Posted by: Timothy Ellis (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.

57 responses to “Monday Open Thread (2012-03-26)”

  1. softwarengineer

    Total Labor Force in the Seattle/Bellevue/Everett Area

    May of gone up a percent or two the last year, so what. Its high the last year is the early 2009 labor force horrifying figures, after the Great Depression was supposedly averted. Meaningless and totally dismal too.

    http://www.seattlepi.com/local/komo/article/How-was-job-growth-in-Seattle-Better-than-you-3430023.php

    Also, if you do a regression analysis on the last three years of Seattle/Everett/Bellevue total labor force, it basically flat and on a downward trend getting worse.

    http://data.bls.gov/timeseries/LAUMT53426606?data_tool=XGtable

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  2. pfft

    By softwarengineer @ 1:

    Total Labor Force in the Seattle/Bellevue/Everett Area

    May of gone up a percent or two the last year, so what. Its high the last year is the early 2009 labor force horrifying figures, after the Great Depression was supposedly averted. Meaningless and totally dismal too.

    http://www.seattlepi.com/local/komo/article/How-was-job-growth-in-Seattle-Better-than-you-3430023.php

    Also, if you do a regression analysis on the last three years of Seattle/Everett/Bellevue total labor force, it basically flat and on a downward trend getting worse.

    http://data.bls.gov/timeseries/LAUMT53426606?data_tool=XGtable

    I don’t know if you know this but there is this generation called the “baby boomers” that are now doing this thing called “retiring.”

    http://en.wikipedia.org/wiki/Baby_boomer

    “after the Great Depression was supposedly averted.”

    don’t think that is much of a debate unless you have an alternative scenario at to why the banking system going under would have stimulated the economy.

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  3. pfft

    just in case people need to be reminded there is no reason to get all bent out of shape about how much debt has been taken on to stabilize the economy. the cost to the economy this year of fannie, freddie, TARP and the economic recovery measure is…

    $78 billion.

    LOL! collapse is just around the corner!

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  4. pfft

    oh the bush tax cuts this year ALONE will cost $322 billion.

    http://www.cbpp.org/images/cms/12-16-09bud-rev6-28-10-t11.jpg

    those of course are the unfunded bush tax cuts for the rich.

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  5. Blurtman

    RE: pfft @ 3 – There are lies, dmaned lies, then there is cherry picked accounting. Ask the senior citizens what the cost of manipulated, low interest rates is. While difficult to quantitate, what is the cost of the realization that there is a two-tiered justice system in the USA? Or that the dollar as digital credits is freely given to some folks, but others are lucky if they have the opportunity to be able to work hard to earn it. Corroding via cronyism, and hollow on the inside. And before you announce the recovery too loudly, what about the deplorable labor participation rate? And don’t blame the numbers on the retirng boomers. Over 65 year olds are not counted.

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  6. pfft

    By Blurtman @ 5:

    RE: pfft @ 3 – There are lies, dmaned lies, then there is cherry picked accounting. Ask the senior citizens what the cost of manipulated, low interest rates is. While difficult to quantitate, what is the cost of the realization that there is a two-tiered justice system in the USA? Or that the dollar as digital credits is freely given to some folks, but others are lucky if they have the opportunity to be able to work hard to earn it. Corroding via cronyism, and hollow on the inside. And before you announce the recovery too loudly, what about the deplorable labor participation rate? And don’t blame the numbers on the retirng boomers. Over 65 year olds are not counted.

    “Ask the senior citizens what the cost of manipulated, low interest rates is.”

    interest rates aren’t that manipulated. we are deleveraging. people are saving and not spending at a time when there are not a whole lot of interest in investing in new businesses because we have massive overcapacity in the economy.

    what happens when money is pouring into banks and nobody wants to borrow from them? interest rates stay low low low. we are 4 years into a liquidity trap. you should know this.

    you realize you can retire before 65 right?

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  7. Blurtman

    RE: pfft @ 6 – “you realize you can retire before 65 right?”

    Look up the average savings of the average Merican. You think folks are willingly retiring early? Look at the dramatic increase in the SS disability roles.

