Monday Open Thread (2010-04-12)

Here is your open thread for Monday April 12th, 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.

86 comments:

  1. 1
    David Losh says:

    I went to one of the many Open Houses this week end and the Real Estate agent was a bafoon. It’s what gives the industry a bad name. The house was nice enough, and you could see the agent orchestrated preparing the property for sale, but the house itself has issues. It was all cheap tricks.

    On the other hand we have worked on some really nice properties these past few weeks. The prices have been right, if not a little below current market value. Properties are selling, but in these next two weeks it will be interesting to see what the strategy is for clearing, what I see as, a growing listing inventory.

  2. 2

    RE: David Losh @ 1
    Growing inventory, expiration of the buyer credits, and higher interest rates.
    Does that sound like recovery to you?

  3. 3

    I’m a home seller who’s trying to get out while the gettin’s good. We had almost 40 people come through our Seattle house this weekend. It feels like there’s a lot of panic buying going on right now, with everyone rushing in to buy for the credit. I know a lot of people here have said it won’t/didn’t have a big effect but my anecdotal experience has shown otherwise. There were some moments while we toured open houses while we were kicked out of ours that felt like shades of 2007. I’m very curious to see what CS numbers look like for April, I wouldn’t be surprised to see a solid month-over-month gain. …I don’t think it’s sustainable which is why we’ll be renting for while until I see more evidence that we still don’t have double digit depreciation ahead of us.

  4. 4
    The_Dude_Abides says:

    NYTimes article on the failure of WaMu’s regulator(s).
    Mr. Killinger looks like W.
    http://www.nytimes.com/2010/04/12/business/12wamu.html?ref=business

  5. 5
    Lurker says:

    RE: gordonshumway @ 3

    wife and i went to almost a dozen places over the weekend and hardly saw anybody else. Felt really quiet to me and the only panic we felt was from the agents. :) I think everybody knows what doesn’t sell by the end of the month is going to demand aggressive price drops.

    Everything we look at is klunky though. Odd choices of home improvements, converted attic bedrooms w/ remodeled bathrooms that you have to duck to get into (but they have granite kitchen counters downstairs!!). Well thought out homes are hard to find, maybe yours is really nice.

  6. 6
    pfft says:

    By The_Dude_Abides @ 4:

    NYTimes article on the failure of WaMu’s regulator(s).
    Mr. Killinger looks like W.
    http://www.nytimes.com/2010/04/12/business/12wamu.html?ref=business

    calculated risk had a good comment on this.

    “Earlier reports for other bank failures showed that the field examiners identified the problems early – and then for some unexplained reason, no action was taken. The regulatory system failed.”

    http://www.calculatedriskblog.com/2010/04/report-regulators-failed-to-properly.html

    I can tell you EXACTLY what probably happened. republicans were in power and they hate regulations so they just looked the other way. someone will probably come out in the weeks and years to come and say they warned about this and some superior told them to forget about it. there can’t really be any other answer.

  7. 7
    Scotsman says:

    RE: pfft @ 6

    “there can’t really be any other answer”

    Really? How about Dodd and Frank, both democrats, both top recipients of campaign donations from the banking industry, both in charge of banking regulations, let it slide by? They were the ones in control in 2006. They were also in effective control for many years before that.

  8. 8
    BillE says:

    All the buyers I know or hear of recently have an odor of subprime about them. Zero down VA, zero down USDA, 3.5% down FHA. Today I heard about a friend’s kid closing on a house. Not a penny to his name and he was asking relatives for down payment money. Now he’s an owner.

  9. 9

    RE: BillE @ 8

    If All Banks Were Old Fashion Ma and Pa Neighborhood Banks

    You’d probably need a $100K income to qualify for a $100K loan and the avg home price in Seattle would be $150K.

    We all know this is true, but if we paid too much for a house, just ignore the Inconvenient Truth.

  10. 10

    Hey Seattle Bubble Bloggers

    Forbes says GM makes junk.

    Based on Forbes’ twisted advice, with no rationale and they’re always wrong….better buy a GM….LOL

  11. 11
    pfft says:

    By Scotsman @ 7:

    RE: pfft @ 6

    “there canâ��t really be any other answer”

    Really? How about Dodd and Frank, both democrats, both top recipients of campaign donations from the banking industry, both in charge of banking regulations, let it slide by? They were the ones in control in 2006. They were also in effective control for many years before that.

    really? they controlled the Office of Thrift Supervision which was apart of the Bush Treasury Dept?

    the truth is I was right beyond even my wildest dreams.

