Monday Open Thread (2010-02-08)

Here is your open thread for Monday February 8th, 2010. 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.

62 comments:

  1. 1
    Scotsman says:

    A quick explanation of the “drop” in unemployment that even Pfft will understand:

    http://www.youtube.com/watch?v=9mqVCctaBK4&feature=player_embedded

  2. 2
    AMS says:

    RE: Scotsman @ 1 – Nice find, but I am not sure about your claim that “even Pfft will understand.”

  3. 3
  4. 4
    David Losh says:

    The guy is off the mark because the Census is hiring and will be on a temporary basis. That will bring the unemployment figures in line a few months from now.

    More interesting to me is the number of people who have entered the business world. Over the week end I was checking our online status for our cleaning business. On the Google search map there is a list of company names. A year ago there were about 6 pages of cleaning companies and this year 27 pages. Every body can clean right?

    You’ve mentioned my Gravatar before so let me take a minute to explain it. We are at war with our own economy. Especially in construction if you had a job you are out of work now. Properties still need to be maintained, but most companies, with the fancy trucks, are struggling.

    I am a shameless self promoter, who believes that there are great opportunities in the world today for the people who want to work. If you have a business, or have thought about starting a business, now would be the time.

    If you wanted to chat about having a business, or have an idea for a business this would be a good forum. We are on a web site of Tim Ellis’ who had an idea and followed it. Good things can come out of chaos.

  5. 5
    Snigliastic says:

    RE: David Losh @ 4
    Please, get rid of your Rosie the Riveter avatar. it is hard enough taking you seriously based on your statements.

  6. 6
    David Losh says:

    RE: Pegasus @ 3

    What’s interesting to me is the number of corporate sponsors on the side bar of the article, lead by American Express. If only our government would give more concessions to the business sector and loosen it’s regulations these corporation would take care of us.

  7. 7
  8. 8

    RE: David Losh @ 6

    Your Comment Especially Applies to Boeing on 787

    Trouble is, all the King’s Horses and all the King’s Men tax write-offs couldn’t put the Seattle area 787 Boeing manufacturing together again, when South Carolina offers half pay.

  9. 9

    RE: Snigliastic @ 5

    Wired Magazine had a Similar Article that was a Joke too

    It stated America was in a 2nd Industrial Revolution and all we have to do is invent stuff in our garages and make it in China.

    LOL, now where do the other 160,000,000 Americans work?

    I’m cancelling that magazine subscription, pure buffoon nonsense.

  10. 10

    RE: softwarengineer @ 8 – Well see. The 787 has had two supplier plants fail in SC to the extent that Boeing had to buy them to try to salvage the situation. But hey, at least the employees worked for cheap, right?

    What’s the chance that the second assembly plant won’t also be a failure? The other possibility is that Boeing won’t even need to build more than 7 planes a month (or can’t due to supplier constraints) and that the SC plant will be completely worthless for that reason (it is only designed to build 3 a month while Everett is designed to build 7).

  11. 11
    AMS says:

    Valuation & WaMu

    Remember the days when WaMu actually existed? Yes, yes, I know it doesn’t seem so long ago.

    For the sake of simplicity, I am going to suggest that at the point of total failure WaMu stock was worthless. That said, I remember a friend celebrating when he purchased WaMu at $2. It didn’t take long before the value went to zero. He was convinced the price was low, but the price he paid might have been too high! How did he value the stock? Was it based on economics? I have no idea, but I do know he considers it to be a loss.

    I’m seeing a bit of this in housing. People are so happy to pay lower prices, but are the prices still too high?

    And for those who make the silly claims that homes cannot go down to near zero value, it’s time to take a trip to Detroit, where some places don’t sell for $500. I am not predicting this is going to happen to Seattle anytime soon, but rather I am using it as an example that it can happen. For a less extreme example, take a look at what’s happening in Vegas, where the price reductions continue, even with the US taxpayer paying up to $8,000 per sale.

    Remember the good days when taxpayer money went to roads, parks, bridges? Now we get toll bridges and the Federal government pays for junk cars and sponsors home buying.

    Yes, we are often reminded by pfft how the road to recovery isn’t asphalt, but rather it’s a financial road paved in taxpayer dollars. I am sure we all are so much better off today.

    How much is that home worth?

  12. 12

    RE: Kary L. Krismer @ 10

    I Hear the 787 Tools are Portable

    Meaning, those Everett tools can be shipped anywhere in the world. I wonder why they did that….LOL

  13. 13

    RE: AMS @ 11

    Upper Class Welfare

    And with most of the tax credits going to what’s left of the employment market’s better paying jobs….doesn’t leave much left for the poor or generating a real industrial jobs’ base for the poor.

