Weekend Open Thread (2010-02-05)

Here is your open thread for the weekend beginning Friday February 5th, 2010. 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!


About The Tim

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

118 comments:

  1. 1
    Jillayne says:

    The_Tim,

    What did you decide to do with the domain name?

    I was thinking that Seattle Bubble might still fit if we begin to see signs of a shadow inventory bubble like what they’re seeing in Orange County.

    http://mortgage.freedomblogging.com/2010/02/04/is-ocs-shadow-inventory-growing/25723/

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  2. 2
    The Tim says:

    RE: Jillayne @ 1 – For right now I’m keeping it.

    In other news, in the cheap laughs spirit of http://icanhascheezburger.com/ and http://thereifixedit.com/, I give you http://youforgotaletter.com/

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  3. 3

    Unemployment Down to 9.7%?

    Does this likely mean that last November’s 14-20 week extension has run dry for a bunch of chronic unemployed; as they join the “ghost unemployed” [not counted] ranks:

    Article in part, came out about 14 weeks ago:

    “…The latest extension of unemployment benefits couldn’t come at a better time, it seems; President Barack Obama signed legislation into law Friday providing an additional 14 to 20 weeks of benefits for those who have already exhausted theirs or will do so by year-end….”

    http://blogs.wsj.com/economics/2009/11/06/unemployment-extension-adds-up-to-99-weeks-of-benefits/tab/article/

    And what about the approx 2 million they omitted from the 2008-2009-2010 unemployment count in error, why hasn’t that corrected the unemployment rate numbers yet?

    Liars.

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  4. 4

    There were almost 500,000 new claims last week. That’s still a pretty high level.

    Rate this comment: Thumb up 0

  5. 5
    pfft says:

    Less people lossing their jobs.
    Unemployment rate coming down.

    Things are get better.

    Rate this comment: Thumb up 0

  6. 6
    Scotsman says:

    Statistics and statistical models are not the same as reality. From the same report here are the total number employed and the percentage of the labor force employed, a different story:

    http://market-ticker.org/uploads/2010/Feb/employed.png

    http://market-ticker.org/uploads/2010/Feb/participation.png

    Sorry, there is no good news here except a misleading headline number for the mainstream press to report. You are being manipulated. Who would have thought that the number unemployed and the number employed would not add up to the total workforce?

    It takes employeed people to pay taxes, buy goods, and drive the economy back to health. That number continues to drop.

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  7. 7
    pfft says:

    By Scotsman @ 6:

    Statistics and statistical models are not the same as reality. From the same report here are the total number employed and the percentage of the labor force employed, a different story:

    http://market-ticker.org/uploads/2010/Feb/employed.png

    http://market-ticker.org/uploads/2010/Feb/participation.png

    Sorry, there is no good news here except a misleading headline number for the mainstream press to report. You are being manipulated. Who would have thought that the number unemployed and the number employed would not add up to the total workforce?

    It takes employeed people to pay taxes, buy goods, and drive the economy back to health. That number continues to drop.

    the thing is the numbers are always(mostly) calculated that way. the fact is the recession is over. the unemployment rate is coming down. how do you get out of a recession and into the recovery? first the recession has to be over. check. then the unemployment rate comes down. check.

    via calcualed risk

    http://4.bp.blogspot.com/_pMscxxELHEg/S2wfrjhrFRI/AAAAAAAAHcE/G0sLLe_FUK4/s1600-h/EmploymentMeasuresJan2010.jpg

    If you want an actual economists take look to krugman.

    Jobs Are Up! I Mean Down! Whatever …
    http://krugman.blogs.nytimes.com/2010/02/05/jobs-are-up-i-mean-down-whatever/

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  8. 8

    RE: Scotsman @ 6

    Exactly Scotsman

    Stock investors aren’t getting fooled by the BS smoke and mirror unemployment report either; stocks are plummetting again today below DOW 9900 because of horrifying snow-balling unemployment worsening with no end in sight.

    Do they think we’re all morons? LOL

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  9. 9
    AMS says:

    RE: softwarengineer @ 8 – Is the market like housing? The deals just keep getting better?

    “The Dow breached not just one key level today but two — falling below 9,900 — as worries about the recovery and Europe’s debt woes made investors skittish.”

    Buy now or forever be priced out?

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  10. 10
    patient says:

    RE: softwarengineer @ 8 – “Do they think we’re all morons?” Yes they do, or at least the majority of us. However it seems like this whole illusion of a recovery that they have built on national debt and half truths is starting to get some cracks in it. It’s a nightmare for the gov. that sovreign debt, foreign and our own is now the main focus of investors. I wonder what plan is brewing to move the headlines in another direction? A hostage situation for example is a popular way for the gov.to show leadership, win popularity and get people to rally behind the gov and forget about the debt for a while.

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  11. 11

    RE: AMS @ 9

    Yeah, Like Inflation is Another One of Those Lagging Indicators….LOL

    Are employment/inflation lagging indicators like Valentine Cupid Arrows, they poke ya in the rear….LOL

    “…Demand for safer investments rose as stocks tumbled. The dollar rose again Friday, while Treasury bond prices inched higher. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 3.58 percent from 3.61 percent.

    Gold prices fell. Oil fell $2.40 to $70.74 a barrel on the New York Mercantile Exchange….”

    http://finance.yahoo.com/news/Stocks-fall-on-mixed-jobs-apf-3414941666.html?x=0&sec=topStories&pos=main&asset=&ccode=

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  12. 12
    AMS says:

    RE: softwarengineer @ 11 – The Freshmen

    “We fell through the ice when we tried not to slip.”

    -The Verve Pipe

    http://www.youtube.com/watch?v=7hxe85iErew

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  13. 13
    pfft says:

    By softwarengineer @ 8:

    RE: Scotsman @ 6

    Exactly Scotsman

    Stock investors aren’t getting fooled by the BS smoke and mirror unemployment report either; stocks are plummetting again today below DOW 9900 because of horrifying snow-balling unemployment worsening with no end in sight.

    Do they think we’re all morons? LOL

    I thought the market was tumbling because of greece?

    the unemployment rate is coming down.

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  14. 14
    pfft says:

    By patient @ 10:

    RE: softwarengineer @ 8 – “Do they think weâ��re all morons?” Yes they do, or at least the majority of us. However it seems like this whole illusion of a recovery that they have built on national debt and half truths is starting to get some cracks in it. It’s a nightmare for the gov. that sovreign debt, foreign and our own is now the main focus of investors. I wonder what plan is brewing to move the headlines in another direction? A hostage situation for example is a popular way for the gov.to show leadership, win popularity and get people to rally behind the gov and forget about the debt for a while.

    the national debt is not that high. it’s not even close to an all-time high as a percentage of GDP.

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  15. 15
    AMS says:

    Remember the days when any seller could suggest he’d just sell the house to another, better buyer? Many buyer’s financing was pre-approved, buyers were waiving inspections, and a appraisal was essentially a rubber stamp from the dime store.

    During this period the threat that an individual buyer would be paying a higher interest rate suggested that one buyer would be impacted, and maybe not able to buy the great opportunity. Another willing and able buyer, who had a slightly better credit score was standing in line with foam at the mouth.

    What are we seeing today? If rates go up, do you think buyers will simply be willing to pay higher payments?

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  16. 16
    AMS says:

    More on those Arrow driver’s who were left stranded just before Christmas and were promised $200 to turn in the truck to the finance company, now Daimler Truck Financial is refusing to pay.

    “Now it appears that Daimler Truck Financial, owner of Arrow’s Freightliner and Kenworth trucks, is reneging on its commitment to drivers to compensate them $200 or a bus ticket home if they turned in their trucks at the nearest Freightliner or Kenworth dealer.”

    http://www.tulsaworld.com/news/article.aspx?subjectid=14&articleid=20100205_54_A1_Arrowt32556&rss_lnk=11

    In regards to unpaid medical expenses, “There was a closet that had a waist-high stack of bills and claims in it,” said one former employee, who asked to remain anonymous. “We worked for several days to add up the amount and came up with $650,000. We were told to not put all the claims on the books at once because it would not look good.”

    http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20100202_11_A1_ArrowT673299&archive=yes

    I suspect the problem is that so many expect things to improve. There is no problem. Everything will be ok. So they plan accordingly, just as the Doss family did. Once the failure happens, it’s catastrophic.

