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.

72 responses to “Weekly Open Thread (2014-03-17)”

  1. Kary L. Krismer

    By whatsmyname @ 65:

    RE:
    In more practical terms, I know that no one here has more posts than you on increasing productivity through technology, so I know we agree workers are producing more – in real terms. Are they getting more – in real terms? Most people would agree that they are getting less, often a lot less.

    That $15 minimum wage will hurt a lot fewer people (in the US) than our trade policies have done. And we have the opportunity to watch Seatac to somewhat isolate and stratify the effects. It’s a great learning opportunity. I think people on both sides will be trying to not learn from the results.

    As to the first paragraph, I think the reason they are not getting more is that the technology reduces the demand for labor. That has the effect of tending to reduce wages. Combine that with an increasing population size, which increases the supply of labor, and you get more downward impact on wages. If you want to increase wages you need to either increase training or increase the demand for labor. Productivity alone won’t do it.

    When a new labor saving technology is applied, some people are displaced from their work. That is generally viewed as being an extreme hardship. I find it somewhat ironic that the people who complain about that sort of thing are largely the same people who promote a $15 minimum wage. That will provide the same type of extreme hardship on some people, but they don’t care because they don’t understand basic economics.

    As to Seatac, I don’t think that’s a terribly good test because it’s a somewhat captive market given the proximity to the airport. In fact, I would suspect that’s what it’s promoters saw when they proposed it. A much better test would be all of Seattle, but I don’t know why anyone would want to do a test that is almost certain to cause many people hardship.

    San Jose increased their minimum wage to I think $10 something, without huge impact, but that is in an area where the economy is already booming. I sort of wonder who was making minimum wage there.

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  2. Kary L. Krismer

    On the topic of technology and labor, probably the biggest shift ever was in the early 20th century when technology greatly reduced the demand for labor to grow food. During the 20th Century we went from having about 40% of the population living on farms to less than 10% in 1960 and well less than 5% today. Fortunately the demand for factory labor increased to take up the slack, although not fast enough to prevent the Great Depression.

    With electronics and 3D printers and other technology, as well as outsourcing, we’re seeing a new round of lessened demand for labor. Something needs to take up the slack or wages will suffer. Technology companies do tend to hire a lot of people, so that helps some, but not all of them hire the type of people likely to be earning minimum wage.

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  3. softwarengineer

    RE: Kary L. Krismer @ 1

    Yes Kary

    The original plan in 1962′s World’s Fair in Seattle was to automate and reduce our work week to 3-4 days and pay us the same…..that all got flushed down the toilet with NWO overpopulation into America the last few decades…now we want slavery?

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  4. softwarengineer

    RE: Kary L. Krismer @ 2

    Yes Kary

    We needed more population in the early 1900s for the Industrial Revolution. That was CLEARLY over 50+ years ago and MSM thinks its still a valid reason for more overpopulation/slavery. Of course our MSM is now mostly funded by foreign/corporate lobbyists’ and pundits’ brainwashers…Even Senator Sessions now admits it….

    http://immigrationreform.com/2014/03/14/sen-sessions-the-gop-must-be-the-party-of-working-people/

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  5. softwarengineer

    Slightly Off Topic

    That Malaysian missing Boeing 777 A/C flight is off the Richtor Scale…..one possibility comes to mind….the Devil’s Triangle not too far east from the flight….especially if it veered as they allegate now. UFOs swallowed it up? LOL

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  6. pfft

    By softwarengineer @ 5:

    Slightly Off Topic

    That Malaysian missing Boeing 777 A/C flight is off the Richtor Scale…..one possibility comes to mind….the Devil’s Triangle not too far east from the flight….especially if it veered as they allegate now. UFOs swallowed it up? LOL

    soon to be an episode of Ancient Aliens.

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  7. softwarengineer

    RE: pfft @ 6

    You Watch That Show Too?

    I love it when Skeptic Magazine alleges against Ancient Alien’s Manufacturing Engineers’ credentials [and MIT scientists] that cutting granite to like a 10,000th of an inch 10,000 years ago didn’t require high tech machines we barely have the technology to match, even today…..i.e., hand chisels, sand and soft copper saws the Skeptic Magazine [falsely] alleges were used….LOL

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  8. whatsmyname

    By Kary L. Krismer @ 1:

    As to the first paragraph, I think the reason they are not getting more is that the technology reduces the demand for labor. That has the effect of tending to reduce wages. Combine that with an increasing population size, which increases the supply of labor, and you get more downward impact on wages.

    This would mean that technology doesn’t create wealth, but only concentrates it. I don’t think that is true, but to the degree it is true, that could be the basis of a good conversation on how that ties to social desirability.

    If you want to increase wages you need to either increase training or increase the demand for labor. Productivity alone won’t do it.

    Increased training all round won’t help wages for jobs that aren’t there. It only reduces pricing power for those who do get the jobs in the now more competitive arena, thereby reducing wages. Basic economics, as one guy put it.