    Even the asphalt infrastructure spending is a flash pan economy with no longterm investment future.

  14. 14
    AMS says:

    RE: softwarengineer @ 13 – There is very little dispute that our original interstate system (Eisenhower) have a very high economic value, the investment was very good. The roads have paid dividends for many years, even if there is some maintenance cost.

    I am not so sure that crushing cars and sending the scrap to China has a high economic value. By the way, I don’t really know where all that steel has gone, but China was suggested as one destination. I should probably track the scrap.

    Sending a qualified buyer $8k? I guess if it stops a total catastrophe, then it has some value, but I don’t expect these silly games to pay economic dividends some 50 years later.

    What is it the American Lung Association suggests, “If you cannot breath, nothing else matters.” Similarly, if you cannot breath, then your next breath is all that matters.

    I guess we have been relegated to worrying about our next economic breath–look at that, there is some sign of life, things are getting better, the economy hasn’t died.

    Wait until the ventilators are removed. The housing tax credits are scheduled to expire. Hopefully our economy will breath on its own.

  15. 15

    AMS said ” By the way, I don’t really know where all that steel has gone, but China was suggested as one destination. I should probably track the scrap.”
    Apropos of nothing, just prior to WWII, many American streetcar lines were being dismantled in favor of the automobile and that wave of the future, the diesel bus. The streetcars were scrapped and crushed, and then shipped to Japan. They, in turn, recycled the steel into guns, bombs, and bullets.

  16. 16
    patient says:

    RE: AMS @ 11

    “I’m seeing a bit of this in housing. People are so happy to pay lower prices, but are the prices still too high?”

    This is so true, people are to focused on short-term relative price/value and not fundamental price/value. -It’s cheaper than at the top so it much be a good value, bzzzz wrong.

  17. 17
    patient says:

    RE: AMS @ 14RE: AMS @ 11

    “Wait until the ventilators are removed. The housing tax credits are scheduled to expire. Hopefully our economy will breath on its own.”

    I think it’s inevitable that the government will be forced to realize that the assumption that a recovery is only possible by propping up the housing market is totally false and that a true recovery can only take place when they abandon housing support and let fundamental price discovery take place. The question is how much debt will we have to accumulate before this realization is made?

  18. 18
    Trigger says:

    RE: Pegasus @ 3 – Pegasus and others –

    Why don’t people focus on those points:

    1) DEBT in the US is in USD. As such We can PRINT and PRINT some more. We can give back the money to people or countries by PRINTING. If a very bad thing happens – we can PRINT. In other countries they cannot print USD. We can. Isn’t this nice?

    2) Our debt is not as bad as in Europe and we are stil not such a dysfunctional welfare state.

    3) So we need to get the economy moving, get the tax receipts up and then increase taxes if needed. But for now until things stabilize we need to relax and hike and just take on more debt.

  19. 19

    RE: patient @ 17

    Amen Patient

    What really irks me is the horrifying/growing homelessness problems in America and Habitat for Humanity is a complete joke as a cure.

    Its very sad when our churches feed more poor and take care of their needs more than our government.

    Trickle down….didn’t we hear that joke from Reagan too.

  20. 20

    By softwarengineer @ 12:

    RE: Kary L. Krismer @ 10

    I Hear the 787 Tools are Portable

    Meaning, those Everett tools can be shipped anywhere in the world. I wonder why they did that….LOL

    Probably so that they can get the SC stuff back up here when that line fails, and convert the temporary 787 line in Everett into a permanent line. ;-)

  21. 21
    Pegasus says:

    Liberal Germany(Weimar Republic) did that in the 1920’s. Their country collapsed and brought to power some guy named Adolf Hitler who Time Magazine featured as the “Man Of The Year”. How did that work out? Oh yeah it finally ended when World War II ended. Zimbawe recently tried the same thing with the same results.

    table 1
    Zimbabwe’s Hyperinflation
    Month-over-month Year-over-year
    Date inflation rate (%) inflation rate (%)
    March 2007 50.54 2,200.20
    April 2007 100.70 3,713.90
    May 2007 55.40 4,530.00
    June 2007 86.20 7,251.10
    July 2007 31.60 7,634.80
    August 2007 11.80 6,592.80
    September 2007 38.70 7,982.10
    October 2007 135.62 14,840.65
    November 2007 131.42 26,470.78
    December 2007 240.06 66,212.30
    January 2008 120.83 100,580.16
    February 2008 125.86 164,900.29
    March 2008 281.29 417,823.13
    April 2008 212.54 650,599.00
    May 2008 433.40 2,233,713.43
    June 2008 839.30 11,268,758.90
    July 2008 2,600.24 231,150,888.87
    August 2008 3,190.00 9,690,000,000.00
    September 2008 12,400.00 471,000,000,000.00
    October 2008 690,000,000.00 3,840,000,000,000,000,000.00
    14 November 2008 79,600,000,000.00 89,700,000,000,000,000,000,000.00