    The show must go on…

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  17. 17
    pfft says:

    By softwarengineer @ 8:

    RE: Scotsman @ 6

    Exactly Scotsman

    Stock investors aren’t getting fooled by the BS smoke and mirror unemployment report either; stocks are plummetting again today below DOW 9900 because of horrifying snow-balling unemployment worsening with no end in sight.

    Do they think we’re all morons? LOL

    it’s about 4:13 and the market closes UP!

    bearfail!

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  18. 18
    AMS says:

    RE: pfft @ 17 – Down all day, sometimes over 150 points (~1.5%), but finishes essentially equal, and that’s called “bearfail!”

    lol

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  19. 19
    Scotsman says:

    RE: pfft @ 13

    The unemployment rate is a statistical fiction. The one number that counts is the total number of people employed. These are the folks that pay taxes and buy stuff- 72% of our economy. And that number is falling. Take a look at this chart again until you understand it:

    http://market-ticker.org/uploads/2010/Feb/participation.png

    Even a fifth grader knows there are two parts of a fraction- the numerator and the denominator. The government’s approach to unemployment statistics shrinks the denominator faster than the numerator so it looks like unemployment is falling. It isn’t. There are more people unemployed now than there have been for a long time, and their numbers are increasing. You can put your fingers in your ears and scream “LA LA La LA La” all you want, but it won’t change reality.

    If you can’t be intellectually honest, what’s the point of having a discussion?

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  20. 20
    AMS says:

    RE: Scotsman @ 19 – “The government’s approach to unemployment statistics shrinks the denominator faster than the numerator so it looks like unemployment is falling.”

    To shrink a fraction it’s the other way around:

    …shrinks the numerator faster than the denominator…

    And the limit of this should be zero.

    In other words, the government (BLS) is quicker to exclude people from unemployed than to exclude them from the employment base.

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  21. 21

    Here’s What’s Wrong With Stocks for 2010 in a Month Long Nutshell:

    G Fund F Fund C Fund S Fund I Fund
    January 2010 0.29% 1.54% (3.60)% (2.43)% (5.17)%
    Year-to-date 0.29% 1.54% (3.60)% (2.43)% (5.17)%

    BTW, C/S/I are all stock funds, G is MM and F is Bonds

    Day to day trending is interesting and I note it too [you short day sellers/buyers can gamble away, but don’t cry to me if you lose your shirts some days too; LOL], but month to month and year to yaer generally put money or take money out of your 401Ks.

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  22. 22
    Scotsman says:

    RE: AMS @ 20

    Right, but they aren’t shrinking the absolute value, i.e. unemployment is dropping. By not counting those who have given up, i.e. shrinking the number of potentially employable folks (denominator) the absolute value increases. Too many double negatives, or I didn’t clearly define the terms, but I stand by the statement. Read it again?

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  23. 23

    RE: AMS @ 20

    Maybe We Should Just Outsource all of America’s Ghost Unemployed

    They oviously have irritated all the recession/depression bottom callers for the last decade and we don’t want to contradict their rosy predictions with horrifying hoards of Americans.

    Hades, the we can replace then with cheaper in-source labor that Greenspan/Bernanke says is good for the economy….LOL

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  24. 24
  25. 25
    AMS says:

    RE: Scotsman @ 22 – Let’s drop “absolute value” as the unemployment rate is always greater than zero.

    Numerator is the people who are unemployed
    Denominator is total work force

    Both “unemployed” and “total work force” are according to the BLS definition.

    Some things reduce both, such as a person who no longer seeks work. This person is no longer in the work force AND no longer unemployed. Since our fraction is always less than 1 and greater than 0, the numerator is being reduced faster than the denominator.

    Other factors only affect one or the other.

    Numerator only: Someone who was previously counted as unemployed is no longer unemployed.

    Denominator only: Someone who was employed is no longer counted as employed or unemployed.

    With all this in mind, re-reading your original statement is simply written wrong: “The government’s approach to unemployment statistics shrinks the denominator faster than the numerator so it looks like unemployment is falling.”

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  26. 26
    pfft says:

    By AMS @ 18:

    RE: pfft @ 17 – Down all day, sometimes over 150 points (~1.5%), but finishes essentially equal, and that’s called “bearfail!”

    lol

    read what I quoted.

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  27. 27
    AMS says:

    RE: pfft @ 26 – So it all has to happen in a day’s time?

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  28. 28
    pfft says:

    By Scotsman @ 19:

    RE: pfft @ 13

    The unemployment rate is a statistical fiction. The one number that counts is the total number of people employed. These are the folks that pay taxes and buy stuff- 72% of our economy. And that number is falling. Take a look at this chart again until you understand it:

    http://market-ticker.org/uploads/2010/Feb/participation.png

    Even a fifth grader knows there are two parts of a fraction- the numerator and the denominator. The government’s approach to unemployment statistics shrinks the denominator faster than the numerator so it looks like unemployment is falling. It isn’t. There are more people unemployed now than there have been for a long time, and their numbers are increasing. You can put your fingers in your ears and scream “LA LA La LA La” all you want, but it won’t change reality.

    If you can’t be intellectually honest, what’s the point of having a discussion?

    I don’t think you get it. a falling unemployment rate is a good thing and a sign of recovery. the unemployment rate has probably always had the quirk that you talk about. I could go back to every time the unemployment rate fell after a recession(we are out of recession) and the same argument you made will probably be true. however, falling unemployment rate after a recession is good thing.

    http://4.bp.blogspot.com/_pMscxxELHEg/S2wfrjhrFRI/AAAAAAAAHcE/G0sLLe_FUK4/s1600-h/EmploymentMeasuresJan2010.jpg

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  29. 29
  30. 30
    pfft says:

    By AMS @ 27:

    RE: pfft @ 26 – So it all has to happen in a day’s time?

    I responded to a specific quote, that’s all.

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  31. 31
    Scotsman says:

    RE: AMS @ 25

    No, if we’re shrinking both, the numerator is the number employed, as referenced in the links I posted. The denominator is the number counted in the labor force. The unemployment rate is 1 minus the calculated fraction. If the available labor pool (denominator) shrinks faster than the number employed (numerator, also shrinking) and the result is subtracted from 1 the “unemployment rate (as opposed to the employment rate) goes up. Since I referenced both halves of the fraction shrinking, it makes sense to see it as employed labor over available labor. Your seeing it as the more commonly reported number makes sense, but it wasn’t what I was trying to explain. Clear?

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  32. 32
    AMS says:

    RE: Scotsman @ 31 – “The unemployment rate is 1 minus the calculated fraction.”

    Your rates of change might still have problems, but it’s clear.

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  33. 33
  34. 34
    Scotsman says:

    RE: pfft @ 28

    No, I don';t think you get it. The unemployment rate isn’t really falling. There is a smaller percentage of the population employed than at any time since 2004, and the number is continuing to fall. But there are so many folks who have just given up looking for work that they aren’t counted any more, so it looks like the unemployment rate has fallen. Smoke and mirrors.

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  35. 35
    AMS says:

    RE: Scotsman @ 34 – Simply put, unemployed people who are no longer looking for work are not part of the work force, so the published unemployment rate goes down (improves).

    (Also to be counted as unemployed you must be in the work force.)

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  36. 36
    Scotsman says:

    RE: pfft @ 14

    Debt isn’t that high? Sure, your mastercard isn’t that bad, but when we add on the other 12 cards, the car payments, the mortgage, it gets a bit overwhelming. Here’s a quick summary from Nate’s site I linked up above- it includes all the debt- federal, state, local, consumer, commercial, npv of entitlements. etc. that we workers- the only real income in the system, have to pay. Note how just the interest @ 5% is close to the average wage:

    “By the end of 2011, each man, woman, and newborn child will be responsible to service $321,283 in debt. Each worker in the United States will be responsible to service $704,530! For the four working members of my family, that is an obligation of more than $2.8 million. Just the interest on $704,530 at 5%, JUST THE INTEREST, is $35,266 per year! That’s getting up toward what an average worker earns, just for the interest, no principle included!