    I think the biggest technology affecting jobs, though, is tariff reduction technology, whereby jobs are simply replaced by actual lower grade technology shops in other countries who arbitrage the difference in safety, and lower wages. It is a race to the bottom here – an eventual “traditional” economy with a tiny satiated aristocracy having no need of a large economy, and an increasingly large peasantry too impoverished to support a 1st world economy. Not that I think real life ever operates quite that neatly.

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  9. Blurtman

    RE: whatsmyname @ 8 – And environmental destruction.

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  10. Blurtman

    Have you forgotten George W already?

    Another Bush run for the White House? Jeb may be up for it

    http://www.reuters.com/article/2014/03/18/us-usa-politics-jebbush-insight-idUSBREA2H06U20140318

    Just in time to launch a war against India for their incursion into the Ukraine.

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  11. Kary L. Krismer

    By whatsmyname @ 8:By Kary L. Krismer @ 1:

    As to the first paragraph, I think the reason they are not getting more is that the technology reduces the demand for labor. That has the effect of tending to reduce wages. Combine that with an increasing population size, which increases the supply of labor, and you get more downward impact on wages.

    This would mean that technology doesn’t create wealth, but only concentrates it. I don’t think that is true, but to the degree it is true, that could be the basis of a good conversation on how that ties to social desirability.

    I’m not saying it doesn’t create wealth, just that the benefit doesn’t go to the laborer. The technology replaces them, so the benefit goes to the business owner and/or the company selling the technology. And yes, that can concentrate wealth, particularly if the company selling the technology is a large company.

    You have other similar situations where the benefit to one thing goes somewhere else. Arguably the benefit of public financing of stadiums does to professional athletes and team owners. Conversely, the cost of the Seatac minimum wage could over the long run hit owners of commercial space, who might not be able to lease their properties for as much as before.

    If you want to increase wages you need to either increase training or increase the demand for labor. Productivity alone won’t do it.

    Increased training all round won’t help wages for jobs that aren’t there. It only reduces pricing power for those who do get the jobs in the now more competitive arena, thereby reducing wages.

    I would agree at the group level training doesn’t help. Training can help some individuals, but only limited numbers based on the demand. You need the demand for jobs to increase for widespread increased wages.

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  12. Kary L. Krismer

    This is a very small, but very good example of why government spending is out of control. They just go out looking for things to spend money on, even things that are already being done.

    http://www.voiceofthevalley.com/community_news/news/article_9c5bf018-ae52-11e3-8e5b-001a4bcf6878.html

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  13. softwarengineer

    RE: Kary L. Krismer @ 12

    Maybe the HOA Can Get the Bankrupt King County

    To pay for their Neighborhood Day’s pizza and bingo cards too…LOL

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  14. softwarengineer

    RE: Blurtman @ 9
    Yeah Blurtman

    Like recycling American plastic in India because its too toxic a process to accomplish in America. Why do we recycle plastic at all?

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  15. softwarengineer

    RE: Blurtman @ 10
    Jeb Should Wear His Favorite NWO Baseball Hat

    With “Overpopulation” printed on it.

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  16. Blake

    Kary L. Krismer: “This is a very small, but very good example of why government spending is out of control.”

    WTF Kary!?? Government spending is NOT out of control! Government spending is declining and net employment in the government sector has declined by over 500,000 the last few years.
    You sound like a broken record…
    http://www.cepr.net/index.php/blogs/beat-the-press/republicans-are-not-telling-the-truth-when-they-say-that-government-spending-is-out-of-control

    http://www.epi.org/blog/years-recovery-state-local-austerity-hurt/
    “Further, the most glaring weakness in the current recovery relative to previous ones is the unprecedented public-sector job loss seen over the last three years.”

    Without all those government layoffs the unemployment rate would be below 7% by now!!
    http://talkingpointsmemo.com/dc/chart-what-gov-t-job-cuts-have-done-to-the-unemployment-rate

    WTF!??

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  17. Kary L. Krismer

    RE: Blake @ 16 – All I have to say is you are amazingly delusional. Government spending has been out of control for decades. That they haven’t continued to spend at the peak levels doesn’t mean government spending isn’t still out of control.

    And I’m sorry, but to say unemployment would be lower if there were more government employment is absurd. Government obviously could eliminate unemployment entirely by giving people nominal jobs and a paycheck, but that wouldn’t mean the economy was doing well. So what is your point?

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  18. Blake

    OK Kary… just look at this graph of government spending as a percent of GDP over the last 40+ years and reread what you wrote!? It peaked at about 24% of GDP in the early 80s and more or less declined to about 18 or 19% up until the Great Recession began in 2008.
    “Out of control for years”… WTF? You are entitled to your own opinions, but not your own facts.
    http://www.cepr.net/index.php/blogs/beat-the-press/republicans-are-not-telling-the-truth-when-they-say-that-government-spending-is-out-of-control

    And yes… if we decided as a society to rebuild the decaying infrastructure of this country – our roads, bridges, schools, water systems, locks and dams – that would bring the unemployment rate way down. “Oh… how can I be so stupid!? That would be BAD and those would not be REAL jobs!??”
    http://www.nakedcapitalism.com/2013/11/us-infrastructure-spending-plunges.html

