Posted by: 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.

58 responses to “Upper Percentiles Rapidly Approach YoY Break Even”

  1. patient

    It looks like the higher percentiles were in positive YoY almost all of 2010 and then look at what happened in 2011. It wasn’t the bottom in 2010 and I doubt it will be the bottom in 2012.

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  2. Kary L. Krismer

    RE: patient @ 1 – Possibly the upturn was related to a severe downturn (a bounce) caused by what happened to the stock market in 2008. That really hurt the upper end market since so many of those buyers buy with high down payments. Then there was a dip in the stock market again in 2011, but it’s more questionable that caused the 2011 dip in the upper end. That dip wasn’t as severe.

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  3. patient

    RE: Kary L. Krismer @ 2

    The market is hyper fragile with very little pricing power. Interest rates, stock market, oil prices, foreclosures etc has much more impact than when you have a solid sustainable value growth, I.e an historically “normal” market. We are far from there yet.

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  4. No Name Guy

    This time of year in 2011 (based on that last chart) it was flat YOY.

    Approaching the same state right now? So what. Look what it did in the 2nd 1/2 of 2011 – cratered back to near double digit YOY drops.

    At this point, I’d call it the usual, expected, annual spring bounce. When YOY in the fall and winter is near flat line, THEN I’ll consider believing the bottom is in.

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  5. Kary L. Krismer

    RE: patient @ 3 – I would agree, but I was just commenting that the upper end is really affected by the stock market because that’s where the wealthy park much of their money.

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  6. patient

    RE: No Name Guy @ 4

    With that reasoning you would have believed the bottom was in 2010. It takes more than YoY charts to decode this beast. The overall economy and housing debt load vs. value matters, it wasn’t that rosy in 2010 and ain’t that rosy now.

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  7. patient

    RE: Kary L. Krismer @ 5
    Yes, I was agreeing with you as well.

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  8. patient

    By The Tim @ 8:

    The $8,000 homebuyer tax credit was in effect from February 2009 through June 2010. It is no coincidence that this period directly overlaps the previous upward trend in the year-over-year chart.

    Now the lines are all headed up without a giant free money giveaway. How is that not significant?

    Since the giant give-away is even more ginormous this time. It's called interest manipulation ala operation twist. Accumulate the savings over 30 years and you will see that the tax credit is dwarfed in comparison for most buyers.

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  9. Kary L. Krismer

    By patient @ 9:

    Since the giant give-away is even more ginormous this time. It’s called interest manipulation ala operation twist. Accumulate the savings over 30 years and you will see that the tax credit is dwarfed in comparison for most buyers.

    You may agree with this too, but part of the purpose of the interest manipulation is to maintain house prices, because that’s the banks’ collateral, and too much of a decline would put the banking system at risk. I think another purpose is to easily segregate the risky loans (ones not refinanced) from the presumably better ones.

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  10. patient

    RE: Kary L. Krismer @ 10

    Agree. The main objective of operation twist is to reduce bank losses by enticing underwater owners to refinance in order to stay and pay. However these extraordinary low rates also entices buyers, it’s what temporarily supports prices now, nothing else. It’s just like tax credit but bigger.

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  11. softwarengineer

    RE: Kary L. Krismer @ 2

    I Used to Think the same Thing Kary

    Stocks go up, home prices soon too.

    The actuality is as stocks DOW went from 8000 in early 2009 to its present 13,000; home prices in the Seattle area fell 20-40%. there’s apparent little or no connection anymore. It may likely be do to the fact that many who pulled out of the stock market in 2008 never went back in, leaving Obama’s QE1 and QE2 to overinflate it with deficit bucks for the remaining retirement fund management funds and rich to reap.

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  12. softwarengineer

    RE: patient @ 3

    Yes Patient

    High energy prices add the straw that breaks the camel’s back to the economy; and makes it totally unpredictable to assume anything good about real estate pricing increases.

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  13. David Losh

    RE: patient @ 11

    The low interest rates benefit the government debt, which is substantial.

    We are in an election year when the President will do a lot to maintain the economy. After the election reality sets in again.

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  14. Kary L. Krismer

    By softwarengineer @ 12:

    RE: Kary L. Krismer @ 2

    I Used to Think the same Thing Kary

    Stocks go up, home prices soon too.