    As far as I can tell the only two directors of the OTS under Bush are shown here with chainsaws cutting the red tape!

    http://krugman.blogs.nytimes.com/2008/07/13/look-whos-talking/

    the real question is why were the regulators shown cozying up to the bankers in a picture cutting red tape- tape needed to keep the bankers from bankrupting us?

  12. 12
    Herman says:

    Open houses were pretty dead for us last weekend. We only saw five other couples, and we visited four houses.

    The last one had the stereotypical hosting agent, yapping loudly into her cell phone and ignoring/annoying the visitors. I guess that’s how you sell a $750k house. I mean, if it didn’t work, she wouldn’t do it, right?

  13. 13
    Daniel says:

    By pfft @ 6:

    I can tell you EXACTLY what probably happened. republicans were in power and they hate regulations so they just looked the other way.

    Which makes them different from the Clinton administration in what way? And the Obama administration puts the screws so tight, those causing the mess pay out record bonuses again =).

    In most regards I am far on the left of most Democrats politically, but the old black and white or Republican vs. Democrat, blame game just does not work here, they are both the same guilty. It just shows that the large part of American people that is represented by neither party can still be efficiently distracted from that fact by proxy debates and irrelevant differences.

    Do I think Obama does a better job than Bush? Yes. Is it “change we can believe in”? Not at all.

  14. 14
    Daniel says:

    (Unrelated to any previous discussions)

    I bet a lot of people working either as consultants or as quantitative analysts and also people in government positions feel exactly like this:

    http://tech.mit.edu/V130/N18/dubai.html

    In fact it is not the first story like this I heard.

  15. 15
    pfft says:

    By Daniel @ 13:

    By pfft @ 6:

    I can tell you EXACTLY what probably happened. republicans were in power and they hate regulations so they just looked the other way.

    Which makes them different from the Clinton administration in what way? And the Obama administration puts the screws so tight, those causing the mess pay out record bonuses again =).

    In most regards I am far on the left of most Democrats politically, but the old black and white or Republican vs. Democrat, blame game just does not work here, they are both the same guilty. It just shows that the large part of American people that is represented by neither party can still be efficiently distracted from that fact by proxy debates and irrelevant differences.

    Do I think Obama does a better job than Bush? Yes. Is it “change we can believe in”? Not at all.

    read #11.

  16. 16
    Daniel says:

    By pfft @ 15:

    read #11.

    No need to reiterate, I am quite able to read and It does not answer anything I talk about. Maybe you could learn to just quote what is needed as well…

  17. 17
    Scotsman says:

    Gonna need the .gov’s permission to sell your house soon- this should help drive equity down as the needed upgrades get paid for:

    http://www.federalobserver.com/2009/10/01/thinking-about-selling-your-house-a-look-at-h-r-2454-cap-and-trade-bill/

  18. 18
    Scotsman says:

    Calling all current and ex stoners! Magic mushrooms are back, and this time they’re legitimate:

    http://www.nytimes.com/2010/04/12/science/12psychedelics.html?partner=rss&emc=rss

    “Scientists are taking a new look at hallucinogens, which became taboo among regulators after enthusiasts like Timothy Leary promoted them in the 1960s with the slogan “Turn on, tune in, drop out.” Now, using rigorous protocols and safeguards, scientists have won permission to study once again the drugs’ potential for treating mental problems and illuminating the nature of consciousness”

    Oh yeah.

  19. 19
    pfft says:

    By Daniel @ 16:

    By pfft @ 15:

    read #11.

    No need to reiterate, I am quite able to read and It does not answer anything I talk about. Maybe you could learn to just quote what is needed as well…

    I was right. I was also was being your nice in deciding not to rip apart your comment line by line.

  20. 20
    pfft says:

    By Scotsman @ 17:

    Gonna need the .gov’s permission to sell your house soon- this should help drive equity down as the needed upgrades get paid for:

    http://www.federalobserver.com/2009/10/01/thinking-about-selling-your-house-a-look-at-h-r-2454-cap-and-trade-bill/

    it’s funny how you fall for and regurgitate every right wing talking point out there.

    http://www.snopes.com/politics/business/captrade.asp

    your link makes an absolutely preposterous claim.

    “The Congressional Budget Office (supposedly non-partisan) estimates that in just a few years the average cost to every family of four will be $6,800 per year.”

    I don’t even know where to start. last time I heard that erroneous right-wing talking point it was $3000 dollars per family of four. the number is closer to $200.

  21. 21
    Daniel says:

    By pfft @ 19:

    I was also was being your nice in deciding not to rip apart your comment line by line.

    ymmd =)

  22. 22
    pfft says:

    I am trying to be nicer!