    Chart of the day: Labor force participation rate at 30-year low

    http://www.creditwritedowns.com/2012/02/chart-of-the-day-labor-force-participation-rate-at-30-year-low.html

    GDP has been a bogus metric for quite a while, inflated by the housing bubble, and its associated bogus RE consumption, unecessary construction, and fraudulent securities churn.

    Hollow on the inside. Why the compuslion to put lipstick on the pig?

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  8. wreckingbull

    By pfft @ 6:

    interest rates aren’t that manipulated.

    Your best comment to date. Please keep these gems coming, as we could all use the comic relief.

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  9. pfft

    we have an oversupply of savings. the Fed doesn’t necessarily set interest rates. it usually FOLLOWS interest rates. the fed has kept rates the same for years right? yet have interest rates for mortgages or savings account fluctuated? YES!

    people are not spending and they are not borrowing. There isn’t a whole lot of demand for money and that is why interest rates are low. banks take in deposits and loan out money. with the housing bust fewer people are talking mortgages. so an excess supply of savings is chasing too few loans. simple supply and demand if you just take a moment and think about it.

    there is article after article about people taking their money out of the stock market in 2008 and putting it into the bank or the bond market. they don’t care about the return they just want their money back.

    like I said…four years into a liquidity trap you guys should know this.

    what happens when you try to loan out money to people who don’t want it? low interest rates!

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  10. pfft

    quick question for fellow commentators. what happens to the price of homes when everyone wants to sell and nobody wants to buy?

    what happens to the price of loans when everyone wants to loan out money and nobody wants to borrow it?

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  11. pfft

    By Blurtman @ 7:

    RE: pfft @ 6 – “you realize you can retire before 65 right?”

    Look up the average savings of the average Merican. You think folks are willingly retiring early? Look at the dramatic increase in the SS disability roles.

    Chart of the day: Labor force participation rate at 30-year low

    http://www.creditwritedowns.com/2012/02/chart-of-the-day-labor-force-participation-rate-at-30-year-low.html

    GDP has been a bogus metric for quite a while, inflated by the housing bubble, and its associated bogus RE consumption, unecessary construction, and fraudulent securities churn.

    Hollow on the inside. Why the compuslion to put lipstick on the pig?

    you didn’t even address my point. by the way you are so 2007. GDP is not a bogus metric because the bubble has burst. you are living in the past. times are constantly changing.

    you realize the housing bubble and it’s associated ills has collapsed and even reversed right? the bear party is over folks!

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  12. ChrisM

    Zillow fun du jour – searching for houses in Richland, WA, Zillow has *five* properties with either 38.5 or 39.5 baths.

    The very few times I use that site I’m quickly reminded why I don’t use the site… Searching for real estate outside of Redfin’s covered areas is painful.

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  13. Kary L. Krismer

    RE: ChrisM @ 12 – There should be other broker sites you can use.

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  14. Blurtman

    RE: pfft @ 9 – Please go back to school, and please stop fabricating. Or at least place the “/snark/” after your comments.

    manipulate definition: to adapt or change (accounts, figures, etc.) to suit one’s purpose or advantage.

    http://dictionary.reference.com/browse/manipulate

    “In response to a financial crisis resulting from a collapse in housing values, the Federal Reserve began to cut interest rates in 2007. The federal funds rate was lowered from 5.25 percent in August of 2007 to effectively zero by December of 2008, and it has remained at or near that level ever since. The Fed has declared an intention to keep short-term interest rates at this near-zero level through late 2014. If this intention is fulfilled, the entire course of the zero rate policy will have lasted six years, an unprecedented and extraordinary policy move on the part of the Fed.”

    http://www.usnews.com/opinion/blogs/economic-intelligence/2012/03/26/retirees-the-victims-of-federal-reserves-war-on-saving

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  15. Kary L. Krismer

    RE: Blurtman @ 14 – pfft falls for the Democratic claims, hook, line and sinker. That’s about as far as his analysis goes on any issue.

    Falling for the claims of either party is a mistake.

