Case-Shiller: Seattle Home Prices Hit New Post-Peak Low

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to October data,

Down 1.3% September to October.
Down 4.1% YOY.
Down 25.6% from the July 2007 peak

Last year prices rose 0.2% from September to October and year-over-year prices were down 12.4%.

October’s data marked a new post-peak low point for Seattle home prices, which have now “rewound” to roughly February of 2005. Prices are down 2.7% since July, and down 4.3% since their late-2009 tax credit mini-peak.

Here’s an interactive graph of all twenty Case-Shiller-tracked cities, courtesy of Tableau Software (check and un-check the boxes on the right):

As the 20-city composite index drops back into negative YOY territory, only four cities are still above where they were this time last year: Los Angeles, San Diego, San Francisco, and Washington DC.

In October, thirteen of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops (or saw year-over-year increases) than Seattle:

  • Washington, DC at +3.7%
  • Los Angeles at +3.3%
  • San Diego at +3.0%
  • San Francisco at +2.2%
  • Boston at -0.2%
  • Denver at -1.8%
  • New York at -1.9%
  • Cleveland at -2.6%
  • Minneapolis at -2.8%
  • Dallas at -3.1%
  • Miami at -3.4%
  • Las Vegas at -3.6%
  • Tampa at -3.6%

Falling faster than Seattle as of October: Charlotte, Phoenix, Portland, Detroit, Atlanta, and Chicago.

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of the raw Case-Shiller HPIs.

Here’s the interactive chart of the raw HPI for all twenty cities through October.

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

Case-Shiller HPI: Decline From Peak

In the thirty-nine months since the price peak in Seattle prices have declined 25.6%, a new high.

For posterity, here’s our offset graph—the same graph we post every month—with L.A. & San Diego time-shifted from Seattle & Portland by 17 months. All four cities continued to fall in October. Year-over-year, Portland came in at -5.2%, Los Angeles at +3.3%, and San Diego at +3.0%.

I think this graph is still worth posting if only to display how the government’s massive intervention in the market screwed with the natural flow, causing all the markets to rise simultaneously, but in the end they are all turning back down.

Case-Shiller HPI: West Coast

Note: This graph is not intended to be predictive. It is for entertainment purposes only.

Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 12.28.2010)


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.

139 comments:

  1. 1

    Here is a rather interesting look at the long-term outlook for the housing market:

    http://viableopposition.blogspot.com/2010/12/next-housing-bubble-is-this-perfect.html

    As consumers of real estate, we tend to ignore the long-term ramifications of supply and demand and concentrate on the month-to-month changes that are relatively meaningless. With baby boomers reaching their senior years over the coming 15 years, the supply of and demand for certain types of real estate is certain to change

  2. 2
    softwarengineer says:

    Real Estate in Winter Blahs

    But Boeing’s to hire 5000 more workers? They don’t tell us if all or most of them are going to South Carolina.

    Microsoft 2011 layoffs?

    http://www.webguild.org/20100706/microsoft-to-make-surprise-layoffs-today

    The MSM news on Seattle company downsizing is getting to be “smoke and mirrors” news stories in 3-D unclarity lately.

  3. 3
    Scotsman says:

    Double dip!

  4. 4
    Ben says:

    From Monday Thread: RE: Ben @ 2 – Not hard to predict if one is paying attention.

    The questions now are how long will this continue, how far will we fall, and what will be the consequences to the economy?

  5. 5
    David S says:

    By Scotsman @ 3:

    Double dip!

    I’d call it a dead cat bounce.

    Of the 35 properties I am watching at least 5 of them have had price reductions in the last month. The others must have nowhere to go.

  6. 6
    Sparky says:

    RE: softwarengineer @ 2 – FY’11, not calendar year 2011. That story is six months old…

  7. 7
    Scotsman says:

    RE: David S @ 5

    But we haven’t hit bottom yet- maybe that bump up was a window ledge?

  8. 8
    softwarengineer says:

    RE: Sparky @ 6

    The story ends June 2011.

  9. 9
    softwarengineer says:

    RE: Scotsman @ 7

    Unemployment Will Shoot Way Up Now IMO

    “…Citing what it calls “an unprecedented rise” in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless….”

    http://www.usatoday.com/news/nation/2010-12-28-1Ajobless28_ST_N.htm

  10. 10
    Blake says:

    What is the “official” unemployment rate? I’ve heard that around 20% of middle-aged men are unemployed now…
    But it’s a numbers racket that has been jiggered for decades:
    http://www.harpers.org/archive/2008/05/0082023
    -snip- “Since the 1960s, Washington has been forced to gull its citizens and creditors by debasing official statistics: the vital instruments with which the vigor and muscle of the American economy are measured. The effect, over the past twenty-five years, has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed. ”

    “Transparency is the hallmark of democracy, but we now find ourselves with economic statistics every bit as opaque—and as vulnerable to double- dealing—as a subprime CDO. Of the “big three” statistics, let us start with unemployment…”
    by Kevin Phillips in May’08… the whole piece is worth reading.

  11. 11
    Matthew says:

    Keep in mind this report is tracking October data and rates are up considerably since then. I think I hear a flushing noise in the background….

  12. 12
    Blurtman says:

    When did Eric Holder pass away?

    Allstate sues BofA, others over Countrywide losses
    NEW YORK | Tue Dec 28, 2010 1:09pm EST

    NEW YORK (Reuters) – Allstate Corp has sued Bank of America Corp and 18 other defendants over losses it said it suffered on more than $700 million of mortgage debt it bought from Countrywide Financial Corp.

    In a complaint filed Monday in Manhattan federal court, Allstate, the largest publicly traded U.S. home and auto insurer, alleged that Countrywide misled it into believing the securities it bought were safe, and that the quality of residential home loans backing them was high.

    “Defendants knew the loans offloaded onto Allstate were a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default,” the complaint said. Allstate suffered “significant losses” as a result, the complaint said

    http://www.reuters.com/article/idUSTRE6BR2TI20101228?feedType=RSS&feedName=businessNews&WT.tsrc=Social%20Media&WT.z_smid=twtr-reuters_biz&WT.z_smid_dest=Twitter

  13. 13
    Jonness says:

    Awhile back I reported seeing falling prices in October and forecast this would show up in the Case-Shiller data. Thus, the drop doesn’t surprise me. I’ve seen at least as much, and probably more pain in November, so I’m expecting another good drop in CS next month as well.

    Everybody knows where we are heading depends on jobs. However, that’s only part of the equation. Bank lending is also a concern. Mortgage rates are still pretty cheap, but you need a FICO of 740+ and 20% down to get the good rate. Not many people qualify for this, and many of the people who do are smart enough to buy using logic as opposed to giddiness. As long as the banks continue to hold their money as excess reserves, it can’t hit mainstreet and jumpstart inflation and spending. We’ll have to wait and see to see how the latest Fed/Politician massive borrow-and-spend programs pan out, but for now the money mostly remains on the sidelines.

    I expect prices to temporarily stabilize this Spring due to seasonality; to what extent I’m uncertain. IMO, the main factor is not jobs or lending; it’s REO’s. If the bank’s start releasing them in droves, (as Deejoyah’s banker friend recently alluded to) seasonality will be largely offset, and we will continue to drop till year’s end and beyond. If instead, my neighbors who are nearing 3 years of free rent get another stay of execution, then we could see some false stability for a while.

    Prices are still too high compared to historical fundamentals, and the overall trend remains down. Seattle will drop until things get back on track. Don’t be fooled by Spring seasonality when it arrives, or you could end up like the suckers who ran down to the bank during the recent tax-credit era and leveraged in with FHA loans and are now underwater on their houses. In those days, numerous Realtors told me my predictions of “temporary price support” were ridiculous. But look where we are today. Be extremely leery of Realtors’ claims. If houses don’t sell, they don’t eat.

    I’ve been telling my friends for years that we are witnessing an unprecedented time in our lives to live frugally and save up a down payment. This continues to be true. It’s not often when you can save a down payment and not have rising costs eat into the amount you save. To have prices falling while you are saving is an unprecedented gift. If I save another $25K and prices fall another $25K, that’s $50K of free equity. But that’s only part of the story. It’s $50K I don’t have to borrow and pay interest on for the next 30 years. And $50K is a drop in the bucket compared to where we might be heading. This is not a sellers’ market. This is not a buyers’ market. This is a down payment savers’ market.

  14. 14
    Interloper says:

    RE: Jonness @ 13

    “This is not a sellers’ market. This is not a buyers’ market. This is a down payment savers’ market.”

    Yep.

  15. 15
    Scotsman says:

    RE: Jonness @ 13

    Yup, financing is getting to be a significant hurdle, one that will surprise many when they find out the loan they assumed was a given isn’t going to be so straight forward. I think the trend will continue to be toward higher down payments with credit history a secondary concern.

    I don’t think we really have any historical precedents for what is about to take place- a world-wide debt bubble and major power shifts from a few super powers to a much broader base. I’d rather read about it than live it, but here we go.

  16. 16
    Jonness says:

    Seattle is one of the most overpriced markets in the country. It’s not just overpriced, it’s WAY overpriced.

    http://economix.blogs.nytimes.com/2010/12/22/buy-vs-rent-an-update/?source=patrick.net#entry-94091

    “A good rule of thumb is that you should often buy when the ratio is below 15 and rent when the ratio is above 20. If it’s between 15 and 20, lean toward renting — unless you find a home you really like and expect to stay there for many years.

    East Bay, Calif. 35.9
    Honolulu 34.4
    San Jose, Calif. 32.7
    San Francisco 27.9
    Seattle 27.3
    Charlotte, N.C. 27
    Orange County, Calif. 27
    New York (Manhattan) 26.7
    Raleigh, N.C. 26.2
    Portland, Ore. 25.9”

  17. 17
    LA Relo says:

    The CSI data is an average of the month listed and the 2 months preceding which means this still includes August data.

    You could say that August data was lower than average because the first time buyer tax credit bribe moved sales into preceding months, but then all that means is the tax credit was a crutch for the housing market that is now gone.

    It’s going to be far worse in 2011 than it was in 2010, unless of course helicopter boy or DOH’Bama decide to “fix” things some more.

  18. 18
    Nic says:

    Watch for a big drop in mortgages in January :).

  19. 19
    Blake says:

    I loved the 4th comment here in response to this post by the Atlanta Federal Resevre Bank’s VP/Dir of Research:
    http://www.ritholtz.com/blog/2010/12/an-inflation-or-lack-thereof-chart-show/
    by “ZackAttack” (referencing how the Fed’s monetary policies will most likely lead to a bubble in commodity prices, driving up the price of rice and other essential commodities.)
    “My question to you, sir, is how many people around the world die as a direct or indirect result of your misguided – and ultimately fruitless – efforts to reflate real estate assets held on bank balance sheets?”