    Nothing makes people so stupid as adherence to dogmatic ideology…

    Flashback in time…
    http://whohijackedourcountry.blogspot.com/2011/01/republican-party-platform-from-1956.html
    “The Eisenhower Administration will continue to fight for dynamic and progressive programs which, among other things, will:

    Stimulate improved job safety of our workers, through assistance to the States, employees and employers;

    Strengthen and improve the Federal-State Employment Service and improve the effectiveness of the unemployment insurance system;

    Protect by law, the assets of employee welfare and benefit plans so that workers who are the beneficiaries can be assured of their rightful benefits;

    Federally-assisted construction, and maintain and continue the vigorous administration of the Federal prevailing minimum wage law for public supply contracts;

    Extend the protection of the Federal minimum wage laws to as many more workers as is possible and practicable;

    Continue and further perfect its programs of assistance to the millions of workers with special employment problems, such as older workers, handicapped workers, members of minority groups, and migratory workers;

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  19. Kary L. Krismer

    Apparently the lawsuit by Move Inc (Realtor.com) against Zillow is filed right here in King County.

    http://realtormag.realtor.org/daily-news/2014/03/18/nar-joins-move-lawsuit-against-zillow-samuelson?om_rid=AADdSv&om_mid=_BTKJs5B845jTwX&om_ntype=RMODaily

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  20. softwarengineer

    RE: Blake @ 18
    One Problem With Your Logic Blake IMO

    You assume a lower unemployment rate is good…..I assume its bad, it means more “giveups” aren’t counted anymore in our stagnant total labor force absorbing the world’s overpopulation. Hades, who doesn’t want to sneak into America?

    BTW….if the new insourced population can’t get jobs but must live off our deficit welfare state until its bankrupt too….they aren’t counted as unemployed either….LOL

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  21. Kary L. Krismer

    RE: Blake @ 18 – Apparently I need to be more precise when I use the word decades. I’m not just trying to blame this on Obama or Bush. We’ve not run at a deficit only four times since 1970, and IMHO the reason for those four years was more related to tax collections than spending control.

    As to building roads, how many roads do you want built? We’ve been building a lot of roads since 2009.

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  22. Blake

    SWE: Agree that a lower ‘calculated’ unemployment rate based upon more discouraged workers leaving the workforce is not good… Would add that a lower rate based upon low wage service workers (with little discretionary income) does not help the economy much either. We have both now…
    Also agree about immigration and open borders… this is a lousy country to be a poor, low skill worker… bringing in more such does not help.

    Kary: Not many new roads needed, but those old roads decay under heavy truck traffic and neglect and are in bad shape. And for the life of me I can’t figure out why the roads around Seattle are in such bad shape. I lived in the upper midwest for 25 years and the temps would range from -20 to 100, while around here there is hardly ever a hard freeze and it rarely breaks 90!? At least the bad roads keep the auto repair shops busy :-)

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  23. Blake

    Hye Kary… I saw this last week and wondered… is this as crazy as it sounds? I may not get the nuances, but it smells bad… “Ta Da paperwork”!! :-)
    http://nypost.com/2014/03/12/wells-fargo-made-up-on-demand-foreclosure-papers-plan-court-filing-charges/

    My partner is a prosecutor and several colleagues have been trying to talk her into leaving the AG’s office to go private to go after these kind of scoundrels… It seems like there is enough of this kind of crap going on to keep her going til retirement!? No?

    Reminds me of this Chanos interview last year about a “Fiduciary Duty to Cheat”…
    http://www.alternet.org/economy/fiduciary-duty-cheat-stock-market-super-star-jim-chanos-reveals-perverse-new-mindset
    … my father also told me that he saw a sea change in corporate America from the 70s through the 90s (when he retired) where they brough in all these slick MBA-financial engineers to goose profits. Ta da!

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  24. Kary L. Krismer

    RE: Blake @ 23 – Hard to tell from that NY Post article. Obviously there have to be procedures when the note was not properly endorsed, and I sort of doubt that the author of that piece would have any understanding what what proper procedure would be. That could even apply to the attorney bringing the suit. And in Washington the proper procedure isn’t even all that clear given the rather unclear case decision that came down on MERS.

    There are a number of attorneys in the area that already bring these types of actions. I’m not sure whether or not they are overloaded (or how you would find out).

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  25. wreckingbull

    RE: Blake @ 22 – Apparently you did not get the memo when you moved here. Roads are evil, mkay? That Mahi Mahi you just bought at Whole Foods was shipped via Sparkling Transport Fairies who glide through the ether with nothing more than a mild whooshing sound.

    On a more serious note, you must not have lived in the Twin Cities. I travel there once per month and fear losing a filling each time I drive.

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  26. Blurtman

    RE: Blake @ 23 – Kill the bankers!

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  27. whatsmyname

    Kary, you may remember posting a link to an article last week about a letter purportedly from 500 “economists” decrying a minimum wage hike as being bad for the poor. You might want to read on for the “rest of the story”

    http://delong.typepad.com/sdj/2014/03/right-wing-economists-phone-it-in-live-from-the-roasterie-cxx-march-17-2014.html

    Although Nobel Laureate Vernon Smith circulated this under his own name, it was written by a staffer at the National Restaurant Association, and distributed by a Washington lobbying firm. That’s the big spoiler, but there is plenty of entertaining less-than-forthrightness and other venal behavior if you have a few minutes to read.