    The actuality is as stocks DOW went from 8000 in early 2009 to its present 13,000; home prices in the Seattle area fell 20-40%. there’s apparent little or no connection anymore.

    First, I’m only talking about the upper end of the market. It hardly has any impact on the median, and stocks don’t affect lower than median sales much.

    Second, the median is brought down by the mix of short sales and REOs. If you back those out the median has been pretty steady at about $400,000 plus or minus most months.

    Number from NWMLS sources, but not compiled or guaranteed by the NWMLS.

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  15. Kary L. Krismer

    By David Losh @ 14
    “We are in an election year when the President will do a lot to maintain the economy. After the election flexibility sets in . . ..”

    I fixed your terminology. ;-)

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  16. David Losh

    RE: Kary L. Krismer @ 16

    From my recollections election years with incumbents are usually pretty good economically. There is conniving like we have this year with gas prices, but after the election, no matter who gets elected, the politicking gets a cold splash of water.

    So I look at this year as worse than the tax credit. The tax credit added money to the consumer base economy for an immediate boost. This low interest on high debt loads will be a long term drain on the economy.

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  17. softwarengineer

    RE: Kary L. Krismer @ 15

    Your Point Gains Credence

    If the upper incomes start selling their stock [stocks go down] and buying real estate. With inventory and sales data so boggish lately, trying to connect the dots that way today becomes a gordian knot though.

    You mentioned the upper tier homes have the most cash down too I believe, so lower interest rates likely have minimal connection there too. Much of the rich stock cash does get poured into short term federal 0% trearsuries for safe keeping, when the market goes bearish….look for 10 yr bond interest slides downward if that happens over the long run too.

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  18. Kary L. Krismer

    RE: David Losh @ 17 – I was just making a play off of what President Obama said to the Russian ambassador (or whoever he was). That he would have more flexibility after the election.

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  19. Kary L. Krismer

    RE: softwarengineer @ 18 – Or tax free state and municipal bonds. Those, btw, would also be insurance against the Buffett rule kicking in.

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  20. softwarengineer

    RE: David Losh @ 17

    I Think This trend Toward High Energy prices is Evolving Like a Scripted Play, Over the Last 10 years Too

    They get us used to $2/gal, raise it to like $3/gal; back down to $2.50/gal, etc, etc and we eventually think gas is cheap again at $3.50/gal. The problem is not the energy con game played [its real though], its the stagnation of wages, higher uncounted unemployment snow-balling stagflation I’d worry about. No amount of shell gaming can increase the pool of available money for real estate that just stagnates or declines with time.

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  21. Kary L. Krismer

    RE: softwarengineer @ 21 – This time it seems like consumption has slumped off pretty quickly with the rise in prices. Either that or those evil speculators have decided that they have enough money and are letting prices drop out of the goodness of their hearts. /sarc

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  22. David Losh

    Gas prices are inflationary. The wind fall profits are confined to the industry. That money will need to go to work some time, but it’s hard to get money to work when the government is pushing low interest rates.

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  23. deejayoh

    By patient @ 9:

    Since the giant give-away is even more ginormous this time. It's called interest manipulation ala operation twist. Accumulate the savings over 30 years and you will see that the tax credit is dwarfed in comparison for most buyers.

    So basically, according to the “operation twist” theory, the government oodles and oodles of money and pay whatever rate they like, market for debt be gollyed. Is that how I should interpret this?

    Who thinks the government sets interest rates? Show of hands?

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  24. David Losh

    RE: deejayoh @ 24

    I’ll Google it in a minute, but Fed policy has been to keep interest rates low, because inflation is under control.

    However,

    “NEW YORK — Don’t be misled by reports that inflation is tame. For small business owners, it’s a threat to profits and expansion plans.

    An 8 percent increase in the cost of eggs over the past year is eating away at restaurants and bakeries. Cotton’s 14 percent increase is hurting clothing manufacturers and retailers. And any business that sends somebody on a sales trip is bearing the brunt of an 8 percent increase in jet fuel or 7 percent rise in gasoline.

    If this were a “normal” economy, companies could pass along the cost of doing business to customers. But these days, customers are demanding to pay less, not more. As a result, small businesses are often left with no options.

    “You have to absorb a lot,” says Celeste Hilling, whose skin-care company has seen travel costs rise 30 percent in the past year after a 20 percent gain the year before. Rising fares, baggage fees and hotel bills are to blame.

