Seattle is #1… In Delinquent Construction Loans

I posted about this earlier this week on the official Seattle Bubble Twitter account, but I thought it would be worth a post of its own. Via The New York Times: Construction Loans Falter, a Bad Omen for Banks

Even as the economy may be starting to recover, banks across the country are confronting a worsening outlook for their construction loans, an area that boomed for much of the decade.

Reports filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks.

Foresight’s estimates of the proportion of problem construction loans in the 20 largest metropolitan areas has one surprise: the one with the largest proportion of troubled loans is Seattle, where the recession has started to pinch.

According to the graphic attached to the story, over 30% of construction loans in Seattle are currently in delinquency. Yikes.

In related news, the Mastro bankruptcy is progressing, with the situation becoming seemingly more complicated with each update.

And, speaking of the commercial real estate market, Russell Investments just purchased the 42-story former WaMu Center for close to two thirds off what it cost to build just three years ago. Yowza.

It’s certainly an interesting time in the real estate and financing scene here in Seattle. How far we have come from just a year or two ago when everyone seemed to think that Seattle was bulletproof.

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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.

55 comments:

  1. 1
    wreckingbull says:

    Does anyone think that Cascade Bank will survive the Mastro mess? From what I read, it seems they are at least first in line in the Chapter 7 proceedings.

  2. 2

    Tim, Its Like the Bible Says in Proverbs:

    “A haughty man goeth before the fall.”

  3. 3
    David Losh says:

    Please define bullet proof.

    So what? Banks are a bunch of thieves that can take losses and pass them on to future suckers who put in deposits, take out loans, or continue to pay for the rip off loan products already on the market.

    Any concern about banks is misplaced. No one should be giving these creeps a dime.

    Banks have done a thousand times more damage to this country and the global economy than Osama Bin Laden or a million armed terrorists.

    Our government should be spending tax dollars to jail bankers, lenders, insurance, and mortgage executives. They deserve the severest of jail time.

    Today on the anniversary of 9/11 we should all pause to consider that the United States could have rebuilt a better America after this cowardly terrorist attack. Our banker chose to destroy the economy to make a few billion dollars. These are the people who are the true terrorists. These are the insiders who engaged in unAmerican activity.

  4. 4

    RE: David Losh @ 3

    Yes David

    Today’s Yahoo Tech Ticker is humming your song, states in part:

    “…Everybody, it seems, knows the banks face future losses from commercial real estate, still-rising foreclosure rates, and credit card delinquencies, among other loan types.

    Investors are currently ignoring the “massive losses” ahead for the industry and instead are focusing on the various and sundry ways the government is helping banks recapitalize on the cheap, says Josh Rosner, managing director of Graham Fisher.

    But Rosner, who turned bullish on the sector last spring after making some very prescient warnings in 2007, says the bank rally is likely to end by late October, when investors start discounting what’s ahead. “We’re not out of the woods yet,” he says.

    Furthermore, Rosner says there are other risks to the industry that aren’t being priced in currently, most notably the FDIC’s ability (and need) to raise fees further as its insurance fund dwindles to dangerously low levels….”

    The rest of the URL:

    http://finance.yahoo.com/tech-ticker/article/325198/%22We're-Not-Out-of-the-Woods-Yet%22-Bank-Rally-to-Stall-in-Q4-Rosner-Says?tickers=XLF,SKF,FAS,FAZ,%5EDJI,%5EGSPC,SPY&sec=topStories&pos=8&asset=&ccode=

  5. 5
    Acerun says:

    Bail them out!
    Bail them out!
    Bail them out!
    Bail them out!

    Seriously though, it is fun to watch them all crash and burn by their greed, errrrrrr, by their quest to raise revenue.

  6. 6
    ray pepper says:

    RE: wreckingbull @ 1

    Watch out for the small banks…C & D Orders everywhere!…………FTBK (Frontier),STSA(Sterling) and BANR(Banner) Venture/HomeStreet–the list goes on and on. Buy of a lifetime?…………………..No way! Write down after Write down for years to come! They do NOT have the Cash to Cope.

    http://www.fool.com/investing/small-cap/2009/08/02/dont-buy-these-stocks-today.aspx

  7. 7
    Kary L. Krismer says:

    By wreckingbull @ 1:

    Does anyone think that Cascade Bank will survive the Mastro mess? From what I read, it seems they are at least first in line in the Chapter 7 proceedings.

