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.

123 responses to “Weekly Open Thread (2014-03-31)”

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  1. pfft

    By Ira Sacharoff @ 88:

    RE: Erik @ 85
    I may be a fit stud, but I’m also a fat stud. According to the charts, I’m 35 pounds overweight. I don’t take in a ton of calories, I hike, I garden,I go to the gym, I eat healthy foods. I wouldn’t trust those who’d make the decisions on who pays more for health insurance premiums. I’m paying more now cause I’m an old fart and not poor enough to get a subsidy. So the monthly premium for my wife and me more than doubled as a result of the “Affordable Care ” act. But if they decided to add other things to determine the premium, they’d charge more for things like total cholesterol. Half the people who die of heart disease have normal cholesterol. I can see charging a higher premium for smokers, or for people whose typical breakfast consists of Twinkies, potato chips, and Pepsi.

    forget the charts. get a scale that gives you bmi, body fat and muscle % readings. body fat % don’t lie!

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  2. Ron

    RE: Erik @ 85

    “Anyone that is fat should pay more”

    quote of the day! thank you. I needed a quick laugh.

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  3. Erik

    RE: Ron @ 102
    My pleasure. I was laughing to myself as I typed it.

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  4. Kary L. Krismer

    Here’s an article explaining why the corporate income tax should be repealed, and replaced with higher taxes on the owners of the stock (similar to what I proposed a week or two ago).

    http://taxvox.taxpolicycenter.org/2014/04/04/two-ways-to-fix-the-corporate-income-tax-internationalize-it-or-kill-it/

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  5. Kary L. Krismer

    This is interesting. This isn’t the IRS going after Redfin, but from what’s described I can see that happening.

    http://www.inman.com/2014/02/12/redfin-accused-of-misclassifying-employees-as-independent-contractors/?utm_source=20140403&utm_medium=email&utm_campaign=newsflash

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  6. Kary L. Krismer

    And in yet more breaking news, it turns out not all the houses in Seattle are affordable!

    http://www.king5.com/news/cities/seattle/homes-unaffordable-in-Seattle-253891111.html

    Seriously, is there any place in the country with a halfway decent economy where at least some of the houses are not unaffordable? I’m surprised that they only think it’s 1/3rd.

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  7. Blake

    By Kary L. Krismer @ 104:

    Here’s an article explaining why the corporate income tax should be repealed, and replaced with higher taxes on the owners of the stock (similar to what I proposed a week or two ago).

    http://taxvox.taxpolicycenter.org/2014/04/04/two-ways-to-fix-the-corporate-income-tax-internationalize-it-or-kill-it/

    Oooo… another tax “reform” proposal from the American Enterprise Institute and Pete Peterson… I wonder WHO that might benefit? They are known for their altruism and always put the public ahead of THEIR private interests… Hmmmm

    It may take another, larger crash, but their “straw man” ideas about internationalizing the tax system so the corporations don’t have anywhere to hide their profits may have more legs in the future. I also think that a small world-wide tax – of 0.01% or so – on fanancial transactions (“Tobin tax”) is what will be needed to reign in the rampant speculation and hot money that destabilizes markets around the world. The people around the world will increasingly realize that the corporations and oligarchs have total contempt for the nation state’s rules and laws and will continue to destabilize the system. But it is obvious from our Supreme Court rulings that our government will incresasingly be under the control of these people – Pete Peterson et al. – and they will continue to enrich themselves and shift taxes onto the weak and powerless… Hey, it’s only greed and self interest! That’s what they do! (And don’t for a minute pretend that they are motivated by anything beyond $$$$!)

    btw: The Tobin “financial transaction tax” has a large and growing number of supporters across the political spectrum: http://www.cepr.net/documents/ftt-support.pdf

    One is David Stockman (former Reagan Budget official – for you young ‘uns…)
    This is a great piece he wrote this week:
    http://davidstockmanscontracorner.com/2014/04/01/bubbleberg-news-lp-why-we-are-plagued-with-drivel-mascarading-as-financial-reporting/
    -snip- “One of the evils of massive over-financialization is that it enables Wall Street to scalp vast “rents” from the Main Street economy. These zero sum extractions not only bloat the paper wealth of the 1% but also fund a parasitic bubble finance infrastructure that would largely not exist in a world of free market finance and honest money.

    Needless to say, the parabolic rise in financial sector profits from about 1.25% of GDP prior to Camp David to 4.25% of GDP today—call it a round $500 billion per year—is only the tip of the ice-berg. What lies beneath, according to the Commerce Department numbers crunchers, is “value-added” of some $3.75 trillion in the FIRE sector (finance, insurance and real estate), which generates the aforementioned accounting profits and consists primarily of compensation.