  22. 22
    Trigger says:

    RE: Pegasus @ 21 – Pegasus – But Zimbabwe borrows in USD and cannot print USD at all. If it prints more Zimbabwe Dollars then the currency sinks. With the US if the currency sinks it only means that exporters will have a better time AND less outsourcing will happen AND China will produce less for the US. Is that a bad thing? Ok – US salaries will go down in other currency terms but so what?

    I think there is a big difference between Weimar Republic and the US. I would agree with you if US debt was in EURO or sthg like that. Here it should not be a biggie at all. I mean it will be hard etc and the US might stagnate a little but so what?

    So even if someone says that the US is running a ponzi scheme – so what. Normally Bernie would be cool if he was not arrested. Nobody is going to arrest the US when it has nukes. So running a ponzi scheme on a large scale is completely acceptable. Especially taking into account that other nations are much worse. Look in China you can get death penalty for having some drugs on you.

    I think people need to put everything into perspective. It is not all that bad. Ponzi scheme is cool. Worse case scenario is that people who have $$ on them get a bit burned.

    Plus – another thing is that the $$ might not sink that fast. EURO zone countries are more messed up and dysfunctional and socialist. China will stop existing and their regime will fall if they do not get to produce more toys for the US. And then you have some really nice areas like Iran and North Korea that are rogue states and are very dangerous for the world.

    If the world was a less messed up place THEN maybe it would make sense to do less of a ponzi scheme here and there and instead it would be better to reduce military expenses. But with rogue states getting out of control – having nukes is your best insurance policy.

    I think we need to put into perspective that the whole US is messed up. And then once we realize we are doing really well and are very nice by just running small ponzi schemes and we do not obliterate the whole world because we are getting bored and we do not do research on how to produce new generation soap out of people – THEN it will be a good time to go for a hike and relax.

  23. 23

    RE: Pegasus @ 21

    Hey, Some of You Bloggers Changed Tunes on Europe and Asia Lately

    What happenned to the dollar’s imminent devaluing and they don’t need America globalists’ viewpoints out there?

    Now you see what I meant when I said: “When America catches a cold, the rest of the world catches pneumonia”.

    BTW, good for you, I do it too all the time and it is a sign of intelligence to change your minds armed with new data/ideas :-)

    As far as Europe’s debt, Germany didn’t go to Stimulus bailouts like we did….they scolded Obama for too much debt [remember early 2009]….Thank God we don’t have a North American [America/Mexico/Canada] Union currency like the Euro. When one country crumbles, like Greece/Mexico, our whole currency would have gone down the toilet with the worst of them.

    A lot of people feel China will replace Boeing in aerospace manufacturing eventually….LOL….who’s gonna buy their plane seats when we become paupers, the Chinese making a few bucks an hour….LOL. Hades, even the Chinese manufacturing slavelords will dwindle way down in numbers when we stop buying their stuff.

    As far as printing and printing more dollars, it sounds good on paper until you factor 15% interest rates into our real estate market like 1979 deja vu….LOL

    No matter what you think is the magic way out of our overpopulation economic mess, it always ends up in a horrifying imminent hornets nest, without immediate world population control.

  24. 24
    Ross Jordan says:

    By softwarengineer @ 19:

    Its very sad when our churches feed more poor and take care of their needs more than our government.

    That sounds like a good thing to me. Not saying that poor needing help is a good thing, but I think our churches are probably much more efficient, kind, effective and humane at helping the poor.

  25. 25
    Pegasus says:

    I have not changed softee but I will if we go Weimar. I have that fear. So far we are printing less than the global debts being defaulted on or repaid but we are still wasting bullets that we will need before this ends. Outstanding debt has to shrink both here and abroad and that has not happened. Our country is bent on trying to reinflate everything. It can’t work. The consumer debt has been shrinking inspite of attempts to make consumers spend. In the long run having consumers save and pay off debt is good for all of us but it does not help when kickstarting an economy.Most global debt gets repaid in dollars and that helps the dollar. That and when fear strikes and the dollar remains a safe haven. The Euro is stuck now. Too many countries looking to default to be safe anymore. Japan is trapped in their own nightmare and if those dollar/yen carry trades unwind…..they will go Weimar.