    … the Fed and the banks are still holding trillions of bad RE debt at fantasy valuations and they were doing everything they could to reflate RE values. So the failure of the RE market continues to imperil the banking system and drive Fed and US govt policies. The chickens (or CDOs/MBSs) are coming home to roost, but the Fed is still blowing bubbles.

  20. 20
    DrShort says:

    RE: Jonness @ 16

    Those ratios are really measuring something else: The difference in quality between rental and owner occupied housing. If you look at specific houses in the Seattle area (that is would rent for & sell for), the ratio is around 20.

  21. 21
    dscott says:

    My real world calc of the property I rent as well as a few others in the general area are right in line with your observation @ Dr. Short (Kirkland rent/buy ~ 20-ish)

  22. 22
    Lurker says:

    Same here. In my searches for a new SFH rental (from Sept to Oct) I was finding the numbers to be around 20.

  23. 23
    Lake Hills Renter says:

    Queue Kary complaining about the offset graph.

  24. 24

    RE: Lake Hills Renter @ 22 – I’ve given up complaining about that. It was actually someone else who complained about it last month. At this point though that chart would be a lot more useful without the offset.

  25. 25
    Ben says:

    RE: Ben @ 4 – Roubini: “It’s Pretty Clear The Housing Market Has Already Double Dipped”
    http://www.zerohedge.com/article/roubini-its-pretty-clear-housing-market-has-already-double-dipped

    “Hopefully today’s 4th consecutive decline in home prices, as per the earlier noted Case Shiller October data (and with both mortgage rates and foreclosure inventory surging, we are willing to bet that following the reported November and December CS data, the decline will be for half a year straight), makes it sufficiently clear that housing has double dipped, and that the primary goal of Bernanke, which is not to pad banker bonuses, but to reflate home prices and recreate that mythical HELOC “fake wealth effect” piggybank, has been a complete failure (he sure is succeeding in getting WTI about to soon hit $100/barrel). Just in case there are any doubters left, Nouriel Roubini sat down with CNBC’s netnet to confirm what virtually everyone else already knows: “It’s pretty clear the housing market has already double dipped,” per Nouriel, who recently took advantage of the NYC housing downturn and bought a $5.5MM pad. “And the rate of decline is stronger than in previous months” – precisely what we pointed out a few hours back. In other words, the double dip is accelerating. Today’s jump in 10 and 30 Y rates will not help.

    Furthermore, another rather obvious observation by Roubini demonstrates precisely why the drop in home prices is just starting to be felt: “The shadow inventory of not-yet-foreclosed homes—due to the moratorium—will surge in the next year.” In other words, “Supply will increase, demand will drop.”

    Also, keeping in mind that there are tens of millions of Americans who are underwater on their mortgages, and thus not incentivized to pay their bills, any ongoing price drops will create a vicious loop whereby more and more people walk away from mortgages, and otherwise stop paying, as a result of which, banks will be forced to REO at least some of these properties (it is well known that banks allow squatters to live under payment delinquency for up to 24 months: where else does America get the money for that 4th Kindle and 2nd iPad?), causing prices to drop even more, and make the Catch 22 even worse. Which means that very soon Ben will again be forced to do a ritualistic killing of the stock market, pretty much as what happened on May 6, to get the population out of stocks again and back into bonds. Because should the 10 Year pass 4%, it is game over for housing, no matter how much Goldman protests, and the Chairman knows it all too well. “

  26. 26
    Lo Ball Jones says:

    RE: Blurtman @ 12

    Even if you want to run a valid honest company (Allstate) the crooks will bring it down.

  27. 27
    zipzippygc says:

    RE: DrShort @ 20
    I agree, I cannot get to 27 based on houses I have considered renting in just the last month.

  28. 28
    Jonness says:

    By DrShort @ 20:

    RE: Jonness @ 16

    Those ratios are really measuring something else: The difference in quality between rental and owner occupied housing. If you look at specific houses in the Seattle area (that is would rent for & sell for), the ratio is around 20.

    Do you have data or an analysis that demonstrates this? If so, I’d be interested in seeing it, as I haven’t found a really good source for this. A friend of mine crawls Craigslist rentals and compares them to Zillow values. That’s about the best I have been able to come up with so far. I don’t have exact figures at the moment, but his results show overpricing exists.

    If it is true these quality differences exist in Seattle as you say, they also exist in other cities in the study, which still puts Seattle as the 5th most overpriced city in the U.S. when comparing rents to incomes.

  29. 29
    Jonness says:

    The other day I posted I felt the minimum risk for Seattle Metro house prices is about -10%. I’ll elaborate a little more on that today by taking a look at median house price compared to median household income.

    The following chart shows the Oct, 2010 price to income ratio at 4.56 according to Case-Shiller and OFM data. This corresponds to Aug, 2004 affordability levels using this measure with no other factors being considered. Note, the price in Aug, 2004 is 6.3% lower than Oct, 2010 when price to income is the same because income has increased since then.

    http://www.housingcorrection.com/images/seattlepricetoincome1.jpg

    In the following chart, the blue house price line diverges upward from the green line (median household income * 3). If we roughly split the initial trend, we arrive at June, 2000 price divided by income levels of 4.1x. IMO, this roughly represents the minimum downside risk using this particular indicator. It’s important to note, this does not equate to house prices at June, 2000 levels. It equates to income affordability at those levels.

    If we look at the house price correction that occurred in the 1990’s, we see house price divided by income toughed at 3.3x just before the bubble occurred. This represents roughly the maximum downside risk using this particular indicator.

    http://www.housingcorrection.com/images/seattlepricetoincome2.jpg

    The following chart shows 4.1x income to price represents a further correction of roughly 10%, which would bring prices to about April, 2004 price levels. A 3.3x income to price represents a roughly 28% correction, which would bring Seattle area prices to about April, 2000 levels.

    http://www.housingcorrection.com/images/seattlepricetoincome3.jpg

    It’s important to note that house prices depend on many other factors other than price divided by income. However, none of these indicators look very favorable relevant to price appreciation at the moment.

    I used the following charting tool, which I updated today with the most recent OFM and CS data:

    http://www.housingcorrection.com/medianpricechart/caseshillerAbsoluteVsMHI.aspx

  30. 30
    Herman says:

    Ardell was right —

    After bottoming in March 2009, then falling to a second bottom in June 2010, prices are now headed to a new bottom.

  31. 31
    pfft says:

    By Jonness @ 13:

    Everybody knows where we are heading depends on jobs.

    the private sector added 1 million jobs last year but austerity at the state and local level has kept unemployment up. so much for austerity curing our ills. maybe we should bleed the economy?

  32. 32
    EconE says:

    RE: Jonness @ 28

    I’m coming up with the same 20 or so and you can rest assured that I’m no industry shill. ;^)

    Most of my research is condos as it’s easier to do an apple to apple comparison. Houses that I’ve checked are harder to compare but If I had to throw out a rent multiplier number it would probably still be fairly close to 20…maybe a little more. Definitely not 27 however.

    I’m taking the asking rents that are reasonable on CL and comparing them to *sold* prices. I ignore the fantasy asking rents and the fantasy asking sales prices. I never use Zillow for valuations.

    A GRM of 240 (20x annual) is still way too high. A reasonable GRM is 150-180 (12-15x annual rent) and an investor who is going to rent the property out will look for a 120 GRM (10x annual rent) and will be conservative about how much it can *actually* rent for and the potential vacancy rate.

    Low interest rates are the only thing that bumps the rent multiplier up. People with “payment mentalities” will stroke themselves over *buying* at a low interest rate. Smart investors pay attention to price.

  33. 33
    EconE says:

    By pfft @ 31:

    By Jonness @ 13:

    Everybody knows where we are heading depends on jobs.

    the private sector added 1 million jobs last year but austerity at the state and local level has kept unemployment up. so much for austerity curing our ills. maybe we should bleed the economy?

    Too bad those jobs were low paying.

    http://www.job.com/career-advice/employment-news/study-most-new-jobs-added-in-2010-are-low-paying.html

  34. 34
    Ross Jordan says:

    By EconE @ 32:

    RE: Jonness @ 28

    I’m coming up with the same 20 or so and you can rest assured that I’m no industry shill. ;^)

    Most of my research is condos as it’s easier to do an apple to apple comparison. Houses that I’ve checked are harder to compare but If I had to throw out a rent multiplier number it would probably still be fairly close to 20…maybe a little more. Definitely not 27 however.

    I’m taking the asking rents that are reasonable on CL and comparing them to *sold* prices. I ignore the fantasy asking rents and the fantasy asking sales prices. I never use Zillow for valuations.

    A GRM of 240 (20x annual) is still way too high. A reasonable GRM is 150-180 (12-15x annual rent) and an investor who is going to rent the property out will look for a 120 GRM (10x annual rent) and will be conservative about how much it can *actually* rent for and the potential vacancy rate.

    Low interest rates are the only thing that bumps the rent multiplier up. People with “payment mentalities” will stroke themselves over *buying* at a low interest rate. Smart investors pay attention to price.

    There’s a lot of discussion here that the high price to rent ratio means that housing prices are too high and should fall. While that is possible, it could also be that rent prices are depressed, or some combination of low rent and high housing prices. Given the economy, and the high unemployment it does follow to a certain extent that rents would be depressed (as landlords respond to reality of what renters can afford). I do think that housing prices are still too high and will fall, but its not as simple as taking some target ideal price to rent ratio and correcting housing pricing assuming fixed rent.

  35. 35
    EconE says:

    RE: Ross Jordan @ 34

    I’m just saying that I’m not seeing the 27x annual that the so called study pointed to when comparing apples to apples.

    I still wouldnt pay more than 150-180GRM and with the glut of empty homes on the market I wouldn’t be surprised if rents fell further.

    I think that there is downside to both housing prices *and* rents.

  36. 36
    Jonness says:

    By pfft @ 31:

    the private sector added 1 million jobs last year

    But it requires 100,000+ new jobs per month just to keep up with the growing labor force. So we actually lost jobs last year.

  37. 37
    Blurtman says:

    RE: Lo Ball Jones @ 26 – And yet, somehow, the crooks do not go to jail and get to keep the loot.

  38. 38
    Dirty Renter says:

    RE: Blurtman @ 12

    Allstate wants a mulligan?
    So did the last wave of tulip buyers in Amsterdam circa 1624.

  39. 39
    Scotsman says:

    RE: Herman @ 30

    +1 ;-)

  40. 40
    Jonness says:

    By EconE @ 35:

    RE: Ross Jordan @ 34

    I’m just saying that I’m not seeing the 27x annual that the so called study pointed to when comparing apples to apples.