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  28. ChrisM

    RE: whatsmyname @ 27 – Again, if we’re concerned about minimum wage, I propose my solution to end poverty: raise the minimum wage to $200/hour.

    Clearly, that solves the problem.

    Another option is eliminate the minimum wage altogether, but clearly that is an absurd idea.

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  29. whatsmyname

    RE: ChrisM @ 28
    If the problem is getting around reading a two page article, understanding or addressing the post content, or even just thinking; then you clearly have solved the problem.

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  30. Kary L. Krismer

    RE: whatsmyname @ 27 – Interesting, but whenever you see a survey or a letter like that it’s safe to assume someone is behind it. That economists would think that is hardly surprising. They probably teach that every year in their introduction to economics courses.

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  31. Kary L. Krismer

    By ChrisM @ 28:

    Another option is eliminate the minimum wage altogether, but clearly that is an absurd idea.

    It’s unfortunate that unions have such a bad reputation, because making it easier to unionize would be a better solution. That could still lead to unemployment and hardship, but it wouldn’t be such a one size fits all solution as the minimum wage.

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  32. softwarengineer

    RE: Blake @ 23

    And Ever Since Fiat Toook Over Chrysler

    And eliminated a lion’s share of the business MBA control of the design [IOWs, the engineers took it back over and stopped penny pinching], because Fiat has no background on heavy duty vehicle design with good mpgs anyway….the company has prospered….lately better than Toyota, GM and Ford….

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  33. softwarengineer

    RE: Kary L. Krismer @ 31

    Yes Kary

    No union pay and benefits in Seattle means one thing…..a doomed high priced real estate market, after the “old money” dries up soon….even new Boeing machinists could benefit from a $15/hr minimum wage, the lower tier makes less than that.

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  34. Kary L. Krismer

    RE: softwarengineer @ 33 – And therein lies the quandary. If you increase the earnings of a lot of people, prices go up. I think those earning a living would still see a net benefit, but those living on a fixed income would suffer.

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  35. Kary L. Krismer

    NPR is covering the cost of college issue:
    http://www.npr.org/2014/03/18/290868013/how-the-cost-of-college-went-from-affordable-to-sky-high?utm_medium=facebook&utm_source=npr&utm_campaign=nprnews&utm_content=03182014

    Two things they mention. In the 70s the feds apparently switched their support from grants to schools to support for loans.

    Earlier than that women started going to college in greater numbers. Like with housing and the effects of more women earning a living, that impacted price in an upward trajectory.

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  36. softwarengineer

    RE: Kary L. Krismer @ 35

    Ironically Since Obama Took Over

    There are less women in the work force now. Perhaps its likely because the rehiring after the 08 layoffs was mostly men.

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  37. softwarengineer

    RE: softwarengineer @ 7

    Malaysian 777 Attacked/Abducted by the Dragon’s Triangle Unknowns?

    Its now in MSM:

    “…Amid all the rumors and speculation on what has happened to Malaysian Flight MH370, is a place little mentioned in mainstream media. This location is near the flight path of MH370 and has been described as more mysterious and more dangerous than the Alantic’s Bermuda Triangle….”

    http://beforeitsnews.com/alternative/2014/03/malaysian-flight-mh370-another-victim-of-the-pacific-oceans-bermuda-triangle-dragons-triangle-videos-2916974.html

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  38. Kary L. Krismer

    The Fed implicitly calls the unemployment data bogus.

    http://www.reuters.com/article/2014/03/19/us-usa-fed-idUSBREA2I07520140319

    And Israel thinks Obama is weak and feeble.

    http://guardianlv.com/2014/03/israel-disappointed-by-obama-foreign-policy/

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  39. wreckingbull

    RE: softwarengineer @ 32 – The bean counters have designed a hell of a truck. I leaned against my Ram 1-ton while talking to a neighbor and put a dent in the sheet metal. Biggest POS I have ever owned, except for the mighty ISB under the hood, which of course is not a Chrysler product.

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  40. Blake

    By softwarengineer @ 32:

    RE: Blake @ 23

    And Ever Since Fiat Toook Over Chrysler

    And eliminated a lion’s share of the business MBA control of the design [IOWs, the engineers took it back over and stopped penny pinching], because Fiat has no background on heavy duty vehicle design with good mpgs anyway….the company has prospered….lately better than Toyota, GM and Ford….

    SWE… I hadn’t realized this and I may be in the market for a new car soon. I’ll take a look at Fiat/Chrysler. thx
    It interesting that in the mid-80s, when I got my engineering degree, the story was that US auto manufacturing couldn’t compete because US workers were not up to the task. I read many papers along these lines, but some dissented and said the problem was that US executives viewed their workers as a liability while Japanese execs saw their workers as an easet worth training. (The Japanese had the “condon” cord on the assembly line that allowed any worker to stop the line if they saw defects… US companies wouldn’t dream of that). Then throughout the 80s and 90s the Japanese built US assembly plants and started churning out amazingly reliable vehicles. I have to admit, their design engineers kicked our asses – - but largely thanks to the influence of W. Edwards Deming who gave up on the US managers and moved to Japan. (Of course Japan was churning out ten engineers for every engineer we produced, while we were churning out ten times more lawyers per capita (no offense Kary…)) American companies seem to have largely learned these lessons, but are still too often driven by short term profits. It will be interesting to see how Chrysler does under Fiat’s control…

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  41. Kary L. Krismer

    RE: Blake @ 40 – I have always put the blame at the foot of management, and cited to the fact that they would always outsource smaller cars to the foreign manufacturing. They were stuck in the past.

