Mid-Week Open Thread (2010-03-03)

Here is your open thread for the mid-week on March 3rd, 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.

41 comments:

  1. 1
    David Losh says:

    “The consumer can’t spend if the banks can’t lend.”

    This Gem was in the equity ladder thread. Is that true? Can we only spend what the banks give us?

    There was also speculation about where to put our money and it seems that Banks and Credit Unions are the only safe place to keep our money. Banks or the mattress, those are the only choices.

    When did banks take over our lives? When did the bank, the known enemy for thousands of years, begin dictating our economy?

    OK, those are rhetorical questions. I know the answer is in the 1863 National Banking Act. Bank transactions are for the purpose of taxation. Governments like to keep track of who has money.

    Now the question that I have concerns the shadow economy. Lot’s of people refer to Japan, the second largest economy, as an example. In Japan many Real Estate transactions are done with cash.

    What if our Real Estate market was based on cash? Real Estate would be much more liquid if it were. You can sell for less than value easier if you own free and clear.

  2. 2
    The_Dude_Abides says:

    Ira – you got me. I was juiced when you said Kinder was paying 8% and was ready to buy some. Alas, it is 6.5%…still good for such a high quality co. The MLPs I own are much riskier, in fact, one just reinstated it’s distribution after a 4 quarter cancellation.
    GLTA

  3. 3

    RE: David Losh @ 1 – Without a banking system the economy would be only a fraction of what it is today. Banking has a multiplier effect on money, resulting from the fact that banks can lend what is on deposit in checking accounts and such, because as a practical matter not all of that money is going to be withdrawn at the same time (and to the extent it is withdrawn it is instantly deposited in another account).

    As to the spend/lend issue you raised first, lending increases spending. Without it, not all spending would stop, but for the economy to be speeding along at a fast clip you need lending (whether such a fast clip is good or bad is another issue entirely).

  4. 4

    By The_Dude_Abides @ 2:

    Ira – you got me. I was juiced when you said Kinder was paying 8% and was ready to buy some. Alas, it is 6.5%…still good for such a high quality co. The MLPs I own are much riskier, in fact, one just reinstated it’s distribution after a 4 quarter cancellation.
    GLTA

    Well, it was 8% when I bought it. Shows you how much I pay attention.

  5. 5

    RE: David Losh @ 1
    I don’t know the answer to that one. I feel the same way about banks as you do, David. They have their share of irresponsible crooks masquerading as upstanding stewards of money, and they were a big part of the reason our economy went into the tank because of their risk taking, because they couldn’t pass up the opportunity for higher profits.
    Yes, large banks, insurance companies, investment houses, and some other large corporations have a stranglehold on our economy, and it’s not for our benefit.

  6. 6
    Fran Tarkenton says:

    From the forums, which I’ve never been able to get registered for:

    “Post Re: Ive been foreclosed!!!!!
    My understanding is that the lease comes with the house.”

    I don’t have a great way to explain this, but you can’t lease out what you don’t have. So, the landlord took out a mortgage on the house, then rented it without being able to guarantee to the tenant that he had the right to do so for the duration of the lease. Think about this situation where the opposite rule is in effect: I take out a mortgage on a house, then lease it to someone else for 99 years at $1/year. Then I could default on the mortgage, and there’s nothing the bank could do to get the property back.

    If the landlord owned it free-and-clear and sold it, the new owner would be bound by the lease.

  7. 7

    RE: Fran Tarkenton @ 6 – There are, however, new state and federal laws with allow a bona fide tenant to live there for a few months after the foreclosure in many/most situations.

  8. 8

    So You Still Think SWE’s a Fringe Nut

    For predicting a Great Depression II; both possibly on-going and forth-coming soon at a theater near you.

    ABC News article in part:

    “…With the Senate Banking Committee, led by Chris Dodd, D-Conn., poised to unveil its financial regulatory reform proposal sometime in the next week, the report calls on Congress to enact reforms strong enough to prevent another meltdown.

    “Sen. Dick Durbin once said the banks ‘owned’ the Senate,” says Johnson. “The next few weeks will determine whether or not that statement is true.”

    In response to the report, a spokesman for the Treasury Department told ABC News that the administration’s regulatory reform proposals would be the most significant Wall Street overhaul in generations….”

    http://abcnews.go.com/Business/economists-warn-financial-us-economy/story?id=9990828&page=2

    Couple this delightful MSM news with the Supreme Court allowing campaign contributions by foreign corporations to control our American Senate and both Bernanke/Geithner leading us into the first 2008 turmoil mitigating regulatory reform, let’s be honest and pragmatic, and we have a real witches brew ahead of us IMO.