    Here the uplift is even more dramatic. The FIRE sector’s 800 basis point gain from 14% of GDP in 1970 to 22% at present rounds to about $1.4 trillion. That’s the bloat from financialization—which is to say, the infrastructure of bubble finance.”

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  8. Kary L. Krismer

    RE: Blake @ 107 – Well you apparently prefer the current system where corporations produce less, employ fewer people and when they do things they do so in places which are less likely to be the United States. And even worse, the current system has the United States basically subsidizing the corporate income tax of virtually every other country.

    Who does that benefit?

    I do find it somewhat ironic that corporations are treated with such a broad brush. Simultaneously they apparently take advantage of all their employees while at the same time paying them so much that it causes housing prices to rise. If your analysis begins and ends at _________ is evil, then chances are you are wrong, and that is true when you’re talking about corporations. Some are good and some are bad, but virtually all of them will try to find ways of minimizing their tax hit.

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  9. pfft

    LOL.

    Ryan wants to take health care away from millions of people and replace it with … uh … something
    http://www.dailykos.com/story/2014/04/04/1289681/-Ryan-wants-to-take-health-care-away-from-millions-of-people-and-replace-it-with-uh-something

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  10. pfft

    By Kary L. Krismer @ 4:

    Here’s an article explaining why the corporate income tax should be repealed, and replaced with higher taxes on the owners of the stock (similar to what I proposed a week or two ago).

    http://taxvox.taxpolicycenter.org/2014/04/04/two-ways-to-fix-the-corporate-income-tax-internationalize-it-or-kill-it/

    I laughed and stopped reading when I read “In a paper funded by the Peter G. Peterson Foundation.” that dude has been trying to cut SS for YEARS. He’s a former CEO of…Lehman Brothers and the Blackstone group. Whatever plan he has to tax owners of stock his lawyers and accountants will probably figure a way out from.

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  11. pfft

    By Blake @ 7:

    By Kary L. Krismer @ 104:
    Here’s an article explaining why the corporate income tax should be repealed, and replaced with higher taxes on the owners of the stock (similar to what I proposed a week or two ago).

    http://taxvox.taxpolicycenter.org/2014/04/04/two-ways-to-fix-the-corporate-income-tax-internationalize-it-or-kill-it/

    Oooo… another tax “reform” proposal from the American Enterprise Institute and Pete Peterson… I wonder WHO that might benefit? They are known for their altruism and always put the public ahead of THEIR private interests… Hmmmm

    It may take another, larger crash, but their “straw man” ideas about internationalizing the tax system so the corporations don’t have anywhere to hide their profits may have more legs in the future. I also think that a small world-wide tax – of 0.01% or so – on fanancial transactions (“Tobin tax”) is what will be needed to reign in the rampant speculation and hot money that destabilizes markets around the world. The people around the world will increasingly realize that the corporations and oligarchs have total contempt for the nation state’s rules and laws and will continue to destabilize the system. But it is obvious from our Supreme Court rulings that our government will incresasingly be under the control of these people – Pete Peterson et al. – and they will continue to enrich themselves and shift taxes onto the weak and powerless… Hey, it’s only greed and self interest! That’s what they do! (And don’t for a minute pretend that they are motivated by anything beyond $$$$!)

    btw: The Tobin “financial transaction tax” has a large and growing number of supporters across the political spectrum: http://www.cepr.net/documents/ftt-support.pdf

    One is David Stockman (former Reagan Budget official – for you young ‘uns…)
    This is a great piece he wrote this week:
    http://davidstockmanscontracorner.com/2014/04/01/bubbleberg-news-lp-why-we-are-plagued-with-drivel-mascarading-as-financial-reporting/
    -snip- “One of the evils of massive over-financialization is that it enables Wall Street to scalp vast “rents” from the Main Street economy. These zero sum extractions not only bloat the paper wealth of the 1% but also fund a parasitic bubble finance infrastructure that would largely not exist in a world of free market finance and honest money.

    Needless to say, the parabolic rise in financial sector profits from about 1.25% of GDP prior to Camp David to 4.25% of GDP today—call it a round $500 billion per year—is only the tip of the ice-berg. What lies beneath, according to the Commerce Department numbers crunchers, is “value-added” of some $3.75 trillion in the FIRE sector (finance, insurance and real estate), which generates the aforementioned accounting profits and consists primarily of compensation.