    Totally unrelated, on the LED bulb news front I bought four of these Philips SlimStyle LEDs from Home Depot with a discount through PSE. $17.33 including shipping and tax for four. Anyway, I like them better than the Philips from last year that had the yellow top. Much better light. And at 10.5 watt for 800 lumen I think they are slightly more efficient too.

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  42. Blake

    By wreckingbull @ 39:

    RE: softwarengineer @ 32 – The bean counters have designed a hell of a truck. I leaned against my Ram 1-ton while talking to a neighbor and put a dent in the sheet metal. Biggest POS I have ever owned, except for the mighty ISB under the hood, which of course is not a Chrysler product.

    Who made the engine? I have a 2000 Mazda B4000 which has an awesome V6. That was the last year they made the engine at the Ford factory in Cologne, Germany… The truck is basically a Ford Ranger and the interior and such ain’t nothing special…. but I think it’ll keep running for a long time! (I drive only about 4,000 miles per year…)

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  43. Kary L. Krismer

    RE: Blake @ 42 – I still have my 89 Ranger. 196,000 miles now, but as of last year it’s no longer a daily driver.

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  44. Blake

    By Kary L. Krismer @ 41:

    RE: Blake @ 40 – Totally unrelated, on the LED bulb news front I bought four of these Philips SlimStyle LEDs from Home Depot with a discount through PSE. $17.33 including shipping and tax for four. Anyway, I like them better than the Philips from last year that had the yellow top. Much better light. And at 10.5 watt for 800 lumen I think they are slightly more efficient too.

    LEDs are amazing and getting better and better. About 30% of electricity is currently used for illumination, so with LED saving 90% we could easily reduce electricity consumption 15-20% or more …and we are! But my tree hugger friends get mad at me when I tell them engineers will save the world…
    http://www.eia.gov/totalenergy/data/monthly/pdf/sec1_3.pdf
    … look at the final column Total Consumption! The Great Recession helped slow everything down, but energy efficiency has kept us from getting back to the previous levels.

    Now… I just hope that after the next market collapse and meltdown the US may invest $1 trillion+ in mag-lev mass transit instead of invading a sh**ty little country or giving massive tax breaks so the rich can horde more money offshore…

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  45. softwarengineer

    RE: Blake @ 42

    And This “Made in America” is BS Hype Too

    Where’s the design engineers visiting the manufacturing plant for “producibility” drawing changes….your MBAs for the NWO like’em 2000-5000 miles away where they don’t upset the on-going safety recall apple cart…ohhhhh….its Japanese built, then its automatically just a gas pedal or floor mat problem, I’m surprised they didn’t blame their faulty airbags on the floor mats too…LOL

    You think the body panels on RAMs are weak? Maybe you’ve mixed Chrysler up with Ford’s new 2015 aluminum truck body panels [weaker, means better?]…..oh, maybe you read Consumer Reports pointless downgrade of Jeep Wranglers’ rough “jeeplike” ride….LOL, that’s why Jeep’s have the highest resale.

    This NWO outsourcing is not only destroying Boeing’s reputation on the 787 [its cracked wings lately], most everyones’ going down the no producibility toilet….

    Back to real estate:

    Here’s a typical real estate pundits’ explanation of the market:

    “…”I think that we’re close enough where the risk/reward is in your favor,” says Ross. “If you wait around and kind of dither here worrying about pennies, you might miss this significant move to the upside. I think your risk/reward is very favorable – with a well-defined stop at prior resistance ($24) which should now be support.”…”

    Its all clear now, we can all breath a sigh of relief now, even with the easing of the QE.

    http://finance.yahoo.com/blogs/talking-numbers/this-could-spell-trouble-for-housing-224654481.html

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  46. wreckingbull

    RE: Blake @ 42 – Cummins makes it in Columbus Indiana. The 5.9 is the best motor ever produced. Many go a half million miles before overhaul. By then there won’t be much truck left.

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  47. pfft

    anyone have any theories on the missing plane?

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  48. Blurtman

    RE: Kary L. Krismer @ 38 – Yellen will likely go down (ugh!) as the George W. Bush of the Fed. Adjust your portfolios accordingly.

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  49. pfft

    By Blurtman @ 48:

    RE: Kary L. Krismer @ 38 – Yellen will likely go down (ugh!) as the George W. Bush of the Fed. Adjust your portfolios accordingly.

    wrong. she is the perfect person. she cares more about jobs than inflation. Besides I though Bernanke was supposed to be the W of the Fed?

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  50. Blake

    By pfft @ 47:

    anyone have any theories on the missing plane?

