Weekend Open Thread (2009-05-22)

Here is your open thread for the weekend beginning Friday May 22nd, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

82 comments:

  1. 1
    Trigger says:

    Today the futures are pointing to a bull run. But is it a bull run or just a bear market rally? Do you believe that GDP will only fall 1-2% this year?

    I think the Fed is becoming successful at reviving a rally thru printing money or adding money supply like crazy. So if money supply contracts – you just add more money into the system and you are all set. So people who said that the Fed will not be able to catch up with the speed that money supply is contracting were wrong after all?

    If this is true – then real estate just needs to go down another say 20% in Seattle area and then we are all set. It will start coming back. It will grow say 2% per year from then on and it will be profitable to buy a house as opposed to rent a house.

  2. 2
    Cheap South says:

    Trigger; I am just happy that is May and the wife and I still have a paycheck each!!!

  3. 3
    What The Heck says:

    With all the talk about short sales – I have a couple of questions. Seems to me that there were two types of foreclosures a lender could choose:

    Judicial – Owner on the hook for the deficiency after sale of the home

    Non-Judicial – Owner walks and bank writes off any loan balance remaining after sale.

    I may not have the terms correct or just don’t understand the process.

    If there are two types of foreclosure options, why don’t the banks go after the loan balance routinely via the Judicial route? Seems this would keep people from walking when they could actually make the payment – or is the “short sale” a compromise between the lender/borrower in lieu of Judicial Foreclosure?

    Thanks

  4. 4
    Trigger says:

    RE: Cheap South @ 2

    Cheap South – Look at this:
    http://money.cnn.com/2009/05/22/news/economy/State_unemployment/index.htm?postversion=2009052211

    Unemployment is going down. People are investing hard. It is crazy. It is as if the sizzle was about to start. But I am not 100% sure. Because earlier growth was based on real estate building – so if you have no subprimes – then the recovery will be slow. So it might not be a big sizzle but rather things staying stagnant. But the uneomployment may never reach say 15% or 25% using earlier calculations. So you are likely to keep your job and maybe get a bonus down the road!

  5. 5
    Kary L. Krismer says:

    RE: What The Heck @ 3 – If the property is the owner’s residence, they’ll likely get to stay there rent free for 12 months as part of the homestead rights. And there’s a redemption period also. And it’s probably more expensive and invites countersuits.

  6. 6

    RE: What The Heck @ 3
    Lenders have traditionally preferred non judicial foreclosures in this state because it’s a much faster and less expensive process.

  7. 7
    lilypad says:

    Okay, there’s not that much going on right now, so please help me with this: what should we do?

    Scenario #1—list the home, and in order to keep it from being a short sale but to price it aggressively, we would have to sell some other assets—2 cars—and decimate our emergency savings to bring $$ to closing but would hopefully emerge with the house sold and excellent credit intact. (We’d need that excellent credit to get another car!)

    Scenario #2—stay in the home, but use every last dime in emergency savings account and possibly sell a car later on in order to keep paying for it and hope that the market improves enough to sell in the next year or so

    Scenario #3—admit we’re doomed and prices are not coming back for 10 years, let it go to foreclosure, ruin excellent credit but emerge with more emergency savings left (enough to pay deposits on a rental) because of that whole “free rent” (sarcastic) part of the foreclosure process.

    Please note—this circumstance has come about because we bought at the peak, yes we should have known better, blah blah blah so please spare me the moralizing. We are stuck with one income that cannot increase and serious health issues so a 2nd income is out of the question. If you can offer advice without yelling at me, great, I would appreciate that. Thanks!

  8. 8
    patient says:

    lilypad, I’m not comfortable with telling you what you should do but I can tell you what I would do to get you another persons input to your own decision making. If the loans are structured so that the lenders can not or most likely will not go after my other assets I would stop paying and mail the keys to the lender, find a rental and go on with life. If scenario 3 would mean destruction of other assets I would choose scenario 1. Again this is not advice that takes your personal situation into account, just what I would do.

  9. 9
    lilypad says:

    RE: patient @ 8 – Thanks for the input. There are no other assets, but no other debts, either. Don’t worry, I’m not going to sue anyone for giving me advice. :-) I just want others’ opinions because I don’t know much about economics (I have a liberal arts degree, hah), I’m busy keeping my kid fed and clothed and bathed so I find it overwhelming when you all are arguing about what the future holds for the region, the nation, etc.

  10. 10
    What The Heck says:

    RE: lilypad @ 9

    Do you know if your loan is with Freddie Mac or Fannie Mae?

    Have you discussed the loan modification program with your lender? I don’t know the pariticulars but this was put out by the Obama administration as a way for troubled homeowners to get help.