  9. 9
    Fran Tarkenton says:

    RE: Kary L. Krismer @ 7 – I defer to your expertise on the matter.

  10. 10
    johnnybigspenda says:

    Found an article today on SeekingAlpha that a number of graphs and stats: The Housing Downturn Has Resumed in Earnest .

    http://seekingalpha.com/article/191616-the-housing-downturn-has-resumed-in-earnest

  11. 11

    RE: Fran Tarkenton @ 6
    If you have a lease and the home gets foreclosed on, the foreclosure wipes out other liens ( except for IRS liens?)and interests, including your lease. But your landlord may have still caused a breach of contract and can be sued for it.
    I’m not absolutely positive, but I think the new federal law gives tenants 90 days following a foreclosure.

  12. 12
    Mikal says:

    RE: softwarengineer @ 8 – No, I just think you are a fringe nut for the rest of the crap you write.

  13. 13

    RE: Mikal @ 12

    Be More Specific

    Or your term “crap” applies to your blog.

  14. 14

    RE: softwarengineer @ 8
    Correct me if I’m wrong here, but wasn’t the Supreme Court decision to allow corporations to make unlimited donations not specified to domestic or foreign corporations?
    No, I don’t want Huawei or Toyota influencing the minds of Americans, but I don’t especially want Wal-Mart , Microsoft , or Wellpoint having that much control either.

  15. 15

    RE: Ira Sacharoff @ 14

    The Big Stumbling Block Was Foreign Money Influencing American Campaigns to We the People (Dem or Rep)

    Of course all the other domestic [?] corporations outsourcing are in bed with foreign influence and money too. So I agree with you, the New World Order has mixed them all together like a witches brew.

    The bottom line is those who fund our campaigns pick our candidates.

  16. 16
    WestSideBilly says:

    SWE, you should probably read what Citizens United vs FEC does and does not do before posting stuff like that.

    Ira, in short, Citizens United vs FEC removes the restrictions on corporations and unions for spending money on campaign ads. The caps for donations to specific candidates remain in place, however companies are now allowed to spend general treasury funds to run election ads for specific candidates or groups of candidates. Foreign corporations are still prohibited from donating, although many foreign companies have domestic arms which are incorporated in the US.

  17. 17
  18. 18

    RE: WestSideBilly @ 16

    Please Provide me an Internet News URL Proof On Foreign Campaign Contribution Caps

    LOL

    Here’s your campaign cap limits hard at work, article in part:

    “…George Soros has pledged millions to independent groups, “to ensure that the money spent on trying to re-elect President Bush doesn’t overwhelm the process.”…”

    http://www.cnn.com/2003/ALLPOLITICS/12/26/elec04.prez.bush.soros.reut/

    Isn’t that all GE money?

  19. 19

    GM (Cobalt) and Nissan (Trucks) Just had Safety Recalls This Week Too

    Nissan Safety Recall Article in part:

    “…Japan’s third-biggest car maker, said it will recall about 540,000 vehicles worldwide due to potential defects in brake pedal pins and fuel-gauge components, mostly in the United States….”

    http://news.yahoo.com/s/nm/20100303/bs_nm/us_nissan_recall_5

    Toyota Part Problem in GM Cobalt article in part:

    “…General Motors has blamed a supplier partly owned by Toyota for a faulty car part that led to the recall of 1.3m Chevrolet and Pontiac cars in North America.
    Bob Lutz, GM’s vice-chairman, on Tuesday told the BBC in Geneva that the supplier – separately identified as JTEKT, a joint venture between Toyoda Machine Works and Koyo Seiko – had not met “all requirements for reliability and durability”….”

    http://www.ft.com/cms/s/53960ada-2607-11df-b2fc-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F53960ada-2607-11df-b2fc-00144feabdc0.html%3Fftcamp%3Drss%26nclick_check%3D1&_i_referer=&ftcamp=rss&nclick_check=1

    Cobalt Safety Recall Article in Part:

    “…”After our in-depth investigation, we found that this is a condition that takes time to develop. It tends to occur in older models out of warranty,” said Jamie Hresko, GM vice president of quality, in a statement. “Recalling these vehicles is the right thing to do for our customers’ peace of mind.”