    Here the uplift is even more dramatic. The FIRE sector’s 800 basis point gain from 14% of GDP in 1970 to 22% at present rounds to about $1.4 trillion. That’s the bloat from financialization—which is to say, the infrastructure of bubble finance.”

    we desperately need a FTT. We could use the money for infrastructure, free college tuition, green energy and to police wall street. All those investments will both tax wall street and cut down on inequality.

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  12. Blake

    By Kary L. Krismer @ 108:

    RE: Blake @ 107 – Well you apparently prefer the current system where corporations produce less, employ fewer people and when they do things they do so in places which are less likely to be the United States. And even worse, the current system has the United States basically subsidizing the corporate income tax of virtually every other country.

    So you are assuming all that is true because of our onerous corp tax rates? You know, for 30 years their lobbiests and paid Reps have been modifying our corp codes so that corps pay less and LESS and get all sorts of write-offs and accelerated depreciations for doing things they probably would do anyways (like oil depletion!) So it is absurd for you to imply that the fact that corporations are not sharing their profits with their workers and expanding plants and investments is because of these horrible corporate tax codes that they largely wrote!?!? Where have you been the last 30 years?

    Kary: “If your analysis begins and ends at _________ is evil, then chances are you are wrong, and that is true when you’re talking about corporations. Some are good and some are bad, but virtually all of them will try to find ways of minimizing their tax hit. ”

    I never used the word “evil”… you did. I just pointed out that corporations will constantly pursue profits and $$$$ . If you think that is evil then maybe you are onto something! (I think the Bible, Thucydides and a few other sources from the last 3,000 years of history may back you up on this…) These corporations act to influence public opinion and policy thru their groups like AEI and leaders like Pete Peterson and so their recommendations for “reform” should be taken with a pillar of salt! And what makes you think that ANY “reform” that THIS Congress would pass would benefit anyone except the rich and powerful!? But perhaps they may be incompetent and propose reforms that force them to pay a larger share of the tax burden… Ha hah hah hah!!! OMG s’funny!!

    Love of power, operating through greed and through personal ambition, was the cause of all these evils. -Thucydides

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  13. Kary L. Krismer

    RE: Blake @ 112 – I’m not suggesting that they are not sharing their profits because of the tax code. What I am saying is that they are moving work out of the country because of the tax code. What I am saying is they are engaged in fewer projects because of the tax code. What they pay their workers would vary by company, as it does now. But without a corporate income tax there would be a lot more economic activity in this country, even if the government made up 100% of that revenue from shareholders.

    BTW, the reason Congress might not be willing to go this route, beyond the political fact that they’ve vilified corporations for years, is that they like having this control. If they want something to occur (e.g. low income housing), they can make that happen by providing tax breaks. IMHO it would be better if everything had that same level of economic activity, not just the areas picked by Congress.

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  14. wreckingbull

    I get my nutrients from this thing they call ‘healthy food’. You all should try it!

    http://annals.org/article.aspx?articleid=1789253

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  15. whatsmyname

    RE: Kary L. Krismer @ 113
    No one is forced to use a corporation to create economic activity. Like the old joke about divorce, corporations are expensive because they are worth it.

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  16. Blurtman

    RE: Blake @ 107 – Vast rents paid to a crime ridden industry with a guaranteed unlimited USG backstop.

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  17. ChrisM

    RE: Kary L. Krismer @ 113 – About 10 years ago I listened to a books-on-tape history of Coca-Cola (I think it was http://www.amazon.com/For-God-Country-Coca-Cola-Definitive/dp/0465029175) which was fascinating because at one point they were the equivalent of the 90’s era Microsoft – an innovative company absolutely drowning in money that they refused to return to the shareholders. This was in the 19th century.

    IIRC, the government forced them to declare dividends so that it could be taxed. The govt. needed money and Coke was a tempting target with all their cash.

    At the time I thought the author didn’t understand the full ramifications – essentially it was govt. confiscation of a targeted company. I remember thinking that set a precedent, so the govt. could do the same to today’s Microsoft.

    It is an interesting thought experiment. Were I benevolent dictator I’d probably eliminate corporate taxes, but at the same time I’d eliminate taxes on dividends and eliminate the H1B program (replacing with a simpler visa program that allows talented foreigners in with the expectation they assimilate and apply for citizenship). I’ve long thought if companies were incentivized to return profits via dividends it would fix a ton of problems. You can’t fake a dividend cash payout (at least not for 2 successive quarters)… I would also seek jail time for board members if it is determined that corporations have committed a crime.

    Farm subsidies go away, military switches to defensive mode, the country turns xenophobic, we switch to a French 20 hour work week, it would become a paradise!!!