    Just a thought – I only know what I read in the paper (scary thought)

  11. 11
    lilypad says:

    RE: What The Heck @ 10 – Thanks for the tip—yeah, we have talked with our lender and they are supposedly looking at it. I have no confidence in that, though—it’s kind of a Catch 22, since we do have some emergency funds in the bank, it looks like we’re not a sad enough situation to get help, when actually the reason we have money in the bank (and have stayed current on the payment) is that we have scrimped and saved and gone without and sold stuff and we can’t do that indefinitely. The payment is simply too high. The Obama plan is supposed to lower your payment if it’s over 31% of your income (don’t quote me, this is from memory) and ours is way higher, which of course we can prove by pay stubs or whatever. In a “normal” time we would sell or refinance. We tried to sell last year when we first realized we were in trouble. Also we are not happy here for numerous reasons and the thought of toughing it out for another ten years really stinks. I would love to be in a rental that better suits our family’s needs. My kid wants to build a time machine so we can go back and fix this. That’s scenario #4, I guess!

  12. 12
    Scotsman says:

    RE: lilypad @ 7 – I’d check with an attorney about the specific structure of my loan first. Make sure you fully understand what they can and can’t do to you. If they can’t come after other assets or future income, I’d probably walk. I don’t think you can expect things to get markedly better for years and years. Take what little you have and get to work rebuilding a more secure and sustainable life style. and future. Live well within your means. Save more every month. The loan was a business deal with all the consequences and benefits spelled out for both sides and any decisions you/they may make. The only ethical issue is whether you choose to stay payment free during the foreclosure, or move out to rent. I’d move, but understand those who chose differently.

    I wouldn’t worry so much about credit. I know people who have filed for bankruptcy, and you’ll be surprised how soon the credit offers start flowing in. Situations such as yours will become increasingly common, almost the norm. Standards and laws will change in response. The need for credit is a myth- your ATM card will do everything a credit card does, except allow you to spend money you don’t have. And that’s a lesson you should should have learned by now. If not, here’s your chance to get it right going forward. Good luck!

  13. 13
    Marc says:

    lilypad,

    It sounds like you would really benefit from independent and unbiased advice. There are countelss scammers out there so be careful. Fortunately, there are some bona fide organizations out there that may be able to help you or give you free advice like Solid Ground (http://www.solid-ground.org/Pages/Default.aspx) or programs from government agencies like Fannie Mae (http://www.makinghomeaffordable.gov/), HUD (http://www.hud.gov/offices/hsg/sfh/hcc/fc/), etc.

    An extremely important fact in determining your best course of action is the type of financing you used to purchase the home, i.e., a first mortgage only or a first and a second mortgage, because this goes to the sort of recourse that is available against you.

    I counsel people facing foreclosure farily often and I’d be happy to help if I can. But, I cost money so look into the free options first.

  14. 14
    S-Crow says:

    Got gas last night on way home and a the guy gassing up on the other side of me was talking about everyone leaving early for the weekend. He dropped some garbage into the garbage bin next to me and I noticed he was packing a gun right out in the open, holstered and all.

    This morning I got gas for my wife’s car. I couldn’t believe it. Another guy had an open holstered gun on his side.

    Sheesh. Anyone else see people carrying weapons? Or is Snohomish “just a little different.”

  15. 15
    Marc says:

    S-Crow

    You gotta love the law:

    Washington State Constitution –

    SECTION 24 RIGHT TO BEAR ARMS. The right of the individual citizen to bear arms in defense of himself, or the state, shall not be impaired, but nothing in this section shall be construed as authorizing individuals or corporations to organize, maintain or employ an armed body of men.

    In Seattle it’s pretty easy: http://www.seattle.gov/police/contact/records.htm#permit

  16. 16
    S-Crow says:

    Marc,

    I was thinking to myself, gee, I just witnessed first hand what we’ve read about with lots of people buying or owning guns. The one guy looked like he was going on a camping trip and I think I heard on the radio something about our National Parks allowing people to carry. Maybe I’m wrong.

    On the other hand, these characters looked like they had their stuff together and probably were very well versed in gun safety. But, you sure couldn’t miss those sidearms on the hip. One of the pistols looked quite large, similar to an Isreali Arms Desert Eagle 44……not that I know anything about guns.

    Anway, back to real estate….

  17. 17
    deejayoh says:

    By Trigger @ 4:

    Unemployment is going down.

    I am curious about your definition of “down”

    from the article you linked:

    Nationally, the unemployment rate rose to 8.9% in April, up from 8.5% a month earlier.

  18. 18
    What The Heck says:

    RE: S-Crow @ 14

    I lived in Anchorage for 10+ years and it was common to see folks in the outlying areas packing a piece.

    At the time no law against, as long as you did not conceal it.

    Maybe Snohomish is an outlying area? (kidding)

    Gun sales are up nationwide and even some retailers have reported running out of ammo at times.

