard heat and I was looking at moving to forced air gas. The gas line was only three houses down, but the gas company wanted $7,000 just for the line. Our electric bill at the time was only $75 a month, so it didn’t make sense. I think by the time we moved in 2007, it was about $225 a month.
By jon @ 17:
Exactly. So people who can’t afford health insurance now will be forced to buy it. I’m sure they’ll be very appreciative when they can’t make rent or put food on the table. At least with auto insurance or home insurance (don’t get me started on those being mandatory either) someone has the choice to not own it, however inconvenient it may be. With health there is no choice. It’s basically a breathing tax, paid to the insurance companies.
“Public welfare” does not give the government a blank check, and certainly doesn’t negate the rest of the Constitution or its intent.
By Kary L. Krismer @ 16:
Except that’s exactly the opposite of what the 10th Amendment says:
That’s pretty explicit. If a power is not specifically described by the constitution as belonging to the federal government, they don’t have it. Sadly, a series of court cases over the years have made the 10th Amendment pretty much entirely meaningless. But it is right there in plain English. Just because one doesn’t like it doesn’t mean it ceases to exist.
RE: Kary L. Krismer @ 19 –
The gas line is another boon doggle altogether.
He did it with glass panels, and solar tubes, something you don’t hear about any more. The houses are as ugly as sin. There is one in Maple Leaf that has the southern glass design. Then you have the hot water solar collectors with a small oil boiler. The place was kept a constant seventy two degrees. The top window panels opened in the summer and the open floor design made circulating the heat easier.
The problem is lighting. That was his biggest expense. Water was collected year around in a cistern system for the toilets.
If he would have had the solar panels we have today he would almost be self contained.
So there is apparently a $1000 fine for not having health insurance under the planned implementation. So if someone can’t afford health insurance, I doubt they can’t afford a $1000 fine. Does that mean they will go to jail? For not having insurance? And when do they plan to check if someone has insurance? If it’s at the hospital, be prepared for people not going to the hospital when they get injured/sick. Kinda increases the mortality of poor people. Or is the government planning to dig into everyone’s lives to make sure they have it? Then fine or jail? This whole things reeks.
Has anyone else noticed that Zillow is tossing out recent sales as comparable in their models?
Seems like every time I look at a house that has sold recently, the price has that little asterisk by it indicating they are not using that price in their calculation.
I think Zillow was generally too low with their Zestimates on the way up and now seems to be generally too high on the way down. I guess that is the nature of these sorts of models – that they tend to miss inflection points.
RE: Lake Hills Renter @ 20 –
Public Welfare is a protection. It’s called a protection of the Constitution.
When did health get to be regulated by the government?
Why is the government allowed to regulate drugs that grow wild. Marijuana, Coca, and Opium are all medicines, they are drugs, like alcohol is a drug.
Why can the government say that tobacco, which is a drug, is not a health risk and claim other drugs are?
Why do we have the system of medicine that we are allowed to have, and other medical treatment is bad. Vitamins are bad, medicine prescribed by a doctor is good. Nutrition, health and fitness bad, but the doctor is good.
Why?
Why does the Constitution protect doctors and not the patient.
Doctors kill people every day. the medical community is profit driven. People are made sick and are dying by our for profit system. We need protection from these animals.
Even if we didn’t desperately need protection, the for profit health insurance system is losing money. That’s why premiums go up so much. They can’t keep up. It’s a bail out in the making the same as banks, and auto., but worse, because people are dying from it.
But, hey, it’s big business, and we love big business.
Walking away from investment condos in Seattle:
I sold my house in early 2008 and had been renting a nice new condo in downtown Seattle. The landlord was an investor and had purchased several condos in Seattle (Cosmo, 5th and Madison, etc.). I noticed that he’s defaulted on several of them recently. Notice of Trustee sales on 3 units in the past month. Luckily I moved out several months ago. One of the units looks like it was refinanced in February and he never made a single payment on the new loan! Another unit (my old one) was rented out **after** he stopped making payments. The new tenants must have come home one day and found the NTS on the door.
Someone can go to jail for stealing a candy bar, but not this??
RE: deejayoh @ 24 –
You must have missed the change in business model. Zillow is selling mortgages. They have always wanted high values to get you to cash out, or refinance at the 80/20%.
Their in the mortgage business.
You will also see they are pushing Real Estate agents on you. Go to Zillow, get a great rate, and Real Estate agent to boot. Next redfin and Zillow will merge and you will get a rebate!!!
It’s good for the consumer, get on board.
By David Losh @ 25:
I don’t think the government should regulate those things. And there’s a big difference between the government saying someone can’t own something (drugs, etc) and saying they MUST own something (health care) if owning it requires me to pay for it. It’s the equivalent of saying I have to pay to not be able to grow marijuana.
RE: The Tim @ 21 –
I’m pretty sure the tenth is one of the “living, breathing” parts of the constitution. ;-)
RE: Lake Hills Renter @ 20 –
I agree that people should be forced to buy health insurance, or be fined. A breathing tax, if you will. People have a choice to not drive cars. I guess they have a choice to not live too. The alternative is that I pay for their health care when they inevitably need it–that’s unacceptable to me.