    Found it!
    http://money.cnn.com/2012/01/25/news/economy/fed_rates_bernanke/index.htm

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  25. patient

    RE: deejayoh @ 24

    I didn’t say that the gov. set the interest rate I said that they manipulate it. They buy huge amount of 10 year treasuries to drive down the yield which has close ties to mortgage rates and by re-investing principals of their MBS portfolio into more MBSs they further drive down mortgage rates. It’s theoretically not the same as setting the rate but the practical result is the same.

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  26. Hugh Dominic

    RE: patient @ 26 – Patient is correct.

    We have a massively manipulated credit market. When the Bernak prints money, he has to spend it somewhere, and he spends it buying Timmay’s debt and mortgages. Timmay can issue government debt at rock-bottom rates because he knows Ben will buy it. Any TBTF bank can buy it at those same low rates, which makes it profitable for them to issue loans at 3% and sell those loans to Ben.

    That is the way we laundered a few $Trillion of support to banks through QE. It allowed us to maintain bank executive pay high enough to retain those excellent managers of our economy, kept interest rates low enough to blunt the correction in housing prices, and issue plenty of government debt. It’s a win-win-win! (except for savers and renters)

    Operation Twist has the same effect but works a little differently. Instead of printing new money, Ben raises money by selling off his short term debt and buying long term debt – which is the debt that drives home interest rates. No real investor wants to own 10-year debt at 0.5% interest, when inflation is bound to explode sometime in that period as a result of all this printing, so Ben acts as the sucker of last resort and picks it up.

    SPOILER ALERT:

    Ben will run out short term bonds to sell/trade in July. Interest rates will rise as July approaches. Fearing a curtailing of the fragile recovery, Ben will announce another QE! And another round of rising stock prices and bank profits will ensue. Interest rates will return to their lows, and the game will continue… until the election, if not longer.

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  27. Scotsman

    RE: Hugh Dominic @ 27

    “Ben will run out short term bonds to sell/trade in July.”

    Doesn’t matter, he’ll just buy longer term. Operation Twist was just one choice that came up on his i-pad. It might cost a bit more to buy 10 year, but Treasury has his back. No QE3- the optics look bad in an election year.

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  28. deejayoh

    I wouldn’t call it manipulation unless the fed is borrowing money for more than it lends it. And AFAIK, thefed funds rate (to which the article David Losh linked) is less than the 10 year yield. So the fed is able to borrow money super cheap, and lend it cheap. That’s not really manipulation.

    How long they can maintain this depends on how long the ROW continues to flock to the “stability” of US currency. But they don’t need to jack up rates anticipating that.

    As for inflation – it’s part of interest rates, not vice versa. Interest Rate = Real interest rate + Inflation. So if inflation is going up, then look for interest rates to rise. Which I fully expect to happen. And if that happens, housing prices will go up as well given a debased currency. At that point, one will be very happy with a 30 year fixed mortgage.

    I remember 1979.

    Doncha know the prime rates going up up up. To live in this town, you must be tough tough tough tough tough. Shattered.

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  29. patient

    “and the game will continue… until the election, if not longer.”
    Most likely longer. I’ve decided to vote out the government instead of voting in. I have no trust in that any president or congress candidates will be fiscally responsible out of conviction and moral so I’m just going to vote against any sitting representative that is not putting an end to the robbery of the tax payer to fill the pockets of the banksters. This will be the first time I’m putting fiscal responsibility before social responsibility in an election and I will continue to do so until our numbers are back in the black.

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  30. patient

    RE: deejayoh @ 29
    The gov. is manipulating the mortgage rates. Period.

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  31. Pegasus

    RE: patient @ 30 – The problem with your new voting strategy is that you are most likely voting for someone that will be at least as bad or possibly worse if they get elected. Your choice is only about which grifter you want to represent you. It is not about electing competent and honest politicians. It’s how the system is designed and how it works. The Republicans are virtual proof of that. They have a Presidential election that they could not lose yet they are going to…..

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  32. patient

    RE: Pegasus @ 32
    All true, I don’t know what I will get by voting for someone but I know if I’m willing to endorse the fiscal policies of the sitting. I like Obama and would have voted for him if he didn’t select Timmy and endorsed Bernanke. Now I will show that by voting Romney and see how he performs if he gets elected. 4 years is enough to show if you have what it takes, if not I’m voting against him in 4 years.