    If the govt bonds go junk, maybe we’ll all be carrying some self-defense.

  19. 19
    David Losh says:

    RE: S-Crow @ 16

    The open carry law of Washington State has been gaining followers.

    In Seattle you can get a Concealed Pistol Permit which allows you to carry a pistol under your coat. It was a Concealed Weapons Permit until a few years ago, maybe ten years ago,

    The price of pistols such as Uzis, or Styer SPPs, H&K SP 89s, or even cheaper high capacity pistols have gone through the roof. So the open carry law is being promoted as an alternative to high gun prices.

    Another aside is that since Obama took office the price of guns went up. The fear was that Obama, a Democrat, would reinstate the ban on assault weapons.

    Those that follow such things noticed in Obama’s campaign he stayed clear of the issue and said directly he had no intention of reinstating the ban. Many people believe that is why he won the candidacy over Clinton a known anti gun advocate.

    The new law that allows guns in National Parks was tied to the Credit Card Bill that Obama signed in to law today. That should quiet the issue for a while.

  20. 20
    Scotsman says:

    Are America’s markets and regulators corrupt, run by a few gangster-like hedge funds?

    http://www.deepcapture.com

    http://www.deepcapturethemovie.com/

  21. 21
    b says:

    lily –

    Are your cars in good shape? Do you plan on renting for the next 3-5 years? If the answer to both is yes, my advice would be to let it foreclose. You need to remember the reason you want to maintain good credit is mainly to get a good rate on a home or auto loan, it is not a measure of self worth. Too many people attach some significance to it beyond the computer generated interest rate it might allow you. If you aren’t planning on taking out a huge loan at a low rate in the next few years, it really is not that big of a deal. A single foreclosure on the record during the biggest foreclosure event in the last 80 years is not something to lose all of your other assets and savings trying to keep out of your Equifax report.

  22. 22
    Racket says:

    By S-Crow @ 16:

    Marc,

    On the other hand, these characters looked like they had their stuff together and probably were very well versed in gun safety.

    I’d almost swear you saw a crime being committed.

    There are over 200,000 gun owners in this state.

  23. 23
    Kary L. Krismer says:

    RE: deejayoh @ 17 – I think the confusion is probably due to new claims being down. Total unemployment, however, is up.

    Sort of like the confusion on Microsoft and earnings and revenue.

  24. 24
    Kary L. Krismer says:

    RE: lilypad @ 7 – I wouldn’t want to advise you here, but I would note the biggest factor might be whether you have a first and second mortgage. If you do, then you’d might as well count the second’s debt as part of your other debt, because it’s unlikely to go away in a foreclosure.

    If you’d like to email me I could send you the names of several very competent attorneys who could advise you legally. No one, of course, can tell you what the market is going to do.

  25. 25
    lilypad says:

    RE: b @ 21 – Good point—the cars are 3 and 4 years old, paid in full, well-maintained, so if we don’t need to sell them to raise cash, they will last a long time. And there’s no way we could afford to buy another house anytime soon no matter what, realistically we’re gonna have to inherit some money in order to have enough buy again. Mr. Lilypad (the Bullfrog??) is worried that if he loses his job, God forbid, he will need a good credit score to get another one. That’s what The Man wants him to think, anyway. So that’s why we’ve been having this conversation (and I’ve been pestering you all for ideas) for the last 8 – 9 months.
    Thanks for sharing your thoughts.

  26. 26
    lilypad says:

    RE: Kary L. Krismer @ 24 – Thanks for your response, Kary. We do have a second mortgage but have devised a plan to pay it off (it’s very painful financially but can be done). Then we’ll be back to a no debt situation. Thanks for the offer to put me in touch with official advice-givers, I may take you up on that. I did speak with someone several months ago. That’s when I found out that the 2nd mortgage was not going to go bye-bye as “easily” as the first. Um, you would hope that I would have known that when I signed on the dotted line for it years ago but I didn’t. When this is all over, I’ll be poorer, but oh so much wiser.

  27. 27
    lilypad says:

    RE: Marc @ 13 – Marc, I appreciate you taking the time to respond. I have talked with a counselor from the Making Home Affordable website, but there’s not much they can say that I haven’t already considered. I mean, they try and not get too specific either, and I assume a “real” lawyer would not be afraid to lay the facts on the line and give me an official recommendation. As I mentioned in my response to Kary, I did talk with an attorney and got the bad news about the 2nd mortgage.

  28. 28
    David Losh says:

    RE: lilypad @ 25

    I’m going to reluctantly reply because there has been a change in the way banks are doing business. It’s a slight change that maybe others can attest to.

    Banks are asking for Financial Information to process a Short Sale or any type of Loan modification. In my opinion they are ramping up to litigate deficiencies. Give them nothing to use against you later, in my opinion.