  23. 23
    Hugh Dominic says:

    RE: pfft @ 20 – I was pretty disappointed when Scotsman turned out to be a Republican mouthpiece.

    At first his commentary was focused on the workings of our financial system, and his posts seemed to be insightful and well informed. But he began to make assertions with equal authority in many other subjects (e.g. healthcare) and it was clear that he was just reciting talking points.

    Then guys like One Eyed Man started pointing out factual errors even in his financial posts, and I no longer find him credible.

  24. 24
    Scotsman says:

    RE: pfft @ 20

    From the CBO, the actual estimated cost is $1,128/year for a family of 4, not your $200. It’s $84.6B per year divided by 300 million folks.

    As for the retrofit, looks like you’re right- and I stand corrected.

  25. 25
    Shelly T. says:

    I understand Killinger is testifying on Tuesday about the Fed’s seizure of WAMU. There sure were a lot of local people (stockholders, employees, etc.) hurt by the Fed’s actions regarding WAMU. Why did so many other institutions qualify for “TOO BIG TO FAIL” bailouts while WAMU didn’t? The policy wasn’t applied fairly across the board. There was no logical reason to bail out others and seize WAMU. Something smells bad at the Fed. Real bad! What the Fed did is just another form of corruption — at our expense!

  26. 26
    David Losh says:

    RE: pfft @ 20RE: Scotsman @ 17

    Uh, Oh, it’s going to be some Obama bashing. Let’s do a chart on the price of oil, and Natural Gas. How much will those things cost in the future? What will be the cost of heating a home, per house hold, be in the future? You don’t know, nobody knows.

    The price of oil at the end of the Bush Era was $150 per barrel, twice what it should have been, or close to twice what it is today, in these bad old days. Even after invading Iraq to protect American oil interests we still saw oil at $150 per barrel.

    Sorry, I wasn’t clear that I meant Bush II after his father sent troops in to secure the slant drilling practices of Kuwait into Iraqi oil fields.

    We need to address the consumer interests in heating a home rather than rely on the good graces of the oil, and Natural Gas companies.

    Hmmm, maybe we should Nationalize oil, and Natural Gas, in the interest of National Security? That would make more sense than giving tax dollars to banks, and insurance companies.

  27. 27
    pfft says:

    By Scotsman @ 24:

    RE: pfft @ 20

    From the CBO, the actual estimated cost is $1,128/year for a family of 4, not your $200. It’s $84.6B per year divided by 300 million folks.

    As for the retrofit, looks like you’re right- and I stand corrected.

    from the WSJ.

    “The Congressional Budget Office says the net annual economy-wide cost of the cap-and-trade program in the House Energy & Commerce Committee’s climate-change bill in 2020 would be $22 billion — or about $175 per household.”

    http://blogs.wsj.com/economics/2009/06/21/cap-and-trade-price-tag-175-per-household/tab/article/

    remember, instead of imposing a “negative externality” on others polluters now will have to pay to pollute. after all you can’t just throw your garbage in the street, why can you throw pollution into the air? does anyone remember the acid rain problem of the 1990s? we have cap and trade for sulfur and it worked better than anyone ever thought.

    low income families I believe are getting a rebate to offset costs so as not to overly burden them.

  28. 28
    pfft says:

    By Shelly T. @ 25:

    I understand Killinger is testifying on Tuesday about the Fed’s seizure of WAMU. There sure were a lot of local people (stockholders, employees, etc.) hurt by the Fed’s actions regarding WAMU. Why did so many other institutions qualify for “TOO BIG TO FAIL” bailouts while WAMU didn’t? The policy wasn’t applied fairly across the board. There was no logical reason to bail out others and seize WAMU. Something smells bad at the Fed. Real bad! What the Fed did is just another form of corruption — at our expense!

    I think the FDIC took over Wamu and didn’t have the power to takeover some of the other institutions like Bear Stearns. I don’t think the FDIC has power over investment banks and insurance companies like AIG.

    I do agree that we weren’t punitive enough on some of the big banks. bond holders and preferred shareholders should have taken some haircuts.

  29. 29

    RE: David Losh @ 26

    I Agree David

    If we bailed out the consumers’ oil and gas costs like Venezuela [instead of the banksters], with gas at the pumps subsidized at about $.5-1.00/gal….imagine how red hot the economy would be right now….LOL

  30. 30

    RE: Scotsman @ 7

    Demopublicans and Republicrats

    Another blogger said it for me too, the MSM uses meaningless “Wedge Issue” [like abortion, gay marriage, gun rights, etc, etc] differences between our two party system to distract us from a horrifying snowballing unemployment growth repression, where we all know our candidates are chosen for us, from the elite lobbyist campaign loot the Supreme Court recently put the “Betty Crocker” seal of approval on.