    Crashed into the water and sunk…

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  51. Blake

    Take a look at figures 2 through 8… 6 and 7 (home and auto sales) are especially ominous… (and we’ve previously discussed here the huge drag that student loan debt will be.)
    Really not much Janet Yellen can do about this… Fed is virtually out of bullets. And the US Coingress ain’t about to provide any fiscal stimulus.
    http://www.sprott.com/markets-at-a-glance/deconstructing-the-us-economy-the-non-recovery/
    To conclude, numerous indicators of the state of the U.S. economy point to a non-recovery:
    – The participation rate is low and supported by baby boomers working more or coming out of retirement.
    – Students (the future labor force) are defaulting on their loans in record amounts.
    – Disposable income is still below its pre-recession level.
    – An ever increasing share of disposable income is being spent on health care, crippling discretionary spending.
    – Higher interest rates are further depressing discretionary spending (home and auto sales).
    – All of which is resulting in anemic business and economic activity.

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  52. Blurtman

    RE: Blake @ 51 – Not news to some. But the MSM continually touts the “improvement” in the unemployment rate. Even the Bernank would describe the target unemployment rate in his dog and pony shows. But one on this board who claimed that retiring boomers accounted for the decline in the LFPR has remained silent at least on this issue.

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  53. Blurtman

    It was amusing to watch Jeff Merkley question Yellen about her response to bank criminality. The Oregon senator reviewed the HBSC money laundering saga, reminded Yellen that Americans were troubled by the double standard, and asked Yellen what she would do when banks broke the law. “I would provide any information to the Justice Department.” Yellen replied twice, to uproarious laughter. When reminded that as head of the Fed, she could take action herself, and again asked what she would do, Yellen paused, and with a deer in the headlights look, after continued blinking claimed that she would have to get back to the senator with her reply. She is a buffoon, and a looming disaster.

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  54. pfft

    By Blurtman @ 53:

    It was amusing to watch Jeff Merkley question Yellen about her response to bank criminality. The Oregon senator reviewed the HBSC money laundering saga, reminded Yellen that Americans were troubled by the double standard, and asked Yellen what she would do when banks broke the law. “I would provide any information to the Justice Department.” Yellen replied twice, to uproarious laughter. When reminded that as head of the Fed, she could take action herself, and again asked what she would do, Yellen paused, and with a deer in the headlights look, after continued blinking claimed that she would have to get back to the senator with her reply. She is a buffoon, and a looming disaster.

    you don’t think the DOJ is the best venue? if a DOT employee sees someone doing 100mph shouldn’t they refer that to the police?

    what would you have her do?

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  55. One Eyed Man

    RE: pfft @ 54

    The point is that the DOJ isn’t the only venue when you’re the offending party’s regulator. If an EPA District Director sees somebody discharging non-permitted toxic waste in the Hudson River should they issue a cease and desist order and levy appropriate fines or just say F-it call the DOJ? I usually prefer a coach who waits till 4th down to send in the punter.

    That said, I’m not as worried about Yellen as Blurt. His thing with Yellen is partly personal. And Yellen probably has a reasonably sophisticated staff to point her toward the lady’s room when she struggles with incontinence and forgets her Depends.

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  56. pfft

    By One Eyed Man @ 55:

    RE: pfft @ 54

    The point is that the DOJ isn’t the only venue when you’re the offending party’s regulator. If an EPA District Director sees somebody discharging non-permitted toxic waste in the Hudson River should they issue a cease and desist order and levy appropriate fines or just say F-it call the DOJ?

    that’s not really a good analogy. Criminal activity should be turned over to the DOJ. Dumping toxic waste is not necessarily a thing you call the police over. it could eventually be.

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  57. Blurtman

    Yellen is exhibiting the typical deceptive practice of a fraudster. She feigns ignorance, or perhaps stupidity, when in reality, she is being purposely deceptive. Even the interested lay person is aware of the Fed’s authority to debar banking execs who commit crimes. How is it possible that Yellen, an assumed competent former SF Fed bank head, is ignorant of the Fed’s regulatory powers? Pleading ignorance or stupidity might be a successful tactic when indicted for fraud, but it is an absolutely unbelievable tactic in a confirmation hearing. Note the word “complaint” below.


    (a) Grounds. The Board may suspend an institution-affiliated party from office or prohibit an institution-affiliated party from further participation in any manner in the conduct of an institution’s affairs when the person is charged in any information, indictment, or complaint authorized by a United States attorney with the commission of, or participation in, a crime involving dishonesty or breach of trust that is punishable by imprisonment for a term exceeding one year under State or Federal law. The Board may remove an institution-affiliated party from office or prohibit an institution-affiliated party from further participation in any manner in the conduct of an institution’s affairs when the person is convicted of such an offense and the conviction is not subject to further direct appellate review. The Board may suspend or remove an institution-affiliated party or prohibit an institution-affiliated party from participation in an institution’s affairs in these circumstances if the Board finds that continued service to the financial institution or participation in its affairs by the institution-affiliated party may pose a threat to the interests of the institution’s depositors or may threaten to impair public confidence in the financial institution.”