    Your husband is correct about the job search. Employers looking at credit history have a hard time with foreclosure.

    You need an attorney. You may be stuck with your home. You mentioned serious illness which helps your case, but banks are notoriously hard hearted. You may well need a judge to intercede.

  29. 29
    Kary L. Krismer says:

    RE: lilypad @ 7 – I also occurred to me you should read my latest piece on short sales: http://blog.seattlepi.com/realestate/archives/169061.asp

    The balance owing does not necessarily go away. I sort of wonder whether the Congress and President (Bush I guess) is responsible for this, because in passing the tax relief they didn’t make it clear that the debt doesn’t necessarily go away.

  30. 30
    Kary L. Krismer says:

    RE: David Losh @ 26 – Of course they’re asking for financial information to do a short sale or modification. Why wouldn’t they? I don’t think it’s a sign at all of ramping up for litigation. You’d expect them to do that.

  31. 31
    truthtold says:

    s-crow,
    terrified, packin’ fools are really quite terrified, no? and now they are in the nat’l parks… terrified.

  32. 32
    Kary L. Krismer says:

    The National Parks issue is a joke because they’ve always allowed firearms in National Forests (because of hunting being allowed).

  33. 33
    David Losh says:

    RE: Kary L. Krismer @ 30

    In terms of a short sale it makes no sense. A person is behind three months on payments and the investor has an offer on the table. The bank can ask for financial information to try to get the short seller to perform on the loan. It’s just harassment.

    It would be better to clear the inventory than prolong what isn’t working. It makes no sense.

    In terms of the loan modifications again it would be better for the bank to lower payments than try to re qualify the owner.

    Banks have an obligation to the investors and stock holders. Banks trying to do some kind of business as usual will only hasten the collapse of the system. Banks need to adapt to a situation they created. People are giving them a gift of payments right now, but in a few months or years that will seem foolish.

    Look at the Credit Card bill. It does nothing for the consumers. It only says that in future, if you are stupid enough to use a credit card, the card company has to inform you they will be ripping you off mercilessly.

    The gun law is outside of the hunting season exclusion.

  34. 34
    Kary L. Krismer says:

    By David Losh @ 33:

    Banks have an obligation to the investors and stock holders. Banks trying to do some kind of business as usual will only hasten the collapse of the system. Banks need to adapt to a situation they created.

    I’d agree with this. Even on the REO stuff they don’t manage that at all well, and it’s hurting them greatly–seemingly even more than what they get hurt on short sales.

    But I don’t understand why you think they wouldn’t need financial information to do a short sale. They’re releasing an interest in real property for a partial payment. Why wouldn’t they want to make sure the seller couldn’t make the payments? And to the extent the seller is asking for a personal release (which presumably they would want), why wouldn’t they need to know that the seller’s financial condition is such that they would be very unlikely to collect anything significant? I just don’t see how they could possibly do a short sale without getting significant amounts of financial information.

  35. 35
    David Losh says:

    RE: Kary L. Krismer @ 34

    It’s easy. The property is headed for foreclosure. That is the recourse banks wanted and got. A short sale traditionally costs them less and nets them more than a foreclosure.

    I can’t imagine any one buying a foreclosure today. There is no money in it. That leaves them with the REO. All together it makes sense for the short sale process to be made easier and clear inventory. The bank can ding the sellers credit, but they net more.

    To follow the thought, if the process were simpler the prices would probably stabilize.

    I could never advise a short seller to provide financial information. The banks have the same recourses following a short as they would with the foreclosure. Please spare the judicial or non judicial debate. This is about time and money to the investor.

    The longer the bank takes to get cash into the hands of the investor the more exposure they have to the liability. Let me follow that thought with the fact banks sold these “secured” mortgages to investors. We now know banks knew before any one that the value of the security was light and they sold these “investments” anyway.

    In my opinion investors should be the ones taking banks to court rather than banks taking consumers.

  36. 36
    Joel says:

    RE: Kary L. Krismer @ 32Nope you can’t carry in National Parks. State Parks are ok (depending on the state laws obviously). Open carry is legal in Washington without a permit.

  37. 37
    b says:

    lily –

    I dont know what kind of companies/jobs he works, but I personally don’t think a single foreclosure event, occurring during this time period, would be enough to make an employer decide not to hire him. Most employers who do credit checks are trying to see if you are up to your neck in debt, in which case you may be more inclined to steal or, if this is a military/government job, are inclined to bribery. Some others may raise a flag if you have a long history of being a deadbeat. But anyways, none of those really apply to having one foreclosure, during the biggest foreclosure epidemic in the country, in an otherwise normal credit history

  38. 38
    b says:

    To put it another way, a lack of savings and cushion for unemployment will hinder you FAR more when trying to find a new job than a ding on your credit report.