    I don’t know enough about Cascade Bank, but Shoreline Savings was seemingly first in line in the Capretto & Clark bankruptcy, and they didn’t survive.

    I’m not really sure what the point was of the Mastro bankruptcy link. Those are just typical stories in bankruptcy. You could have seen dozens and dozens of those in the Capretto & Clark case, and for much larger amounts.

  8. 8
    singliac says:

    RE: David Losh @ 3 – Do you really want us to take you seriously? Were they irresponsible? Yes. Does this make them terrorists? No. I think many people were guilty of irrational exuberance and groupthink, but demonizing them like this is pretty immature. Loaning money to people who can’t pay it back is not quite the same thing as killing thousands of people. Of all days…sheesh.

  9. 9
    AMS says:

    RE: wreckingbull @ 1 – Today is BFF-Bank Failure Friday!

  10. 10
    Kary L. Krismer says:

    I’d guess were number 1 in construction loan defaults because our part of the country turned south later than others. Those tend to be hard to get in declining markets, so other parts of the country have probably worked through most of theirs by now.

  11. 11
    Mike2 says:

    I get the impression there are regional differences in how delinquent construction loans are handled. Seattle seems to have a lot more stalled projects that stopped work after infrastructure was installed, or after constuction started (see throughs).

    While the DC area got hit earlier, the one thing you don’t see much of are stalled projects past the lot preparation phase. We’ve had a few townhome and mixed-use developments in our area stop or slow work, but the furthest they got was clearing the land. Once the utilities were in, construction continued to completion. Same situation for both residential and commercial.

    The level of commercial overbuilding outside the Beltway is staggering. The WaPo reported that there are more than 50 office buildings substantially or completely void of tenants – on the Virginia side alone. Dozens of these are brand new 200-300K sq ft mid-rises along the road to Dulles Airport. The situation in the district itself is somewhat better, but the amount of office space still under construction is immense. Almost every block in the CBD north/west of the capitol has a new building going in.

  12. 12
    Kary L. Krismer says:

    RE: Mike2 @ 11 – It’s possible some areas require the builder to post a bond guaranteeing completion. And I remember there was one state that handled the cost of the infrastructure (water, power) different than Washington, but I don’t remember the details, other than it was more risky for the buyers of the land.

  13. 13
    Dan C. says:

    Some of the reasons for the low pricing on the WaMu building is as follows:
    1. SAM condo interest (243,500sf)
    2. Ground lease from SAM on the whole site
    3. The amount of TI’s Russell will have to do to get it to headquarters standard ($60+sf)

    Final pricing is around $132.95/sf…a huge discount regardless, but just wanted to supply some more info. Works out to mid-teens rent at an 7% cap.

  14. 14
    Slumlord says:

    I have mixed feelings about the trouble local banks are facing. On the one hand, they are responsible for making poor business decisions. On the other, they are an important part of the local economy because it is much easier for a small business to get a loan from a local bank than some large institution.

    What really galls me is that the bailout has been disproportionately in favor of a few mega institutions such as Goldman Sachs and Bank of America. In my opinion, these huge companies deserve punishment. Instead, the taxpayer is on the hook for bailing out the big banksters, simply because they had more influence in DC than small local banks.

  15. 15
    CCG says:

    “And, speaking of the commercial real estate market, Russell Investments just purchased the 42-story former WaMu Center for close to two thirds off what it cost to build just three years ago. Yowza.”

    But, but, I thought real estate never sold below its cost of construction. That would be like giving it away.

  16. 16
    Dave0 says:

    RE: David Losh @ 3 – Your rant makes me think you’d be interested in prosper.com or lendingclub.com. They are attempts to get the banks out of the lending process and people people lend to other people. I’ve been lending on prosper.com for a while and have yet to break even. The people that go there either can’t get loans from banks or they don’t feel threatened enough to keep paying their bills or something, cause so many of the loans I’ve leant have been written-off. I’m starting to think banks have a useful role in lending, because they have the power to deal with people who don’t pay back their loans.