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  33. ARDELL

    I’ve never like Bernanke. How do we get rid of him?

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  34. David Losh

    RE: deejayoh @ 29

    It took me less than thirty seconds to find that link, and just clicked on the first one.

    This is different than 1979.

    I don’t recall any time that interest rates were hovering around 4%. It has always been possible, but was never a reality.

    The only thing that low interest rates are doing is making debt payments more affordable. If rates go up the amount the consumer spends to service debt will go up, the amount needed to service all debt will go up. Your mortgage may stay the same, but the price will be lower for any future sales.

    If interest rates go up, the price of Real Property will go down so that the consumer can have affordable payments.

    The consumer is maxed out on debt. That would need to be fixed first before any real inflation can take place. We either lower prices, or pay the workers more. I think prices have a long ways to fall before any worker will be getting a raise.

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  35. Ira Sacharoff

    RE: patient @ 33
    I’m pretty disappointed in Obama, and may not vote for him. But it’ll be a cold day in Hades before I’d vote for Romney. If he gets elected he will owe his soul to right wing Republicans, and to the corporate masters who put him in office. I also doubt very highly that fiscally he’ll be much different than Obama. There are other candidates out there besides those two, and sometimes it’s okay to vote one’s conscience.

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  36. patient

    RE: Ira Sacharoff @ 36
    I can understand that and I’m certainly concerned about it but I’m afraid the only power left to the people is the ability vote out underperforming representatives. We don’t have the lobbyists and bribes to make ouselves heard but we can put fear in the only thing dearer to them than money, their power.

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  37. ChrisM

    RE: deejayoh @ 29
    Hi Deejayoh,

    “So if inflation is going up, then look for interest rates to rise. Which I fully expect to happen. And if that happens, housing prices will go up as well given a debased currency”

    IMO that’s a complex scenario, in which (IMO) comparable fx needs to be taken into account (not that I disagree!). If we see USD going into the toilet, does it necessarily follow that housing prices would increase, or would they be part of an inflationary collapse? Can you tie Weimer into this?

    Yes, I’m serious, because it seems to me that if USD falls into the sewer that implies that EUR and Chinese Yuan must be stronger, which is hard for me to imagine. I now believe that, as crappy as the USD is, there is not a stronger alternative, nor will there be one within the foreseeable future. Do you disagree?

    Also, the interest rate rising is sort of a separate issue. Seems like there would be two scenarios for interest rate increase: a) strong economy, in which case housing prices may increase b) currency collapse (per your scenario), in which case housing prices may go either way, depending on govt actions, employment rate, and lending rules. Pathetic that I’d have to add caveats about govt & lending rules, but given $8k giveaways and apparent govt approval of crazy lending, there you are…

    Thoughts?

    I keep looking back to graphs of the Dow 1920-1950 and I’m not very optimistic!

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  38. MichaelB

    RE: Ira Sacharoff @ 36

    Obama will win with or without your vote because Hillary will be his running mate.

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  39. tim2

    People the bottom was in as of March this year. What is different this time from the spring bounce in 2011, 2010?? Fundamentals people. Fundamentals. No not the government tricks of sugar high first time home buyers. What drives housing people?? Job growth. Seattle, Washington state, we are experiencing real job growth for the first time since recession (depression) began. Real jobs too, Think engineers for Boeing, think Amazon hiring spree (stealing the lunch money from big box retailers). Follow the money people, follow the money. Rental cost are approaching mortgage payments for the low end of the market. Fundamentals people. The trend line continued up on housing prices … until it didn’t. The trend line continued down until it didn’t. When the fundamentals change, the results change.

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  40. Kary L. Krismer

    By Pegasus @ 32:

    RE: patient @ 30 – The problem with your new voting strategy is that you are most likely voting for someone that will be at least as bad or possibly worse if they get elected..

    You’re missing the fact that Patient said he would continue to vote them out. As long as the politicians show more loyalty to party than their constituents, and as long as voters vote solely by party, we’ll have the types of problems we have. Something needs to change.

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  41. Kary L. Krismer

    By Ira Sacharoff @ 36:

    RE: patient @ 33
    I’m pretty disappointed in Obama, and may not vote for him. But it’ll be a cold day in Hades before I’d vote for Romney.. . .There are other candidates out there besides those two, and sometimes it’s okay to vote one’s conscience.