  39. 39
    mukoh says:

    RE: lilypad @ 7 – #3 is probably best. Prior though, try to negotiate through attorney with your lien holder a short sale price that will get the home moving. No lender wants the home back.

  40. 40
    mukoh says:

    RE: S-Crow @ 14 – I was at school of all places for my kids activities, one of the parents had a guy as well. Some people just love to carry their guns everywhere.

    Most stores in Snohomish are out of ammo too.

  41. 41
    David Losh says:

    RE: mukoh @ 39

    This is dangerous advice.

  42. 42
    David Losh says:

    RE: mukoh @ 40

    Have you checked all the gun stores? Or just most of them.

  43. 43
    mukoh says:

    David,
    To 41.
    Its not really dangerous when the underlying lien holder is CW/BoA, or a few others that are allowing short sales to go through. It should be taken up with an attorney though before proceeding.

    To 42.
    I checked all the major retailers including WalMart which has been out of 9mm and 7.62 for three weeks now. Small guys like Sam’s and Kenmore have it but they have raised prices.
    In the end had to order online.

  44. 44
    BillE says:

    By Kary L. Krismer @ 32:

    The National Parks issue is a joke because they’ve always allowed firearms in National Forests (because of hunting being allowed).

    National Parks and National Forests are managed very differently. This ruling affects National Parks, not National Forests.

  45. 45
    lilypad says:

    RE: Scotsman @ 12 – Scotsman, I think if we could get out from under this, we could easily live within our means—we always did before—and this would just be an aberration on our credit report. And in our lives, because it’s just the most stupid and un-frugal thing we ever did and I want to get past it so I can stop beating myself up about it. When I made my original comment, I was wondering if real estate pros would say “yes, you can sell now, things are better” and that we should jump back in. That hasn’t happened. I always enjoy reading your comments (even when they go over my head, tee-hee) so thanks for your input. Hunkering down here for the next 10 years (while my kid only gets bigger and the yard and house get smaller!) is my least favorite option.

  46. 46
    Kary L. Krismer says:

    By Joel @ 36:

    RE: Kary L. Krismer @ 32Nope you can’t carry in National Parks. State Parks are ok (depending on the state laws obviously). Open carry is legal in Washington without a permit.

    I said national forests, not national parks (the pending legislation covers parks) and that link doesn’t work at all for me.

  47. 47
    Kary L. Krismer says:

    RE: b @ 37 – I have had a client where debt problems affected their right to a security clearance. As I recall just filing a bankruptcy cleared it up, because it was more the stress factor that was at issue. Once the problem was behind him, it was okay. This was years ago though, and I don’t remember the details or even who the client was.

  48. 48
    Kary L. Krismer says:

    By BillE @ 44:

    By Kary L. Krismer @ 32:

    The National Parks issue is a joke because they’ve always allowed firearms in National Forests (because of hunting being allowed).

    National Parks and National Forests are managed very differently. This ruling affects National Parks, not National Forests.

    And that was my point. The anti-gun crowd thinks this idea is awful, when in reality there are plenty of places out in the woods people can carry guns. The rule against carry in National Parks is the odd rule.

  49. 49
    David Losh says:

    RE: Kary L. Krismer @ 47

    A friend on mine was declined a job in a bank because of bad credit, another did have a security clearance issue.

    Bankruptcy is something that never occerred to me as a solution, but that sounds right about the stress,

  50. 50
    David Losh says:

    RE: Kary L. Krismer @ 48

    The legislation is important because it shows a Democratic Congress and President can get passed the gun issue.

    In terms of building bridges with the right wing it goes a very long ways.

  51. 51
    Kary L. Krismer says:

    RE: David Losh @ 50 – I would agree only in that it shows that they aren’t fighting over stupid partisan issues that don’t really mean much. So it’s good in that regard. But it’s not like they’re actually giving much up. It’s not a huge issue on either side. Gun issues can be, but this particular one really isn’t.

  52. 52
    David Losh says:

    The gun issue is huge. It is one of the most divisive.

    The grass roots movement that voted out several members of Congress after the assualt weapons ban showed that legislation has consequences.

    This legislation, tied to credit card regulation, shows that Obama is following through on his promise to reach across the aisle. Republicans wanted something for the banking regulation and they got a victory on guns.

    It’s an important symbolic gesture.

  53. 53
    BillE says:

    I see what you mean now Kary. Most of the arguments I’ve heard against guns in the parks have to do with potential poaching. I don’t buy it. Poachers aren’t concerned about the rules anyway so it’s not like they were unwilling to bring a gun in before.

  54. 54
    what goes up must come down says:

    Considering the gun issue does anyone remember the gal who was hiking and got killed because the kid thought she was a deer, oh that’s right don’t worry about stuff like that because it doesn’t happen. You know what they say about guys with the big guns it is the same thing they say about the guys the with the corvettes.