    RE: Slumlord @ 14 – I say let the banks fail… I’ve had all my money in credit unions for some time now and don’t feel any need to ever use a bank again. Credit unions provide much better service and take fewer risks because they don’t have to answer to greedy shareholders.

  17. 17
    Russ says:

    Speaking of the Russell Investment. How does this effect the future of Tacoma? Will Russell be moving its operations to Seattle? Bad for Tacoma. Great for Seattle.

  18. 18
    Scott Weitz says:

    AMS @ 11 – very funny

    FORECLOSURE AUCTIONS:

    I went to a foreclosure auction today as there was particular property that seemed interesting. In the 45 mintues I was there, I did not see a single bid (probably 20 properties were auctioned)….that’s a scary thought.

  19. 19
    EastBellevueEtherBinge says:

    By singliac @ 8:

    RE: David Losh @ 3 – Do you really want us to take you seriously? Were they irresponsible? Yes. Does this make them terrorists? No. I think many people were guilty of irrational exuberance and groupthink, but demonizing them like this is pretty immature. Loaning money to people who can’t pay it back is not quite the same thing as killing thousands of people. Of all days…sheesh.

    I agree – it undermines one’s credibility to equate genocidal murderers with mere a-holes.

  20. 20
    Acerun says:

    By Russ @ 17:

    Speaking of the Russell Investment. How does this effect the future of Tacoma? Will Russell be moving its operations to Seattle? Bad for Tacoma. Great for Seattle.

    Tacoma has a future??? {confused}

    I thought it was the Gary, Ind of the Northwest.

  21. 21
    Indy says:

    By Scott Weitz @ 18:

    AMS @ 11 – very funny

    FORECLOSURE AUCTIONS:

    I went to a foreclosure auction today as there was particular property that seemed interesting. In the 45 mintues I was there, I did not see a single bid…

    Yeah, I’ve had the same experience several times – I’ve seen two sales out of several hundred real offers (and almost as many delays/cancellations/bankruptcies, etc…). The vast majority of homeowners were deeply underwater – and the average judgment (especially with default fees added) almost always vastly exceeded the fair market value of the properties. In some other areas banks have started voluntarily reducing the opening bids below the judgment, but I think that it still a rarity in the Seattle area.

    The foreclosure process has just become a legal formality to deliver a bank a deed with clean title with which to conduct (eventually) an REO resale.

  22. 22
    anony says:

    RE: Dave0 @ 16 – I honestly don’t know why anyone uses a traditional bank now. Every credit union I looked at had better rates on every product, in every way, than the banks I looked at. The banks aren’t even competitive for personal finance (checking, savings, money market, visa, etc.)

    On home loans, OK, the banks were competitive. But we now know why.

  23. 23
    Scott Weitz says:

    RE: Indy @ 21

    These reduced opening bids (otherwise known as drop bids) were common today. Even so, nothing was moving. There was one in particular that sold for 1.7M in ’07 and couldn’t even fetch 895 today!!!

  24. 24
    Scotsman says:

    RE: CCG @ 15

    Would that be, like, 80% off peak?

    Has Seattle’s “pink pony” wandered off?

  25. 25
    Scotsman says:

    “The foreclosure process has just become a legal formality to deliver a bank a deed with clean title with which to conduct (eventually) an REO resale.”

    And will probably remain so for some time- we’re still setting up for the main event.

  26. 26
    David Losh says:

    RE: singliac @ 8RE: EastBellevueEtherBinge @ 19

    I’m very serious.

    Banks took advatage of the situation. Lnders took advatantage as did investors. Insurance companies just refusedt to pay and have gotten away with it.

    The target of the 9/11 attack was the World Trade Center, the heart of the financial markets, globally.

    Rather than rebuild and create prosperity, the financial markets chose to take that time, and those emotions for investment in American to run the biggest con job in history.

    Like I said, a few billion dollars.

    People have been wiped out financially. Retirement accounts, Real Estate portfolios, investment portfolios, and companies globally have lost those billions of dollars to these swindles. How many people out of work? How many charities no longer have funding? What about the financial resources of the federal government of the United States?