    The data comes from Mark Zandi of Moody’s and is Q2, 2010. I’m sure not what methods he used, but it is Metro area data. So if you are only looking in a single neighborhood, that could be part of the difference. I agree with you it seems overstated though. It seems to me the study is most likely performed consistently bad, so Seattle’s placement of 5th worst in the U.S. is probably pretty accurate. Here is his prior data set for comparison:

    Rent ratios in the 4th quarter each year
    Metro area 2009….2005…..Chg……Q2, 2010
    Seattle 28.1……32.4 …..-4.3……..27.9

  41. 41
    dscott says:

    If *27 is correct, we’d be able to rent a 650K house for ~2K/mo.

    Has anyone here run into a deal like that on a SFH? We pay $1950 for a property that is maybe 450K (actual tax appraisal) … and dropping.

  42. 42
    Ross Jordan says:

    RE: dscott @ 41
    I rented a home that sold in 2008 for 1.3 million for $2000/mo (on lake sammamish). It’s definitely possible.

  43. 43
    EconE says:

    RE: Jonness @ 40

    The neighborhoods that I’m looking in are Alki, Ballard, Greenlake, Phinney, Fremont, Westlake, Eastlake, Downtown, Pioneer Square, Belltown, SLU, Queen Anne, Magnolia, Madison Park, Leschi, Capitol Hill, First Hill, Kirkland (98034 and 98033), Downtown Bellevue and Issaquah. I’m definitely not narrowing it down to one neighborhood.

    95% condos 5% houses. Primarily condos as they’re the easiest to run the numbers on and they’re fairly homogeneous.

    I’m strictly comparing apples to apples (Same building/line w/in building) and not doing any kind of aggregate search that uses median/mean etc. Trying to look at desirable stuff rather than the junk (of which there is plenty especially in SFR’s)

    I’ve done some pretty exhaustive comparisons and I’m still coming up with 20x +/-. Of course, there are people who are asking for 25x annual rent but they are fewer and further between than they were in 2007-2009.

    Even at 25x, I should be able to find $300,000 (selling price) condos that are renting for $1000 and I’m not finding any. I’m seeing plenty of condos that are sitting vacant and have been sitting for months (some going on a year or more) with pie in the sky rent prices. I’m not using those units as my reference as the owners are still in fantasyland.

  44. 44
    pfft says:

    By EconE @ 33:

    By pfft @ 31:

    By Jonness @ 13:

    Everybody knows where we are heading depends on jobs.

    the private sector added 1 million jobs last year but austerity at the state and local level has kept unemployment up. so much for austerity curing our ills. maybe we should bleed the economy?

    Too bad those jobs were low paying.

    http://www.job.com/career-advice/employment-news/study-most-new-jobs-added-in-2010-are-low-paying.html

    nothing is ever good enough is it? wages are up by the way. with the zombie bears it’s almost like those creationists who continually ask for transition fossils.

  45. 45
    pfft says:

    By Jonness @ 36:

    By pfft @ 31:

    the private sector added 1 million jobs last year

    But it requires 100,000+ new jobs per month just to keep up with the growing labor force. So we actually lost jobs last year.

    source please. if we hadn’t had austerity at the state and local level we’d be in better shape. loss of public sector jobs also effects growth of private sector jobs.

  46. 46
    Hugh Dominic says:

    By Steve Thompson @ 1:

    As consumers of real estate, we tend to ignore the long-term ramifications of supply and demand and concentrate on the month-to-month changes that are relatively meaningless. With baby boomers reaching their senior years over the coming 15 years, the supply of and demand for certain types of real estate is certain to change

    Boomer retirement is not as huge as many think. The US net births since 1990 have equalled or exceeded births during the boomer era. That means as 65 year olds sell out, 20 year olds join in equal numbers. Add immigration to that figure and boomer losses are mitigated.

    It is true of course that an immigrant or 20 year old is not necessarily buying the same housing stock that the boomers are selling, and they bring less money into the system than the boomers would like to take out. So, I agree there will be some demographically driven depressive effect, though I don’t agree it makes a headline when compared to other factors.

  47. 47
    Jonness says:

    By pfft @ 45:

    But it requires 100,000+ new jobs per month just to keep up with the growing labor force. So we actually lost jobs last year.

    source please.

    “Holding the labor force participation rate constant, job growth above 100,000 per month would bring the unemployment rate down, while job growth below 100,000 would push the unemployment rate up. ” FEDERAL RESERVE BANK OF SAN FRANCISCO

    http://www.frbsf.org/publications/economics/letter/2010/el2010-27.html

  48. 48

    RE: EconE @ 43
    I’m seeing the same thing. That a 300,000 dollar unit generally rents for about 1250, 1300.
    When it’s a very expensive home, it’s a lower ratio, and when it’s a little cheap dump, the ratio is higher.
    Meaning that a million dollar home might rent for 3000 dollars, but a 180,000 dollar home might rent for 1000.
    So, if you’re buying a home in order to rent it out ( which you’d have to be at least a little nuts to do), don’t buy a million dollar home to rent out unless you’re prepared to flush a few thousand a month down the toilet.

  49. 49
    Hugh Dominic says:

    By Interloper @ 14:

    RE: Jonness @ 13

    “This is not a sellers’ market. This is not a buyers’ market. This is a down payment savers’ market.”

    Yep.

    Hmm. As exactly that kind of saver, I am scared as heck. The (broke) government needs money, and they need to see money getting spent to drive the economy. Who else can they take it from but the savers? If you have it and won’t spend it on yourself, then the government will take it and spend it on someone else.

    At least figure out how to convert that cash into something that the government can’t find, count, or easily take.

  50. 50
    EconE says:

    RE: Ira Sacharoff @ 48

    Some of those “cheapies” end up being killers when it comes to deferred maintenance.

    Check out the condo units that have sold in the last 3 months at 9030 Seward Park Ave. S. 98118.

    At least with a house you can do some/most of the work yourself.

  51. 51
    EconE says:

    By Hugh Dominic @ 49:

    By Interloper @ 14:

    RE: Jonness @ 13

    “This is not a sellers� market. This is not a buyers� market. This is a down payment savers� market.”

    Yep.

    Hmm. As exactly that kind of saver, I am scared as heck. The (broke) government needs money, and they need to see money getting spent to drive the economy. Who else can they take it from but the savers? If you have it and won’t spend it on yourself, then the government will take it and spend it on someone else.

    At least figure out how to convert that cash into something that the government can’t find, count, or easily take.

    I’ve thought the same thing, but then I realized that they’d rather the savers not only have a nice down payment for a house, but also buy one of the gazillion vacation condos that fannie/freddie owns/will own.

    Take your pick…Florida or Las Vegas!

  52. 52
    BillE says:

    By Ira Sacharoff @ 48:

    don’t buy a million dollar home to rent out unless you’re prepared to flush a few thousand a month down the toilet.

    That’s not money down the toilet. That’s a forced savings account. It’s an investment in your future.

  53. 53
    Pissed Smurf says:

    @ 47. Jonness

    I sense Calculated Risk teachings in you… :)

  54. 54
    Jeremy says:

    RE: Hugh Dominic @ 46 – With how some people’s savings have been decimated by the great recession I suspect we’ll also see a lot of boomers postpone their planned retirement. In this context I think it’s important to bring up that a lot of boomers saw their home equity as retirement money but basically 25% of that has vanished nationwide.

    It’s anecdotal but a friend of mine said he’ll basically have to postpone retirement for about five years past his previous plans because of investment losses in the last three.

  55. 55
    Herman says:

    By Jeremy @ 53:

    RE: Hugh Dominic @ 46 – With how some people’s savings have been decimated by the great recession I suspect we’ll also see a lot of boomers postpone their planned retirement.

    …thus elevating the unemployment rate. Sorry, kids. Grandpa’s got your job.

    You can have it when he’s done with it. You’ll need it to pay for his Medicare and the debts that he left you with.

  56. 56
    Pissed Smurf says:

    By pfft @ 45:

    By Jonness @ 36:

    By pfft @ 31:

    the private sector added 1 million jobs last year

    But it requires 100,000+ new jobs per month just to keep up with the growing labor force. So we actually lost jobs last year.

    source please. if we hadn’t had austerity at the state and local level we’d be in better shape. loss of public sector jobs also effects growth of private sector jobs.

    OT:
    Which austerity are you talking about? Like Revenues != Expenditures?
    You mean the $67MM budget hole in Seattle for 2011, which most likely be revised again?
    Or perhaps, 2009-2011 Wa State deficit of $1B or perhaps, the estimated $3.3 B in 2012-13?
    Google it for source.

  57. 57
    Scotsman says:

    RE: pfft @ 44

    I’ve pretty much given up responding to you but when you just start spouting “facts” with nothing to back them up the record needs to be corrected. I think it’s great that you want to be an optimist, but cherry picking positive data points in an effort to convince the world that all is well is a huge disservice to your fellow man. Let’s take a quick look at the big picture one more time in a way everybody can understand.

    The U.S. economy is like a 14 trillion gallon GDP cistern or bucket. Normally it acts like it’s sitting on top of a natural spring and an extra new 400 billion gallons of water (2.8% annual GDP growth) are added to it every year. That’s what a healthy economy looks like. Lately the water hasn’t been rising in the bucket- no GDP growth, so we went out and borrowed 1.4 trillion gallons of water from the nearby stream to pour into the bucket to sort of jump start the whole process. That’s QE 1 and 2, TARP, etc. In the simplest sense the 1.4 trillion deficit funded gallons of water should have brought the water level up to 15.4 trillion gallons of GDP. But it didn’t. It only brought it up about 4%, not the 10% we added. Now how can that be? We got 2% growth, and 2% inflation, but 6% still leaked out somewhere. It did the same thing 2 years ago, and it looks like it’s going to do the same thing next year. Now some say we should stop the pumping and fix the dang leaks- you call that austerity. And some think we should just keep pumping more water in from the top, even though in the long run it will just be an expensive folly as the leaks keep getting worse, and we’ll get less and less for our effort.

    Here’s how to tell the economy is really bottoming- when we add 500 billion gallons of water to the bucket they all stay in. And when we come out some morning and discover the spring is indeed flowing again and we don’t have to add any water on our own- that’s recovery. Until then Christmas spending, unemployment, average wages, consumer sentiment, median house prices, they’re nothing but noise in the machine, interesting perhaps, but meaningless without the context of the complete picture.

  58. 58
    Herman says:

    RE: Scotsman @ 55 – Now can you do one where the economy is like a cruise missile packed with billion-dollar bills? And Goldman Sachs is Saddam Hussein? I don’t know, see what you can do with it.

  59. 59
    Blurtman says:

    RE: Dirty Renter @ 38 – Continuing your somewhat inappropriate tulip analogy, B of A knowingly sold Allstate dead flowers that they represented as being fresh and of the highest quality. Your claim of a mulligan might be correct if B of A did indeed sell tuips of the highest quality, but then the market for these crashed and Allstate wanted to give them back. But that is not at all what happened.