  55. 55
    Kary L. Krismer says:

    RE: what goes up must come down @ 54 – But the guns at issue in the legislation are for protection. I’m fairly sure they’re not talking about allowing hunting in National Parks.

  56. 56
  57. 57
    Racket says:

    “Considering the gun issue does anyone remember the gal who was hiking and got killed because the kid thought she was a deer, oh that’s right don’t worry about stuff like that because it doesn’t happen.”

    How many people get ran over while drivers are texting.

    People do stupid things, accidents happen.

  58. 58
    Joel says:

    I’m ending the gun debate right here and now.

    Hitler.

  59. 59
    Trigger says:

    RE: Kary L. Krismer @ 23
    But even so it could show the unemployment situation stabilizing. Maybe it will increase say to 12% overall in WA state but the scale of implosion is kind of being cut back. And this could be a good sign.

  60. 60
    Trigger says:

    Putting gun issue aside – did you notice the dollar imploding. It is kind of slow for now. But EUR is back at 1.4 USD again. Not that European economies are sound at this point.

  61. 61
    Kary L. Krismer says:

    RE: Trigger @ 59 – Exactly, it’s a good sign, just not as good as what was indicated. And people do seem to think that unemployment is a lagging indicator. I have a hard time getting my head around that one, but I guess if we can have an organization go in and declare a recession started before it did, we can also have it be over before it is too.

  62. 62
    One Eyed Man says:

    After reading this thread, I’m left felling like I need Aaron Copland to resurect my soul by playing Fanfare for the Common Man. If we’re left clinging to our guns and religion, I’m pretty much screwed cause I’ve only got a crappy little open sight 22 reminiscent of the kind of squirel gun kids in my father’s generation had, and a long standing relationship with my reverand whose a pastor in the Church of Mother Earth. Unfortunately I (and our national economy) am all in with a Jack high stinker of a hand , and I bluff like a ten year old with a hard on. (Everyone can see it but no one believes it.)

    Are we stuck with a national debt we can’t pay and nobody to show us the way back to a sustainable economic future? Well don’t count on the market place to guide you back. The market place would sooner eat you alive than feed you because you’re hungry, unless of course there’s a profit in it. And it’s a global market place that has no great love of america. Are we now also about to wallow in national self pitty because we have to give up the macho self righteous belief that we are the moral and economic leaders of mankind? Well fucking GET OVER IT! We are the common man. No better, and No worse. That’s what it means to be a democracy. And nobody is going to pay you to be the world’s policeman unless you exact a toll like a troll or billy goat gruff, or the Roman Empire.

    The will of the common man shall lead us. That’s what it means to believe in democracy and markets are just a form of economic democracy. I believe in democracy and I believe in a market economy, but I’m not blind enough to believe that either one always yields the best result without a lot of painful ebb and flow. Those who worship the market place as the god of economic salvation are often too stupid to realize that the market place is just a means of choosing resource allocation by the common man voting with the dollar. And unfortunately, that decision is commonly ill informed and based only on a short term analysis of what do I have an appetite to consume today and which of my alternatives is currently cheapest. There is commonly no consideration for the long term macro effects of one’s choice. And choosing short run self interest may leave your national economy as crippled as a world class athelete who chose steroids and now has a body which is burnt out with the testicles of an apple doll. Not much hope for his progeny.

    Have you ever heard the line “the first one’s free.” Well it’s implication of addiction now applies to three different economic stimulants, each of which the pundits sometimes refer to as the life blood of the American economy; credit, consumer goods, and energy. We’re addicted to energy sources we don’t create or control and we have to pay the pusher to keep our economy from going into withdrawal. Not only that, now the same thing has happened with consumer goods. We get them at an artificially low price because foreign labor will work at lower cost and we’re therefore once again dependent on sources of supply we don’t create or control. And we now finance our consumption of energy and consumer goods, along with our national debt, by borrowing from the same foreign sources of supply.

    Way to go market economy. Dumb fucks. Can we get an economic “do over” by printing money? Probably. I think it’s the international economic equivalent of declaring bankruptcy. You’ll have bad credit for years, your standard of living will decrease and you’ll have to give up your status and the benefits of being the reserve currency, but to some degree you’ll get a fresh start.

    The real estate bubble is just a symptom. The inability of the myopic market place to properly evaluate risk is the cause. You can add some regulation to increase transparency but you can’t eliminate the creativity of the market place to come up with new financial bull shit like the shadow banking system to get around regulation. It will happen again, and again, and again. We just have to keep fixing it, with the new deal, and the great society, and the RTC and the TARP, etc. etc. etc.