    How many people do you think have been ruined? How many lives have been negatively impacted? Will people actually starve to death for those financiers to have a few billion more dollars? I belive so.

    These are demons and as long as we continue to feed them they will feed on us.

  27. 27
    David Losh says:

    RE: Dave0 @ 16

    What I believe in is investing in small companies. Many small businesses need help today. They need investment capital and also consulting.

    There are returns to be made, fairly, and equitably by investing in small business ventures that make sense and give a return.

    It may also take an investment of your time to make sure the company stays on course and you may, as with any Note you may buy, need to be prepared to step in to take over.

  28. 28
    The Other Ben says:

    By Kary L. Krismer @ 10:

    I’d guess were number 1 in construction loan defaults because our part of the country turned south later than others. Those tend to be hard to get in declining markets, so other parts of the country have probably worked through most of theirs by now.

    Actually, that’s not true – if you look at the graph, all of the markets are up from the previous year – everyone’s rising, we’re just rising faster.

  29. 29
    Kary L. Krismer says:

    By Acerun @ 20:

    By Russ @ 17:

    Speaking of the Russell Investment. How does this effect the future of Tacoma? Will Russell be moving its operations to Seattle? Bad for Tacoma. Great for Seattle.

    Tacoma has a future??? {confused}

    I thought it was the Gary, Ind of the Northwest.

    That’s an interesting comparison, because Gary, IN used to be the one place in the country that smelled worse than Fife did.

    (For those too young to remember, you used to have to hold your breath driving through Fife.)

  30. 30
    David Losh says:

    RE: Scott Weitz @ 23

    A guy called me yesterday asking what the bid price should be on a property and what he could sell it for.

    My price came in at $245k for a sale and that is the auction asking price. He would need to buy at about $180K to make a profit.

    The house sold in 2006 for $340K.

  31. 31
    Jonness says:

    Meredith Whitney thinks home prices could fall by another 25%.

    http://www.cnbc.com/id/32773345/

    If you are buying a home in the near future, make sure that you will be OK if prices drop another 25%.

    IOW, if you want to buy the average $400K house in Seattle, only do it if you don’t mind it being worth $300K a couple years from now. I’m not saying it will happen, but there is a reasonable chance that it will.

  32. 32
    EastBellevueEtherBinge says:

    RE: David Losh @ 26
    Well, fantastic, you’ve made a solid case against greed and corruption. It remains intellectually dishonest and totally outrageous to justify mass murder in the name of payback against the financial industry. Can you elaborate on why you feel 9/11/2001 represents justice, in your mind?

  33. 33
    Jonness says:

    RE: EastBellevueEtherBinge @ 32 – The financial industry stole from America. I say put the higher ups in work camps along with the politicians they bought. They should not be let out until the National Debt has been paid in full.

    Get rid of campaign funding by special interests, and put all politicians into the work camps who are caught taking money from them after the law goes into effect.

    All assets of these criminals should be seized and used to help fund the work camps. The rest of the funding can come from breaking hard rocks with a sledge hammer 12-hours/day 7 days/week. Those physically unable to do the work in the quarry can clean the outhouse vat with a toothbrush for 16 hours/day.

    Make govt. borrowing of money illegal with a sentence of joining the work camps for all perpetrators. In the case of attack, or an act of nature, money can be borrowed up to a certain percentage of GDP, but the politicians who make the order must pay 50% of their accumulated wealth for the privilege of protecting America. Make wars not brought on by being directly attacked illegal.

    Balance the budget and start a national savings plan.

  34. 34
    Sara says:

    RE: Kary L. Krismer @ 29 – Ahhhh… the good ol’ Tacoma aroma!

  35. 35
    EastBellevueEtherBinge says:

    RE: Jonness @ 33
    I agree in principle. However, business will always steal if it is legal or even quasi-legal. Nobody should be surprised at the mercenary ethos of commercial activity – it is older than history.

    I think a heavier burden falls on government because there is an implicit obligation of service, conduct and policy directed towards improving our society and culture. Clearly, there are many elements at many levels that have corrupted and undermined this obligation.