    We know from the testimony of Richard Bowen, former chief underwriter at Citi, that Citi also knowingly sold fraudulent securities. On Nov. 3, 2007, Bowen sent an email to Robert Rubin and senior finance and risk management executives at Citigroup with the subject line “URGENT — READ IMMEDIATELY — FINANCIAL ISSUES. Bowen continued to issue his warnings, but Citi “continued to purchase and sell increasing volumes of defective mortgage product,” he said. “The overall defective rate increased to over 80 percentage in 2007.”

    Considering that this masive fraud crashed the US economy, destroying the lives of millions of citizens, and financially ruining many more, why do you think no one has gone to jail for these crimes?

  60. 60
    One Eyed Man says:

    RE: Blurtman @ 59

    I can’t prove that Countrywide (and BAC as successor in interest) didn’t commit securities fraud. They may have. But so far I haven’t seen proof sufficient to hold BAC liable. Saying that there is testimony from Bowen that Citi committed fraud therefore BAC committed fraud is hardly sufficinet to meet any legal standard. As we all know, criminal violations require proof beyond a resonable doubt. I’m not sure of the level of proof needed to prove civil securities fraud under the Securities Acts of 1933 and/or 1934, but common law fraud claims require “clear and convincing evidence” which is a higher standard of proof than normal civil claims which require only “a preponderance of the evidence.”

    Denninger’s rant about “owner occupied” being an easy issue to check with tax returns is also a weak argument and extremely unlikely in my opinion to meet the level of proof. If Countrywide had the borrower’s statement in the loan application under penalty of perjury that they intended to occupy the home as a personal residence, Countrywide probably didn’t have any duty to independently verify that the borrower was telling the truth. If Allstate can prove that Countrywide was a co-conspirator with the borrowers in obtaining a false application, that would be different. But that’s probably extremely difficult to prove on a large scale for thousands of loans which were sold. It would probably require testimoney from the Countywide employees who were instrumental in committing the fraud (who likely wouldn’t testify without immunity) or from the borrowers who were committting a federal felony when they lied on the loan application. Unless you, Black, Denninger and Allstate have significantly more evidence, you better start working on your lowball settlement strategy before Allstate’s lawyers eat up all the settlement money.

    I certainly wouldn’t bet the farm on my opinion. I don’t even know the specifics of the applicable law, much less all the facts. But I probably have better insight into the issues than just about anybody on this Blog. I wasn’t a litigator and didn’t work on the Lincoln Savings case, but I was Of Counsel to one of the 12 law firms that won the fraud case against Lincoln Savings and Ketting.

    And by the way, the reason lender’s I know of did lost note affidavits in foreclosures isn’t so they can destroy the original notes to cover up missing endorsements. It’s because its cheaper and easier to do a lost note affidavit than it is to have people physically locate and produce the original documents given that most foreclosures go unchallenged and no one ever asks to see the originals. The professors who say its a cover up don’t understand that although it might be perjury to say the note’s lost without trying to find it, its done for efficiency not to cover up potential title issues.

    If you don’t believe me, just go into a car dealer on Sunday and say you want to trade in your old car but will have to wait til Monday to get the title out of your safe deposit box. They’ll immediately say there’s no need to wait cause they can just do a lost title affidavit. It’s technically perjury but its not a conspiracy to cover up bad title or to defraud anybody.

  61. 61
    Dirty Renter says:

    RE: Blurtman @ 59

    Yeah! Mulligans for every investor…every day!!!
    The ratings agencies rated the mortgages AAA, no?
    The GoodHands people bought them, for the phat yield, no?
    All based upon the underlining premise that real estate prices never go down?

    Tulips, pets.com, real estate…it’s all good.

    Judge Schmales is chomping @ the bit….”You’ll get nothing, and like it.”

  62. 62

    RE: One Eyed Man @ 60 – I’m not familiar with the specific claims of false owner-occupied status, but I have a hard time seeing how the lender would typically know that the borrower was lying about their FUTURE intentions. They don’t own the house at the time the application is made, so they don’t live there and have not filed any tax returns there, etc.

    That said, I have heard of mortgage originators trying to push borrowers into owner occupied loans. It’s another example of the one-tract mind problem some of them had–getting the lowest rate at any cost–which is what lead to so many 80/20 loans. Anyway, to the extent that CW had in-house mortgage originators that were doing that I could see some exposure. Absent that, I see next to none.

  63. 63

    RE: Dirty Renter @ 61 – I would agree with your skepticism to some extent. To the extent the losses are just the result of the down real estate market, I wouldn’t given them a recovery. As I’ve said before, business people were incredibly naive if they really thought that secured by real estate meant “safe.”

    But if the products were knowingly not as advertised, there should be some sort of partial recovery to the extent that such products had higher than average losses as a result of that misrepresentation.

  64. 64
    Timmcb says:

    RE: Jonness @ 16

    I know I’m a day late on this discussion but rent ratios for some reason are being skewed in certain markets. I’m not certain that its on purpose or not but I’ll use this case in point:

    http://money.cnn.com/galleries/2010/real_estate/1010/gallery.cities_rent_buy/4.html

    Seattle: Rent
    Average list price: $614,762
    Average monthly rent : $1,654
    Price to rent ratio: 30.97

    I’m fairly certain this data is being used by Moody’s (your source as well.) My point being that a their data is flawed somehow. A 615k home does not equate to a $1650 rental property. I’d Be wary of such sensational claims. In our neck of the woods I’d agree with most posters that its similarly around 20+/-.

  65. 65

    RE: Timmcb @ 64 – Just to guess, the numbers are probably affected by the percentage of rentals that are in multi-family buildings and/or the age of the rental buildings.

  66. 66
    Blake says:

    RE: One Eyed Man @ 60
    One Eyed Man… thanks for your insight. Prosecutions for fraud are difficult, but the DOJ has been extremely negligent. Here is Bill Black’s most recent piece about this important subject (I’ve clipped key passages but the whole thing is worth reading).

    2011 Will Bring More de Facto Decriminalization of Elite Financial Fraud
    http://www.huffingtonpost.com/william-k-black/the-role-of-the-criminal_b_802115.html
    “The FBI and the DOJ remain unlikely to prosecute the elite bank officers that ran the enormous “accounting control frauds” that drove the financial crisis. While over 1000 elites were convicted of felonies arising from the savings and loan (S&L) debacle, there are no convictions of controlling officers of the large nonprime lenders.

    Here is the four-part recipe for maximizing fraudulent accounting income in the short-term:
    1. Grow extremely rapidly
    2. By making bad loans at high yields
    3. While employing extreme leverage, and
    4. Providing only minimal loss reserves
    A bank that follows this recipe is mathematically guaranteed to report record income in the near term… Note that the same recipe that maximizes short-term fictional income in the near term maximizes real losses in the longer term.

    Absent guidance and support from the regulators, the FBI turned to the worst conceivable source of guidance and support – the trade association of the “perps” — the Mortgage Bankers Association (MBA).

    Why did an the home mortgage lending industry — which had traditionally been able to keep losses from all sources to roughly one percent — suddenly begin to suffer 80-100 percent fraud incidence on “liar’s” loans? Why would an honest mortgage lender make “liar’s” loans knowing that doing so would produce intense “adverse selection” and a “negative expected value”? They would not do so. They were not mandated to do so by federal regulation or law. They were not encouraged to do so by federal regulation or law. They did so because their CEOs decided they would do so in order to maximize fictional income and real bonuses. The CEOs increased the number of liar’s loans they made after they were warned by the FBI that there was an “epidemic” of mortgage fraud and the FBI predicted it would cause an “economic crisis” were it not contained. The CEOs increased their liar’s loans after the MBA’s own anti-fraud experts stated that they deserved the name “liar’s” loans because they were pervasively fraudulent…

    The media, however, has begun to pick up our warnings about the failure of the criminal justice response to the epidemic of fraud. Prominent economists, particularly Joseph Stiglitz and Alan Greenspan, have joined Akerlof, Romer, Galbraith,Wray, and Prasch in emphasizing the key role that elite fraud played in driving this crisis. Even Andrew Ross Sorkin, generally seen as an apologist for the Street’s elites, has decried the lack of prosecutions.”

  67. 67
    Blurtman says:

    RE: Dirty Renter @ 61 – The underlying premise that real estate prices never go down is a complete fabrication. No one believed that. Why do you continue to repeat an outright lie?

    Irrespective of whether Allstate was chasing a fat yield, to knowingly misrepresent the risk of securities that you sell is fraud.

    The ratings agencies were complicit in this fraud as they were compensated to lie.

  68. 68
    One Eyed Man says:

    RE: Scotsman @ 57

    “Here’s how to tell the economy is really bottoming- when we add 500 billion gallons of water to the bucket they all stay in. ”

    I don’t think that’s exactly accurate. All 500B gallons don’t have to “stay in.” But the rate of growth (or perhaps rate of economic contraction) certainly has to be improved by the additional debt sufficiently to leave the overall economic condition ahead of the practical alternatives. In the end, the growth rate of the economy at the very least has to exceed the growth rate of the deficit.

    Pfft may or may not understand that and probably overstates his case perhaps because he’s acting as an advocate for an unpopular position in a battle with multiple adversaries. With regard to the housing market, it will likely continue to drop to be more in line with historic levels of affordability in any event. But the improvements in the macro-economy aren’t irrelevant if they help provide the only route the politicians will potentially take to a better long term economy. That being a route that doesn’t involve an economic contraction in the near term. As you know, I contend that the key is to keep annual budget cuts as a percentage of GDP at significantly less than the rate of GDP growth so as to avoid economic contraction.

    The annual Federal tax revenues dropped by about 400B in 2008. They’ve already come back about 200B. I can pull the Treasury numbers if you want to see them. A couple of years ago, everyone was saying that BLS understated the employment drop and TrimTabs was more accurate. Last month, TrimTabs said that BLS was understating the private sector employment gains at 39K and the real number was over 100K new private sector jobs. The consensus GDP estimates for next year are now for growth of better than 3%, at least in part due to QE2.

    No politician is going to cut 1.3T out of the Federal budget in one year. But if Obama will back something similar to the recommendation of his own debt commission, they can probably cut the deficit to less than the GDP growth rate in about 5 years thru a combination of spending cuts while preserving modest increases in GDP and tax revenue.

    You may consider it politically unlikely, especially with the loss of reasonable politicians like Judd Greg and an assortment of blue dogs, but its not unreasonable. And its the improving economy in the form of private sector employment and GDP growth that will make the unprecedented cuts to Federal spending palatable and politically possible. The improvements to the economy don’t fix the problem. But they help provide the opportunity to remedy the problem over time without a current economic contraction. The Fed is using QE to hold the door to long term recovery open for Obama and the Congress to pass through by enacting annual incremental budget cuts. If they don’t take advantage of the opportunity, they’re the one’s who will be responsible. And Obama doesn’t need Pelosi to pass this one. He needs John Boehner.