    We’re slowly resolving the real estate bubble by deleveraging and the associated economic pain of recession. Fixing our dependence on foreign manufacturing requires us to either accept the long term lowering of our standard of living or produce at a substantially more efficient rate than currently possible. Good luck with that one. Somebody better invent another new technology soon because I’m not real excited about learning to say “do you want fry’s with that” which is probably becoming the baseline to our new service economy. Sadly, I think it’s more productive than my old profession, practicing law. Consider the absurdity of practicing law, it largely boils down to fighting over other peoples money. Creating and selling justice just sounds a little absurd doesn’t it?

    Replacing dependence on petroleum with alternative energy is the only solution that seems like it might have an upside. But don’t complicate it and don’t count on the private sector to do it. If it’s left ot the private sector alone, just like VHS won out over BETA and Windows won out over the Mac, bad energy decisions will likely win out over long term high initial investment solutions like significant alternative energy R & D. And Cap and Trade is just setting up a fake economy to solve a real problem. Tax petroleum if you want to but don’t mask it with a fake market. Fund something like the Picken’s Plan to hedge the risk of high gas prices caused by peak petroleum. I haven’t read the “Picken’s Plan” but to me that means funding a build out of CNG distribution facilities at gas stations across america with a tax credit or other subsidy. And fund the crap out of research into alternative energy in all forms so that we are the leaders in developing, implementing and marketing clean and inexpensive energy. It’s that or McDonalds, and none of us can afford a house selling frys at McDonalds except maybe the franchise owners. The end result is hopefully the eventual elimination of the hundreds of billions we spend on foreign energy and the creation of jobs in america with at least some of the savings.

    If you’d like to help, please send a dollar to “One Eyed Man for President.” It’s either that or you’ll be getting your gas at McDonalds. Either way, it will be conpressed and natural.

  63. 63
    Racket says:

    “. The end result is hopefully the eventual elimination of the hundreds of billions we spend on foreign energy and the creation of jobs in america with at least some of the savings.”

    This is one of the few things Obama has hit right on the head. Forget environmentalism, we need alternative energy to keep money here. We can afford to have the Chinese make our tv’s and computers, but when we send trillions overseas for crude oil we almost never see any of that back.

  64. 64
    Scotsman says:

    Phffft. We have oil, lots of it. We could have nuclear. We have methane ice at the edge of the continental shelf, enough to last generations.

    We also have so many market distortions headed up by the government and special interests that we’ll never have any of these possibilities brought to market.

    The free market fixes all of these problems. Like a guided missile, it’s occasionally off course but will self correct if given time. Unfortunately, the guidance programming for our markets is all screwed up. Thank the government.

    The dollar will go down until the foreign economies crash, then come back up. We’re screwed, but they’re screwed even worse. Spain is on life support, Great Britain isn’t far behind, as is Germany, etc. Stand by, the lights are beginning to turn on in the population at large.

  65. 65
    Racket says:

    Methane ice sounds like a fortified malt liquor.

  66. 66
    Racket says:

    Oh BTW Methane Clathrate is not really harvestable in quantities that would make any difference in our energy consumption.

    We may or may not have oil. I believe the people that say the US has hidden reserves, but I wouldn’t live my life off of a maybe.

  67. 67

    “The free market fixes all of these problems”

    There’s no question that the government screws things up, but if left to their own devices vis a vis the free market

    We’d still have slavery
    Children would be working in sweatshops
    The standard work week would be 80 hours
    There would be no minimum wage
    Pollution would be a whole lot worse than it is now

  68. 68
    Racket says:

    Min wage, does nothing but devalues our dollar. They raise the min wage the price of everything has to go up to compensate for that. So the guy who makes the cheese burgers has to pay more for sneakers. Who does it really help?

  69. 69
    One Eyed Man says:

    RE: Racket @ 65

    If you haven’t trade marked it yet, I’m going to. I think the rights to that one could be worth millions.

  70. 70
    Kary L. Krismer says:

    RE: Racket @ 68 – If minimum wage had the effect you claim, our country would have one of the least valuable currencies out there. Actually what it does is makes employers more frugal with employee hours. That over the long term leads to greater efficiencies as people are replaced with machines, aided by machines, etc. So each person still working produces more.

    Over the short term increases put people out of work, or reduce their hours.

    Connecting up to Ira’s slavery comment, with that type of a system you have 100 people working an area of land for a week that can be done by one person with a machine in less than a day. That means the other 99.8 people (the .8 accounts for the 4 days) are producing other things in the economy. That makes the economy more productive.

  71. 71
    Scotsman says:

    RE: Racket @ 66

    My understanding is that Japan is less than a decade away from being able to fuel themselves off methane ice alone. They clearly lead in this field. Our environmentalists will probably stop it in its tracks.

  72. 72
    Scotsman says:

    RE: Ira Sacharoff @ 67 – You’re too gloomy! I bet as productivity rose through the industrial age that social pressures (a market force, just like government) would have brought about change in all the areas you mention. The church was a market force back then, countering all of the ills you mention.