    I would agree it’s a lousy choice. It’s almost always a lousy choice. And I’d agree there are other candidates out there. But I really doubt Romney would be that big of a swing to the right. He was after all governor of Massachusetts–hardly a conservative state.

    I’d point out your vote though is irrelevant. Too many people in Washington state, and particularly King County, vote only on party affiliation and sound bites.

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  42. Kary L. Krismer

    By MichaelB @ 39:

    RE: Ira Sacharoff @ 36

    Obama will win with or without your vote because Hillary will be his running mate.

    I hope you’re right. Having Biden a heart beat away is a scary thought. He’s just as bad as Palin, IMHO.

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  43. David Losh

    RE: tim2 @ 40

    Don’t forget trade with China. Did you mention Microsoft, and Starbucks?

    The fundamentals are the banking industry has handed out loans, globally, that they expect to be paid back. We have a secondary debt market that is attempting to collect on all those loans. At some point all those people who have jobs will be expected to pay back money they borrow every day.

    Things like student loans, an area that as I understand is in crisis, was never a national talking point before. What will get foreclosed on with that?

    GDP goes up, and credit card use goes up.

    Amazon is probably more about debt, than delivering products to your door. Boeing orders for plane are more about financing than what the return will be on the planes delivered. General Electric, and General Motors, are major lenders.

    The economy today is all about debt, and debt markets. That is a fundamental, and the consumer is tapped out of that game. The consumer is side lined, so where is the next growth spurt going to come from? IPhones?

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  44. Kary L. Krismer

    RE: David Losh @ 44 – From memory, I think GM spun off GMAC a long time ago.

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  45. Kary L. Krismer

    By David Losh @ 44:

    The consumer is side lined, so where is the next growth spurt going to come from? IPhones?

    I wonder whether iPhones are an anchor on the economy. People spending $50-100 a month on a consumer service that provides nothing once the month is past. Consumers ditched $20 landlines for $100 cell phone service, and that leaves less to spend on other things.

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  46. softwarengineer

    RE: David Losh @ 25

    Yes David

    There’s dumbed down down arrows that don’t like it when we point at grocery prices, lack of retail sales and gasoline price gouging affecting real estate. They simply don’t want to hear the truth, when its clearly destroying economic stability.

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  47. softwarengineer

    RE: Ira Sacharoff @ 36

    I’m Leaving the President Vote Blank

    The rest of the candidates too, unless they have a growth control plan in their platform.

    Perhaps I’ll just vote no on all the Intiatives trying to raise my property tax.

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  48. softwarengineer

    RE: Kary L. Krismer @ 46

    I Have a Cheap $25/mo Cell Phone

    And spend the rest of my monthly cost money on cable big screen premiums, at least I can watch it on a 42″ screen or my 16″ laptop..

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  49. softwarengineer

    RE: David Losh @ 44

    Yes David

    An economy that depends on I Phones and X Boxes, with no heavy industry manufacturing, is a complete joke.

    The 787 is 90% outsourced, so Boeing is just like us Americans, waiting for the box of parts from China to arrive, then they get out their screw driver.

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  50. Kary L. Krismer

    RE: Kary L. Krismer @ 46 – To follow up on the cell phone thing, that is also spending that doesn’t create many jobs at the margin. The money I spent on cell phones last month only employed one person for about 5 minutes because I had to call about a text charge my wife received. Ordinarily it doesn’t employ anyone because even the billing and payment of the bill is all electronic. People making paper don’t even get a job.

    With say Dave’s Amazon example, someone made the goods (although perhaps in a different country), several people helped ship it to Amazon, people at Amazon put it away, then selected it, then packed it, then several people at UPS or Fed Ex helped transport it.

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  51. Dirty Renter

    RE: softwarengineer @ 12
    Softy – the Dow was down to $6600 in March of ’09.

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  52. Dirty Renter

    RE: Ira Sacharoff @ 36
    That’s the horror of a 2 party system which is evenly divided @ 50%.
    The fringe elements of both parties wield entirely too much power.
    That is all.