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  58. One Eyed Man

    RE: pfft @ 56

    So I guess the FED should have dropped their “Enforcement Action” and let DOJ take care of it? Did Yellen even know what the Fed did in the HSBC case? Her testimony doesn’t seem to reflect much knowledge of the Fed’s action. In her defense, staff people do the actual work, she’s just the boss. You can’t expect her to know what all the little people spend their time doing. She was just a Fed governor at the time of the largest civil penalty for violations of the money laundering regulations. And it was only $165 mil.

    “Press Release
    Federal Reserve Press Release
    Release Date: December 11, 2012
    For immediate release
    The Federal Reserve Board on Tuesday issued a consent cease and desist order against HSBC Holdings plc, London, United Kingdom, (Holdings) and assessed a $165 million civil money penalty against Holdings and its subsidiary in the United States, HSBC North America Holdings, Inc., New York, New York (HNAH). The civil money penalty is the largest the Federal Reserve has assessed as a result of unsafe and unsound practices related to insufficient compliance with Bank Secrecy Act and anti-money laundering requirements, and U.S. economic sanctions.
    Holdings conducts its banking operations in the United States through HNAH, which owns and controls HSBC Bank USA, N.A., (HBUS) and various other bank and non-bank subsidiaries.
    The orders address inadequate oversight by Holdings and HNAH of anti-money laundering controls and U.S. dollar clearing practices used by the firm’s banking subsidiaries in the United States and abroad. A government investigation found that due to these oversight deficiencies, Holdings’ banking subsidiary in Mexico engaged in a substantial number of high-risk transactions with the firm’s subsidiary bank in the United States. Investigations also found compliance gaps at the firm’s subsidiaries in Europe and the Middle East that enabled sanctioned entities to illegally route dollar payments through the U.S. financial system.
    When combined with separate, coordinated actions by the Department of Justice, the District Attorney for the County of New York, and the Office of the Comptroller of the Currency, the payments made by Holdings, HNAH, and HBUS in forfeitures and penalties in connection with the money-laundering and sanctions violations total approximately $1.9 billion. Separate assessments by the Treasury Department’s Office of Foreign Assets Control and Financial Crimes Enforcement Network will be deemed satisfied by payments made to other federal agencies.
    The Federal Reserve’s order requires Holdings to improve its programs and practices to ensure full compliance with the Bank Secrecy Act, anti-money laundering requirements, and U.S. economic sanctions. The United Kingdom’s Financial Services Authority, the home country supervisor of Holdings, has agreed to assist the Federal Reserve in the supervision of the order. ”

    http://www.federalreserve.gov/newsevents/press/enforcement/20121211b.htm

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  59. pfft

    By Blurtman @ 57:

    Yellen is exhibiting the typical deceptive practice of a fraudster. She feigns ignorance, or perhaps stupidity, when in reality, she is being purposely deceptive. Even the interested lay person is aware of the Fed’s authority to debar banking execs who commit crimes. How is it possible that Yellen, an assumed competent former SF Fed bank head, is ignorant of the Fed’s regulatory powers? Pleading ignorance or stupidity might be a successful tactic when indicted for fraud, but it is an absolutely unbelievable tactic in a confirmation hearing. Note the word “complaint” below.


    (a) Grounds. The Board may suspend an institution-affiliated party from office or prohibit an institution-affiliated party from further participation in any manner in the conduct of an institution’s affairs when the person is charged in any information, indictment, or complaint authorized by a United States attorney with the commission of, or participation in, a crime involving dishonesty or breach of trust that is punishable by imprisonment for a term exceeding one year under State or Federal law. The Board may remove an institution-affiliated party from office or prohibit an institution-affiliated party from further participation in any manner in the conduct of an institution’s affairs when the person is convicted of such an offense and the conviction is not subject to further direct appellate review. The Board may suspend or remove an institution-affiliated party or prohibit an institution-affiliated party from participation in an institution’s affairs in these circumstances if the Board finds that continued service to the financial institution or participation in its affairs by the institution-affiliated party may pose a threat to the interests of the institution’s depositors or may threaten to impair public confidence in the financial institution.”

    that is all civil action. she said if they find criminal actions they turn it over to the DOJ. We don’t even know if the Fed is the point government regulator on this. Could be the Office of thrift or some other office.

    this conversation is pointless w/o a transcript of what she said. I’ve been here too long to know that you guys far too often quote out of context. transcript please.

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  60. Blake

    Sign of the market top?
    3 Reasons To Tap Into Home Equity To Buy Stocks
    http://finance.yahoo.com/news/3-reasons-tap-home-equity-185226024.html

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  61. Blake

    golly… “The Big Lie” still has legs, thanks to the NYTimes and AEI’s Peter Wallison. It’s like the zombie you cannot kill… Facts be gollyed!
    http://www.cjr.org/the_audit/the_nyt_spread_the_big_lie_of.php?page=all
    (… check out the graph showing the housing boom ten years ago as privately issued MBS taking over from Fannie and Freddie – - F&F which stepped back in when it all started to collapse in ’08.)
    -snip- “The GSEs move into subprime came at the tail end of the bubble as they sought to compete with Wall Street, which had decimated its market share in mortgage securities. Or perhaps Fannie and Freddie were just responding to Wallison’s persistent demands for them to loosen their standards. Even then, though, Fannie/Freddie’s low standards were nothing compared to Wall Street’s. The Financial Crisis Inquiry Commission found that just 6 percent of loans in Fannie/Freddie securities defined as subprime by AEI (which is another story in itself) were seriously delinquent, compared to 28 percent of Wall Street’s.”