    And you think we can work or grow our way out of this? That’s delusion- just the interest will consume everything this country makes. We are headed for a serious depression at some relatively near point in the future.

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  37. 37
    AMS says:

    RE: Scotsman @ 31 – I know why I went the unemployment direction.

    “The government’s approach to unemployment statistics shrinks the denominator faster than the numerator so it looks like unemployment is falling.”

    How about:

    “The government’s approach to employment statistics shrinks the denominator faster than the numerator so it looks like employment rate is rising while participation is falling.”

    Note: Participation falling includes both raw count and rate.

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  38. 38
    AMS says:

    RE: Scotsman @ 36 – pfft always talks in terms of debt in percent of GDP. You are talking in terms of debt per person, or family.

    If we expect personal incomes (and GDP) to significantly rise in dollar terms, then it might not be so bad.

    The income in dollar terms can rise based on productivity or inflation. If we are entering a deflationary period of low productivity, then that’s the worst possible situation to pay debt back.

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  39. 39
    Scotsman says:

    RE: AMS @ 37

    That works- I should have made it clear that I was more focused on both raw employed and raw employable falling, confusing when compared with the more traditional presentation of focusing on those who are simply out of work as a percentage of the population. The main issue is I don’t type well, so lengthy but more complete explanations tend to not happen. ;-)

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  40. 40
    Scotsman says:

    RE: AMS @ 38

    Yup. I think it makes it easier to see how deep the chocolate is when it’s compared to personal incomes. Percentages don’t mean that much to most folks since they have no basis for comparison in their daily lives.

    But go back and look at the numbers and think about it. With just the interest expense consuming almost all of the average worker’s pay at current levels, we have to grow the economy by 4 or 5 fold to get things back into scale. And we’re going to crash before that ever has a chance to happen.

    Here’s what I see happening. The feds will continue to force interest rates down through QE and various other schemes that are in effect printing. These efforts will buffer the inherent deflation that is going on, keeping us on a somewhat even path. But eventually the bond market will wake up, interest rates will rise, and those with debt, most notably the feds, will be caught. Government will strike a balance between cutting entitlements and open printing to bring back a balanced budget. But the printing will destroy the currency, bringing inflation in the face of ever more reduced federal spending,leading to a second and final “balanced” phase where our standard of living slowly continues to decline. In 10-20 years we’ll hit bottom and start to rebuild, hopefully with a balanced budget amendment and a restructured banking system that precludes the same from happening again. That last part is probably a dream. ;-)

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  41. 41
    AMS says:

    RE: Scotsman @ 39 – Just for fun, I’m going to re-present this with the ratios you chose. How about:

    the raw employed is falling [=Numerator]
    the raw employable is falling faster [=Denominator]
    yet the total population continues to grow. [=larger Denominator]

    (Hopefully it goes without saying that all employed are part of the employable which are all part of the total population.)

    The employment rate, and complementary unemployment rate, is derived from the first two lines. The number who are not working for some reason is growing, even if the published unemployment rate is falling.

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  42. 42
    Scotsman says:

    RE: AMS @ 41RE: AMS @ 41

    I would say the second line, the raw employable, is actually growing because the population is growing. But when calculating the unemployment number the government comes up with a fourth possibility, those who are looking for work, and have been doing so for less than 6 months. It only makes sense to a government bureaucrat.

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  43. 43
    AMS says:

    RE: Scotsman @ 42 – I was trying to use the original, “The government’s approach to unemployment statistics shrinks the denominator faster than the numerator so it looks like unemployment is falling.”

    This is important enough that I will have to think this over and get the presentation right. Getting the concept right is only 50%.

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  44. 44
    pfft says:

    By Scotsman @ 34:

    RE: pfft @ 28

    No, I don';t think you get it. The unemployment rate isn’t really falling. There is a smaller percentage of the population employed than at any time since 2004, and the number is continuing to fall. But there are so many folks who have just given up looking for work that they aren’t counted any more, so it looks like the unemployment rate has fallen. Smoke and mirrors.

    no it is not smoke and mirrors. the unemployment rate is calculated the same(as far as I know) as in past recessions. in the past when we have a recovery the rate falls. all things are equal as compared to past recessions. the unemployment situation is getting better. we are basically losing no jobs. the economy is recovering.

    Jobs Are Up! I Mean Down! Whatever …
    http://krugman.blogs.nytimes.com/2010/02/05/jobs-are-up-i-mean-down-whatever/

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  45. 45
    pfft says:

    By The Tim @ 29:

    By pfft @ 17:
    it’s about 4:13 and the market closes UP!

    bearfail!

    http://www.zerohedge.com/article/thank-you-jpmorgan-must-see-jpms-etf-desk-ramps-market-higher-close

    who cares?

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  46. 46
    pfft says:

    By Scotsman @ 36:

    RE: pfft @ 14

    Debt isn’t that high? Sure, your mastercard isn’t that bad, but when we add on the other 12 cards, the car payments, the mortgage, it gets a bit overwhelming. Here’s a quick summary from Nate’s site I linked up above- it includes all the debt- federal, state, local, consumer, commercial, npv of entitlements. etc. that we workers- the only real income in the system, have to pay. Note how just the interest @ 5% is close to the average wage:

    “By the end of 2011, each man, woman, and newborn child will be responsible to service $321,283 in debt. Each worker in the United States will be responsible to service $704,530! For the four working members of my family, that is an obligation of more than $2.8 million. Just the interest on $704,530 at 5%, JUST THE INTEREST, is $35,266 per year! Thatâ��s getting up toward what an average worker earns, just for the interest, no principle included!

    And you think we can work or grow our way out of this? That’s delusion- just the interest will consume everything this country makes. We are headed for a serious depression at some relatively near point in the future.

    I don’t know if you noticed but we just had a serious recession.

    how could interest possibly consumer everything this country makes. we are a $11 or $12 trillion dollar economy. the interest payment as a percentage of gdp will be back to where we were under HW bush. that’s 3.5%.

    “Debt isn’t that high? Sure, your mastercard isn’t that bad, but when we add on the other 12 cards, the car payments, the mortgage, it gets a bit overwhelming.”

    the national debt is not high. we have had higher national debts as a % of GDP as have other lesser nations and they have done ok. besides private sector borrowing collapsed about the same amount as gov’t borrowing increase.

    here is how we will work our way out. businesses will start hiring because they cut too much during the recession. the savings rate rocketed higher so there will be pent-up demand. the stock market has risen so there is the wealth effect from that. housing will start going up soon so we will have the wealth effect from that. as the dollar falls we will export more(and add jobs) to the rapidly growing emerging markets.

    are corporations included in those per family calculations of our national debt? am I missing something?

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  47. 47
    Scotsman says:

    RE: pfft @ 46

    ” am I missing something?”

    No, everything is fine. Carry on.

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  48. 48
    Scotsman says:

    The Great Crash:

    “Simply returning to the bloated budget of George Bush’s final year would require a historically unprecedented cut of over 15% in total government spending. The budget President Obama just submitted would swell the federal workforce to over two million. Trimming it back to where Bush left it would put half a million people out of work. Correcting this ruinous course will be an achievement unlike any the world has ever seen. The world has also never seen anything like the crash that awaits us if we fail.”

    http://www.doczero.org/2010/02/the-great-crash/

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  49. 49
    Pegasus says:

    pfft @ 46

    Are you on crack or catfood?

    The market was pumped without real investors for the most part. The housing market is being pumped by tax credits and artificially low mortgage rates subsidized by the American worker who ran out of credit three years ago. The bankers are not held to reporting their real financial shape. Are you a complete idiot? Bet you voted for Bozo Senator Murray didntcha? Better go back to watching American Idol while you miss America fading into oblivion.

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  50. 50
    David Losh says:

    RE: pfft @ 44

    If you read the news story rather than the opinion page you would see the Census is hiring. I went on about this last year and no one cared, but this year the Census is taking up the unemployment slack. It is the largest mobilization of man power out side of war time. Oops we have a couple of wars going on also.