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  16. Blurtman

    RE: Kary L. Krismer @ 15 – Agreed. Where are the Soggy Bottom Boys when you need them?

    http://www.youtube.com/watch?v=Q3eTSbC3neA

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  17. Blurtman

    Yes, we will be paying other people’s mortgages.

    “Other reports, including an interview with Freddie’s CEO, indicate that the GSEs’ analysis finds that principal reductions would be “cost effective” for the GSEs ONLY after factoring in the new, turbo-charged incentives Treasury would pay to the GSEs (and other lenders/investors) for doing a principal reduction under HAMP. Such incentives — which were recently tripled, and which the administration recently agreed would be paid to the GSEs as well as other HAMP participants (the GSEs didn’t use to get any HAMP incentives) – are obviously paid for by the government/taxpayers.

    HousingWire reported on Friday, e.g., that Freddie CEO “Ed” Haldeman said the following at a symposium:

    “I have to say recently the Treasury sweetened the program and tremendously increased the incentive payments in their offer to us. We will reevaluate that to see what may be in our economic best interest. If there are very large incentive payments — which could be 50% of what you could write down — it may be in our economic self-interest to participate in that.”

    http://www.calculatedriskblog.com/2012/03/lawler-on-possible-fannie-and-freddie.html

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  18. David Losh

    RE: pfft @ 11

    Most of the time I find your assertions plausible, except for predicting that housing cost will rise; they won’t, can’t.

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  19. pfft

    By Blurtman @ 14:

    RE: pfft @ 9 – Please go back to school, and please stop fabricating. Or at least place the “/snark/” after your comments.

    manipulate definition: to adapt or change (accounts, figures, etc.) to suit one’s purpose or advantage.

    http://dictionary.reference.com/browse/manipulate

    “In response to a financial crisis resulting from a collapse in housing values, the Federal Reserve began to cut interest rates in 2007. The federal funds rate was lowered from 5.25 percent in August of 2007 to effectively zero by December of 2008, and it has remained at or near that level ever since. The Fed has declared an intention to keep short-term interest rates at this near-zero level through late 2014. If this intention is fulfilled, the entire course of the zero rate policy will have lasted six years, an unprecedented and extraordinary policy move on the part of the Fed.”

    http://www.usnews.com/opinion/blogs/economic-intelligence/2012/03/26/retirees-the-victims-of-federal-reserves-war-on-saving

    the Fed just follows interest rates. Interest rates were going down. the Fed followed them.

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  20. pfft

    By Kary L. Krismer @ 15:

    RE: Blurtman @ 14 – pfft falls for the Democratic claims, hook, line and sinker. That’s about as far as his analysis goes on any issue.

    Falling for the claims of either party is a mistake.

    I don’t, I make my own judgments. I’ve been critical of obama too.

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  21. pfft

    think the fed is lying about inflation? think again.

    http://www.businessinsider.com/million-prices-project-vs-the-cpi-2012-3

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  22. Sweet Pea

    RE: Blurtman @ 17

    I’m toying with the idea of trying to turn “economic self-interest” into a verb. As in, “I economic self-interested myself until I couldn’t stand it anymore.” Or, collectively, “we economic self-interested ourselves the best we could but eventually we self-interested ourselves into a corner.” I think teenagers would find this very useful. So hard for American parents to argue against economic self-interest.

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  23. softwarengineer

    RE: pfft @ 2
    Baby Boomers Retiring???

    LOL Pffft, most baby Boomers can’t afford to retire anymore on 0% 401Ks, haven’t you read the news lately?

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  24. wreckingbull

    By pfft @ 19:

    the Fed just follows interest rates. Interest rates were going down. the Fed followed them.

    When you find yourself in a hole, stop digging.

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  25. softwarengineer

    RE: softwarengineer @ 1

    Hey “Dumbed Down” Down Thumbs

    I gave you true Obama government BLS data you didn’t like. So you down thumb me? LOL

    The scientific community speaking truth is all Frankensteins to your type. No wonder American engineers are put down in this country, even though they’re the best engineers in the world, ask the rest of the world, they agree with me.

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  26. softwarengineer

    RE: pfft @ 4

    Pfft Now Rules the Up Thumbs

    Give me more down thumbs, please!