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  62. Kary L. Krismer

    RE: Blake @ 60 – Another sign–I think condo conversions may be starting up again.

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  63. Blurtman

    At 2:01:00, stammering moron Yellen oblivious about Fed’s power to take action against criminal banks. Again I have to ask, how is it possible that the interested layman is aware of the Fed’s authority to take action against criminal banks and bank execs, but not the Fed chairman?

    http://www.c-span.org/video/?318016-1/hearing-us-economic-outlook

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  64. Kary L. Krismer
  65. Kary L. Krismer

    RE: Blurtman @ 63 – I would cut someone some slack for what they say when being interrogated by a bunch of elected pompous A-holes whose only qualification to fill their position is good hair and party affiliation. Rather than thinking of the appropriate and correct answer a lot of mental energy has to be wasted to keep from entering into an obscenity filled rant insulting every member of the panel who opened their mouth to say something stupid (basically every member of the panel).

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  66. Blurtman

    Just wait till Janet takes action. Oh boy!

    “It’s good to see that a lawsuit providing critical new evidence of systematic foreclosure abuses is getting the attention it warrants. Democracy Now interviewed Linda Tirelli, who filed a Wells Fargo “Foreclosure Attorney Procedure Manual” in a recent case in New York. This document sets forth in considerable detail how attorneys and other staff members should fabricate documents in the event that they are unable to muster up solid evidence that the bank has standing to foreclose. This manual is a smoking gun for foreclosure defense attorneys opposing Wells. Many judges have been reluctant to side with delinquent borrowers and assume that any bank error are mere sloppiness. This manual shows that the bank has institutionalized its practices for deceiving the court.”

    http://www.nakedcapitalism.com/2014/03/democracy-now-discusses-wells-fargo-foreclosure-document-fabrication-manual.html

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  67. Kary L. Krismer

    RE: Blurtman @ 66 – I don’t see that as the type of activity the Fed would be in any way concerned about. I don’t even see the DOJ being concerned about that. That would be left to the states (meaning whatever state the land is in AND NY State because the NY Attorney General typically has political ambitions which result in their suing forjust about anything anywhere).

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  68. mike

    RE: Kary L. Krismer @ 62 – Last time around condo conversions preceded the top by about 4 years.

    Demand for condos still seems low. In neighborhoods where houses and town homes are selling at peak prices there still tend to be a lot of underwater condos. Matt over at urbnlivn commented that only 2 new condo projects have broken I do expect a lot of the newer apartments to ‘go condo’ once demand returns, but I see little evidence that demand has returned just yet.

    If apartments start converting in the far flung suburbs like Bothell and Kent where there is still a lot of SFH construction, I’d see that as a sign of sorts. In city, in dense higher priced neighborhoods, it’s expected.

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  69. Kary L. Krismer

    RE: mike @ 68 – I would agree we’re not far enough along on that for it to show a top just yet. And good point about the newer units eventually being converted. I wonder how many were built with that in mind?

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  70. pfft

    By Blurtman @ 66:

    Just wait till Janet takes action. Oh boy!

    “It’s good to see that a lawsuit providing critical new evidence of systematic foreclosure abuses is getting the attention it warrants. Democracy Now interviewed Linda Tirelli, who filed a Wells Fargo “Foreclosure Attorney Procedure Manual” in a recent case in New York. This document sets forth in considerable detail how attorneys and other staff members should fabricate documents in the event that they are unable to muster up solid evidence that the bank has standing to foreclose. This manual is a smoking gun for foreclosure defense attorneys opposing Wells. Many judges have been reluctant to side with delinquent borrowers and assume that any bank error are mere sloppiness. This manual shows that the bank has institutionalized its practices for deceiving the court.”

    http://www.nakedcapitalism.com/2014/03/democracy-now-discusses-wells-fargo-foreclosure-document-fabrication-manual.html

    janet yellen is the best available candidate if you want more regulations on banks…

    http://www.reuters.com/article/2013/11/14/us-usa-fed-yellen-regulation-idUSBRE9AD13H20131114

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  71. pfft

    By Kary L. Krismer @ 67:

    RE: Blurtman @ 66 – I don’t see that as the type of activity the Fed would be in any way concerned about. I don’t even see the DOJ being concerned about that. That would be left to the states (meaning whatever state the land is in AND NY State because the NY Attorney General typically has political ambitions which result in their suing forjust about anything anywhere).

    pretty much. also they are usually Democrats.

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  72. mike

    RE: Kary L. Krismer @ 69 – Yeah, I’d like to see some actual #’s on it – but one thing is clear, a lot of those new “luxury” buildings in Ballard have very downscale finishes in them, as if they’re only planning for them to last a few years before the remodel.

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