  69. 69
    Ben says:

    RE: One Eyed Man @ 68

    “Pfft may or may not understand that and probably overstates his case perhaps because he’s acting as an advocate for an unpopular position in a battle with multiple adversaries.”

    Mostly wrong? I’m quite certain. Unpopular? For everyone’s sake, I hope so.

    “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” Murray N. Rothbard

  70. 70
    Blurtman says:

    RE: One Eyed Man @ 60 – I am not pursuing a case against BAC (Countrywide) or Citi. My citing Richard Bowen’s testimony was only to illustrate that this fraud was widespread involving the knowledge of well respected (?)financial advisors such as Robert Rubin. But since you brought it up, could one make money from a successful lawsuit against these banks? For example, King County was swindled out of about $100 million through the purchase of fraudulent SIV’s. There is enough smoking gun evidence to indicate that those who sold this crap misrepresented its risk. As a resident of King County, I have been defrauded. Could I, as an active party to the lawsuit, make money if such a lawsuit were successfully prosecuted?

    BTW, here is an analysis of Allstate’s claims against BAC (Countrywide): http://www.zerohedge.com/article/how-allstate-used-sampling-confirm-bofacountrywide-lied-about-virtually-everything-selling-m

  71. 71
    pfft says:

    By Jonness @ 47:

    By pfft @ 45:

    But it requires 100,000+ new jobs per month just to keep up with the growing labor force. So we actually lost jobs last year.

    source please.

    “Holding the labor force participation rate constant, job growth above 100,000 per month would bring the unemployment rate down, while job growth below 100,000 would push the unemployment rate up. ” FEDERAL RESERVE BANK OF SAN FRANCISCO

    http://www.frbsf.org/publications/economics/letter/2010/el2010-27.html

    thanks!

  72. 72
    The Tim says:

    By Kary L. Krismer @ 24:

    At this point though that chart would be a lot more useful without the offset.

    Oh gee, if only this post included such a chart.

    Oh wait. It does. The very first chart. The only one “above the fold.” In an interactive format that allows readers to adjust the city selection and time scale to their liking.

  73. 73
    pfft says:

    By Hugh Dominic @ 49:

    By Interloper @ 14:

    RE: Jonness @ 13

    “This is not a sellers’ market. This is not a buyers’ market. This is a down payment savers’ market.”

    Yep.

    Hmm. As exactly that kind of saver, I am scared as heck. The (broke) government needs money, and they need to see money getting spent to drive the economy. Who else can they take it from but the savers? If you have it and won’t spend it on yourself, then the government will take it and spend it on someone else.

    At least figure out how to convert that cash into something that the government can’t find, count, or easily take.

    the government pays you interest when you give them your money.

  74. 74

    RE: The Tim @ 72 – I use Firefox w/ NoScript, so I don’t see that graph unless I allow it to be seen. I didn’t do that this time, so I forgot about it. In any case, that the first graph exists doesn’t make the graph complained about anything less than completely pointless.

    BTW, I highly recommend that combination of software because it makes these pages load a lot faster when there are the Tableau (sp?) graphs present.

  75. 75
    Ron Nelson says:

    I Know its probably not a Popular theory here..

    Im thinking that this next year we are going to see another possible variation of the Bailout~!
    My thoughts are that there going to be pushing loan modifications that will eliminate the 2nd. loan?
    They will use a possible blend of Dropping the Interest rate on the Primary and then in some cases forgiving the 2nd. Loan.

    It does Suck that by being responsible you end up picking up the tab…. Welcome to The NEW AMERICA…..

  76. 76
    Scotsman says:

    RE: One Eyed Man @ 68

    There’s so much going on now that affects the economy- globalization, entitlements, baby-boomers, lost equity, fraud, deficits, pensions, etc. that’s it’s difficult, if not impossible, to capture the cumulative effect in a short essay, let alone one post. But here’s my short response to your proposed budget plans. My money says they can’t even come up with a freeze, let alone real cuts or a redesign of the tax system. The debt will never be paid. We will continue to “party on” at an ever reducing level until the checks bounce, and only then will there be a serious effort to make sustainable changes. The good news is we should have some idea within 3-5 years what the result will be, whether the nation and its leadership have the stomach to make real changes and lead, or whether (and most likely) we just get one reaction/cya after another.

  77. 77
    Ron Nelson says:

    I think for Seattle the Rental Values are So important.

    I think that by watching Rentals you can get an idea of where the Market is Going.

    Think about it~!
    How many Landlords out there are on the Margin?
    How many accidental Landlords are there, the last couple of years.
    How many of the Condos that were converted/built are now rental units.(last 2-3 years)
    What are the Actual Vacancy numbers on rentals? anyone actually know ?

    Housing Is Housing, “period… its all the same pool of housing (houses/apartments/condos.)

    2004-2005 there was a large amount of people buying houses and making them into rental units. If the rents don’t support the 2004-2005 buying level then that supply of houses will find its way into the housing stock. If we blow though 2004-2005 levels on Housing prices then also if rental values drop in conjunction by 10% or more then we could easily see another 15-25% drop in values.
    The rental market provides the Floor for Values… So i’m watching rents.

    I picked up a house in Meridian Idaho recently for 160,000. rental thats almost brand new 2,500 feet off the golf course that sold for over 300,000. at peak price, given interest rates and 50% haircut and mortgage/taxes/insurance of just over 700. per month how can I loose unless rents dropped below 700. which I don’t see happening . have placed a couple other offers as of recently on 2 more homes in Meridian/Boise Idaho recently, both which I was just overbid on. For me it was a no Brainer with rental values that exceed the mortgage/taxes/insurance by several hundred dollars, of course I places over 30% downpayment however my dollars in Gold wasn’t giving me any real gains. Other than the Value Going Up… Im not selling my Silver- The gains from the Silver will possibly buy 2-3 more houses if I choose to.
    I see Seattle as a place that will possibly be a good investment in about 2-3 years.. maybe, maybe not? only time will tell. A lot is also riding on interest rates which are hard to predict.

  78. 78
    Pegasus says:

    RE: One Eyed Man @ 60 – I oft wonder here why two persistent posters whom have identified themselves as attorneys seem to spend an inordinate time here posting about “there is no fraud”, “fraud is difficult to prove”, “it is not fraud when you lie to the courts”, “MERS is not committing fraud”, it is not fraud when lying when “its done for efficiency”. etc, etc, ad nauseum. Really guys. I understand good attorneys play devil’s advocate and may have a better understanding about the law(although I really wonder about that) and the system but trying to make readers believe that everything is just bad luck is ridiculous. The FBI as early as 2004 made this statement:

    “Fraud is running rampant in the nation’s mortgage industry, with nearly three times as many reports of suspicious activity so far this year compared with 2001”, a top FBI official said Friday.

    “It has the potential to be an epidemic,” said Chris Swecker, FBI assistant director for criminal investigations.

    “You can find this anywhere in the country,” Swecker told reporters.

    The FBI based this statement on the massive increases in instances of suspicious activity reported to them by quess who? Mortgage companies and banks, the real crooks in this nightmare.
    Nothing was really done, no huge funds were ever to be given to the FBI to investigate what was occurring and what was a preventable nightmare has now become systemic risk for the entire global economic system. All because no one would enforce the laws or rules.

    The entire financial system has brought to its knees, no one has been sent to prison, new exposures are made every day, massive lawsuits are being filed for fraud daily, regulators are trying to cover up by accepting token settlements from the perps, 50 states are “investigating” fraudclosure, everyday we grow closer to financial oblivion and you guys keep rotely saying “There is no fraud”. One really has to ponder the motivations……really…

  79. 79
    Ron Nelson says:

    Im not that Crazy at the Same time of being a Landlord~!
    Im looking at storage units, they have great returns without the headaches.

    Tax Liens are another Vehicle.
    Right now there is Opportunities, however you have to be careful. Try to stay away from the Guy selling Snake Oil. The Stock market is something to be weary of…. Ford at 1.50 was a huge Opportunity & General Electric at 7.00

  80. 80
    Ron Nelson says:

    Talking about Fraud.

    How about the real estate agents?

    how about the agents that are placing the Short Sales/Foreclosures on the market and are Supposed to be accepting offers from the Best and Highest Bidder- turns out some of these are actually just going to the agents friends for well below market values.
    I ran into a couple of these type of deals going on the last year.. where my offer wasn’t being presented to the Bank. The offer that was presented was the one that was thousands of dollars less than mine. This is a lot more common than I ever thought… since its happened to me twice.

  81. 81
    Ron Nelson says:

    RE: Scotsman @ 76

    Yes- I agree however what good does it do to focus so much on Something you have no control over? Better question is ask yourself what can it mean for me? i’ve spent countless hours looking over the data myself, however knowing all this doesn’t do any good it just creates headaches.. its great to be in the know its better to let that knowledge work for you.

  82. 82
    Ron Nelson says:

    Im thinking about all those rental units…
    Problem is that when I think about Seattle rental units one phase comes to mind:
    SLUMLORDS

    Think about it… many of the rental units/houses are just plain OLD and WORN OUT
    Think about all the delayed maintenance on those 60-70s housing.
    Much of the housing stock is from the 60-70-80s thats whats usually comes to mind when I think about Seattle rental housing…

    Now picture yourself being an Landlord that purchased the last couple of years, I don’t like that picture. Purchasing a 30+ year old home and maybe barely making that mortgage payment with the rents collected. On top of that i’m thinking about those Old Pipes/Roof/Poor insulation it it was built in the 60s.. The list goes on….

  83. 83
    Ben says:

    RE: Pegasus @ 78 – Fraud as a Business Model. Maybe they haven’t internalized and come to terms with it all yet.

    Janet Tavakoli does a great job laying it all out:

    Repairing the Damage of “Fraud as a Business Model”
    TSF Address to the FHFA’s Supervision Summit – December 8, 2010

    On December 8, 2010, I presented an analysis to the Federal Housing Finance Agency (FHFA) in Washington D.C. of key causes of our current financial crisis: “Repairing the Damage of Fraud as a Business Model.” Since I was speaking on issues of public interest and policy, I took more latitude with my remarks than I would in a typical presentation:

    http://www.tavakolistructuredfinance.com/TSF100.html

  84. 84

    RE: Pegasus @ 78 – It’s because non-lawyers, including reporters, tend to use the term fraud in the common sense, even though they are using it in a legal sense. In other words, they don’t know what they’re talking about.

    That incorrect use of the term bothers attorneys, just as calling a porpoise a dolphin bothers marine mammal experts.

  85. 85

    RE: Ron Nelson @ 80 – That can be short sale fraud, or in some instances it can be that the bank has actually asked not to see any new offers while they review an existing offer. It could also be the first offer doesn’t allow the seller to present second offers. It could also be that the agent and/or short sale negotiator is concerned about the new offer starting the clock all over again.

    In short, there are explanations that are not fraudulent, but fraud is a possibility.