    The cars are apparently safe to drive even if the outage occurs, but it will require more effort to steer the vehicle. You’ll know its happening when the steering becomes difficult and you hear a chime and see a “Power Steering” warning light coming on….”

    http://consumerist.com/2010/03/gm-to-recall-chevy-cobalts-various-pontiacs-due-to-steering-problems.html

    Sounds like a Toyota safety fraud mountain compared to a Chevy molehill…LOL

    Will the Toyota Accelerator Fix Work? Not really, article in part:

    “…Some Toyota owners say they’re still having trouble with unintended acceleration after their recalled cars were repaired, and the Transportation Department said Wednesday it is looking into their complaints…”

    http://finance.yahoo.com/news/Govt-still-hearing-complaints-apf-2087001762.html?x=0&sec=topStories&pos=3&asset=&ccode=

    BTW, I predicted on SB the control system at the gas pedal to the engine [assuming its a simple pull cable and no computer involved] defect has no fix. I was apparently right.

  20. 20
    pfft says:

    In God we trust, all others bring data. I like chris puplava’s analysis. he brings the data. he is much better than people like ron paul, peter schiff, permabears or the doom and gloom/tea party types.

    Market Rally & Global Economic Growth Recovery Remain Alive
    http://financialsense.com/Market/cpuplava/2010/0303.html

    note that even with the title he still gives data on a possible bearish development in china.

  21. 21
    Black Dynamite says:

    Awesome article, says it like it is…

    http://www.webofdebt.com/articles/fiscal_responsibility.php

    IMF-STYLE AUSTERITY MEASURES COME TO AMERICA:
    WHAT “FISCAL RESPONSIBILITY” MEANS TO YOU
    Ellen Brown, March 1st, 2010

  22. 22
    Mikal says:

    RE: softwarengineer @ 13 – I have pointed out your goofiness here a few times and no one has stood behind you. Questions?

  23. 23

    When you own a home and don’t pay your mortgage, what’s the worst that can happen? Foreclosure.
    If you’re a renter and don’t pay your rent, what’s the worst than can happen?

    http://seattletimes.nwsource.com/html/localnews/2011247970_vashonslaying04m.html

  24. 24

    By Mikal @ 22:

    RE: softwarengineer @ 13 – I have pointed out your goofiness here a few times and no one has stood behind you. Questions?

    I’ll stand behind SWE. I certainly don’t agree with him on a lot of things, and yes, he does at times put out that all things foreign are evil, but face it: Do you really want Seattle Bubble to be full of people who always agree with each other?
    A fair number of people out there share SWE’s beliefs. That, by definition, would make him not a fringe nut, not that there’s anything wrong with being a fringe nut.
    I’d miss SWE if he went away. As long as people are respectful, I think the disagreements on Seattle Bubble are a wonderful thing. And sometimes it’s tough to stay respectful. I’ve lost it on a couple of occasions. But only when I’ve felt personally attacked.

  25. 25
    One Eyed Man says:

    RE: Ira Sacharoff @ 23

    “On the night of Aug. 19, 2007, Childers showed up at Kunkel’s home to talk about the growing debt and found Kunkel with a loaded shotgun and a box full of swords nearby, charging papers said. Three gunshots were fired, and Kunkel ran out of the room, telling his roommates that he shot Childers in self-defense after the man ran at him with a sword, according to court documents.”

    Just one more reason not to buy real estate. That box full of swords defense never works!

  26. 26

    RE: Ira Sacharoff @ 24

    Thanks Ira

    I’ve seen the troll hound snapping at you too and I believe I stood up for you [and others] when that happens. The bottom line is blogging is fun. Exchanging different opinions isn’t a name calling contest, its exchanging different facts and beliefs for dissemination, business, analysis and entertainment. Believe me, many good SB bloggers have changed my opinions 180 degrees, when they give me justifiable facts and reasoning, like you Ira.

    You have given SB your vast experience and I offer mine too. The fact that I don’t know real estate as well as you or you don’t know manufacturing/engineering economic impacts on real estate as well as myself isn’t a short-coming for either of us, it’s an opportunity to listen/learn from each other and enjoy the exchange along the way.

    Trolls don’t like experts with pragmatic facts and rarely backup their allegations with written proof, they’d rather hold to their old opinions and call you names, if you threaten their pocketbook or pre-conceived ideas.