    So don’t be too hard on Scotsman or Pfft…..but remember too, LOL…..SWE voted Nader….so don’t blame my candidate.

  31. 31
    pfft says:

    By softwarengineer @ 30:

    RE: Scotsman @ 7

    Demopublicans and Republicrats

    Another blogger said it for me too, the MSM uses meaningless “Wedge Issue” [like abortion, gay marriage, gun rightes, etc, etc] differences between our two party system to distract us from a horrifying snowballing unemployment growth repression,

    the economy is recovering, deal with it. stop anchoring to the winter/spring of 2009.

  32. 32

    RE: pfft @ 31

    Pfft Read This WSJ Article, States in Part:

    “…So yes, the bailouts have worked. They’ve worked for the beneficiaries: the bankers, the traders, the assembly-line workers and management teams that seem incapable of learning from their mistakes. They’ve worked for two administrations by keeping money and influence flowing to Washington. And they’ve worked for those of us who were able to hang on to our homes and our jobs directly or indirectly through the spending.

    But chances are either you or someone you know isn’t getting the benefits. Maybe they’re in foreclosure or struggling with credit card debt. For them, there could have been some small comfort in knowing the system was held accountable instead of preserved and made more menacing.

    You should get more for $89 billion….”

    http://finance.yahoo.com/banking-budgeting/article/109303/bailout-success-is-the-problem;_ylt=AqQehXjLaHxS5Xnxt256gnm7YWsA;_ylu=X3oDMTE1ZWE1OXZqBHBvcwM0BHNlYwN0b3BTdG9yaWVzBHNsawN0aGViYWlsb3V0c3c-?sec=topStories&pos=2&asset=&ccode=

    The problem Pfft is horrifying depression sized unemployment, even your VP Biden with Obama agrees with me to date….even adding some subpar 160K jobs in March [assuming it’s true] and subtracting the 870K Census P/T jobs from this subpar rosy exageration, gives us a theoretical 700K job loss figure for March 2010.

    Severely underemployed [like P/T Census Workers from the unemployed pool] were counted as unemployed during the Great Depression history [I bet they make no more than 1/4th of your annual pay].

    The two party system MSM doesn’t care about 1929 history records for unemployment counts, just how to tweak a repression into a phony short-term debt bailout recovery with no longterm jobs produced in 2010.

  33. 33
    One Eyed Man says:

    RE: Hugh Dominic @ 23

    Don’t throw the baby out with the bath water Hugh. Scotsman’s a prolific source of info and his comments are the catalyst for a lot of interesting discussion. All of us have our underlying political issues that may sometimes affect the objectivity of our comments. If we all had the same take on every issue there wouldn’t be much to learn from each other.

  34. 34
    Ross says:

    By Shelly T. @ 25:

    I understand Killinger is testifying on Tuesday about the Fed’s seizure of WAMU. There sure were a lot of local people (stockholders, employees, etc.) hurt by the Fed’s actions regarding WAMU. Why did so many other institutions qualify for “TOO BIG TO FAIL” bailouts while WAMU didn’t? The policy wasn’t applied fairly across the board. There was no logical reason to bail out others and seize WAMU. Something smells bad at the Fed. Real bad! What the Fed did is just another form of corruption — at our expense!

    Well, WAMU had a lot of loans on their books, and especially more exotic loans. More, as a percentage, than almost any other big bank. So I don’t think it was a random conspiracy by the FED to screw over shareholders. Their biggest fault, perhaps, was not being big enough to be “too big to fail”.

  35. 35
    One Eyed Man says:

    RE: softwarengineer @ 32

    You’re right SWE, its ugly for most everyone and its brutal for those who are directly impacted. But the 160K March jobs number only included 48K for the census hiring according to the BLS. The rest haven’t been hired yet supposedly due to some administrative delay issue (one of those things Scotsman would point to as the incompetence of government to even get the hiring done timely to help their own employment number).

  36. 36
    pfft says:

    By softwarengineer @ 32:

    RE: pfft @ 31

    Pfft Read This WSJ Article, States in Part:

    “…So yes, the bailouts have worked. They’ve worked for the beneficiaries: the bankers, the traders, the assembly-line workers and management teams that seem incapable of learning from their mistakes. They’ve worked for two administrations by keeping money and influence flowing to Washington. And they’ve worked for those of us who were able to hang on to our homes and our jobs directly or indirectly through the spending.