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  53. Ira Sacharoff

    RE: Kary L. Krismer @ 42
    Massachussets is a liberal state. A Governor can’t survive there if he acts like a Conservative.
    America as a whole is much more conservative than Massachussets, and the Republican party in this country has moved to the right. The Dan Evans/Nelson Rockefeller/Mark Hatfield liberal Republicans of old are no longer accepted by the party, so I do think Romney’s reign as Gov of Mass. will have no bearing as how he’ll be as President. He strikes me as someone who has no ideals whatsoever, and will say and do whatever will get him elected.
    But yeah: Obama may be labeled a socialist and an ultraliberal, but his actions point him to the middle of the road, and Romney likewise is unlikely to be as “moderate” as he’s accused of being.

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  54. Kary L. Krismer

    The biggest difference I see is Romney understands business and the economy, but not necessarily how to help people, while President Obama understands how to have the government spend money to purportedly help people. but doesn’t have a clue on business or economic matters. Having government help people doesn’t work too well if there aren’t jobs.

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  55. tim2

    Re: David @ 44

    Not talking about the next job “spurt”. We are not set up for the next “boom”. I’m just talking about job stability, the current state. Really not predicting the future, just looking at the data. If you are wondering why, without government interference, the real estate market has seemed to have suspended it’s free fall it is because there are more employed people today than yesterday. The job growth engines have begun hiring in this area, and when they do, the Seattle economy stabilizes and so does real estate (home prices). Every cycle I hear how Boeing employment no longer matters, because of one reason or another, but every cycle it does matter. Don’t get me wrong, it is a long flat bottom, no v shaped recovery, but the bottom is in.

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  56. David Losh

    I understand about Seattle, and the long term out look for employment. We have FaceBook who has hired 90 people, and in my opinion FaceBook has a lot of expansion to do. The economy will continue to grow, there is no doubt about that.

    What I question is the disparity between the engineers who are maiking $100K per year, and every one else. I question the debt that it costs in order to become an engineer, or a lawyer, doctor, or any degree that pays well. Debt to buy the car, the house, the kids schooling, because we have to have the best, and the “healthy” life style.

    Boeing may be hiring, but the muscle jobs, I like that term, will go where ever it’s cheapest.

    So there is a disparity in wages, but paying debt is a big equalizer for those with degrees. The people who are coming out ahead are the passive income people. People collecting rental, or investment income, speculators, and hedge funds, those are the engines driving the economy. The bottom is in for those people, but what about you? Can you really afford to pay on a thirty year debt if the asset price never increases? If you are paying the debt to end up with an asset(?) that is worth the same dollar amount is that a leveraged investment?

    Then I look at the quality of the construction, the places people are paying top dollar for. Will they last thirty years, or will you end up with an empty lot?

    We are in a period of financial drain, due to debt, and market manipulation. The bottom isn’t close to being in. Those are just some of the fundamentals, and I haven’t started in about China, the Euro, or where we sit globally.

    The good news is that you know this, and can make your deals accordingly. Walk away from the frenzy and wait for the next leg down. Make the best deal you can to pay off quickly. Collect assets that will give you a tangible return, don’t hope your day trader stocks will last until retirement. Be pro active.

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  57. No Name Guy

    By David Losh @ 57:

    What I question is the disparity between the engineers who are maiking $100K per year, and every one else. I question the debt that it costs in order to become an engineer, or a lawyer, doctor, or any degree that pays well. Debt to buy the car, the house, the kids schooling, because we have to have the best, and the “healthy” life style.

    Boeing may be hiring, but the muscle jobs, I like that term, will go where ever it’s cheapest.

    .

    No debt is required to earn a top notch engineering degree. 2 years at the local CC will prep you for a transfer to UW / WSU engineering program at a very bargain basement price. In my UW Engineering class (back in the day) about 1/3 were CC transfers and they didn’t give up ANYTHING to those that did their first 2 at the UW.

    Oh, and given that engineers, by self selection / personality type, aren’t the flashy popular extrovert types from high school (you know, the ones that go into law and sales – perfect careers for the fast talking math idiot types), many of us know that debt is to be avoided. Many engineer types don’t have a huge ego need like the extroverts to drive a beemer or acura or a McMansion. They can do the math that says that for each 400 invested, it’s a dollar a month in PERMANENT passive income. And the engineer types understand A=Ao * exponent ^(rate*time).

    Yeah…..most engineers were outcast dorks back in the day……but it’s nice having the personality and skill set to enable punching out of the rat race on passive income in the 30’s or 40’s.

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