    That being said, the ultimate responsibility is with the individual. Anyone who chooses to blindly trust business or government is susceptible to a form of Darwinism that separates those that think for themselves from those that do not – again, it’s been this way since the apes were whooping around the monolith.

  36. 36
    Jonness says:

    By EastBellevueEtherBinge @ 35:

    That being said, the ultimate responsibility is with the individual. Anyone who chooses to blindly trust business or government is susceptible to a form of Darwinism that separates those that think for themselves from those that do not – again, it’s been this way since the apes were whooping around the monolith.

    Yes, but sooner or later, Hal will take over and exterminate us, enslave us, or keep us as pets. Even now, we are only allowed the freedom to think for ourselves so long as we do exactly as we are told.

    Thus, our reward for thinking for ourselves is relative to the reward for those who don’t. On those terms, it appears to be a good deal. But relative to unlimited terms, we are still mindless slaves to the system. The great thought machine has ensnared us all.

  37. 37
    David Losh says:

    RE: EastBellevueEtherBinge @ 32

    Business is War.

    In the 1970s there was a theory circulating that all future wars would be fought economically.

    The World Trade Center was targeted as a clear message that a few hundred people with less than a million dollars can attack the most powerful country on earth and do damage. They attacked and killed military personnel in the Pentagon.

    Rather than go after these people, or do anything about this attack, the United States government chose to do nothing but take this event to make massive amounts of money for political insiders.

    We took this time to protect our oil interests in Iraq. We had a quasi police action in Afghanistan as a distraction while bankers, insurance companies, and the stock market could reap huge profits.

    The attack on the World Trade Center did far less damage to the United States than the lack of response we had to the event.

    Not only was it a lack of response but the United States government used the event to promote profit taking.

    If there was ever a time to promote the greater good that was the time. Now we have a duty to vote out of office any one who profited from this misdirection of public trust. That would be most politicians who held office during the past eight years.

  38. 38
    Jonness says:

    By David Losh @ 37:

    Now we have a duty to vote out of office any one who profited from this misdirection of public trust. That would be most politicians who held office during the past eight years.

    I think the problem goes back to what EastBellevueEtherBinge said. You have a break between people who feel their duty is to trust their government and those who feel their duty is to question their government. Unfortunately, since the dawn of mankind, those with the ability and courage to question authority and think for themselves are in the minority. In a democracy where majority rules, these people are neutralized. I like the way Ralph Nader sums up the problem, “The game is rigged.”

    Since the game is rigged, the powers that be want you to believe the answer is as simple as to vote the corruption out of the system. But here we have Einstein’s dilemna, “We can’t solve problems by using the same kind of thinking we used when we created them.”

    The powers that be believe because of their hierarchical appointment, they are the only group who is allowed to think for themselves. They con, lie, cheat, manipulate, cover up, and steal because they have immunity from prosecution (they make the laws). Thus, there are two types of people who think for themselves, those with high hierarchical positioning and those without. IMO, the ones without are the smarter craftier group because they exhibit the ability to think outside of the game. So the paradox of the minority is to use it’s intellectual edge to figure out how to unrig the game and bring forth a fair and just system. It’s been tried before. For instance, the current system was born in this manner. Unfortunately, history seems to indicate that even the greatest attempts at purification eventually gravitate back to a corrupt rigged system where those who think for themselves are rendered as powerless slaves.

    And the wheel turns very slowly relative to the finite period of the human life span.

  39. 39
    Jonness says:

    Venture bank has been seized.

  40. 40
    David Losh says:

    RE: Jonness @ 38

    Today especially we should be reminded to vote out the Republican party for the anti American activity they have engaged in. They have lined the pockets of arms dealers, Haliburton, oil interests, banking, building, insurance, and medical.

    The demonstration they had today was an attack on the President and the United States in guise of free speech.

    We left George Bush alone. We waited patiently for him to be voted out of office. He raised the deficit more than Reagan did. Ronald Reagan was a great man and President, but George is a coward.

    As Americans we have the duty to vote out of office those people who would hurt our freedoms. We did that with the Democrats when they attacked the Second Amendment Right to bear arms.

    Now it’s our duty to rid ourselves of those forces that attack the office of the President.