    But chances are either you or someone you know isn’t getting the benefits. Maybe they’re in foreclosure or struggling with credit card debt. For them, there could have been some small comfort in knowing the system was held accountable instead of preserved and made more menacing.

    You should get more for $89 billion….”

    http://finance.yahoo.com/banking-budgeting/article/109303/bailout-success-is-the-problem;_ylt=AqQehXjLaHxS5Xnxt256gnm7YWsA;_ylu=X3oDMTE1ZWE1OXZqBHBvcwM0BHNlYwN0b3BTdG9yaWVzBHNsawN0aGViYWlsb3V0c3c-?sec=topStories&pos=2&asset=&ccode=

    The problem Pfft is horrifying depression sized unemployment, even your VP Biden with Obama agrees with me to date….even adding some subpar 160K jobs in March [assuming it’s true] and subtracting the 870K Census P/T jobs from this subpar rosy exageration, gives us a theoretical 700K job loss figure for March 2010.

    Severely underemployed [like P/T Census Workers from the unemployed pool] were counted as unemployed during the Great Depression history [I bet they make no more than 1/4th of your annual pay].

    The two party system MSM doesn’t care about 1929 history records for unemployment counts, just how to tweak a repression into a phony short-term debt bailout recovery with no longterm jobs produced in 2010.

    you just can’t come to grips with the fact that the economy is recovering. I know, I was one of you in 2003-2005. I stayed bearish. no amount of data would convince me. I didn’t even know about a lot of the data like the philly fed and etc. back then. I stayed bearish and lucked into a housing bubble. say it with me, the economy is recovering! a few months ago you guys didn’t think losing less jobs was good. now that we are adding jobs you’re moving the goal posts. now the economy has to in your words produce long-term jobs. the economy is recovering. the bear party is over.

    EDIT:

    stop lying about unemployment. yes it’s bad. but the unemployment rate is about 10%. the depression was twice as high. don’t overstate your case.

  37. 37
    pfft says:

    By Ross @ 34:

    By Shelly T. @ 25:

    I understand Killinger is testifying on Tuesday about the Fed’s seizure of WAMU. There sure were a lot of local people (stockholders, employees, etc.) hurt by the Fed’s actions regarding WAMU. Why did so many other institutions qualify for “TOO BIG TO FAIL” bailouts while WAMU didn’t? The policy wasn’t applied fairly across the board. There was no logical reason to bail out others and seize WAMU. Something smells bad at the Fed. Real bad! What the Fed did is just another form of corruption — at our expense!

    Well, WAMU had a lot of loans on their books, and especially more exotic loans. More, as a percentage, than almost any other big bank. So I don’t think it was a random conspiracy by the FED to screw over shareholders. Their biggest fault, perhaps, was not being big enough to be “too big to fail”.

    or not being headquartered in Manhattan?

  38. 38
    pfft says:

    By One Eyed Man @ 33:

    RE: Hugh Dominic @ 23

    Don’t throw the baby out with the bath water Hugh. Scotsman’s a prolific source of info and his comments are the catalyst for a lot of interesting discussion.

    not only does he not believe in global warming, he actually thinks that scientists can’t even record temperatures right. one can spark good discussion without making some outrageous claims. at least he did correct his cap and trade link, so that is a positive.

  39. 39
    One Eyed Man says:

    RE: Ross @ 34

    It was also probably timing. At that time there were still other big fish like JP Morgan Chase in the financial sea capable of gobbling up a toubled big fish like WAMU. But once all the other big fish are full, the FDIC would have had to eat the next big fish to die. My guess is that’s why Sheila Bair jumped on the Chase deal so quickly. If Sheila didn’t find a home for WAMU when she did, she might have had to close it down and pay out huge claims on accounts. I doubt that Sheila had the management manpower to operate WAMU as a zombie and I’m pretty sure the FDIC didn’t have the cash to cover the claims.

  40. 40
    S-Crow says:

    RE: One Eyed Man @ 39 – good possibility and point.

    Watching the hearings online as much as I can. What a complete circus. I find the questioning about the trips and incentives to bank loan officers etc.. incredibly ironic coming from the Senators themselves. Total BS.

    The idea that anything has fundamentally changed with regards to loan officers & banks working in the best interests of their clients under the guise of a fiduciary duty is utterly nonsense. The entire lending system with regards to pricing rates all but destroys the ability to work in the best interest of the consumer– when lenders continue to incent loan officers in a variety of ways.