    Did anyone notice today when the former head of Merrill Lynch, Thain, got a new job today as head of CIT another bankrupted company? Thain was responsible for Merrill’s destruction. None of these crooks are going to jail where they should be. The “good ole boys club”.This crisis will not end until guys like that are put in prison and the US strips them of the money they have looted.

  26. 26
    pfft says:

    By Scotsman @ 1:

    A quick explanation of the “drop” in unemployment that even Pfft will understand:

    http://www.youtube.com/watch?v=9mqVCctaBK4&feature=player_embedded

    what about a falling unemployment rate don’t you understand? the statistical quirk has probably happened during every recovery. it also has worked the same when the unemployment rate is going up.

    http://4.bp.blogspot.com/_pMscxxELHEg/S2wfrjhrFRI/AAAAAAAAHcE/G0sLLe_FUK4/s1600-h/EmploymentMeasuresJan2010.jpg

    http://1.bp.blogspot.com/_pMscxxELHEg/S1hYDzyj2gI/AAAAAAAAHTU/poKzdj7KNsM/s1600-h/WeeklyClaimsJan16.jpg

    you guys shouldn’t throw too many stones, I gave you 4-5 days to tell me how the economy recovers and you couldn’t. we are in recovery.

  27. 27
    pfft says:

    By Pegasus @ 3:

    Maybe this will help Pfft get the big picture:

    http://www.businessinsider.com/20-reasons-why-the-us-economy-is-dying-and-is-simply-not-going-to-recover-2010-2

    that article is so bearish it makes me think I am not bullish enough. I guess it’s a new era?

    if we have so much debt, why as did the panic not tip us into depression? why just a 6% contraction in GDP? we are almost 1 year off the march lows and people still have a fall of 2008 mindset.

  28. 28
    pfft says:

    By Trigger @ 18:

    RE: Pegasus @ 3

    2) Our debt is not as bad as in Europe and we are stil not such a dysfunctional welfare state.

    europe’s debt picture isn’t that bad. greece and portugal are having trouble but most euro nations have debt around our levels.

    http://krugman.blogs.nytimes.com/2010/02/05/the-spanish-tragedy/

  29. 29
    pfft says:

    By Pegasus @ 25:

    I have not changed softee but I will if we go Weimar. I have that fear. So far we are printing less than the global debts being defaulted on or repaid but we are still wasting bullets that we will need before this ends. Outstanding debt has to shrink both here and abroad and that has not happened. Our country is bent on trying to reinflate everything. It can’t work. The consumer debt has been shrinking inspite of attempts to make consumers spend. In the long run having consumers save and pay off debt is good for all of us but it does not help when kickstarting an economy.Most global debt gets repaid in dollars and that helps the dollar. That and when fear strikes and the dollar remains a safe haven. The Euro is stuck now. Too many countries looking to default to be safe anymore. Japan is trapped in their own nightmare and if those dollar/yen carry trades unwind…..they will go Weimar.

    Did anyone notice today when the former head of Merrill Lynch, Thain, got a new job today as head of CIT another bankrupted company? Thain was responsible for Merrill’s destruction. None of these crooks are going to jail where they should be. The “good ole boys club”.This crisis will not end until guys like that are put in prison and the US strips them of the money they have looted.

    1. the yen carry trade did unwind during the financial crisis w/o hyperinflation

    2. thain wasn’t at merrill long enough to wreck it. he saved the stock holders by getting bank of america to buy it.

    3. if the consumer is so dead why are the consumer numbers getting better? why would so many retail stocks have rocketed off the bottom?

    EDIT: hyperinflation is in vogue but it is extremly rare. it happens usually in nations that have lost a war on their own soil.

  30. 30
    AMS says:

    As far as all this inflation, deflation talk, it’s a good thing we own the printing presses and have the ability to print the dollars and pay back the debt. Imagine what would happen if goods/services were demanded instead of more financial paper?

    What happens if “In God we Trust” no longer holds?

  31. 31
    AMS says:

    Church of Real Estate

    What financial obligation is collected by tossing the deadbeats in jail? What debt is not discharged during bankruptcy?

    We at the Church of Real Estate will treat each home as one of God’s precious creations. Those who do not properly support and care for their homes we will call derelict, or deadbeats. You know, every homeowner should properly support and care for his or her home. Care and support includes both financial as well as spending quality time making sure that it’s well cared for, and ideally it will be a contributing member to the neighborhood. We will not stand for neglected homes! Those scrooge homes give nothing back to the community. The members of Church of Real Estate are keenly aware of the impact that one irresponsible owner can have on the other homes.