    We have a problem with the government spending, but that can be fixed by doing away with the Reagan tax cuts, after the Bush tax cuts expire. We need to tax the wealthy in this country because that trickle down never trickled.

    We were lied to and cheated. We paid our share, more than our fair share, so that the wealthy could make more than we can even imagine.

    I don’t understand why the American people want to give money to Bill Gates, Warren Buffet, or the Waltons. They make dollar volume and should be taxed on that volume. Saying it’s too much is ridiculous. The only way we all make money is to have a solvent government. If you want to give them tax breaks again in the future great, go ahead, but for now they are the only ones with our money.

    Let me also point out that these same people are losing wealth by having our government on shaky ground. If we come out solvent, stronger, and more economically viable we would all make more money.

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  51. 51
    AMS says:

    RE: David Losh @ 50 – What happen to Rosie?

    Did she kick you to the curb? She can do it!

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  52. 52
    pfft says:

    By Scotsman @ 47:

    RE: pfft @ 46

    ” am I missing something?”

    No, everything is fine. Carry on.

    no I get it. about 15 indicators are all flashing recovery. I listen to the market. I listen to the data.

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  53. 53
    AMS says:

    RE: Scotsman @ 39 – This is tough, as the question is “Who is available for work?” There are plenty of people who want work, but have given up. In some way, this gets to the headline U-3 number versus U-6 issue.

    That said, let me rework this a bit:

    the raw employed (falling)
    the raw employable by government count (falling faster)
    the raw employable by in the population (growing) (*)
    the total population (growing)

    *This is the difficult number to agree on. What can we say if someone is not looking for work? Are they employable or not? Yes, we know that there are plenty of auto workers in Detroit that are very frustrated, and a few have given up. We also know that there are those “workers” who work a few hours a week part time that are counted as employed. We should be able to agree that it includes all those the government counts, plus some more.

    These categories are contained within each other, with the top being potentially smaller than the last. Those who are employed are also employable, and in the total population.

    Is this getting closer?

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  54. 54
    AMS says:

    RE: pfft @ 52 – Did I ever mention how I find contrary investment theory very interesting? There are reasons why I find it so interesting. lol

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  55. 55
    AMS says:

    Unofficial problem bank list update:

    “There were eight additions this week including … The Cowlitz Bank, Longview, WA ($578 million, Ticker: CWLZ)…”

    http://www.calculatedriskblog.com/2010/02/unofficial-problem-bank-list-increases.html

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  56. 56
    pfft says:

    By Pegasus @ 49:

    pfft @ 46

    Are you on crack or catfood?

    The market was pumped without real investors for the most part. The housing market is being pumped by tax credits and artificially low mortgage rates subsidized by the American worker who ran out of credit three years ago. The bankers are not held to reporting their real financial shape. Are you a complete idiot? Bet you voted for Bozo Senator Murray didntcha? Better go back to watching American Idol while you miss America fading into oblivion.

    the stock market is pumped? maybe it’s just going up and you don’t know why? if by real investors you mean the average joe is sitting out, that’s a bullish sign. the average joe(retail investor) puts money in before the top and takes money out at the bottom. the retail investor piled into bonds in 2009. the rally from march 2009 was a normal rally out of a panic.

    the housing market knows about the tax credit so it’s already priced it in. why would anyone buy a house solely because of a tax credit if their job was in jeopardy? the consumer is not out of credit. credit is readily available and banks are lending. lending is down only because people don’t want to borrow, not because the banks aren’t lending. governments often intervene when things are really bad. their very involvement can often be signs of a bottom. what happened in march of 2009? wasn’t that when bank of america and citi recieved aid?

    you people need to respect the market and the market has coming roaring back. the data says things are getting bettter.

    via calculated risk

    http://4.bp.blogspot.com/_pMscxxELHEg/S1cGF8dn73I/AAAAAAAAHSc/sgQQbstfmKI/s1600-h/HousingStartsDec.jpg

    http://3.bp.blogspot.com/_pMscxxELHEg/S1X0DCJ7XiI/AAAAAAAAHSE/enl_2BYEqiA/s1600-h/NAHBJan2019.jpg

    http://4.bp.blogspot.com/_pMscxxELHEg/S1X5zbUrjkI/AAAAAAAAHSU/IPKFTIIh7gM/s1600-h/ABIDec2009.jpg

    http://1.bp.blogspot.com/_pMscxxELHEg/S1hYDzyj2gI/AAAAAAAAHTU/poKzdj7KNsM/s1600-h/WeeklyClaimsJan16.jpg

    http://4.bp.blogspot.com/_pMscxxELHEg/SpQGwkeLKqI/AAAAAAAAGNM/62ss6l4UIAQ/s1600-h/PhillyFedStateJuly2009.jpg

    http://4.bp.blogspot.com/_pMscxxELHEg/S1daWqiUeqI/AAAAAAAAHS0/YRf8or0zPus/s1600-h/VehicleMilesNov2009.jpg

    http://1.bp.blogspot.com/_pMscxxELHEg/S0x68dFBReI/AAAAAAAAHPQ/bDUnnoQz-Uw/s1600-h/TradeBalanceNov.jpg

    http://4.bp.blogspot.com/_pMscxxELHEg/S2wfrjhrFRI/AAAAAAAAHcE/G0sLLe_FUK4/s1600-h/EmploymentMeasuresJan2010.jpg

    http://1.bp.blogspot.com/_pMscxxELHEg/S2xms0TLljI/AAAAAAAAHc0/tunJuQXTaYg/s1600-h/DiffusionIndexJan2010.jpg

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  57. 57
    pfft says:

    By AMS @ 54:

    RE: pfft @ 52 – Did I ever mention how I find contrary investment theory very interesting? There are reasons why I find it so interesting. lol

    contrarians can often be too early or never get in at all.

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  58. 58
    Scotsman says:

    RE: AMS @ 53
    That sounds about right. This chart (link at the bottom) really captures all of our discussion in one picture- the percentage of the total population that is employed. I had an older one that went back to 1960- it was interesting to watch labor force participation rise as more and more women entered the work force, peaking in about 1980 as I recall. Since then it moved up and down with the economy until about 1999 when this current chart starts. As you can see, it’s been a steady decline since then thanks to outsourcing and a series of downturns that we never seem to be able to recover from. The current number of folks unemployed for 26 weeks or more is at an all time high. One thing that has been particularly striking about the last decade is that if you lose your job there is an excellent chance you will never get it back. This is the one number that counts- not the unemployment rate, etc.

    http://market-ticker.org/uploads/2010/Feb/participation.png

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  59. 59
    AMS says:

    RE: pfft @ 57 – just like non-contrarians.

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  60. 60
    buystocks says:

    RE: pfft @ 56
    Seriously, I think the frequency of your posts are directly correlated with market bull rallies. You have already agreed were in a secular bear market, so still not sure why you keep trying to use the “market” as proof of anything. What do you think of the pronounced market volatility lately; is that a leading indicator of a healthy market; you sound like you have it all figured out; an engineer perhaps? lol.

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  61. 61
    Cheap South says:

    Blah, blah…. The sky has been falling for 2 years now; and once the stimulus runs out, will continue its free fall. There is no World War to save us this time; and any half ass developing country is eating our lunch. Anyone that has not been drinking the kool aid could have seen this coming for the past 30 years. Our population is lazy and most can’t even name the leaders of our two neighboring countries; heck, they can’t even find themselves on a freaking world map; period!! Now, let’s move on.

    Real Estate has collapsed in most high priced markets but only dropped in Seattle. Nobody has a job; but in Seattle we still want $150-$250 /sq.ft.

    Any thoughts??

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  62. 62
    Pegasus says:

    pfft @ 56
    I am surprised you don’t interject your posts with saying or signing them with “baa baaaah”. It is obvious that you are just another sheep awaiting your annual shearing by the fraudsters and liars. Oh look! Here comes one of those pesky sheepdogs now to hasten your arrival in the haircut line. Tell me how you can operate any bank if the commercial real estate values have plummeted 40 percent and those mortgages that you value at 100 percent are really worth what? Will we design another taxpayer scam to stabilize that market to give away tax credits in the trillions of dollars in money that does exist yet but will have to be repaid? Looks like you have moved up to the front of the line now. Don’t be scared. With a sheep like you, you will surely be shorn every year with the newest and latest tales of greenshoots sprouting everywhere.