  86. 86
    Ron Nelson says:

    This was Both on Listings that were just active.. I think they were both within the first couple of days on market, I checked into it. The word I got from a couple of agents that I was working with that this was/is happening pretty frequently within the Boise area market. From what I understand is that in these instances that the agent was representing the bank and was supposed to within a certain timeframe “was supposed to take all offers and present them to the bank.
    Most the time this was being done… The one was listed about 30%. below market and I came in at 15% below. The Offer that ended up being taken was for the 30% Below- the agent then after all this tried to get me to sign buyers contract with him, I was like Right~! Not a chance.

    It raised some flags for me because this Property was in an exclusive neighborhood and was in Near New condition, almost new home. The agent was plain shady on so many fronts feeding me false information and trying to discourage me at first on this deal of making the offer. It just seemed that from the start this property was an inside deal to a friend. Sharing the profit potentially.

  87. 87

    RE: Ron Nelson @ 86 – The scenario that is clearly fraud is where the short selling agent and/or negotiator has an insider they have make an offer after the property has been on the market a short time, they continue to market the property and then sell to a third party at a simultaneous or slightly delayed second closing.

    What’s so stupid about that scheme is it can be detected by simply looking at the public recordings.

  88. 88
    Ben says:

    RE: Ron Nelson @ 86 – Boise is a wonderful place – I lived there for many years. It’s so much more than potato country :-)

  89. 89
    Ron Nelson says:

    I would agree with that scenario…
    That would make it obvious.

    The market here vs. Boise area is very different.
    There market was plagued with overbuilding on a Grand Scale for about 2-3 years.
    The California buyers were there in droves… in about 2005 it was there peak selling and market appreciation year. It was kind of like when Seattle came onto the Radar back in the 1980s when the California investors came to town, difference that this recession is not like anything we have had and it was so largely built on lending/credit when the credit stop flowing it reminds me of when I was a kid and the music stopped and everyone had to find a chair, problem is that chairs are continually being added. And the Masters of the Game are finding that they put out to many chairs.

    If Seattle corrected like many of the other markets.. I would say its a Opportunity here, however I don’t think the opportunity here is all that great. If I was a Betting man… I would take my dollars elsewhere. Theres not much of a chance I would place any bets on Seattle. Maybe in a couple of years?? Maybe Not, Who cares- Its Just Seattle. There is plenty of other places.

    I was driving around Seattle in early 2003 and shaking my head- 2004-2005 so many houses being placed on the market then I would drive by the same house weeks later and see a rental sign hanging.
    Seems that Rich Dad poor dad did a good job of selling books back then.. Problem is people only read the Beginning of his books and failed to realize that there is a Good and Bad time for everything. Sell when everyone is buying- Buy when everyone is Selling. When houses are on the front page of Wall Street publications, your nearing a top.
    We have some room to run in Commodities in my Opinion.. Gold especially Silver, Im not as much in the Gold Camp anymore. Just like anything there is a RIGHT TIME And WRONG TIME.. Just happens to be the right time for Commodities, is there any Guarantees NO, I could die tomorrow.

  90. 90
    Pegasus says:

    RE: Kary L. Krismer @ 84 – So you are saying that all of these entities screaming FRAUD and filing massive lawsuits don’t know what they are talking about? Their attorneys either don’t know what they are talking about or are they just taking advantage of their clients? Which is it Kary? I understand they still have to prove their claims but really Kary…. here another one of many that just surfaced:

    http://www.zerohedge.com/article/how-allstate-used-sampling-confirm-bofacountrywide-lied-about-virtually-everything-selling-m

  91. 91
    Ron Nelson says:

    RE: Ben @ 88

    Absolutely…
    I Love Boise Area…
    I spend my Vacations there.
    It has everything, “Minus The Ocean- that we have here.

    Fishing/Hiking/Mountain Biking/Rivers lakes… etc.

    I really love the Traffic there… and its not that small anymore- its the 3rd. largest city in the Northwest & probably the fastest growing, and least cost of living Lowest taxes when compared to Seattle Portland.
    Im setting myself up for when I hit 50 thats where i’m moving… Couple of my friends live there now, they lived in Seattle and now they swear they will “Not Leave Boise.

  92. 92
    Ron Nelson says:

    RE: Ben @ 88

    How did you come to be in Seattle?

    Funny when I was there last there was like about a couple of other people I met from Seattle..
    The agent I ran into and actually represents me is just by chance from Seattle.. I thought it was funny that so many people in Boise are Seattle Transplants. I have 5 friends off the top of my head from high school that now live there.

  93. 93

    RE: Pegasus @ 90 – It’s quite common to plead causes of action you can’t prove, just to keep the door open just in case. Back when I started practicing law just about every lawsuit against a small corporation adding in the individual shareholders and the suit claimed that the corporation was a sham, and that therefore the individual shareholders were liable for the debt. Often even inconsistent claims are made (e.g. the driver intentionally ran over the plaintiff, and that the driver was negligent in running over the plaintiff.)

  94. 94
    Pegasus says:

    RE: Kary L. Krismer @ 93 – Well… there certainly seems a lot of large settlements going on that included the word fraud in the original complaint. These amounts are too large to claim they are just getting rid of a nuisance lawsuit.

    http://www.washingtonpost.com/wp-dyn/content/article/2010/12/07/AR2010120703314.html

    The settlement isn’t a fair amount considering the damage and thefts but our regulators are rarely interested in more than token settlements and making sure no one goes to jail. It is just the cost of doing business with fraud as a business model condoned until massive exposure forces action.

  95. 95
    Interloper says:

    RE: Hugh Dominic @ 49

    Don’t fear the government, Dominic, fear the market forces. Affordability, (potential) inflation, etc.

    The government’s not going to come take away your savings account, or my teddy bear.

  96. 96
    pfft says:

    By Scotsman @ 76:

    RE: One Eyed Man @ 68

    There’s so much going on now that affects the economy- globalization, entitlements, baby-boomers, lost equity, fraud, deficits, pensions, etc. that’s it’s difficult, if not impossible, to capture the cumulative effect in a short essay, let alone one post. But here’s my short response to your proposed budget plans. My money says they can’t even come up with a freeze, let alone real cuts or a redesign of the tax system. The debt will never be paid. We will continue to “party on” at an ever reducing level until the checks bounce, and only then will there be a serious effort to make sustainable changes. The good news is we should have some idea within 3-5 years what the result will be, whether the nation and its leadership have the stomach to make real changes and lead, or whether (and most likely) we just get one reaction/cya after another.

    what happeened to the 6 months ending jan 15th? are you abandoning your prediction?

  97. 97

    By Pegasus @ 94:

    RE: Kary L. Krismer @ 93 – Well… there certainly seems a lot of large settlements going on that included the word fraud in the original complaint. These amounts are too large to claim they are just getting rid of a nuisance lawsuit.

    They probably had a good cause of action to go along with the fraud claim. ;-)

  98. 98

    RE: Pegasus @ 94 – BTW, in bankruptcy one of the most common complaints filed is for a “preference.” That is simply being paid on a debt within X days of the debtor’s bankruptcy. There is no wrongdoing at all on the part of the defendant. Back when I was practicing, my complaints would almost always allege implied and actual fraudulent conveyance claims too. Remove (fail to prove) a few elements from a preference claim and you have a fraudulent conveyance claim. Most of those suits would settle out, and the claims other than preference seldom if ever worked their way into the negotiations.

  99. 99
    Blake says:

    RE: Interloper @ 95
    Re: “Don’t fear the government, Dominic, fear the market forces.”

    Agreed… our big bad government is comparatively weak and has been beaten up rather badly in recent years, while the markets have run rampant. For instance: Income taxes and revenue are at historic lows, yet we are still allegedly “overtaxed” and it is not likely that taxes will be raised any time soon…
    (But beware: You, me and millions of others paid an extra $3 trillion in payroll/FICA taxes over the last 28 years and they’re fixin’ to renege on that!)

  100. 100
    Blake says:

    RE: Kary L. Krismer @ 97
    OK Kary… I’ll put “fraud” in quotes so it isn’t confused with the legal version ;-)
    Or we can just use terms like lying, gross negligence, idiocy, incompetence, deception, or Barry Ritholtz’s new one: “assembly line perjury”
    http://www.ritholtz.com/blog/2010/12/impossible-foreclosure-never-late-on-a-payment/
    -snip-
    Hence, the assembly line perjury the banks have committed are harder to hide in mass foreclosure venues. Which is what makes this touching Christmas Eve story all the more peculiar:

    “In one of the more bizarre foreclosure cases, Bank of America is threatening to throw a West Hartford family out of their home even though the couple never missed a mortgage payment.

    The largest bank in the United States earlier this month notified Shock Baitch and his wife Lisa (Friedman) Baitch that foreclosure action will start today – Christmas eve – unless the couple agrees to put their home up for a forced sale.

    Why? Because another unit of Bank of America erroneously reported to credit agencies that the family was seeking a loan modification, ruining their credit rating and as the result putting their mortgage into default.
    end quote

    Whoops… you f*cked up… you trusted us!
    hi-lar-ious ain’t it?

  101. 101
    Scotsman says:

    RE: pfft @ 96RE: pfft @ 96

    Not abandoning, just pushing back the dates. I don’t know of any bears that have changed their minds about the ultimate outcome- Eleua, myself, many other early bears have adjusted time lines however. When someone can show me politically feasible math that confirms a way out of the box I’ll change my mind. Until then, it’s like the dot-com bust- amazement that people are still buying into or taking advantage of it, but understanding there still isn’t any real substance.

  102. 102
    Ron Nelson says:

    RE: Blake @ 99 – Wheres This Overtaxed thing coming from??

    Wheres this OVERTAXED Thing coming from??

    Why is that our Government can’t pay its bills “with what it collects, according to my estimates they would be shaking us down if they figured we needed to pay, then again some politicians would be unelected, right (so that won’t work)? If you made the statement that our Government wasn’t managing what it took in very well, I would agree.

    However when the money they take in they are not paying there bills with it?– then again thats what the Chinese are Made for, “Right.. we send them BOAT FULLS Of IOU’s in return we get lots of Dvd players/Tv’s etc.

    Wait till we pay those IOU’s off, With What Junk Bonds?? maybe we can Sell California off?… imagine having a printing press and issuing all softs of financial instruments tied to promises that Us the American People will pay you back, maybe we will however when you have the reserve currency of the world, (For Now Anyways)…………….. This Can Go On and On… I don’t care to go any further.

  103. 103
    Ron Nelson says:

    RE: Scotsman @ 101

    Its always the Time Line… hardest thing to figure
    There is something coming that will be worse than the Great Depression… another World War~!!

    However I don’t Know if its going to happen tomorrow or 150 years from now… Guarantee it will come though, I would bet a Billion Dollars on It.. Of course my timeline is SO LONG “I cant loose. Anybody want to take me up on my Bet- I will give you my checking account number, routing etc. and hold the funds Until it comes time to pay out the winner.