    George raised the deficit to make profits for his buddies, no other reason. To now make the claim that a President in office for less than a year is to blame is treason.

  41. 41
    Jonness says:

    By David Losh @ 40:

    Ronald Reagan was a great man and President, but George is a coward.

    Reagan got in office by pointing the finger at Carter for having ran up the national debt. Reagan promised to balance the budget and pay off the debt. Instead, he ran the debt up so high, it was no longer recognizable. In doing so, he brainwashed the republican party to believe fiscal conservatism means lowering taxes while borrowing record amounts of money to flood the system and temporarily stimulate the economy.

    The Bush’s had it easy because Reagan brainwashed the taxpayers to believe debt is not an important issue and should not be discussed. This was an amazing feat considering Reagan managed to get elected by convincing the same group of people that debt was so great a danger that it could destroy America.

    You can tell the people whatever lie you want, and if you repeat it enough times, they will believe it. You can even revert the lie to the 180 degree opposite of the previous lie, and the people will still believe it. This was proven in Nazi Germany, and it has since been repeatedly re-proven in America.

    Here comes Obama, and he is spending money so fast it makes Reagan and the Bush’s look like they were fical conservatives.

    Oh, how about some free health care? Obama tells the public, “this won’t effect the national debt at all.” LOL! There are 6 individual special interest personal assigned to every politician in Washington working on the health care bill. This is the same old con job being rammed down the throats of an unsuspecting population that refuses to question authority. I mean, if you want your tax rate raised up to match Canada so that you can make special interests rich, that’s fine. But at least be honest about it.

    We owe $12 trillion dollars that the government will admit to. Throw in all the money it stole from Social Security, Medicare, and elsewhere, and the figure is greater than $50 trillion. The last time I checked, it stood at $438,000.00 for every household in America. This is not a democrat vs. republican issue. This is an issue of the people vs. the politicians, and the people are losing. This spending is unsustainable, and the price that will be eventually paid will be horrific. Right now, we play musical chairs wondering who the poor suckers will be that get destroyed by this game. IMO, those suckers are us. We have stolen from our country, our children, and their children, and we deserve everything that is coming down the pike.

    You cannot vote out the corruption by simply voting for the other candidate. That strategy has been used repeatedly, and it is exactly how the debt was ran up in the first place. Both parties are equally corrupt and support similar agendas. You cannot solve a problem by using the same methodology that created the problem in the first place.

  42. 42
    David Losh says:

    RE: Jonness @ 41

    I’m sorry the debt is irrelevant, but it is.

    Reagan spent our way to the end of the Cold War. He also showed us the Budget, addressed Congers, and the American People. He formed the Grace Commission to show how money is wasted. He cut taxes to encourage investment and that seemed to work. In my opinion it did. Clinton benefited from Reagan. Had he left assault weapons alone, had Al Gore made a statement in favor of gun rights, Bush would have never been elected.

    Bush on the other hand, both Bushes for that matter simply advanced a political agenda in favor of the oil industry. That’s it.

    We already spend the money on the health system, as we call it. The money is there. No new money is needed. We would all benefit economically if the health insurance industry would go away. The Insurance Industry is for sure getting a boost under the compromise plan being advanced. The Republicans want more money for the Insurance Industry. Then they want tort reform to help attorneys.

    Tort reform as it’s presented will make it easier for scum bag attorneys to generate litigation fees rather than having the insurance industry settle out of court.

    The Republicans are looking for dollars to give to campaign contributors.

    Obama is on the right path. If he does what is on the agenda he has presented he can save the United Sates economy. If Republicans get any more nickles and dimes we will be broke in a year.

  43. 43
    Markor says:

    RE: Jonness @ 41

    Whether Obama is going the way of Lincoln remains to be seen. Had $trillions not been borrowed, we’d already be collapsed now. Might be good for me (holding cash), or not–I don’t think it want to take the risk to find out. I’d rather have not seen blatant waste of some of that money though. Some special interests are good, namely those that reflect my interests. If we don’t get a public option in health care, I’ll know we’re toast. If we get a public option and it costs taxpayers $1 trillion, I’ll be confident that that will be pittance compared to the eventual savings to taxpayers. I’m confident that Obama is a true public servant because otherwise there’d be no need to mention health care reform at all (like Republicans don’t), since the health care industry already effectively owns all the gold. Re Republicans, the real brainwashing is making them believe that God is one. That’s why they can flip-flop all they want and be as blatant as they want that they intend to screw their unwealthy supporters.