    Part of our website will have photos of Seattle’s Most Wanted Housing Deadbeats. We will feature the deadbeats who try to skip out and run away from their housing responsibility!

    Any suggestion that homes have gone down in value is simply a test of your faith in real estate. You must maintain your faith in Real Estate!

  32. 32
    pfft says:

    Proof that even the people we think know something about the economy can be wrong.

    Shock: Nouriel Roubini gets it wrong
    http://blogs.telegraph.co.uk/finance/jeremywarner/100003332/shock-nouriel-roubini-gets-it-wrong/

    Here is Ron Paul in 1981 at the precipice of the disinflationary boom that lasted until 2000.

    “The road to monetary destruction has been long and cir-cuitous, but we are coming to the end of it. Sixty-seven years of central banking have brought us to the edge of depression and hyperinflation.”

    Gold fell for 20 years, we had the greatest bull market in perhaps our history for both bonds and stocks for that same 20 year period! if they can’t tell you what is going to happen how can we based on fundamentals? you need to respect market action. you need to respect the data. you need to listen to the technicals.

  33. 33
    Pegasus says:

    Pfft @ 29
    Some of the carry trade did unwind but there are still trillions out there. It has been played for over 20 years. Effects sometimes take years. Japan has had deflation for most of those 20 years. They supported zombie banks, bought stocks to support the market and did lots of things that failed to help. Now we are doing the same. Their debt is 227 percent of their GDP. Their citizens saw their wages decline by 3.9 percent last year. If their rates move up to 4 percent in order to finance their debt they are toast. Their population is aging and their elders are selling their bonds to survive.
    Thain was brought in to fix Merrill’s problems. He did nothing but run it toward bankruptcy. Yes he did sell it for far more than it was worth but he had the help of Bernanke and Paulson to get a premium price to bail out some of the elite. BAC got bilked and according to Lewis he contends he was pressured into buying the over-priced POS that ultimately used taxpayers funds. Thain paid out billions in bonuses before he told Lewis that they had a huge loss coming. He belongs in prison. I am not defending Lewis. They should save a spot in jail for him also.
    The consumer credit numbers still show the consumer is decreasing his outstanding debt. Unemployment is huge and not expected to return to 2006 levels for many years 2015-2020 depending on whom you want to believe. Foodstamp users are one in eight Americans and increasing 20,000 per month. Mortgage defaults increase every month. One in ten American mortgages. Jumbo loan defaults are increasing. Home prices are still falling even with massive taxpayer funded support. Shadow inventory of housing in foreclosure is booming .Freddy and Fanny Mae are bankrupt. Banks are being allowed to misprice their holdings. The deficit is increasing. Retail sales stink. Social security will be cash flow negative because there are less employed to pay into the system. the economy is being funded with borrowed money and it still stinks. When Walmart opens a new store they get between 3000 to 6000 applicants for jobs that pay slave wages. Credit card rates are up to 30 percent now….something the mafia used to do….now it is your friendly banker. Pension funds(private) are severely under funded and can not pay their liabilities in the future. Municipalities are thinking of new ways to tax the consumer because they refuse to cut back spending beyond tokens. Tax revenues are plummeting. Corporate taxes are down 55 percent. Over half of the state run unemployment funds are banko. More than one fifth of the states are banko including California, one of the largest economies in the world. I could continue but I won’t.
    Hyperinflation is a risk for any nation that can’t pay its debts without printing fiat money. That said I have said for years that deflation is our biggest risk and so far that is correct. I think we will continue deflationary trends for years but printing more money won’t help fix it and it will put us at a much bigger risk when we come out of this for hyperinflation.
    Your comments about being almost a year off from March lows people still have a fall of 2008 mindset is telling that you are missing the point. The public is not the pushing the market up:
    “In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can’t be explained by the usual sources of funds flowing into the market — such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases. Read more about Biderman’s theory.

    The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It’s like the dark matter that astrophysicists conjecture must be there, even if we can’t detect it.

    The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government’s response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission.”

    http://www.marketwatch.com/story/time-for-fed-to-disprove-ppt-conspiracy-theory-2010-01-05

  34. 34
    David Losh says:

    RE: Snigliastic @ 5

    Let’s see, Pegasus is talking conspiracy theory, but you object to me talking about being self employed.

    Here’s how it works. Institutions have what’s called Institutional Investing. Pools of money that are a combination of all the leverage low interest rates generate. The AMS person kind of talks about this but never hits the mark. Trillions of dollars are allowed by our economic system to be moved around. There are no barriers to where money can go.