    Case in point: how in the world can you credit a borrower for whatever reason with just the 1point charge typical in the industry. You think the money is coming out of the loan officers check book out of good will?

  41. 41
    David Losh says:

    I’m here today because of another cancelled appointment with a “business consultant.” We have more business than I can manage. My phone rings, and I refer business in cleaning, and construction to other people. We have more people looking for work than at any other time I can think of, and yet the ability to manage this work force is not what people are willing to do.

    In my opinion most “professionals” are hoping the economy comes back to the easy squeezy days of managing money, rather than labor. We have factories in the rust belt that sit idle, we have crumbling infrastructure, people with leaking roofs, peeling paint, faulty wiring, rotten decks, and no one wants to be involved with labor, even at a management level, it’s not cool, or groovey job that people are looking for.

    So yeah, would I like to drive around all day in a new car, in my new suit, in my new tassled loafers, sure, but the days of easy are over.

    There’s money out there, there are jobs, there is an economy, but it’s like deers in the head lights of, “Who, me? You want me to do what?”

  42. 42

    RE: S-Crow @ 40 – Well, I would agree with you that the fiduciary duty thing is naive. But I don’t agree with you that loan officers shouldn’t be able to look out for the best interests of their clients when compensation varies by lender. That would be like saying that a real estate agent wouldn’t show listings at 2.5% or some other lower compensation amount. It is possible to look beyond your own financial interests when dealing with a client.

  43. 43

    Krugman had an interesting side-point to his piece today. That prices rose in areas with restrictive zoning. I’ve often thought here that many of you tend to ignore the role of new construction in pricing. But for new construction, the prices would have gone up a lot more locally prior to 2007, and but for that same new construction, the prices would have fallen a lot less since the peak. It’s part of the fallacy of thinking you can just look at graphs and tell where things are heading.

    Anyway, getting back to Krugman, perhaps the issue isn’t how restrictive the zoning is, but how long it takes for approval. For example, if an area takes 18 months to get a plat approved, then there will be a shortage of houses for 18 months and then later the construction will greatly overshoot what is necessary as too many builders are attracted by the increased prices during those 18 months. Once they buy the raw land, they will be very inclined to build.

  44. 44
    pfft says:

    calculated risk on the wamu hearings.

    “We have seen this over and over. Every time the inspector general’s office issues a report on a failed bank, the field examiners had correctly identified the problems – usually going back to 2003 or so – but no further action was taken.

    Vanasek is arguing this was possibly because of “political influence of senior management of those agencies” – the political appointees in charge. I’ve heard the same thing from examiners.”

    http://www.calculatedriskblog.com/2010/04/dataquick-socal-house-sales-increase-in.html

    James Gilleran was the head of the OTS from 2001 to 2005. he was a deregulator. I am not saying he was the only cause. the banks should run their wisely just as homeowners should buy a home they can afford.

    “”Our goal is to allow thrifts to operate with a wide breadth of freedom from regulatory intrusion”

    Banking Regulator Played Advocate Over Enforcer
    Agency Let Lenders Grow Out of Control, Then Fail
    http://www.washingtonpost.com/wp-dyn/content/article/2008/11/22/AR2008112202213.html

  45. 45
    Civil Servant says:

    Daniel @ 14, thanks for the wonderful link. That article could have been written by any one of dozens of former classmates of mine, should he or she have grown a conscience in the last few years. With a different emphasis it could have been written by many of the lawyers I’ve known or worked with. Pay $100K — or whatever — for a credential that allows one to participate in the cargo cult making many times that for as long as one would like? It is the winningest business proposition ever. (Me, I sleep fine.)

    I knew someone in school who had worked for a goverment contractor in Bosnia. As late as 2005, she was earning so much per hour in “combat zone” bonus pay that she could live on just that premium, paying the salary of two live-in servants and spending every weekend in London. She banked her entire base pay.

  46. 46
    Scotsman says:

    RE: pfft @ 38

    Don’t distort what I’ve said. I reported that NASA doesn’t think they can record temperatures correctly, so they looked to a discredited data base to try and “correct” their data. NASA’s words, not mine. Keep your head in the sand if you want to.

  47. 47
    Scotsman says:

    RE: pfft @ 36

    The economy is not recovering. It is being kept afloat by huge amounts of government spending and borrowing, but there is no recovery. Look at this chart showing corrected or real GNP where the government spending has been subtracted, and tell me about that recovery. The red line is reality, the greenish line the reported .gov stastistic. And remember, after the stimulus stops, the debt remains:

    http://market-ticker.org/uploads/2010/Apr/gdp-real-yoy.png

  48. 48
    pfft says:

    By Scotsman @ 46:

    RE: pfft @ 38

    Don’t distort what I’ve said. I reported that NASA doesn’t think they can record temperatures correctly, so they looked to a discredited data base to try and “correct” their data. NASA’s words, not mine. Keep your head in the sand if you want to.