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  63. 63
    David Losh says:

    RE: AMS @ 51

    The picture is of a banker referenced in a pfft comment. Would you borrow money from this man?

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  64. 64
    David Losh says:

    RE: Pegasus @ 62RE: Cheap South @ 61

    A Recession is a terrible thing to waste.

    We are the ones paying the debt. pfft is absolutely correct that banks are actively looking for suckers to make loans to. People are lining up to refinance, reaffirming the debts that they have. The stock market is in a bubble. but if you look there are probably some bargains in there. Retail investors are probably sitting out the volatility.

    So the sheep are the true believes that the sky is falling.

    We owe more than our homes are worth so we can walk away or pay it off. You chose. We can keep going to the same job and hope our employer will give us a pay check or you can look for opportunities else where. The world is a big place. If you want to sit hope, and pray, you’re out of luck.

    Do what you have to make money, pay down your debt, and buy what opportunities come your way. What are you going to do today to make some money? That is what you’re talking about, isn’t it?

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  65. 65
    AMS says:

    A few days ago I was looking at listings, and many of the listings described the properties as being both “short” and “fixer.” My thoughts at that time, and today, is that these “fixer” properties would have been fixed with new appliances about three years ago.

    Today I have been looking at a different class of listings, and I have noticed that some are still listing price reductions. For example, one suggested, “$225K price reduction.”

    Now I’ll be honest, I’ve never really understood price reductions. The message to me is clear: The place was originally overpriced, and had I paid the asking price, I’d have paid too much.

    I’ll sell you my $15k car for $25k. It’s not selling so well at $25k, so I’ll advertise, “$5k price reduction” and try to sell my $15k car for $20k. Next I’ll advertise “$10k price reduction” and price close fair market value. Does it really matter if I asked $10k too much?

    Clearly I was not thinking about this correctly. So I had to ask, What would the typical buyer of this property think?

    Let me start with it’s really difficult for me to fully understand how other people think. There are times when I have asked for explanations about why someone took a certain action. In many cases I have more questions than answers after being provided an explanation.

    I have also discussed there was a time when basically any asking price would be paid. In message #15, above, I wrote:

    “Remember the days when any seller could suggest he’d just sell the house to another, better buyer? Many buyer’s financing was pre-approved, buyers were waiving inspections, and a appraisal was essentially a rubber stamp from the dime store.”

    Why was the appraisal essentially a rubber stamp from the dime store?

    With home prices going up 15%-20% per year, if an appraisal was a little generous on the day written, it’d only take a day or two before it was accurate.

    Getting back to the “price reduced” idea.

    After outlining my thoughts about the place being overpriced, the conclusion that I came up with is that there is an assumption that someone would have paid the original price. Basically there is the idea that someone would have bought for the original asking price, but the price reduction is being made to sell sooner. It’s like suggesting my car really is worth $25k, but I’ll sell it at $20k for a quicker sale, although I’d be lucky to get $15k.

    I should add, however, that the direction of housing prices should be considered. If prices are going up, then it’s only a matter of time before the asking price is going to be realized. In a flat market, it’s only a matter of pricing the home to market. In a down market, someone could reduce prices by the same rate, or slower, than the market is declining and never sell. For example if the market is going down by 10% per year, but the price reduction is 5% per year, the place will always be over priced, no matter how long or how much the price reduction mounts to.

    Note: 1. Debt is of no consequence. Imagine if debt was part of a buyer’s decision process. It’d be a game of running up debt on the asset to add value.
    2. This reminds me, in large part, of a proof by induction without a base. Alternatively, the base is the other inflated homes, which were valued based on the other inflated homes without a base. Where is the starting point?
    3. Home builders, who start with cash, buy land, materials, labor, and produce homes, calculate costs starting from the ground up, realize increase profits from higher profits. Not surprising these ever increasing profits attracted many small firms to enter, including flippers. These firms increasingly compete for the buyers, which are become scarcer and scarcer relative to the ever increasing supply, which eventually eliminates the excess profits from the industry.

    In any event, when I see “price reduction,” I still read, “was over priced by.”

    I’d love to hear your thoughts on this matter.

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  66. 66
    AMS says:

    RE: David Losh @ 63 – How much cash from the “instant equity” will I walk away with?

    lol.

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  67. 67
    Pegasus says:

    David @ 64
    I am not saying money can not be made in any enviroment. What I am saying is that the average American citizen is worse off than they were two years ago and they will be worse off in two more years. How do I know that? Take a look at Japan whom we are now directly following in their footsteps. We are worse off then they were when their problems started because their citizens had savings unlike us. Twenty years plus later and they are still on the path of doom and it gets worse daily for them. I have grown very weary of the cheerleaders who keep saying things are getting better now. They are NOT! The ones singing this false story of hope are either liars or idiots. Which one are you?

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  68. 68
    mukoh says:

    RE: AMS @ 66 – To dave everything has a face. I don’t care what the banker looks like. As long as what I get is green.

    The things that have changed really is people who could be broke but look good and buy homes are now looking broke, feeling broke and really being broke.

    As far as taxes. Dave you definately are in LaLa land. Or your company and your own finances are not in a bracket where 30%+ gets topped off by the feds then 1-5% gets chopped off by WA. And then when you get paid dividends off already taxed income you get to hit another 30% to the fed.
    I personaly “love” it. Great big check going out to the uncle tomorrow.

    Your whole banter never makes sense as none of it is in real world. It is imaginary.

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  69. 69
    David Losh says:

    RE: Pegasus @ 67

    I’m pretty stupid. My business has grown this past year and we have another venture that would make more money. My problem is that I’m just not smart enough to keep track of everything we have going on. There is tons of money in the economy of the United states and many people are getting bogged down in the macro economic issues that don’t really concern them.

    Are you a banker? Global financier? Are you in the government? Are you making decisions that will change the world on a global scale? All you can do is concentrate on your business, make as much as you can, and invest well.

    That’s how stupid I am. This recession means i have to work. After this recession I will retire again.

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  70. 70
    David Losh says:

    RE: mukoh @ 68

    Talk about not making sense.

    Let me try to follow you on this. You are paying taxes, and you’re happy to send in your tax payment. So basically you don’t make enough money not to pay taxes, and some how that’s a great thing.

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  71. 71
    AMS says:

    RE: David Losh @ 69 – In all fairness, there are plenty of people who are getting kicked around bad. Detroit has a published unemployment rate of 25%. Nationwide teenagers are not doing so well.

    Sure there will be some that make out well, but that only suggests that there are others taking a bigger hit.

    This is like the REALTOR commissions. When the market goes down, and sales go down, some REALTORs will increase their business, but that only means that others are taking the hit.

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  72. 72
    AMS says:

    RE: mukoh @ 68 – In regards to taxes, that 30% federal bracket, plus 1-5% state, is exactly where I suggest that if someone wants to maximize tax benefits, why not let the person in the highest bracket own. It seems so many hands are grabbing at 15 cents on the dollar when there are plenty taxpayers paying 30 cents on the dollar. Oh, that’s right, there is no chance that rents are reduced by the higher tax benefits. No chance.

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  73. 73

    RE: AMS @ 65
    I completely agree. When I see “price reduction” in a listing, I usually think ” It used to be insanely overpriced, now it’s only moderately overpriced.”
    The idea is to make you think you’re getting a bargain, because the listing agent says so. ” Instant equity” is another classic. Why is there instant equity? Because the listing agent says so.
    If you don’t take what listing agents say with a grain ( or a minefull) of salt, maybe you deserve to buy an overpriced house because the listing agent said it was a good deal. A couple of other faves of mine are things like ” Best value in Bellevue.” , and the ” sought after” Earlington neighborhood. Sought after maybe, but not necessarily by people buying homes. Sought after by felons looking for a place to hide out?

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  74. 74
    mukoh says:

    RE: AMS @ 72 – AMS you say it so easy yet you might do this math. Typical 30% of $200k is almost $70k out by April. Thats a lot. $80k median at 15% is only $12k. Seems a bit disproportional at least when that check goes out for $70k. If it was flat 15% would be more fair.