  44. 44
    Jonness says:

    If you want this debt on your Karma, that’s your choice. However, I resent your attempt to push it off on mine. I believe you are looking at the short term rewards and are completely missing the long-term outlook. IMO, you are hoping you have gotten into the pyramid scheme early enough to die before the full consequences of our borrowing catch up with us. In this manner, you will have spent your children’s future but it won’t matter because you’ll be 6′ under and unaware of the pain they are suffering.

    I don’t believe your pyramid scheme is going to work as well as you hope. You wrote I.O.U.’s for all of the money you stole out of social security and medicare. This means you have no money left to care for you when you are old and frail. I’ve looked at the demographics, and I believe a time is coming in your life when a changing of the guard will occur. Why should this new generation pay for your retirement and medical expenses when it will be difficult to fund its own? You spent your money in a belief you can live beyond your means and force somebody else to pay for it. It might work out, but it is a big gamble.

    Your generation is a generation of gamblers, and I suspect you are going to gamble away all of your money with the illusory belief that “I’m sorry the debt is irrelevant, but it is.” IMO, that is just closing your eyes and falling into the trap of failing to question your government. Personally, I do not recommend that strategy. You believe you lived well because of national wealth and tax breaks, but the truth is, you lived well because you borrowed over $50 trillion of someone else’s money.. That economic model is unsustainable. I wish it were so easy, but it’s not. It’s time to put down the debt syringe and learn to live within your means.

  45. 45
    Jonness says:

    “I’m confident that Obama is a true public servant because otherwise there’d be no need to mention health care reform at all”

    There are 6 special interest lobbyists for every politician in Washington working on this health care bill. These lobbyists pay for the campaigns of the Democratic politicians who are working on the health care bill. The special interests they support will make a financial killing on these policies. We are talking about another round of tax dollars being directed to corporate interests.

    The difference between the Democratic agenda and the Republican agenda is simply that they support different corporate interests.

    I agree, though, Obama is a true public servant. But I think it’s because true public servants are mouth pieces for corporate interests, and their true job is to pitch ideas to the public that sound like they are in the best interest of the people, but actually support the guys paying for their campaigns.

    Obama knows the game. He knows he is working for corporations. You can’t get to where he is without giving away free tax dollars to the companies who get you elected. So he is saying, if I have to give away all this money anyways, why not give it away for a good cause? This differs from the Republican strategy in that they are represented by weapons manufacturers, companies who take care of soldiers’ needs (Haliburton) etc. But the game both groups play is exactly the same. Borrow money to give to the companies that get you elected, and to do this, you have to sell it to the American people. Well, Obama is doing a really good job. He is selling a massively expensive war in Afghanistan, a massive free health care bill, and a massive bailout of financial companies. IMO, at what he does, he’s the best ever. My problem is, I believe what he does (borrow money to give to corporations) is not in the best interest of the American people. It would be much better if his primary agenda was to create industry in this country that could support it’s population without the need to borrow money from China. But then, who would pay for his election?

  46. 46
    Markor says:

    RE: Jonness @ 45

    We won’t have the best gov’t until we have instant run-off voting, a la Australia. You don’t see many Americans clamoring for that, let alone know what it is.

    If some special interest group makes a killing while saving me $100K+ on health care, that’s a good start. Health care reform, esp. a public option, could easily save taxpayers much more than the cost. In any case Americans seem intent on borrowing until they can’t anymore. They won’t put down the syringe until they’re forced to.

  47. 47
    David Losh says:

    This is an odd place for this discussion, we were talking about loan defaults, but as long as we are here let’s beat the dead horse.

    There is more than enough money globally to pay down all debt. My particular interest in the past ten years has been South America because I do want to retire with some life style. South America has had the opportunity in the past ten years to pay down national debt.

    This is where the discussion goes sideways. Debt is wealth. The people holding debt are holding an income stream. No one wants the money back, they want a profit. Profit shows well to stock holders.