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  27. softwarengineer

    RE: Sweet Pea @ 22

    Yes Sweet Pea

    The Y Generation has a definite advantage over the X Generation and some Baby Boomers too; they don’t have anything to lose…..so they can speak the truth.

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  28. Kary L. Krismer

    By wreckingbull @ 24:

    By pfft @ 19:
    the Fed just follows interest rates. Interest rates were going down. the Fed followed them.

    When you find yourself in a hole, stop digging.

    When the facts don’t fit your view of the world, pretend the world works differently! ;-)

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  29. softwarengineer

    RE: David Losh @ 18

    You’re Right David

    But what likely happens as population chronically increases in Seattle and wages chronically decrease is degradation of the units over time; especially as the Seattle units house multiple larger groups scrimping by. This will make the price decreases in the future less of an impact, as the remodeling back to code will have lower price slack built in by that time, especially for those of you with college and experience, lucky enough to keep your higher paying jobs over time.

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  30. Scotsman

    RE: pfft @ 19

    “the Fed just follows interest rates. Interest rates were going down. the Fed followed them”

    In the past, yes. But not now. The Fed buys 90% of the new debt issued by the Treasury, and buys it at rates that insure interest rates will remain low. By setting the discount rate and 10yr t-bill rates through direct market intervention the Fed pretty much controls all rates.

    By forcing rates down the Fed not only makes it cheaper to borrow, but reduces the potential returns that can be earned in the market, thus further reducing demand for additional borrowing, a nice little feed-back loop that suits their purposes. Unfortunately it also leads to capital misallocation and inefficiencies, functions that tend to drive us deeper into the hole over time.

    We will be freed when the checks start to bounce.

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  31. Tatiana Kalashnikov

    RE: David Losh @ 18

    “Most of the time I find your assertions plausible, except for predicting that housing cost will rise; they won’t, can’t.”

    Many folks who are upside down keep paying their mortgage. But for many a life-event (death, divorce, job loss, job transfer) will finally force them to sell. Houses in this catagory won’t clear out for years! And each time they go on the market they will depress values all around them. I agree, housing costs/prices will not rise for a long time.

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  32. Sweet Pea

    By softwarengineer @ 27:

    RE: Sweet Pea @ 22

    Yes Sweet Pea

    The Y Generation has a definite advantage over the X Generation and some Baby Boomers too; they don’t have anything to lose…..so they can speak the truth.

    Sorry, my sarcasm may not have come through, I can be a little cryptic at times. I was trying to say that American culture fosters the economic self-interest point of view, and everyone else be gollyed (at the extreme end of the spectrum). Greed is good, I’m my own brand, and all that. The Freddie CEO quoted sees no irony in his statement, despite heading an organization that was put into conservatorship for survival. He wants to run FM like a capitalistic business with one hand and have his other hand stuck out for freebies from the govt. Privatize the gains and socialize the losses and such.

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  33. pnwman

    Shiller: Housing Has “Chance” to Bottom But Suburban Prices May Not Recover “In Our Lifetime”‏

    http://finance.yahoo.com/blogs/daily-ticker/shiller-housing-chance-bottom-suburban-prices-may-not-161914444.html

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  34. softwarengineer

    RE: Tatiana Kalashnikov @ 31

    Shiller Agrees With You Now

    There is now house price recovery for the American suburbs in our lifetimes.

    http://finance.yahoo.com/blogs/daily-ticker/shiller-housing-chance-bottom-suburban-prices-may-not-161914444.html

    I’d include city central too, its all tied together with a frozen labor market and chronic population density increases with lower wages.

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  35. Dirty Renter

    This article has been floating around since 2010, but always good for a chuckle…it’s to collectors what Cramer’s 10 Stocks of the New World is to investors…enjoy:http://www.thestreet.com/story/10863800/1/5-completely-worthless-collectibles.html?cm_ven_int=morej

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  36. whatsmyname

    RE: Scotsman @ 30
    “By forcing rates down the Fed not only makes it cheaper to borrow, but reduces the potential returns that can be earned in the market, thus further reducing demand for additional borrowing, a nice little feed-back loop that suits their purposes. ”

    Cheaper borrowing increases net margins and potential returns/pricing flexibility for producers. This would act to increase borrowing demand, though not past what producers anticipated the market for their products would absorb. Low returns for lenders would tend to discourage lending, but that is not currently the issue. Lendable capital is in good supply. Credit quality is the constraint today.