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  75. 75
    Pegasus says:

    David @ 69

    My net worth has also increased the last few years. Big deal. The willful destruction of this country and its inhabitants continues unabated while the masses are fleeced. You said you are too busy to pay attention to or not smart enough to understand macro events while you go about your daily task of making money. Too bad as that really is stupid. If you think that you will continue to be immune to the results of the looting you are sadly mistaken. We will ALL pay at some point. Yes, some more than others but we will all be damaged. Tricking the masses with lies and distortions will not make things all OK.

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  76. 76
    AMS says:

    RE: mukoh @ 74 – Yes, so many $80k income earners grab at the mortgage interest deduction, which requires giving up the standard deduction.

    So ignoring the standard deduction we have 15% of ~$25k in deductible interest, or less than $4k.

    I guess what I should do is figure out the total taxes paid by two people in an owner-occupied situation versus if the two rented to each other. Clearly if the two rented to each other, they’d live in the same homes, yet it should be clear lower taxes would be paid, and thus less total expense for living in the same place.

    All of the above does not address the issue you present, however. That question is whether taxes are too high, or if the progressive system is fair.

    What can I say? We have ever increasing spending, mounting debt, and a lackluster economy. If taxes are lowered, to zero, clearly total tax revenues would go down, and if taxes were increased to 100% total tax revenues would go down. Where is the ideal point to maximize economic activity, and thus tax revenues?

    As far as the progressive tax system, it’s been my personal observation that those with the least means often command a high portion of police costs. Police resources are spend on gangs, who pay no taxes. I’m not suggesting that it’s fair that those who actually pay taxes pay for gangs to be policed, but where else is the money going to come from?

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  77. 77
    mukoh says:

    RE: AMS @ 76 – Have to agree with you there. The last paragraph at least.

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  78. 78
    Scotsman says:

    RE: mukoh @ 68

    “The things that have changed really is people who could be broke but look good and buy homes are now looking broke, feeling broke and really being broke.”

    Can’t argue with that. It is surprising to see who was real and who was faking it though. I’m always surprised.

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  79. 79
    David Losh says:

    RE: Pegasus @ 75

    Are you fooled? Has some one tricked you or are you talking about the other masses?

    There’s money to be made today, and it can be clean money. People need more help today than ever before. What I’m saying is that the damage is done. We are all paying for the damage, right now, today.

    So what’s it going to be? Keep building on what we have, or cry about what we lost?

    I’m going to be less cryptic because my life is an open book. There are probably a hundred business ventures in my community that are under utilized. My thing is that we should shop at our local QFC, Ace Hardware, Macrina Bakery, or 13 Coins Restaurant before we go to Wal Mart, Home Dopey, Krispy Kreme, or Olive Garden. I would also rather give money away than pay taxes.

    There’s plenty to do, plenty of money to be made, but if that money is siphoned off into large corporate entities we will all have less. So if you have a local business promote it. If you shop, shop locally.

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  80. 80
    Jason says:

    RE: AMS @ 76 – Your last paragraph is completely ridiculous. The function of the police in society is to protect those with means from those without. Why do gated communities also employ their own security forces? Is it because the wealthy in those areas are worried about internal crime? No, of course not. It’s to keep the unwashed masses away from them.

    A progressive income tax is completely fair because the richest who pay the largest proportion of income taxes gain from the system which is set up to protect their property and provide a legal framework for their continual enrichment. The nexus of power in this country is populated by the agents for the wealthy and politicians. Just looking at the recent Supreme Court decision which lets corporations and unions spend unlimited funds on federal elections should make you realize that the system is not there to benefit the weakest but the strongest.

    The money to police gangs, pay for national defense, and regulate business should come from the wealthiest because they ultimately benefit from the system the most.

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  81. 81
    Pegasus says:

    Jason @ 80

    We don’t need progressive tax rates. We need laws to make everyone truly equal. We can pass laws saying that anyone with a net worth more than the national medium has to forfeit those assets to those less privledged. That way everyone becomes equal and can be taxed at the same rate. If their income exceeds the medium then they must forfet all of it over the medium. Voila! End of problem. That will surely stimulate everyone to work hard and be productive, eh? Isn’t that what you truly desire? I am sure Senator Murray would vote for it if she was told to. Taking money from some to give to others? What a novel idea!

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  82. 82
    Scotsman says:

    I always love talk about soaking the rich to pay for this or that. What people forget is that 95% of the rich aren’t dumb, and when it looks like they may actually get “soaked” they’ll pick up and leave. The other part of it is that while the rich may have more than the rest of us, if the government took all that they have it wouldn’t be enough to carry the non producers for very long at all.

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  83. 83
    Pegasus says:

    David @ 79

    The problem is the damage is NOT over. It is just beginning. Your thing is shopping at QFC and not at Walmart. Unfortunately the Walmart business plan works better than QFC’s. Why? Cheaper labor and many products produced in other countries at much lower costs. Plus many in the US can’t afford to shop at QFC anymore but they can at Walmart. People look at you funny at QFC cashing unemployment checks and foodstamps but not at Walmart. It’s change you can believe in. Qfc will go out of business as more and more of the “masses” have to shop at Walmart. Someday Kroger will have to reorg and even you David will no longer be able to shop at QFC because it will be closed. Oh…rue the day Dave. It’s coming because you refuse to look at the big picture and how the “masses” are being fleeced and you are too busy to help change it.

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  84. 84
    pfft says:

    By Cheap South @ 61:

    Blah, blah…. The sky has been falling for 2 years now; and once the stimulus runs out, will continue its free fall.

    you’re right, the devastating 6% decline in GDP is a blow from which we’ll never recover. ever.

    I bet many of the people saying “when the stimulus wears offs” were the same people who said it wouldn’t work.

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  85. 85
    pfft says:

    By Pegasus @ 62:

    pfft @ 56
    I am surprised you don’t interject your posts with saying or signing them with “baa baaaah”. It is obvious that you are just another sheep awaiting your annual shearing by the fraudsters and liars. Oh look! Here comes one of those pesky sheepdogs now to hasten your arrival in the haircut line. Tell me how you can operate any bank if the commercial real estate values have plummeted 40 percent and those mortgages that you value at 100 percent are really worth what? Will we design another taxpayer scam to stabilize that market to give away tax credits in the trillions of dollars in money that does exist yet but will have to be repaid? Looks like you have moved up to the front of the line now. Don’t be scared. With a sheep like you, you will surely be shorn every year with the newest and latest tales of greenshoots sprouting everywhere.

    I listen to the fraudsters and liars, but not just the fraudsters and liars. I listen to the market, the fundamentals and the technicals. that’s why I don’t worry about getting sheared. mortgages were written down a years ago. many banks have already paid back tarp money. banks are back to making boatloads of cash. I think CMBS has rallied.

    you guys may not like the green shots beacause it disagrees with your bearish bias but they are there. we’re actually way beyond green shots. we’re out of the recession.

    the only people getting sheared are those who were short or missed out on the 70% rally when we bottomed in the spring of 2009. this is a normal rally off of a bear market.

    the road to recovery
    http://dshort.com/charts/bears/road-to-recovery-large.gif

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  86. 86
    pfft says:

    By Pegasus @ 83:

    David @ 79

    The problem is the damage is NOT over. It is just beginning.

    we had a stock market panic for the ages that took out some of the largest companies in the world and the damage is just getting started? we had one of the longest recessions in decades and after all that it’s just beginning?

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  87. 87
    Pegasus says:

    pfft @ 86

    Yeah it is just beginning. Almost everything is worse than 12 months ago and in 12 more months we will be able to say the same thing. How much more money will be printed that has to be paid back? How many more banks will finally admit they are bankrupt? The mortgages are not written down. Many were purchased with non-existent money ala the FED at above real value to transfer off from their books. Freddie and Fannie Mae have operate with OUR funds issuing mortgages that should never ever be issued. Their delinquent loans are soaring. Who will pay for this fraud? The taxpayer who is out of work , on food stamps or in foreclosure? All of the liabilities are being transferred to the taxpayers who can not ever repay. Social Security will be negative this year. More funds out than in. Medicare has been for years. Where did all of our contributions over our lifespan go? Goverment boondoggles. The only thing that Social Security owns is debt from the Treasury that will be repaid with printed dollars that don’t exist. Welcome to hell!