  27. 27
    Scotsman says:

    Home sales fall “unexpectedly?” What is the data telling us? It seems the weather has to be absolutely perfect- not too hot, not too cold, not too wet, but just right for home sales to occur. Or is there something else going on, like, ummm, maybe there aren’t enough qualified buyers, or prices are still too high? Maybe folks are waiting for the next round of stimulus or tax benefits. Yup, that must be it! ;-)

    “WASHINGTON (Reuters) – Contracts for pending sales of previously owned homes unexpectedly fell in January, a survey showed, brought down in part by harsh weather in the U.S. Northeast. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December.”

    http://www.reuters.com/article/idUSTRE6232UK20100304

  28. 28
    Scotsman says:

    It appears hotel occupancy rates are soaring compared to the previous month! Or is it just some seasonality? Talk about spin…. Now if this was a stock even Cramer could actually get a positive return

    http://4.bp.blogspot.com/_pMscxxELHEg/S4_i-pEU–I/AAAAAAAAHq0/L-Ve3TUJSQw/s1600/HotelOccupancyMar42010.jpg

  29. 29

    Scotsman said” Home sales fall “unexpectedly?” What is the data telling us?”

    The data is telling us that the “experts” doing the expecting are wild eyed optimists, liars, and fools.

  30. 30
    Scotsman says:

    RE: Ira Sacharoff @ 29

    OK. What are these experts telling us, that Tacoma is the place to party? :-)

    http://www.kirotv.com/news/22729872/detail.html

  31. 31

    RE: Scotsman @ 30
    In Seattle, they’d have arrested the guy because he wasn’t wearing a recyclable, free range, organically grown condom.

  32. 32
    pfft says:

    By Scotsman @ 27:

    Home sales fall “unexpectedly?” What is the data telling us? It seems the weather has to be absolutely perfect- not too hot, not too cold, not too wet, but just right for home sales to occur. Or is there something else going on, like, ummm, maybe there aren’t enough qualified buyers, or prices are still too high? Maybe folks are waiting for the next round of stimulus or tax benefits. Yup, that must be it! ;-)

    “WASHINGTON (Reuters) – Contracts for pending sales of previously owned homes unexpectedly fell in January, a survey showed, brought down in part by harsh weather in the U.S. Northeast. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December.”

    http://www.reuters.com/article/idUSTRE6232UK20100304

    pending sales are useless as SB has pointed out.

    let’s go out of sample for our data. canada and australia added jobs last month. industrial production in the BRICs is up. auto sales in china are up. air freight traffic is up almost everywhere. international personal traffic is up.

    Market Rally & Global Economic Growth Recovery Remain Alive
    http://financialsense.com/Market/cpuplava/2010/0303.html

  33. 33
    The_Dude_Abides says:

    PFFT – Thought you might enjoy this article from Tom Brown.
    http://www.bankstocks.com/ArticleViewer.aspx?ArticleID=6076&ArticleTypeID=2

  34. 34
    pfft says:

    By The_Dude_Abides @ 33:

    PFFT – Thought you might enjoy this article from Tom Brown.
    http://www.bankstocks.com/ArticleViewer.aspx?ArticleID=6076&ArticleTypeID=2

    I love the CRE is the next shoe to drop line.

    note the dates.

    The Next Shoe to Drop: Commercial Real Estate
    By ALEX MARKELS
    Posted: March 3, 2008
    http://www.usnews.com/money/blogs/the-home-front/2008/03/03/the-next-shoe-to-drop-commercial-real-estate

    Commercial Real Estate Loans May Be Next Shoe to Drop
    September 23, 2008
    http://seekingalpha.com/article/96956-commercial-real-estate-loans-may-be-next-shoe-to-drop

    Next Shoe to Drop−−−Commercial Real Estate II
    Fri, May 1 2009
    http://www.fxstreet.com/fundamental/analysis-reports/market-comment/2009-05-01.html

    The next shoe to drop: $6.7 trillion in commercial real estate
    By PETER COHAN
    Posted 10:30 AM 09/01/09
    http://www.dailyfinance.com/story/is-6-7-trillion-in-commercial-real-estate-the-next-shoe-to-drop/19147035/

    will there be more CRE losses? probably, but it’s most likely already priced in. this is rear-view mirror analysis.

    maria bartiromo today said we have no savings. think about that. she is considered an expert and she thinks we have no savings. this whole crisis is partly about how we had no savings and then the savings rate zoomed higher.

  35. 35
    Willy Nilly says:

    RE: pfft @ 32

    Yeah air traffic is up everywhere. This must be why UPS is parking 11% of their pilots.

    China is a developing nation that does not have a lot of cars, so I imagine they are adding cars and will continue to do so for quite some time. 15 years ago bikes were quite popular there.

    Canada and Australia added jobs – That does not help the guys that I’ve had to lay off here in the US does it, or the other people out of work?