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  37. Blurtman

    RE: Sweet Pea @ 32 – The Merican ethos is get it anyway you can. Rules are for the other guy, and if they get in the way, we ignore them, violate them, or change them in our favor. The hypocrisy knows no bounds. W, Condy, Cheney, and the Bush crime syndicate plan a bogus war, knowing full well that civilians will be killed as “collateral damage.” At least 100,000 women, children and elderly are killed in the invastion of Iraq. Bush is a hero. Condy has a plum job at Stanford, and her image is slowly being buffed up in the media for a possible future government appointment.

    Former boiler room stock swindler Robert Bales kills at least 16 Afghan civilains, everyone is outraged. His wife, a true Merican – morbidly obese, veteran of two home defaults – says he is innocent. He probably won’t do time.

    American exceptionalism!

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  38. Kary L. Krismer

    RE: Blurtman @ 37 – That’s relatively minor compared to what US drug policy is doing in foreign countries.

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  39. Blurtman

    RE: whatsmyname @ 36 – Please define “credit quality.”

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  40. Scotsman

    RE: whatsmyname @ 36

    “Cheaper borrowing increases net margins and potential returns/pricing flexibility for producers”

    Yes, but only if you have customers. Unfortunately gran and grampa can’t afford to buy anything because all the money they saved for retirement isn’t earning anything. That $M saved was supposed to be providing $5,000/mo in interest income off 10 year treauries. The reality is less than half that. It isn’t just credit quality- it’s income and demand that has gone “poof.”

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  41. David Losh

    RE: Scotsman @ 40

    We’re on my favorite subject of speculation. Nobody cares about granny, and the savings accounts. Nobody needs that money when there is free money to be had everywhere.

    If I can borrow at 2%, and lend at 6%, 8%, 12%, 24%, or 28% for short term consumer credit why would I have my money in the bank?

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  42. wreckingbull

    RE: David Losh @ 41 – Or… if a bank can borrow from the Fed at 0%, why would it bother to borrow from its own depositors who do annoying like things walk into a branch once in a while or ask for monthly statements.

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  43. David Losh

    RE: wreckingbull @ 42

    Well the bank does want granny’s money to hold in reserves so it can borrow that much more without having to tie up their own money.

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  44. David Losh

    RE: Scotsman @ 40

    Granny can also invest in a REIT that pays returns, or stocks that pay dividends, or emerging market funds. The problem is risk, for them, because they are using earned income dollars. Speculators don’t need to be concerned, and can insure against loss.

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  45. pfft

    By Scotsman @ 30:

    RE: pfft @ 19

    “the Fed just follows interest rates. Interest rates were going down. the Fed followed them”

    In the past, yes. But not now. The Fed buys 90% of the new debt issued by the Treasury

    link please. last time I asked you didn’t. why is that? we you too busy researching obama’s birth certificate?

    the Fed influences rates, it does not set them. it does not set 10-year rates. it does not set mortgage rates.

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  46. pfft

    By Blurtman @ 37:

    RE: Sweet Pea @ 32Bush is a hero. Condy has a plum job at Stanford, and her image is slowly being buffed up in the media for a possible future government appointment.

    Bush isn’t that popular and most academics see him as one of the worst presidents ever. condi is not popular and Stanford faculty didn’t want her back.

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  47. pfft

    By whatsmyname @ 36:

    RE: Scotsman @ 30
    “By forcing rates down the Fed not only makes it cheaper to borrow, but reduces the potential returns that can be earned in the market, thus further reducing demand for additional borrowing, a nice little feed-back loop that suits their purposes. ”

    Cheaper borrowing increases net margins and potential returns/pricing flexibility for producers. This would act to increase borrowing demand, though not past what producers anticipated the market for their products would absorb. Low returns for lenders would tend to discourage lending, but that is not currently the issue. Lendable capital is in good supply. Credit quality is the constraint today.

    exactly. we have an excess supply of savings. that is why rates are so low. too much savings with too few willing(or qualified) borrowers.