    If you want to believe that the government is in control of that money, then you don’t have to worry about the deficit. If you think that Bank of America, AIG, and Lehman Brothers are in control of that money, then you don’t have to worry about the deficit. If you imagine the G8, G20 are in control, then they will never let the United States fail.

    Now if you want to talk about who shot JFK, I agree, it had to be more than one shooter. Do I think government? No. I think a bunch of good old boys wanted JBL in the White House.

    OH, by the way the secret stock market society is a set of rules to stop loss the market in a free fall.

  35. 35
    pfft says:

    By Pegasus @ 33:

    Pfft @ 29
    Some of the carry trade did unwind but there are still trillions out there. It has been played for over 20 years. Effects sometimes take years. Japan has had deflation for most of those 20 years. They supported zombie banks, bought stocks to support the market and did lots of things that failed to help. Now we are doing the same. Their debt is 227 percent of their GDP. Their citizens saw their wages decline by 3.9 percent last year. If their rates move up to 4 percent in order to finance their debt they are toast. Their population is aging and their elders are selling their bonds to survive.
    Thain was brought in to fix Merrill’s problems. He did nothing but run it toward bankruptcy. Yes he did sell it for far more than it was worth but he had the help of Bernanke and Paulson to get a premium price to bail out some of the elite. BAC got bilked and according to Lewis he contends he was pressured into buying the over-priced POS that ultimately used taxpayers funds. Thain paid out billions in bonuses before he told Lewis that they had a huge loss coming. He belongs in prison. I am not defending Lewis. They should save a spot in jail for him also.
    The consumer credit numbers still show the consumer is decreasing his outstanding debt. Unemployment is huge and not expected to return to 2006 levels for many years 2015-2020 depending on whom you want to believe. Foodstamp users are one in eight Americans and increasing 20,000 per month. Mortgage defaults increase every month. One in ten American mortgages. Jumbo loan defaults are increasing. Home prices are still falling even with massive taxpayer funded support. Shadow inventory of housing in foreclosure is booming .Freddy and Fanny Mae are bankrupt. Banks are being allowed to misprice their holdings. The deficit is increasing. Retail sales stink. Social security will be cash flow negative because there are less employed to pay into the system. the economy is being funded with borrowed money and it still stinks. When Walmart opens a new store they get between 3000 to 6000 applicants for jobs that pay slave wages. Credit card rates are up to 30 percent now….something the mafia used to do….now it is your friendly banker. Pension funds(private) are severely under funded and can not pay their liabilities in the future. Municipalities are thinking of new ways to tax the consumer because they refuse to cut back spending beyond tokens. Tax revenues are plummeting. Corporate taxes are down 55 percent. Over half of the state run unemployment funds are banko. More than one fifth of the states are banko including California, one of the largest economies in the world. I could continue but I won’t.
    Hyperinflation is a risk for any nation that can’t pay its debts without printing fiat money. That said I have said for years that deflation is our biggest risk and so far that is correct. I think we will continue deflationary trends for years but printing more money won’t help fix it and it will put us at a much bigger risk when we come out of this for hyperinflation.
    Your comments about being almost a year off from March lows people still have a fall of 2008 mindset is telling that you are missing the point. The public is not the pushing the market up:
    “In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can’t be explained by the usual sources of funds flowing into the market — such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases. Read more about Biderman’s theory.

    The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It’s like the dark matter that astrophysicists conjecture must be there, even if we can’t detect it.

    The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government’s response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission.”

    http://www.marketwatch.com/story/time-for-fed-to-disprove-ppt-conspiracy-theory-2010-01-05

    do you realize you are so incredibly bearish is makes me bullish.

    look at the main data of the economy and you see recovery. look at the stock, bond and credit markets and you see recovery.

    if things are so bad why is industrial production up all around the world? why are vehicle miles driven up? why are the prices of gas and commodities up? sure there has been money printing, but deflationary forces have swamped a lot of it. there has to be some real demand out there. if there is real demand and you combine it with the numbers you get recovery.

    things often look darkest at turning points. remember my maylasia example? the economy recovered faster than anyone thought.

  36. 36
    pfft says:

    When the market was tanking it was proof of the bear case. now that it’s not sending the bearish message the bears are fighting the tape. which one is it? either the market is proof all of the time or none of the time. it can’t be proof only when it breaks your way. I used to be a permabear. I didn’t listen to the 2002 lows and the subsequent recovery because it didn’t agree with how I saw the fundamentals. nothing could convince me, no amount of data, that things were getting better. I don’t try to do that anymore. I don’t make the market agree with me. I just follow the data and what the market is saying.