    In the past eight years the Bush administration created tons of debt based on over valued Real Estate prices. Let’s not even talk about oil which is a ridiculous commodity let’s just stay with Real Estate prices twice what the value of the property was.

    We’re not going to pay it. We’re not going to pay a lot of debt in the good old United States of America. That’s where the Republicans are running into trouble.

    Republicans in the seven years after 9/11, which they invoked at every turn, created debt in every corner of our economy. They did nothing to build any industry, manufacturing, or provide services, they created and sold debt. In Obama’s first few months he paid, with tax dollars, debts created by President Bush. He dismantled the auto industry which should have been done in the 1970s and has proposed repeatedly changes to health care.

    Republicans are fighting to hold onto the debt instruments they have, It’s their wealth. In my opinion they are less concerned about health care reform than Obama promising to reduce the National Debt. Clinton did it, Obama can do it. Republicans don’t like that. They want interest income. They are the ones who want debt.

  48. 48
    MacroInvestor says:

    RE: Scott Weitz @ 23

    “These reduced opening bids (otherwise known as drop bids) were common today. Even so, nothing was moving. There was one in particular that sold for 1.7M in ‘07 and couldn’t even fetch 895 today!!! ”

    I wouldn’t make too much of that. Most of the people at those auctions are just entertaining themselves. They don’t have cash, can’t handle a large purchase with no inspection, or thought they’d see $1 bids like the infomercials claim. Amateurs.

  49. 49
    julie says:

    By MacroInvestor @ 48:

    RE: Scott Weitz @ 23

    “These reduced opening bids (otherwise known as drop bids) were common today. Even so, nothing was moving. There was one in particular that sold for 1.7M in â��07 and couldnâ��t even fetch 895 today!!! ”

    I wouldn’t make too much of that. Most of the people at those auctions are just entertaining themselves. They don’t have cash, can’t handle a large purchase with no inspection, or thought they’d see $1 bids like the infomercials claim. Amateurs.

    Are the opening bids listed some where? Which website is the best for finding king county foreclosures?

  50. 50
    EastBellevueEtherBinge says:

    RE: David Losh @ 37
    I believe the tally of exterminated terrorists in Afghanistan and Iraq is in excess of 50,000 since 2001. Again, war profiteering is older than history.

  51. 51
    EastBellevueEtherBinge says:

    RE: David Losh @ 40

    I think we should vote out the Republican Party for their swing to the left and lack of adherence to conservative principles. That being said, let’s review corporate political contributions and then discuss which party is in the pocket of Big Biz.. Hardly a need to discuss, since the truth is that both parties are wholly owned subsidiaries of Big Biz.

  52. 52
    EastBellevueEtherBinge says:

    RE: David Losh @ 47
    Correct me if I’m wrong but I’m noticing a recurring theme that seems to be the backdrop of much of Losh’s commentary: Republicans are evil to the core and eat babies; Democrats are super-duper global society messiahs that produce nothing but Utopian perfection (or something along those lines).

    I believe that both sides have true believers, scumbags, blind followers, and people that think for themselves.

  53. 53
    EastBellevueEtherBinge says:

    RE: Jonness @ 36
    “…of the people, by the people, for the people…”

  54. 54
    The Kid says:

    Yes. We’re all being screwed by the people with the money and power. This is true. They have rigged the system to keep themselves in power, made themselves immune to the laws that govern the land, and any laws that they are not immune to they have changed to suit their needs. There is no way, none, to unseat them using only the tools of the sytem they created, and are in charge of. There are a few ways to fix this, all of them not physically difficult to do, but require a change in perspective, and a fair amount of co-operation. Little secret about democrats and republicans, conservatives and liberals. Get on google, read the uber conservative blogs, the uber liberal blogs, news sources, talk radio, comedians, all of it. Really listen to it. You will discover one simple fact: We are all angry about the exact same things, but “we the people” are too busy being at each other’s throats to actually strike effectively against the power structure.

  55. 55

    […] the news in September that Seattle is #1 for delinquent construction loans, it probably comes as not much of a surprise that Washington State also happens to rank #1 in the […]

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