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  88. 88
    fabuladocet says:

    Somebody needs to get laid. I’m just saying.

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  89. 89
    cheapseats says:

    RE: pfft @ 84 – You really think it worked?

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  90. 90
    AMS says:

    On the $8k & $6.5k tax credit.

    It’s now February 2010. From what I understand, which could be wrong, for 2009 the State of Colorado had a $7k tax credit for purchasing an electric vehicle. In 2010 the tax credit went down to $6k.

    Thus on January 1, 2010 there is a $1,000 issue. What happens?

    Do buyers suddenly pay more?
    Do sellers drop the price $1,000?
    Maybe some other division?

    Maybe selling prices go up, and buyers are suddenly willing to pay more than $1,000 extra?
    Maybe selling prices go down by more than $1,000?

    The income tax credit is essentially the same, but it’s probably a smaller fraction of the price (maximum percent is 10). In any event, the day after the tax credit expires, are first-time buyers suddenly willing to pay an extra $8,000? Will sellers reduce prices suddenly?

    I suspect we are going to see a great deal of friction in the market.

    (To appease some of the pffts here, maybe prices will be going up so fast that $8,000 will be so small that it won’t be missed? Buyers will simply be bidding the properties up, up, up and away. No friction, lots of lube (lol).)

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  91. 91
    AMS says:

    I’m out searching and reading the listings, and what do I see?

    “Close before May 1 and receive an extra 3.5% in closing costs or appliances!”

    That’s one way to ensure that the qualified buyer will qualify for the tax credit. No messing around with time here. Yes, I know that it’s only under contract by May 1, but certainly this eliminates potential problems.

    This makes me wonder, however, in light of the recent conversation about losing earnest money if the buyer walks away, what would happen if a buyer with a relatively low earnest deposit was going to closing on April 30 and decided he wanted a lower price, like $6,000 lower. At this point the other buyers would not qualify for the tax credit, so it’s not like the seller could simply find another buyer, yet did the property suddenly go down in value by $6,000?

    If I were the seller, I’d probably agree to the reduction, but maybe the pffts would be wanting to re-list the property for $12,000 more?

    (I should say, however, that on the typical Seattle home the $6,000 is a relatively small amount of money. On a $1,000,000 home, it’s pocket change, and not worth discussing. I’m really targeting the lower end, say $80,000 homes, where $6,000 is a significant percentage of the cost. There are very few $80,000 homes in the Seattle area, but in other markets, including Vegas, one would have no problem finding plenty of these.)

    Ultimately, I suspect there is going to be a push to get buyers under contract near the tax credit deadline, and closed by the other deadline. At the same time, I expect that diminishing returns will reduce the total impact.

    This year is going to be very interesting.

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  92. 92

    On a new topic, I think, Dori Monson and a few others are pushing the idea of freezing the wages of union state employees. My question is, why do they think that the state has the power to do that? The state would be breaking its own contracts! They’d probably be sued by the unions, lose and then have an unbalanced budget.

    I think the state would be just as likely to have the power to say that on-air radio and TV personalities can only be paid 50% of their contract amounts, and then tax the stations for 70% of those savings.

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  93. 93
    David Losh says:

    RE: Kary L. Krismer @ 92

    Taxation and government workers! Wow! What a thread.

    Number one, a person making $200K paying $70k in taxes is ridiculous. It’s shameful. A person making a million will expense out everything. Probably the best proposal on the table is to give the tax cuts to people who make less than $250K and have a flat tax, without all the deductions, on people making over a million.

    The thing about Washington State workers is a murky issue. Cutting jobs is probably a bad thing. Cutting programs is probably a bad thing because it will cut jobs. I don’t see the State of Washington raising new revenue because they take a lot right now.

    In the past I would have advocated making Washington more attractive to business, give concessions, and negotiate long term investment in the area. Now I’m more inclined to work with the industries we have to make them more profitable.

    In my opinion the State of Washington seems anti business. It’s like if they collect enough taxes and hire enough people that’s all this State needs to be prosperous. It’s like the Socialist roots this State has is all we have left.

    Small business should get a tax break. We have the sales tax and anything the State does to help business make more, hire more, and do more should be encouraged. I for sure would do away with labor and Industries in favor of a workable Health Care system patterned after Group Health. I would revisit the job programs the State offers and make it easier for employers to connect with workers. In my opinion the State is only interested in how much they can squeeze out of an employer. It’s like you’re punished if you employ people. Maybe all States are the same.

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  94. 94
    Racket says:

    We don’t need to lower their salaries, we just need to make them work like everyone else on the planet.

    They all need to be doings tasks vital to their operation.

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  95. 95
    BillE says:

    I used to like Dori Monson but it seems like he’s become more angry in the last few months.

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  96. 96

    RE: BillE @ 95 – That could be. I don’t listen to talk radio much, but the last time I did and he was on, it was unbearable. Before I could listen to him if he had an interesting topic AND traffic was bad. ;-)

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  97. 97
    pfft says:

    By cheapseats @ 89:

    RE: pfft @ 84 – You really think it worked?

    if people are making the argument that as soon as the stimulus wears off the economy will tank than it must have worked. whether you are for or against it you can’t say that spending $700 billion won’t help. people are rushing to buy those $700 worth of bonds and not other goods. that’s why the recession is so bad.

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  98. 98
    pfft says:

    By Pegasus @ 87:

    pfft @ 86

    Yeah it is just beginning. Almost everything is worse than 12 months ago and in 12 more months we will be able to say the same thing. How much more money will be printed that has to be paid back? How many more banks will finally admit they are bankrupt? The mortgages are not written down. Many were purchased with non-existent money ala the FED at above real value to transfer off from their books. Freddie and Fannie Mae have operate with OUR funds issuing mortgages that should never ever be issued. Their delinquent loans are soaring. Who will pay for this fraud? The taxpayer who is out of work , on food stamps or in foreclosure? All of the liabilities are being transferred to the taxpayers who can not ever repay. Social Security will be negative this year. More funds out than in. Medicare has been for years. Where did all of our contributions over our lifespan go? Goverment boondoggles. The only thing that Social Security owns is debt from the Treasury that will be repaid with printed dollars that don’t exist. Welcome to hell!

    you’re just way too permabearish for me. if you are a permabear it’s been one big block party(until you lose your job) since probably the middle of 2006. because 08 was so bad people don’t remember what 07 was like. it wasn’t pretty, yet the permabears still crave more. not only that, they say it’s worse!

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  99. 99
    pfft says:

    Let’s go outside the US to see if we can see a recovery out of sample so to speak.

    Canadian job market gains 43,000 in January
    http://www.financialpost.com/news-sectors/economy/story.html?id=2525962

    “it was the fourth employment gain in six months.”

    more from outside the US:

    A Recovery That’s Factory-Built and Gaining Speed

    A Global recovery in manufacturing appears to be accelerating. Most manufacturers around the world are reporting an increase in output and new orders, both of which plunged in late 2008 and early 2009 as a credit crisis spurred fears of a new Depression.”

    http://www.nytimes.com/2010/02/06/business/economy/06charts.html

    if you don’t believe the US numbers, notice that the bottom occurred all around the world at almost the same time.

    http://graphics8.nytimes.com/images/2010/02/05/business/0206-biz-webCHARTS.gif

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  100. 100
    Pegasus says:

    pfft @ 98
    Sorry I work with reality…not fiction. Saying everything is OK when it clearly is not won’t fix the economy.

    Here is a dose of reality to keep your mind off the Super Bowl:

    Secret summit of top bankers this weekend

    The world’s top central bankers began arriving in Australia yesterday as renewed fears about the strength of the global economic recovery gripped world share markets.

    Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank landed in Sydney to meet tomorrow at a secret location, the Herald Sun reports.

    Organised by the Bank for International Settlements last year, the two-day talks are shrouded in secrecy with high-level security believed to have been invoked by law enforcement agencies.