  37. 37
    AMS says:

    RE: David Losh @ 34 – “Pools of money that are a combination of all the leverage low interest rates generate.”

    Could you elaborate on this statement?

  38. 38
    David Losh says:

    RE: AMS @ 37

    I mentioned you specifically so you could elaborate.

  39. 39
    HappyRenter says:

    I wanted to ask the bloggers here what you think of the news that the city and the developer Vulcan are trying to build towers up to 30 stories in South Lake Union.

    http://seattletimes.nwsource.com/html/localnews/2011011910_vulcan08m.html

    I think it’s pure madness.

  40. 40
    Scotsman says:

    “With President Obama’s 2010 budget, 42 cents of every dollar the federal government spends will have to be borrowed.”

    Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/china_debt_bomb_onc23nzJdiQR7gTLkrwSpL#ixzz0f13iWdRQ

  41. 41
    Scotsman says:

    RE: HappyRenter @ 39
    “If you build it, they will come” may have worked 20 years ago. For the next couple of decades it sounds like a formula for financial pain.

  42. 42
    Scotsman says:

    RE: pfft @ 36

    “now that it’s not sending the bearish message”

    Only in your world. Many of us see pleny of bearish news, in fact more and more of it every day.

    Since when is a bear market rally in the stock market a reliable forcaster?

  43. 43

    RE: HappyRenter @ 39
    I agree. While it’s a good thing for government to help make local businesses successful, it’s not synonymous with what’s best for the majority of the city’s residents. Personally, i think Seattle government acts as though Paul Allen owns this city, and does pretty much everything he wants. I don’t have anything against Paul Allen. I hear he’s a pretty good guitarist. But he’s worth something like 15 billion dollars.
    I know that a lot of people in Seattle worship the guy, saying things like ” look how much he’s done for the city.” I just don’t see it. To me, he’s a modern day robber baron. We built him a football stadium, we changed the zoning for South Lake Union so he could build uglyass expensive buildings and displace poor people. We’re lining the guy’s pockets, and I don’t see what we’re getting in return.

  44. 44
    corncob says:

    RE: Ira Sacharoff @ 43

    We’re lining the guy’s pockets, and I don’t see what we’re getting in return.

    Empty streetcars, of course.

  45. 45
  46. 46
    Scotsman says:

    RE: Ira Sacharoff @ 43

    We get a world-class city!

  47. 47
    Scotsman says:

    RE: Bes2wait @ 45

    It reminds me of the phrase: “All hat, no cattle.”

    “All staircase, no class.”

    “2500 square foot staircase with a four car garage and a few small bedrooms scattered about.”

  48. 48
    EconE says:

    RE: Bes2wait @ 45

    More like exurban mid-grade McMansion crackage.

    They’ll fall even more due to the upkeep and utility costs.

  49. 49
    Snigliastic says:

    RE: Bes2wait @ 45
    Holy crap:
    Date Event Price Appreciation Source
    Feb 08, 2010 Price Changed $699,000 — NWMLS #29134105
    Jan 18, 2010 Price Changed $999,000 — NWMLS #29134105
    Nov 23, 2009 Price Changed $1,149,000 — NWMLS #29134105
    Oct 22, 2009 Price Changed $1,049,000 — NWMLS #29134105
    Sep 20, 2009 Listed $1,149,000 — NWMLS #29134105
    Apr 22, 2004 Sold (Public Records) $155,000 — Public Records

    so even if they get the reduced asking price, it is still 4x(+) the last sold price six years ago.

    Unless, I suppose, that first sale was just the property.
    But regardless, nice price drops. I see they followed Escala’s pricing model in late 2009.

  50. 50
    The Tim says:

    By Snigliastic @ 49:

    Unless, I suppose, that first sale was just the property.

    From the listing:

    Year Built: 2007
    Aerial shot:

    So yeah, I’d say the 2004 purchase was just for the raw 1.26 acres.

  51. 51

    Tim, the feedburner site isn’t working again.

  52. 52
    The Tim says:

    RE: Kary L. Krismer @ 51 – Thanks for the heads up. I believe it should be repaired now.

  53. 53
    patient says:

    Germany sees an opportunity to own half of Europe without firing a single shot ( Greece, Spain, Portugal, Italy, Ireland). So I’m not surprised that they might have offered to bailout Greece. It will be interresting if it comes to that England needs a bailout, I have a hard time believing they would accept to be debt slaves to Germany independent of what the true rulers of the world ( big banks ) have to say.