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  48. pfft

    By Scotsman @ 40:

    RE: whatsmyname @ 36

    “Cheaper borrowing increases net margins and potential returns/pricing flexibility for producers”

    Yes, but only if you have customers. Unfortunately gran and grampa can’t afford to buy anything because all the money they saved for retirement isn’t earning anything. That $M saved was supposed to be providing $5,000/mo in interest income off 10 year treauries. The reality is less than half that. It isn’t just credit quality- it’s income and demand that has gone “poof.”

    a lot of seniors’ income comes from SS.

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  49. pfft

    I feel like I have to constantly remind people that if we repeal(or let expire) the unfunded bush tax cuts for the rich our debt/gdp levels will stablize.

    http://www.cbpp.org/images/cms//5-10-11bud-f2.jpg

    Economic Downturn and Bush Policies Continue to Drive Large Projected Deficits
    Economic Recovery Measures, Financial Rescues Have Only Temporary Impact
    http://www.cbpp.org/cms/?fa=view&id=3490

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  50. David Losh

    RE: pfft @ 49

    We are way past the Bush tax cuts, and unfunded wars. There would have to be an over all budget put in place to reduce the deficit, and that budget will never come.

    Right now the best the government can hope for is a return on the investments it has already made. It will need to completely rework the military, and health care system. We will see a lot more government before we see a reduced deficit.

    There are no jobs, and no jobs coming. The price of gas is high because we are at the mercy of speculators, to put it nicely. The private sector will squeeze every penny it can from the corpse that was once our economy.

    So should we tax the rich? Absolutely. Should we regulate the heck out of the financial markets, and tax them accordingly? Of course. Do we need more over sight of environmental concerns? Yes. The government has a lot to do to correct the damages that have been done. It has been proved that we can not allow the private sector to run wild.

    So there aren’t quippy quotes that will fix anything. We are in desperate times, with a desperate population.

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  51. pfft

    By David Losh @ 50:

    RE: pfft @ 49

    We are way past the Bush tax cuts, and unfunded wars. There would have to be an over all budget put in place to reduce the deficit, and that budget will never come.

    the unfunded bush tax cuts for the rich expire in Dec of 2012. If obama wants to let them expire, say because he doesn’t get reelected, he can.

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  52. whatsmyname

    By Scotsman @ 40:

    RE: whatsmyname @ 36

    “Cheaper borrowing increases net margins and potential returns/pricing flexibility for producers”

    Yes, but only if you have customers.

    Yes, thank you for paraphrasing the omitted part of my sentence.

    “gran and grampa can’t afford to buy anything because all the money they saved for retirement isn’t earning anything. That $M saved was supposed to be providing $5,000/mo in interest income off 10 year treauries. The reality is less than half that. It isn’t just credit quality- it’s income and demand that has gone “poof.”

    You can’t possibly believe that our economy is based on the spending of elder coupon clippers. Granted, there is negative impact, but the real drag on demand has been the stressed labor force and the part of the economy that used to make things and services. To repeat my original point, lower rates helps demand from that larger part of the economy.

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  53. pfft

    Anyone know at what time tomorrow the Fed announces what is has set mortgage rates at? Is it before or after it tells us at what rate the 10-year will be set at?

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  54. whatsmyname

    By Blurtman @ 39:

    RE: whatsmyname @ 36 – Please define “credit quality.”

    Credit quality is a generalized term for considering repayment risk.

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  55. whatsmyname

    By Blurtman @ 39:

    RE: whatsmyname @ 36 – Please define “credit quality.”

    I don’t know why this didn’t post the first time. Credit quality is just a term for repayment risk.

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  56. Kary L. Krismer

    RE: pfft @ 51 – We really need to get past the Bush tax cuts as an issue and come up with tax increases which make sense. That means tax increases which don’t have a significant adverse impact on GDP. That would include tax increases on the middle class, and would be very politically unpopular.

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