    Speculation that the chairman of the US Federal Reserve, Dr Ben Bernanke, would make an appearance could not be confirmed last night.

    The event will be dominated by Asian delegations and is expected to include governors of the Peoples Bank of China, the Bank of Japan and the Reserve Bank of India.

    The arrival of the high-powered gathering coincided with a fresh meltdown on world sharemarkets, sparked by renewed concerns about global growth and sovereign debt.

    http://www.news.com.au/business/secret-summit-of-top-bankers/story-e6frfm1i-1225827289543

    The Run On Greece Is Here: Investors Pull Out €10 Billion From The Troubled Country; Crisis Escalation Approaches

    “In the last four to six weeks a lot of money has been moved abroad; I’ve heard extraordinary figures,” analyst, Kostas Panagopoulos said.

    “People are moving funds either because they don’t trust our banking system, want to avoid what they fear will be taxes on deposits or are simply anxious about the future of our economy.”

    http://www.zerohedge.com/article/run-greece-here-investors-pull-out-%E2%82%AC10-billion-troubled-country-crisis-escalation-here

    Keep telling everyone everything is peaches. Sure. That’s why they are holding secret meetings. To spread all the “good news”?

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  101. 101
    David Losh says:

    RE: Pegasus @ 100

    I went to get a fresh cup of coffee, to settle in, and read about reality. Some how secret meetings, and reality seem kind of far apart.

    Could this have to do with the G-8 meeting in Canada? http://www.g7.utoronto.ca/

    Greece and Spain were questionable entries into the European Economic Union. As the article points out there is a lot of wealth in these countries. The wealthy avoid paying taxes there by simple corruption. We might as well throw Italy into this mix, because that is another place the government is lax when it comes to wealth.

    We are going to see another round of debt forgiveness coming up. Maybe that’s your concern? Because most people are unable to pay. That seems to be the bottom line. People who won’t, don’t, or can’t pay the taxes to keep the illusion alive any more.

    I’m having a hard time understanding how this will change anything. This is a global matter and here in the United States we have a system in place that can deal with the reality of having no money. We are a big country with a lot of resources and an infrastructure to distribute those resource. For that matter if we wanted to look at North and South America as extended resources we could.

    The bottom line is that the entire world could go to heck in a hand basket and the United States would secure it’s borders to survive. We have the means, capapbility, and resources.

    Then again if you are concerned about our government, the Constitution gaurantees our right to be armed.

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  102. 102
    Scotsman says:

    RE: pfft @ 99

    Noise in the machine. We were doomed well before the housing/financial crisis took hold by demographics and trends in government spending. You’ve got to look at a bigger picture than just the next couple of months. Pull up some graphs on 10-30 year trends in returns on capital and debt, projections for federal expenditures, adjusted personal income growth (none), etc. Sure, the road is a bit smoother here than it was, but just ahead, around that curve, the bridge is still out.

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  103. 103
    HappyRenter says:

    Is the dollar going down or up this year?

    In 2008, when the FED lowered interest rates, the dollar plummeted. If the FED increases the interest rates this year, is the reverse going to happen, i.e., the dollar goes up?

    Any thoughts about that?

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  104. 104

    RE: HappyRenter @ 103
    My guess is that the FED won’t increase interest rates enough this year to cause the dollar to rise. I don’t think the economy has recovered to the point where the FED can risk much of an interest rate hike. Interest rate hikes are used to slow down the economy and prevent inflation.
    At this point, we still have close to 10% unemployment ( officially) and the recovery, if there is one, is pretty fragile. I’d bet on the dollar falling .

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  105. 105
    corncob says:

    RE: HappyRenter @ 103 – Money this year will be flowing out of Europe (due to the PIIGS situation) and probably out of Japan (which is teetering), there are not many “safe” currencies for it to go into so I would expect much to become dollars.

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  106. 106
    David Losh says:

    RE: Scotsman @ 102

    You are forgetting the Reagan years when personal income grew from the tax code adjustments in 1981 and 1986. In my opinion, if George Bush the First would have continued the Reagan policies, adjusted the tax code again to exclude families that made less than $250K, and again, reaffirmed that individuals making over one million dollars should pay a fair share, we would have done better than we have. Whether you agree with Clinton or not he was right to address the issue of debt. It was pretty hard to make two trillion dollars worth of debt disappear, but he did raise the issue.

    I’m just saying that there is a way to make the tax codes work, and there is money in our system to pay the tax bills. The wealth that has left the country, or will leave the country, should have a harder time getting back in. In the next few weeks I’ll research a little bit on the Foreign Investment Tax structure, but my feeling is you are right, we should be paying greater attention to the money that is moving globally.

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  107. 107
    HappyRenter says:

    RE: corncob @ 105

    So, you think the dollar will increase in value?

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  108. 108
    AMS says:

    I know a few too many people who suggested the NOLA Saints would never win…

    “WASHINGTON – Treasury Secretary Timothy Geithner says the U.S. government “will never” lose its sterling credit rating despite big budget deficits and a newly increased debt limit that now tops $14 trillion.

    Geithner says in an interview broadcast Sunday that in times of economic crisis, international investors will continue to buy U.S. Treasury bonds because the bonds are a safe investment.

    Moody’s Investors Service recently issued a warning that the government’s credit rating could eventually be in jeopardy if nation’s finances don’t improve. The cost of borrowing would increase significantly if the ratings service lowered the credit rating, also known as a bond rating, for U.S. Treasuries.

    Geithner tells ABC’s “This Week” that will never happen.”

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  109. 109
    David Losh says:

    Our economy is secure. The dollar is secure. The noise is from countries that have mouths to feed, like Russia, China, India, Ireland, and Iceland. Remarkably the Third World has done pretty well.

    Let’s pretend it all collapses. Where would you want to be? If you could be anywhere in the World when the global economy totally collapses where would you want to be? A better question is where would the people of other countries want to be?

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  110. 110
    pfft says:

    By Pegasus @ 100:

    pfft @ 98
    Sorry I work with reality…not fiction. Saying everything is OK when it clearly is not won’t fix the economy.

    I didn’t say that. I said we are in recovery mode.

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  111. 111
    pfft says:

    By Scotsman @ 102:

    RE: pfft @ 99

    Noise in the machine. We were doomed well before the housing/financial crisis took hold by demographics and trends in government spending. You’ve got to look at a bigger picture than just the next couple of months. Pull up some graphs on 10-30 year trends in returns on capital and debt, projections for federal expenditures, adjusted personal income growth (none), etc. Sure, the road is a bit smoother here than it was, but just ahead, around that curve, the bridge is still out.

    projections are just that- projections.

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  112. 112
    AMS says:

    RE: David Losh @ 109 – What do you mean by “It all collapses?”

    What is it?

    Rate this comment: Thumb up 0

  113. 113
    AMS says:

    RE: pfft @ 110 – You are projecting recovery?

    Rate this comment: Thumb up 0

  114. 114
    corncob says:

    RE: HappyRenter @ 107 – Yes, as reserve currency it is only natural. The next phase of this mess is festering in Europe and is already well beyond the point of no return. Much of the world developed their own real estate bubbles, however only a few (US included) are so far along in popping (not that it is done here). If EU countries and/or banks start going tits up (which looks increasingly likely to occur), I believe the dollar will show very large gains from money fleeing the continent.

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  115. 115
    corncob says:

    RE: AMS @ 113 – pfft is predicting that it is very easy to get a rise out of this crowd.

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  116. 116
    AMS says:

    RE: corncob @ 115 – I’ve pretty much quit feeding him. When he gets a little over-the-top absurd, I find a little humor. As time goes on, pfft’s entertainment value is quickly approaching zero.

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  117. 117
    pfft says:

    By AMS @ 113:

    RE: pfft @ 110 – You are projecting recovery?

    we are already in recovery.

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  118. 118
    pfft says:

    By corncob @ 115:

    RE: AMS @ 113 – pfft is predicting that it is very easy to get a rise out of this crowd.

    I am just reading the data. I was bearish like everyone else in the spring of 2009. the data has changed though. the economy is constantly shifting.

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