  104. 104
    Blake says:

    RE: Ron Nelson @ 102
    Re: “Wheres this OVERTAXED Thing coming from??”
    Where were you the last 5 weeks? Not listening to the TV and radio…??
    IF those rates had gone up from 36 to 39.6% we were going to have a full on revolt of the elites on our hands! Sad because if we could just push the rates on upper incomes back to where they were under Nixon it would wipe out most fo the deficit! Of course that is fantasy and, besides, the elites would be so discouraged they would just stop working! ;-)

  105. 105
    Blake says:

    RE: Ron Nelson @ 102
    >> “Wait till we pay those IOU’s off, With What Junk Bonds?? maybe we can Sell California off?… imagine having a printing press and issuing all softs of financial instruments tied to promises that Us the American People will pay you back, maybe we will however when you have the reserve currency of the world…”

    I’ll never understand so many Americans complaining about this…. You should be laughing. We are the reserve currency and we “own” the printing press and eventually we will monetize those debts and the Chinese and others will watch their holdings dwindle!! Of course “we” also sold them and others a trillion or so in bad MBS securities for which they lost hundreds of billions of $… but they thought those were AAA or Aaa. With the federal reserve notes they are fully aware that the currency could be debased at any time. We should be laughing because 20 years from now we will look back at these times fondly(!) If you want to visit Europe, Japan or China I suggest you do it in the next 10 years…. or start bankrolling some yuan.

  106. 106
    Ron Nelson says:

    Believe Me-

    Back in 2003 I started Investing In hard Gold/Silver (its in a vault- don’t bother looking me up)..
    Most my investments Were In The Metals from 2003 onwards, I did some investments when the market hit about 7,000.. this is someone who in the past invested heavily in the markets.. My favorites Yes- Phillip Morris, RJ Reynolds back in 2000 when everyone was in Technology, thats when Phillip Morris and RJ was getting a lot of flack and lawsuits from the smokers…. get this at 17.00 for RJ and Phillip Morris was at 19.00– RJ Had something like a 19% dividend and Phillip Morris had a very respectful 17% — all this from someone who just about flunked english, and diagnosed ADD… i’m not all that smart, however for some reason “I seem to have a knack for being in the right places.
    My attention span is not that great so its hard for me to read for long periods- I seem to understand just enough, it doesn’t seem that hard however you can not be right all the time, arrogance- (lets just say it will humble you when you fight the forces of the marketplace)… however on the poker table i’m pretty scary up to about 3-4 hours, I have won about a dozen or so poker tournaments. Just good judge of people and good knack of bluffing from time to time. We all have our Strengths and Weaknesses, Writing is not a Strength for me.
    My point is that this stuff financially is so complex, I don’t fully understand all the complexities. I try to get the Big Picture, however its hard… I thought since about 2006 that we would have about a 50% haircut in prices by now, I was right about 50% in certain markets 50% has come and gone, however Seattle has yet to see it- I still think 50% is coming, its the timeline thats the hardest to figure.. also Government intervention is hard to predict, the interest rates and modifications are hard to figure.

  107. 107
    Herman says:

    By pfft @ 73:

    the government pays you interest when you give them your money.

    Oh no, you did not just say that. At this point you must reveal whether you are a troll or a fool. I have to know.

  108. 108
    Scotsman says:

    RE: Ron Nelson @ 102

    “maybe we can Sell California off?”

    There it is, proof you’re a nut. Everyone knows CA is already promised to Mexico. Restitution, or something.

    P.S.- what’s with the random capitalization? Are you the anti-Pfft or something?

  109. 109
    Scotsman says:

    RE: Herman @ 107

    Don’t point out to him that the interest earned is currently less than the inflation rate on the shorter term notes. What would Krugman say?

  110. 110
    Ron Nelson says:

    My Big Investment Mistake:

    I had my finger On the Short Button On my etrade account.. its one of those moments you wish you could have back, “in hindsight.

    get this It would of been possibly my best investment:
    Shorting “Countrywide at the 40s– I couldn’t finish touching that button… I was going to short Countrywide for several thousand shares in the 40s… however I couldn’t push the short button. In a matter of weeks “Countrywide” we all know what happened to them…. Penny Stock.

  111. 111
    Ron Nelson says:

    RE: Scotsman @ 108

    How about Government takeover (police action) of Microsoft, Apple & Berkshire Hathaway

    Use them to pay off the National Dept… after all Gates and Buffett are already promising to give most everything up already. Steve Jobs might have a fit though….

  112. 112
    Ron Nelson says:

    RE: Scotsman @ 108

    Afterall….. Why not?
    Didn’t you see the Movie 2012??
    Where California fell into the Sea..
    Why not get rid of our weakest link, were only one major earthquake from
    Loosing them anyways.

  113. 113
    Herman says:

    By Blake @ 99:

    (But beware: You, me and millions of others paid an extra $3 trillion in payroll/FICA taxes over the last 28 years and they’re fixin’ to renege on that!)

    I think you’re referring to the FICA receipts that the government “loaned” to itself via an accounting trick to offset part of the government’s other spending.

    There are two problems with your position. Number one, the money is gone. Your government spent it on things that the electorate wanted (in other words, YOU spent it by matter of proxy). Your government used the FICA receipts to claim that its deficit was not as deep as it really was, with an expectation that your children’s government would be good for the money when it was time to pay itself back. This is not the case. The money is gone, and you spent it.

    Number two, by saying “renege” you assume that there is some guarantee to you that was granted in exchange for your FICA payments. This is also not true. There is no obligation to pay you anything. There is only a policy that is in effect here and now, and that policy is subject to change. You have no recourse.

    The only thing that cannot be changed is the past. Policies at one time paid people generously under FICA, collected money under FICA, spent the extra FICA collections on lots of other things, and has left your government and all those policies in an unsustainable situation.

  114. 114
    Ron Nelson says:

    RE: Scotsman @ 108

    Is your Point that California is already part of MEXICO??
    If thats your point I concur.. “I agree- I hear the welfare offices are also the voting booths… I don’t know this for a fact, Just a Rumor.

  115. 115
    Scotsman says:

    RE: Ron Nelson @ 112

    “Afterall….. Why not?”

    Well, for one thing, all our movies would have to come from either Bollywood or France, and those subtitles can be hard work. Oh, and ponder this- iPod or Zune? Ha- see, even you can now see the folly in your suggestion. ;-) And if you have to google “zune” I win hands down.

  116. 116
    Ron Nelson says:

    RE: Scotsman @ 108

    P.S.- what’s with the random capitalization?

    I flunked Grammar… Seriously- third grade teacher put me on the fast track in
    the corner of the room, told me she gave up on me…
    “She said I give up on you- you will never
    amount to anything… ( I never believed her though )

  117. 117
    Scotsman says:

    RE: Ron Nelson @ 116

    Fair enough- I flunked Bar-B-Que and will never be a real man. Thank god my wife can cook better than just about anyone except maybe Ira, or so I suppose. It’s funny what really counts over time.

  118. 118
    Ron Nelson says:

    RE: Scotsman @ 115

    You think the Chinese would possible Merge Microsoft and Apple??- why have both right, Zune and the Ipod?

    Keep the Microsoft Operating systems/Office/Xbox add the Ipod/iphone and ipad and now we have 1# big winner.. then the Chinese could charge whatever they want.

  119. 119
    Ron Nelson says:

    anyone here have the New Windows phone?
    I don’t know anyone with it.. take that back- couple people that work for Microsoft.

  120. 120
    Jonness says:

    By Hugh Dominic @ 49:

    Hmm. As exactly that kind of saver, I am scared as heck. The (broke) government needs money, and they need to see money getting spent to drive the economy. Who else can they take it from but the savers? If you have it and won’t spend it on yourself, then the government will take it and spend it on someone else.

    The thing that scares me most, is that “someone else” you speak of isn’t necessarily an American citizen. A significant portion of the government loot winds up overseas inflating foreign economies. On top of that, U.S. corporations provide these economies with cash injections and new jobs. Meanwhile U.S. job growth continues to be lethargic while economists claim the U.S. is doing great, “just look at the stock market.” But if U.S. corporations are piling the majority of their investments into other countries, what good does it do U.S. citizens who don’t own their stock.

    At least figure out how to convert that cash into something that the government can’t find, count, or easily take.

    The only thing that comes to mind and fits that bill is buried gold. I’m not much of a burying these days though.

    Right now I’m holding some cash, some metals, some energy, some Canadian banks, some agriculture, some blue chips with overseas exposure, some emerging markets, etc. I typically don’t take the buy and hold approach unless I’m primarily in for a dividend payment. I try to take profits on the up cycles and buy into the dips. I can’t stand the feeling of being in a market that’s correcting 10%.

    I’m not trying to get rich off of this. I’m just trying to protect myself through what amounts to gambling. But as you mention, doing nothing is perhaps a greater gamble.

    We are witnessing the occurrence of a new paradigm that few voters recognize, acknowledge, or admit to. Thus, the looting continues. Savers must be extremely careful how they proceed. Some asset classes will soar, while others will bust. Buy and hold is most likely dead. One must study prolifically and remain nimble with his positions. It requires a lot of work and a lot of faith in one’s abilities. So far I can’t complain, but who knows about the future? This game is tricky and dangerous.

    “The trend helps explain why unemployment remains high, edging up to 9.8 percent last month, even though companies are performing well: All but 4 percent of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

    Yet, jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says U.S. companies have created 1.4 million jobs overseas this year, compared with fewer than 1 million here. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute’s senior international economist.

    “There’s a huge difference between what is good for American companies versus what is good for the American economy,” Scott said.

    American jobs have been moving overseas for more than two decades. Those jobs, however, have become more sophisticated — semiconductors and software, not toys and clothes.

    And many of the products being made overseas aren’t coming back to the United States. Demand has grown dramatically this year in emerging markets such as India, China and Brazil.

    Meanwhile, consumer demand in the United States has been subdued. Despite a strong holiday shopping season, Americans are spending 18 percent less than before the recession on furniture, and 10 percent less on electronics, according to MasterCard’s SpendingPulse.