  54. 54

    RE: patient @ 53

    Didn’t Look at it that Way

    Interesting take though, and Germany was the one telling us to pen in our debt. But don’t get too carried away though, its still similar to China’s conundrum with us too on debt/trade….with Mercedes/BMW/Audi/VW sales to America thinned down to a trickle lately, they’re seeing a recession with a big “R” too….one wonders how much they have to lend with auto manufacturing collapsed and if they can lend it [if they don’t have it].

    Don’t trust a daily stock market psychology rationale on verbal promises to Greece, it can contradict itself tomorrow too.

  55. 55
    patient says:

    I would have been a better world if GS had been left to crash and burn.

    http://www.spiegel.de/international/europe/0,1518,676634,00.html

  56. 56
    Sniglet says:

    Just a reminder that the Optimistic Bear internet radio show will be airing live tonight (Tuesday the 9th) at 9:00pm Pacific Time. We will be discussing the past week in economics and finance. Feel free to call in and share your thoughts.

    http://surkanstance.blogspot.com/2009/11/introducing-optimistic-bear-weekly.html

  57. 57
    pfft says:

    By Scotsman @ 42:

    RE: pfft @ 36

    “now that itâ��s not sending the bearish message”

    Only in your world. Many of us see pleny of bearish news, in fact more and more of it every day.

    Since when is a bear market rally in the stock market a reliable forcaster?

    you guys probably just had to point to the stock market during the crash to prove your bear points w/o even listing any of your reasons. your bearish case was self-evident because the market was crashing. what more proof could you need? now that the stock market doesn’t agree with you the stock market is wrong. the stock market is sending a signal just like it did regarding the recovery out of the 2001 recession. the stock market doesn’t care what you think the fundamentals are. car sales have held up despite the end of cash for clunkers. the dubai debt crisis is long forgotten. greece and the rest of the letters seem to be taken care of.

    Don’t fight the tape.
    -Jesse Livermore

  58. 58
    EconE says:

    RE: pfft @ 57

    Stock market was still going up when this blog was started from what I remember.

    In fact, I don’t remember any person here ever using the stock market as an indicator other than the RE cheerleaders in 2006 saying exactly what you seem to be saying. (Financeguru etc.)

  59. 59
    AMS says:

    It might be time for a confessional. I just found a place in a specific development that I’ve been watching for over 4 years. The homes are all built by the same builder, and they are all similar. At the peak, some homes in the complex sold for near $350,000. Today one is listed with an asking price under $110,000. This place went pending near $150,000 two months ago. In addition to the low price, the seller is offering some incentives, plus tax credits, and so on. The net cost would be about $100,000. No, I am not sure that the $350,000 home is the same quality, floor plan, and so on. The $350,000 probably is situated better, with higher quality this and that. Better carpet. Whatever. I’d be paying 1/3.

    While the place may continue to go down in value, a 50% loss would be $50,000. Other places in the area are listed, but not selling, for over $200,000. In the next development, nearby, a home is listed at $315,000, but it has remained unsold.

    At one time, the units rented for over $1,000 per month. Today it’s probably closer to $850 per month. Today’s annual rent is about 10% of purchase price (purchase price to rent multiple of about 10), based on 12 times $850.

    Monthly cash flow: The payment (P+I) would be about $500. HOA about $100. Taxes about $200.

    It’s probably still a better deal to rent, but it’s getting closer and closer, and at some price, I am sure it will be a better financial deal to buy.

    Yes, at some low price, I am a buyer.

  60. 60
    ARDELL says:

    RE: Snigliastic @ 49

    The house wasn’t built until 2007, so the $155,000 is the 2004 value of the land only. 2009 Assessed Value is $763,300. What does that tell you? Most sold prices can be tied to 2009 (not 2010) assessed values, give or take depending on immediate factors.

  61. 61
    pfft says:

    By EconE @ 58:

    RE: pfft @ 57

    Stock market was still going up when this blog was started from what I remember.

    In fact, I don’t remember any person here ever using the stock market as an indicator other than the RE cheerleaders in 2006 saying exactly what you seem to be saying. (Financeguru etc.)

    except I am saying what I am saying after a massive crash, not after 4 year mini bull market. I wasn’t a housing bull anyway. that’s why you shouldn’t use just the stock market as your only indicator. you use data, fundamentals and technicals. in 2006 the housing data said homes were expensive on a price/rent and income/home price ratios. home price appreciation was slowing. home sales were falling by jan of 2006. to call a housing market bottom we just do the reverse. when housing price go from falling 15% to falling 7% we know that things are starting to turn around. when sales start to get less worse or even better we must contemplate a housing turnaround.

  62. 62
    AMS says:

    RE: pfft @ 61 – Sounds a bit too revisionist. In 2006 did you post any of this here?

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