    NASA did not say that and you know it. at least give us the courtesy of a direct link or quote from NASA.

  49. 49
    pfft says:

    By Scotsman @ 47:

    RE: pfft @ 36

    The economy is not recovering. It is being kept afloat by huge amounts of government spending and borrowing, but there is no recovery. Look at this chart showing corrected or real GNP where the government spending has been subtracted, and tell me about that recovery. The red line is reality, the greenish line the reported .gov stastistic. And remember, after the stimulus stops, the debt remains:

    http://market-ticker.org/uploads/2010/Apr/gdp-real-yoy.png

    wait, I thought the stimulus couldn’t work? now you are saying it is working? we’ve moved based the phase where the stimulus is the only growth in the economy. the recovery isn’t just in the US, it’s all over the world in just about every country large economy you can think off.

  50. 50
    Scotsman says:

    RE: pfft @ 49

    “wait, I thought the stimulus couldn’t work?”

    It isn’t working- it’s masking the real issue which is a continued deterioration of the fundamentals.

    “it’s all over the world in just about every country large economy you can think off.”

    Pure B.S. Data? Good luck.

  51. 51
    Scotsman says:

    RE: pfft @ 48

    It’s straight from the mouth of the head of NASA, as put down in an email. I’ve provided plenty of links to this in the past. End of story.

  52. 52

    RE: Scotsman @ 50

    You Got It Scotsman

    Article in part:

    “…”This is hardly surprising,” said Douglas Holtz-Eakin, an economist and former director of the nonpartisan Congressional Budget Office. “Under President Obama, only federal spending is going up; jobs, business startups, and incomes are all down. It is proof that the government can’t spend its way to prosperity.” …”

    http://www.washingtontimes.com/news/2010/apr/13/personal-income-falls-32-during-obamas-15-months/

    Even with all the bailout trillions “king’s horses and men” they couldn’t build up “Humpty Dumpty’s” income again [personal incomes down 3.2% since Obama took office].

  53. 53
    One Eyed Man says:

    RE: Scotsman @ 47

    I don’t know how Karl calculated the red line for “actual GDP” but Pfft is arguably right about one thing, if you accept Karl’s chart. In the chart, GDP was increased 10% to 12% by stimulus. Thats 1.3 to 1.6 billion in GDP from stimulus. If we get most of Tarp back (over 50%) and have only spent about 350 billion of the Stimulus package, the total of stimulus spent to date should probably be less than 700 billion, unless you add in some portion of the 1.6 billion in Treasuries and GSE’s that the Fed bought (a good portion of which they arguably will get back). The charts arguably show a multiplier of 2 for the stimulus spending based on 1.3 billion of increased GDP divided by 700 billion of stimulus spent to date.

  54. 54
    S-Crow says:

    RE: Kary L. Krismer @ 42
    Kary, I understand your point. The problem is that the shopping you suggest is sharply reduced. The shift from loan officers at brokers offices with several lenders to choose from (since now imploded) towards (today, out of survival mode) a company that is a licensed consumer loan company with one or two or three wholesale lines to choose from is not a lot of shopping. My guess is that 8 out of 10 consumers will be steered towards the higher yielding profit center for whomever they are working with. I’ve been in a few brokers offices over the years where I overhear the conversations center around, “why are you using that lender, their yield sucks compared to xyz lender.” Rate plays a role, but yield trumps it. And, some lenders may penalize a shop for not reaching certain sales goals or have a history of poor close ratios.

    You have to give the lending community some slack, they have never worked in an environment like this so it will take a while before some of the operators truly understand what it is to work in a fiduciary capacity.

  55. 55
    Dawn Glover says:

    RE: David Losh @ 41

    I agree with you David..I would love an opportunity to discuss with you further how I could be a part of your team. Just before the contraction (I like to call it that so as not to freak people out) I disolved my own business of 15 years sold the house, boat, cars, moved accross the county and have been adjusting our family and planning according to the new economy. I could tell you some interesting stories about the good old days, out on our boat, getting a call for a contract, calling our guy, making money while sipping cocktails…..ahhh…but those days are over :) I am embracing the change and reinventing myself, making the best of things and learning alot.