    “Companies will go where there are fast-growing markets and big profits,” said Jeffrey Sachs, globalization expert and economist at Columbia University. “What’s changed is that companies today are getting top talent in emerging economies, and the U.S. has to really watch out.””

    http://seattletimes.nwsource.com/html/nationworld/2013789073_foreignjobs29.html

  121. 121
    Pegasus says:

    RE: Herman @ 113 – FICA is nothing more than a tax perpetrated mainly upon the lower and the middle class incomes. FICA stops on incomes over $106,800. The wealthy also get to exclude paying FICA on their capital gains and dividend and interest incomes which are an extensive part of their incomes. FICA on real estate profits? Fuggedaboutit. The Obama bogus debt panel suggested raising the retirement age again. Social Security can be fixed easily with some minor fixes. We have about thirty years to fix it…well….unless the government can’t repay the money it borrowed from it…….FICA payments are a cash cow for the spenders in CONgress. Why didn’t they just suggest charging FICA on ALL incomes? Can’t do that cuz it might make a slect group upset? Hehehe…. FICA is just an additional way to extract monies from the masses while a carrot is dangled over their heads until they reach the grave. Did you know when social security was originally designed the average wage earner died before reaching retirement age? Some retirement program….oops you died before you could collect your benefits that we have already spent on boondoogles and lining the pockets of our friends…..so sorry. For a real clue as to how the minds of Senators work when they choose to screw lessor incomes versus the wealthy while crying wolf I give you loon Senator Alan Simpson:
    http://fdlaction.firedoglake.com/2010/06/17/alan-simpson-cutting-social-security-benefits-to-take-care-of-the-lesser-people-in-society/

  122. 122
    Hugh Dominic says:

    RE: Jonness @ 120 – Well said. Savers need to be wise with their savings right now. Leaving it parked in a US Dollar bank account is risky in a system bent on destroying the dollar.

    US economic competitiveness and transformation as you mention is yet another issue. The dollar can only be worth as much as the US economy will justify. As the economy goes, so goes the value of your savings.

    US policy is anti-transformative under Obama. In an effort to prop up the weak and cushion the impact, the US is losing precious years when its capital should instead be driving changes to competitive and novel industries. So we wallow in debt in an economy that loses ground each year to more dynamic emerging nations.

  123. 123
    Pegasus says:

    RE: Jonness @ 120 – Buried gold? You do realize in the 1930’s the gubermint confiscated all gold except commercial users? Pretty hard to trade with contraband. Do you realize that the 1930’s scared the public so much that many just buried their money or hid it for decades instead of collecting interest in a bank? I crossed paths with an elderly couple(victims of the depression) in the late 1970’s in Lacey that were still doing that(buried in the back yard) with substantial assets. Never collecting a nickel in interest while inflation destroyed their honey pot. Fear really is a strong motivating factor.

  124. 124
    Pegasus says:

    By Herman @ 107:

    By pfft @ 73:

    the government pays you interest when you give them your money.

    Oh no, you did not just say that. At this point you must reveal whether you are a troll or a fool. I have to know.

    Haha! He has proven time after time that he is a fool. Some things can’t be changed. Pfft…a constant of the universe? Yikes!

  125. 125
    Jonness says:

    By Ron Nelson @ 110:

    Shorting “Countrywide at the 40s– I couldn’t finish touching that button… I was going to short Countrywide for several thousand shares in the 40s… however I couldn’t push the short button. In a matter of weeks “Countrywide” we all know what happened to them…. Penny Stock.

    Don’t feel bad. I think we all have those experiences. There’s something about playing with real money that makes doing the right thing a lot tougher than just talking about it while you’re at a party. If I could trade like I can rant at parties, I’d be richer than Bill Gates. And that’s why I’m a wage-class slave and will always remain so. :)

  126. 126
    Blake says:

    RE: Ron Nelson @ 110
    I was shorting WaMu, AIG, and some homebuilders through 2007… I couldn’t keep up the positions and gave up by 2008! The markets can remain irrational longer than you can stay solvent… I think Keynes said that.

  127. 127
    Jonness says:

    By Pegasus @ 123:

    – Buried gold? You do realize in the 1930’s the gubermint confiscated all gold except commercial users?

    I’ve read about that. Personally, I quit burying things right after the government put me in jail for it. These days, all my transactions are traceable on paper. :)

    Do you realize that the 1930’s scared the public so much that many just buried their money or hid it for decades instead of collecting interest in a bank? I crossed paths with an elderly couple(victims of the depression) in the late 1970’s in Lacey that were still doing that(buried in the back yard) with substantial assets. Never collecting a nickel in interest while inflation destroyed their honey pot. Fear really is a strong motivating factor.

    Interesting. I guess they buried cash instead of gold due to the illegality of owning gold and the growing value of the dollar in the deflationary environment of the Great Depression? Otherwise they probably would have done pretty well with that strategy.

  128. 128
    Blake says:

    RE: Jonness @ 120
    re: “A significant portion of the government loot winds up overseas inflating foreign economies.”
    >> Typical of a late Empire being looted… Washington and New York are quite similar to Amsterdam, Madrid and London in their similar periods. Wasn’t it interesting that so much of the bailout $ went to foreign banks. (When Congress at first voted down TARP in Sept’08 and the market crashed another 500 pts, Sen. McCain suspended his campaign to fly to Washington… but he had time to meet with Lady de Rothschild in New York and reassure her that her husbands private bank would get the US funds they needed.)

    re “The only thing that comes to mind and fits that bill is buried gold. I’m not much of a burying these days though. Right now I’m holding some cash, some metals, some energy, some Canadian banks, some agriculture, some blue chips with overseas exposure, some emerging markets, etc.”
    >> Yes, to all of the above. Gold had risen to 40% of my holdings so i started selling it at $1400 to 25% of my portfolio. Seems bubbly, but Ritholtz and others say it has a ways to go. Problem is that all the $$ will inflate bubbles all over the world… I have commodities (FFGCX), big blue chips, consumer staples, canada fund, latin am fund…SE asian fund.

    re: “We are witnessing the occurrence of a new paradigm that few voters recognize, acknowledge, or admit to. Thus, the looting continues.”
    >> Yes… it’ll be a lot like the 70s, but different! :-)
    I think ’08 was just the preview and the worst is ahead. Sequels are always worse…

  129. 129
    Blake says:

    RE: Jonness @ 127
    re: “I guess they buried cash instead of gold… ”
    I was waiting tables in the late 70s in the Midwest and this guy handed me a $100 bill that looked completely counterfeit to me. I ran into the kitchen to look at it closely… It was an odd color and looked very strange… it was printed in the 1920s!! I always wondered where that bill had been all those years…

  130. 130

    By Scotsman @ 117:

    RE: Ron Nelson @ 116

    Fair enough- I flunked Bar-B-Que and will never be a real man. Thank god my wife can cook better than just about anyone except maybe Ira, or so I suppose. It’s funny what really counts over time.

    I’m not that great of a cook. Some things I make are insanely good, like BBQ,( smoked in a smoker) pies, mac n cheese, lasagne, but baking bread has always failed me, and cooking a good steak is only something I can do by accident.

  131. 131
    Blake says:

    RE: Pegasus @ 124
    By pfft @ 73: the government pays you interest when you give them your money.

    … in pft’s defense, I think he meant that when you loan the govt money they pay you interest.

    In ref to FICA and the Social Security insanity…
    Yes, FICA taxes are regressive and after the Greenspan Commission double the tax rate in the early 80s, we knew they were doing it to help finance the record setting deficits of the 1980s and soak up the US bonds. But the US bonds that the Social Security trust fund holds are paying decent interest… 3-6% mostly, much higher than inflation
    http://www.ssa.gov/cgi-bin/investheld.cgi
    They are “guaranteed” only in the sense that anything is guaranteed by the government. You think PIMCO is insolvent? They have a lot of US bonds. I’m not sure what the deficit “hawks” and such are after… Do they want the government to default on the bonds held in trust? What do they think that would do to US bond holders (banks) and US interest rates? And keep in mind that foreigners hold only 25-30% of our debt…

    I’m not sure what the $ will be worth when I receive some payments down the road, but it is insane for the rightwingers to pretend that the Social Security Trust fund is broke. It holds US Treasury bonds, just like PIMCO and the major banks.

    btw: the Chinese have cut their holdings of US bonds since ’09… lookit the stupid British lapdogs! (I guess they’re building their $ holdings so they can defend the pound?)
    http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

  132. 132
    drshort says:

    By Ron Nelson @ 110:

    My Big Investment Mistake:

    I had my finger On the Short Button On my etrade account.. its one of those moments you wish you could have back, “in hindsight.

    .

    I much prefer buying put options to shorting a stock. Shorting a stock scares the heck out of me. With a put option, i know what my max loss will be.

  133. 133

    By drshort @ 132:

    By Ron Nelson @ 110:

    My Big Investment Mistake:

    I had my finger On the Short Button On my etrade account.. its one of those moments you wish you could have back, “in hindsight.

    .

    I much prefer buying put options to shorting a stock. Shorting a stock scares the heck out of me. With a put option, i know what my max loss will be.

    I almost never short a stock, but I’ve got a system that hasn’t failed me yet:
    When naming rights for a sports stadium are announced, short the stock. They almost always go down. I did a fairly extensive study of this, and 19 out of 20 companies with stadiums newly named after them were down at least 20% within a couple of months after getting the naming rights. I’ve played it three times with success each time. But that’s the only time I’ll short a stock.

  134. 134
    Jay Banks says:

    Nice analysis,
    When they say home prices fall below recession levels in cities like Seattle, this is not too surprising. Seattle was not hit during the recession as hard as another major markets. Our prices have dropped, but probably not as low as next markets. Basically, it looks like we are playing catch up now. Also, was not California hardest hit during the recession? So, that also leads me to believe that any sort of gain – minute or massive – is fine believeable. Once you have hit the lowest of the low, any amount of growth will be reflected in an incredibly positive light.

  135. 135
  136. 136
    jffj says:

    according to the internet, it’s not illegal to own gold since 1975.

  137. 137
    Blurtman says:

    RE: Dirty Renter @ 135 – And so BAC (Countrywide) was acting to avenge the New Orleans claimants??? The “Yes, someone stole from him, but he was a bum anyway.” is an irrelevant viewpoint, but not uncommon. There are other injured parties besides Allstate versus BAC (Countrywide). Have a look under a freeway overpass, or look at the lines when job openings are posted. Or seniors who get nothing on their savings acounts. Or folks whose wealth was destroyed.

    Frankly, I don’t give a hoot if Goldman’s rips off Merril Lynch who is ripping of Cedit Suisse. But when their greed driven fraud causes worldwide injury, and when they come to citizens begging for a bailout so they can continue to pay bonuses, please lets uphold the law and jail these scumbags.

  138. 138
    Daniel says:

    RE: Kary L. Krismer @ 85 – Be careful with the use of the word “or”. After all “or” in common language usually implies “either .. or”, also called an exclusive or, while my mathematical background makes me understand it as an inclusive or, where a proper answer to “Do you rent or do you own?” would be “yes.”. Maybe I should start harassing people about the use of the word “or” when used in logical reasoning.

  139. 139

    […] all influence his perspective on the Seattle-area real estate market. Possibly Related Posts:Case-Shiller: Seattle Home Prices Hit New Post-Peak LowCase-Shiller: Seattle Home Prices Hit New Low in Nov.Case-Shiller: Seattle Prices Headed South for […]

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