    75% of the flights I have taken in the last 3 months have been about 40-60% empty, and I don’t fly the red eye. The planes have all been downsized and there are far fewer flights.

    Condo prices in Lebanon have been shooting up recently, I guess this is an indicator to pull the trigger on buying a house here? Things are looking up!

  36. 36
    pfft says:

    By Willy Nilly @ 35:

    RE: pfft @ 32

    Yeah air traffic is up everywhere. This must be why UPS is parking 11% of their pilots.

    China is a developing nation that does not have a lot of cars, so I imagine they are adding cars and will continue to do so for quite some time. 15 years ago bikes were quite popular there.

    Canada and Australia added jobs – That does not help the guys that I’ve had to lay off here in the US does it, or the other people out of work?

    75% of the flights I have taken in the last 3 months have been about 40-60% empty, and I don’t fly the red eye. The planes have all been downsized and there are far fewer flights and read news about UPS.

    Condo prices in Lebanon have been shooting up recently, I guess this is an indicator to pull the trigger on buying a house here? Things are looking up!

    so because one company is parking pilots air traffic is not up? is it up or not? the data says yes but I guess you know because you have been on a few semi-empty flight.

    are you really discounting china with that argument? it’s been growing for awhile? auto sales were down and now they are up. that’s good. maybe some of the workers that you mention will get jobs making goods for china, canada or australia.

    all the other data confirms the US data. the economy is recovering. that may disagree with your bearish views, but the market doesn’t care what you think. it doesn’t care what I think.

  37. 37
    pfft says:

    It looks like the dubai crisis is over. I meant greece.

    For Greece, Bond Sale Is a Step Back From Disaster
    http://www.nytimes.com/2010/03/05/business/global/05greece.html?adxnnl=1&ref=business&adxnnlx=1267747726-P6whjV1RvTRSi5wJFuDo+g

    Did anyone look past crises? the tequila crisis hardly registered in US stocks. the same with dubai. the same with greece. even russia only brought the US market down 18%.

  38. 38
    Civil Servant says:

    Publicola has been doing some good work lately. Unfortunately their new “real estate nerd” seems to be punching above her weight:

    http://www.publicola.net/2010/03/04/seattle-home-prices-rising-371500-was-februarys-median-price/#more-29758

    (I love when lazy writers reference someone else’s tendency to resort to cliche. It’s as if making such an accusation means that she couldn’t possibly be guilty of the same thing herself.)

  39. 39
    David Losh says:

    RE: pfft @ 37

    97 percent of the bonds in the issue sold on Thursday were allocated to what he called “real money investors” — institutions with a long-term outlook, like pension funds and insurance companies —

    OK, that was a comment on the sale of Grecian Bonds. The return will be 6.35%, I think. Now the pension funds and insurance companies have an income for propping up a drag on the over all global market.

    In theory these continued bail outs seem to be keeping the financial markets churning paper profits. My question would be who is actually paying for all this.

    The way I’m looking at insurance companies right now is that we have two big disasters that haven’t been fixed: World Trade Center, and Hurricane Katrina. The insurance industry seems to be dragging feet on those. My car insurance, I know better than to ever have a claim, home owner policies are mandated by the banks, and we have to pay.

    Pension Funds are another interesting animal because I know a few people who have non performing pensions; the money is gone, vanished, Others have the money doled out over time, a little at a time.

    In my opinion we are paying into a business model for a bunch of guys to play with our money to make billions of dollars in profit. Is the profit ours? No. We get the crap shoot of either getting our money back out, or not.

    Now if you really want a conspiracy theory let’s talk Health Insurance. After you have paid all your membership dues, pension fund, matching fund, and insurance premiums on everything for 30 yrs why not just kill you when you go to the doctor. They find a small spot, operate, it’s complicated, you get pneumonia, and die.

    Just kidding! All they have to do is collapse the financial markets. Sorry, your investment is lost.

  40. 40

    RE: Civil Servant @ 38
    I read Publicola daily. They’re sometimes insightful, and you often read stuff there you don’t see elsewhere. But their ” real estate nerd” could have almost written that stuff for something like Yahoo real estate. Next week she’ll be citing J Lennox Scott as an impartial expert.

  41. 41

    By Ira Sacharoff @ 31:

    RE: Scotsman @ 30
    In Seattle, they’d have arrested the guy because he wasn’t wearing a recyclable, free range, organically grown condom.

    On the topic of green and Seattle, apparently on Madison near MLK and points east, lighted trees year around are now the fad. And they don’t appear to be LED lights.

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