    WHO’S WITH ME? CHRISM FOR DICTATOR FOR LIFE!!!!!

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  18. ChrisM

    RE: Blake @ 96 – “Here’s the recipe for anyone interested… best stuff EVER!”

    Thanks! I’m firing up my first batch of dandelion wine. This is a decent recipe:
    http://www.homebrewtalk.com/f79/dandelion-wine-21095/

    I’ll have to try ginger mead – I did mead about 10 years ago, and am planning on building a beehive this year (we hosted 16 hives last year). YUM.

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  19. ChrisM

    RE: wreckingbull @ 114 – “I get my nutrients from this thing they call ‘healthy food’.”

    The tough part is finding healthy food in the first place. http://www.amazon.com/Storeys-Guide-Raising-Pigs-Edition/dp/1603424733 states that corn protein in the 20’s was *significantly* higher than today. (This is for animal feed, but I find it is relevant for people as well. The sugar vs. protein content in corn is absolutely astonishing when comparing 30 years ago vs. today.)

    My point is there is clear evidence that today’s produce does not have the same nutritional components as produce from 30+ years ago. Additional evidence at http://www.amazon.com/Eating-Wild-Side-Missing-Optimum/dp/0316227943/

    I’m lucky enough to be able to grow my own meat & produce. But the ordinary consumer (especially earning less than the median income) has a tough time of purchasing good food.

    I’ll be blunt – people on the bottom third of the economic scale have little choice but to succumb to an unhealthy diet. Per pound, broccoli is probably more expensive than ground beef. It should not be this way, especially when one understands the required inputs..

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  20. wreckingbull

    RE: ChrisM @ 119 – Unless we are talking about inner city, high-poverty, neighborhoods, this whole accusation that we are forced to eat unhealthy meals is complete bunk.

    If you want to argue that people don’t make time to cook anymore due to work-life balance problems, fine. That is reasonable.

    Take a look around you in line at the grocery store or Costco, or even your local co-op!! Note what people are buying. Expensive, pre-processed foods. Don’t like supermarket produce? Farmer’s markets offer a reasonably-price alternative. I think you would be amazed at how low ones budget can be if they cook from scratch.

    Ironically, the most expensive items on my budget are my home-sourced chicken and duck eggs. When I amortize out the cost of their coops, those are some expensive eggs. I raise them for fun, not profit. Nothing is more hilarious than watching three Pekins explore your yard.

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  21. Kary L. Krismer

    By ChrisM @ 117:

    RE: Kary L. Krismer @ 113 – About 10 years ago I listened to a books-on-tape history of Coca-Cola. … This was in the 19th century.

    IIRC, the government forced them to declare dividends so that it could be taxed. The govt. needed money and Coke was a tempting target with all their cash.

    At the time I thought the author didn’t understand the full ramifications – essentially it was govt. confiscation of a targeted company. I remember thinking that set a precedent, so the govt. could do the same to today’s Microsoft.

    I don’t know that my proposal would be concerned by that, because I would get rid of the capital gains rate, so when the stock was sold there would be a tax. Note though I’m not caring about timing of the tax coming due. If you tax activity at the corporate level you have a taxable event earlier than if you tax a dividend and probably much earlier than if you tax a sale of the stock. I don’t worry about that because the extra activity (e.g. employee expense) of the corporation should counter the delay of any revenue.

    By whatsmyname @ 115:

    RE: Kary L. Krismer @ 113
    No one is forced to use a corporation to create economic activity. Like the old joke about divorce, corporations are expensive because they are worth it.

    Corporations, like partnerships, allow the pooling of resources to allow larger tasks to be performed. Corporations also limit risk of the investors in that they are not typically personally liable for the acts of the corporation, beyond their investment in it.

    The Republicans like to spout off about how important small businesses are, and they probably are fairly important. But small businesses exist in virtually every country. I would guess that more people probably owe generating six figure incomes to corporations than small business (particularly if you include health care benefits as income).

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  22. Erik

    RE: wreckingbull @ 114
    Food is a better source for sure. I just take the probiotic and that is it. No vitamins.

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  23. redmondjp

    RE: wreckingbull @ 120 – You missed his point completely – even if one does eat ‘healthy,’ the nutritional value of the food is not what it once was, say a half-century or longer ago (before Big Agra took over).

    We live in an age when the toxic- and pharmaceutical-laden sewage sludge from Seattle is trucked to Eastern WA and spread onto food-crop fields and called fertilizer. If it’s true that you are what you eat, we are full of ____!

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