This goes to a larger issue. Right now there are back-to-school donation programs, as usual. I take exception to this. Why should people’s kids be subsidized if the parents are wasting money on other stuff? Every adult, before they are given a handout, should be screened and monitored to make sure they really need it. For example, if someone says they can’t afford health insurance then the gov’t should review their circumstances to make sure they really can’t lift their arms. If indeed they can lift their arms then they can be made to do gov’t work to pay for their health insurance, or else be put in jail. The gov’t should also prevent the rich from becoming insanely richer, so that everyone who can lift their arms can afford health insurance without working more than 40 hours per week. [/rant]
RE: Lake Hills Renter @ 28 –
I don’t look at it that way. I look at military spending. We have the best equiped and trained standing army in the world. We’re not allowed to have it, we should be prohibited from invading foriegn soil, but hey, it’s a glitch in the Constitution so why not. It’s in the interest of National Security.
An armed police force, we pay for, with tax dollars. Department of Commerce, Agriculture, Weights and Measures, it’s all tax dollars and what do I get?
I get big banks, an auto industry that is the big three, heath for profit, and an airplane company that decides when they will produce a product and what they want to charge. Hey, it’s National Security.
I get a big soft ware programming company that is so big there is no competition so I pay what they want. I pay for air time, or cable, or radio, or television, or any other government subsidized program.
We subsidize agriculture, chocolate, breakfast cereal and cheese. We pay for roads, air ports, and port facilities all so other big businesses can make a living. What do i get? I get carp from China because we have a side deal with them for the substandard products.
What do i get? What do you get? By all means let’s not get health care.
RE: The Tim @ 21 –
Well it says “not delegated”, not “not specifically delegated”. What’s delegated is open to interpretation. One thing to realize is that the Constitution is a living document, according to the document itself. That means that the Constitution is really the Supreme Court’s interpretation of it at all times. Is it impossible for them to contradict the Constitution, regardless how they rule, according to the document itself. If they rule that a power is not the states’ to have, then that’s what the Constitution says, regardless what the document says.
RE: Markor @ 32 – Fundamental to the notion of being a nation based on laws is that the laws are written and agreed upon. If it doesn’t matter what is written, then we are no longer a nation of laws. What the Constitution says matters, and the if the Supreme Court attempted to say something plainly not in accord with the written Constitution, they would be subject to impeachment and removal from office by the Senate.
RE: jon @ 33 –
Sure. But their ruling would remain constitutional (not necessarily enforced) until the new members of the court changed it.
The Constitution outlines a system of government. You either believe in it our not. it’s a personal choice. Let’s remeber it was a reaction to a foriegn power governing from afar.
There have been debates every step of the way, with every new territory, new state, new acquisition. Is the government to far removed from the People? Do we have the right to impose our will on foriegn soil?
Here’s what it says to me: there are a collective group of people who govern themselves. We have the right to provide for the common defence and are charged with the duty to promote the Public Welfare.
After that it tells us how.
There is nothing in there about big banks, insurance companies, or auto makers. Promoting the Public Welfare is.
Now a lot of people want to avoid that duty. They want to avoid the duty of common defense and promoting Public Welfare. They are unAmerican. They may be vocal but it is our duty to defend the American Way of life from these people. I will chose to establish Justice and secure the Blessings of Liberty.
Liberty is first:
a. The condition of being free from restriction or control.
b. The right and power to act, believe, or express oneself in a manner of one’s own choosing.
c. The condition of being physically and legally free from confinement, servitude, or forced labor
Second:
2. Freedom from unjust or undue governmental control.
Lastly:
3. A right or immunity to engage in certain actions without control or interference
Private enterprise has taken the role of monarchies. Corporations have restricted or freedoms,curtailed our expression. and forced us into labor. Debt is servitude.
We need to remove government powers that keep free enterprise in the hands of a very few.
Lastly we need to be proactive in eliminating a common enemy of monopolies in health, technology, finance, and agriculture.
Read the gosh darn Constitution before you quote it.
On the insurance comment, I wouldn’t favor everyone having “normal” insurance. That’s part of what’s driving up health care costs. I was thinking more of the government requiring everyone to have at least high deductible coverage, similar to how now the government only requires low levels of auto liability insurance. The cost for a $5,000 deductible policy would be relatively low.
RE: DrShort @ 26 – If someone refi’d and didn’t make pmt #1, that is bad bad bad. It would be ripe for further investigating: borrower, loan originator, appraiser etc…
RE: S-Crow @ 37 – And just to follow up on that, buyer’s agent.
When there are fraudulent schemes, often the same players are involved in numerous transactions. It’s possible that some of them are innocent, but they’ll get caught up too.
It’s actually one of the things I worry about always using some of the same people on transactions. I use them because I know they’re good, but what if they’re doing things on other transactions I don’t know about? That happens in law firms where partners do things their other partners don’t know about, and they’re typically in the same office and could easily know, or at least have the means of knowing!
I think you’ll see some of this in the future in the area of short sales. Not necessarily fraud, but agents getting drug into lawsuits due to who they associated with.
RE: David Losh @ 35 – “We need to remove government powers that keep free enterprise in the hands of a very few. Lastly we need to be proactive in eliminating a common enemy of monopolies in health, technology, finance, and agriculture. ”
AMEN!
IMHO accessible/affordable health care (public option anyone) would help. How much easier would it be to leave your job and start a small business if health insurance was not an issue.
And I know the response to the public option – “no more big government, socialism, yadda yadda” unfortunately the BUSINESS of health care cannot or is not willing to offer the most competitive prices. And for those worried about the cost/taxes of a reformed system: you are already paying for the uninsured every time someone visits the emergency room and can’t pay for the services. Those visits are by far the most expensive to provide, a much more efficient system would provide preventative care to all.
Full disclosure: My mom teaches ethics at a nursing school so this has been a topic of conversation at the dinner table for approximately 30 years for me. I can’t help but step up on the soap box!
RE: Betsy @ 39 –
Flying cars are another great idea- they just never seem to work out. ;-)