    I’d mention there is a vast difference between the government codifying social pressures by legal changes and the government doing social engineering and pushing its own elitist social agenda. It’s supposed to reflect the will of the people, not it’s own power structure and a thousand little bureaucratic fiefdoms.

  73. 73
    Scotsman says:

    RE: One Eyed Man @ 69 – “Methane Ice” could also be a frozen bean burrito.

  74. 74
    Kary L. Krismer says:

    By Scotsman @ 72:

    I’d mention there is a vast difference between the government codifying social pressures by legal changes and the government doing social engineering and pushing its own elitist social agenda.

    Rather obviously your name isn’t Southernman. ;-)

  75. 75
    Racket says:

    “That over the long term leads to greater efficiencies as people are replaced with machines, aided by machines, etc. So each person still working produces more.”

    Who are you kidding, have you seen the jokers that are willing to work for min wage? Getting them to show up is hard enough, productivity is too many syllables for them to grasp

  76. 76
    Racket says:

    By Scotsman @ 71:

    RE: Racket @ 66
    .
    My understanding is that Japan is less than a decade away from being able to fuel themselves off methane ice alone They clearly lead in this field. Our environmentalists will probably stop it in its tracks.

    How often do we hear that something was 10 years away. 40 years ago I bet you guys thought we’d be powering our cars off of moonshine. Still the same old gas -lead just sipping it instead of guzzling

  77. 77
    Scotsman says:

    RE: Racket @ 76 – True enough, and my source is Popular Science, so…? But the potential is there, and the reserves are huge. Where’s the incentive?

    Forty years ago I thought (was told) I’d be freezing in a new ice age by now. The “future” does seem to have a lot of unaccounted for variables. ;-) My own forecasting is limited to economics, flow based structures, good for 2-3 years out at best. Our ability to adapt and change, when allowed, trumps all the predictions over time.

  78. 78
    Scotsman says:

    RE: Kary L. Krismer @ 74 – But I still like Niel Young- in small doses. I think slavery wasn’t far from dying a natural death in the U.S. After all, it’s in pretty direct conflict with the constitution. As soon as blacks were recognized as full human beings, the end was near. While we have an established record of being able to ignore the inconvenient or expensive, over time the legal system seems to get it right. But the time frame is long, and the journey pretty convoluted.

    Without opening a huge debate, I’d say the same is true of abortion. As the science advances and younger and younger fetuses become seen as viable, the time frame for what constitutes a “reasonable” abortion becomes more and more limited. When the law fully recognizes a fetus at any stage as being a viable person with guaranteed rights under the constitution, the gig is up and abortions will become much more limited. The process may drag on for several more decades though. But the end resolution seems pretty certain to me- limited , (but still legal as a political concession), to the first trimester or less.

  79. 79
    One Eyed Man says:

    RE: Scotsman @ 77

    When you say flow based structures, do you ever use mathematic models derived for fluid dynamics, like Bernoulli’s Theorem, or similar models from the natural sciences to model economic flows, velocities, turbulence or pressures? Just curious, I don’t know anything about it but I’ve wondered about it before. And the irony that it might be possible to do wind tunnel testing of economic theory amuses me in that all I generally have to offer is hot air.

  80. 80
    what goes up must come down says:

    Scotsman concerning the slavery issue remember this thing called the civil war, yeah it was just going to go away all by its self and all of sudden black people would be able to vote ( that came about a hundred years latter ) — man why don’t you go read a book. Sometimes you are such an a-hole, but you go ahead and believe the crap you spout, lucky for me I don’t live next door.

  81. 81
    Scotsman says:

    RE: what goes up must come down @ 80 – Brilliant analysis. What makes you think the Civil War wasn’t the result of social pressure? Maybe it was just a whim Abe had one day? And reading my previous post, where did I specify a time line? I simply stated the problem was evolving toward a forgone conclusion, given our legal system. Yes, it’s taking a lot longer than it should, but the issue of equal rights for blacks seems to be headed down the right path. In another hundred years life may be perfect.

    It’s not good to hate- leaves you all bound up inside, and changes nothing. Have a great weekend!

  82. 82
    Racket says:

    “* In July 1861, the U.S. House of Representatives passed a resolution, by a nearly unanimous vote, that affirmed that the North was not waging the war to overthrow slavery but to preserve the Union (Klingaman, Abraham Lincoln and the Road to Emancipation, pp. 66-70). McPherson notes,

    . . . in 1861 the North was fighting for the restoration of a slaveholding Union. In his July 4 message to Congress, Lincoln reiterated the inaugural pledge that he had “no purpose, directly or indirectly, to interfere with slavery in the States where it exists.” (Ordeal By Fire, p. 265)”

    source : http://www.factasy.com/civil_war/2008/02/25/was_war_fought_over_slavery

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