  56. 56
    Scotsman says:

    RE: One Eyed Man @ 53

    You’re right that the stimulus has worked in that it has effectively raised GNP as generally computed. But that misses the point, which is that minus the stimulus there really isn’t any fundamental growth. This argument can be extended back 30 years to the beginning of the easy credit/falling interest rates cycle.

    It might be more to the point to view it as the difference between balance sheet expansion and real net asset growth. When are you richer- when you have $10,000 in the bank and nothing else, or a $500,000 home with a $490,000 mortgage against it?

    Along the same line, looking only at the bump in GNP related to any stimulus spending while ignoring the total expansion in the debt doesn’t really capture the entirety of the situation. Whether some accounting convention delineates $350B or $1.3T as the TARP/stimulus/whatever misses the point that the sum of all deficit dollars spent no longer returns even their full value to the economy. If the bucket is leaking faster than the water is coming in, it doesn’t matter whether you just added a cup or a quart and temporarily bumped the level up, you’re still going to end up with an empty bucket.

  57. 57
    Daniel says:

    By Scotsman @ 56:

    You’re right that the stimulus has worked in that it has effectively raised GNP as generally computed. But that misses the point, which is that minus the stimulus […]

    Not to mention that GNP or GDP are lousy metrics for quality of living and a sad excuse for people who cannot deal with complex issues and think they can reduce it all to a single number.

  58. 58
    Sniglet says:

    Just a reminder that the Optimistic Bear internet radio show will be airing live tonight (Tuesday the 13th) 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

  59. 59
  60. 60
    Gerald says:

    RE: David Losh @ 26 – You have an interesting selective memory of historical oil prices. The reality is that oil spiked to a high in the 140s during the summer of 2008 and was cut in half by the election. The price today is actually nearly double what it was when Bush left office.

    http://futures.tradingcharts.com/chart/CO/W

    If the purpose of the wars in Iraq was to take their oil, wouldn’t it have been easier to roll the armored divisions from their bases in Texas and just take Mexican oil?

  61. 61
    David Losh says:

    RE: Scotsman @ 59

    Alrighty then, it’s the Mail, on line, there’s a news source for you, and yes every one in England is on the dole. It’s obvious that every one in Europe is on the dole. When you go to the pubs in the middle of the day and see all the young lay abouts with the piercings, and tattoos, you just know they are taking the hand outs. Hey wait, it’s exactly the same here.

    Here the government gives free money, contracts, contacts, trade agreements, tax relief, tax credits, and protection to the corporate thugs that hang out all day drinking martinis. Then they whine about how hard they work getting the consumer to pay way toooooooo much for carp they get in China. It’s OK though because we, the consumers, get the easy low, no interest financing which the other half of our corporate welfare scum get to package and resell globally.

    You’re on a slippery slope here. Maybe you should get one of those good paying jobs.

  62. 62
    David Losh says:

    RE: Gerald @ 60

    The war was supposedly to protect oil interests, and yes the price of oil fell when Obama was elected on the promise to get us out of Iraq. Nobody wanted to take the oil, the purpose of the war was to drive the price of the oil up.

  63. 63
    David Losh says:

    RE: Gerald @ 60

    Come to think of it, why wouldn’t we just slant drill into Mexico, like we did in Iraq from Kuwait, during the reign of Bush the First?

  64. 64
    sleepwalker says:

    For what it’s worth, http://www.dailymail.co.uk isn’t a reputable news source. I have no way of validating the story either way, but it’s an internet Enquirer magazine.

  65. 65
    pfft says:

    By Scotsman @ 46:

    RE: pfft @ 38

    Don’t distort what I’ve said. I reported that NASA doesn’t think they can record temperatures correctly, so they looked to a discredited data base to try and “correct” their data. NASA’s words, not mine. Keep your head in the sand if you want to.

    I want a link and quotes directly from NASA.

  66. 66
    Anon says:

    Long time listener, first time caller, thought I’d share a gem I found…

    Excerpt:
    “Mary and Rich Stanley are in a rut. Like
    most of us, this fictional couple was raised
    to believe that paying off their mortgage is
    the ultimate goal of homeownership. In fact,
    their vision of the Great American Dream is
    to own their three bedroom, two-bath home
    outright — with no mortgage. Mary and Rich
    are about to learn that their dream is not
    only outdated, it is holding them back from
    achieving massive wealth and peace of mind.”

    http://www.cornerstonemtggrp.com/CEDocuments/Downloads_GetFile.aspx?id=321915&fd=0

  67. 67
    pfft says:

    By Scotsman @ 50:

    RE: pfft @ 49

    “wait, I thought the stimulus couldn’t work?”

    It isn’t working- it’s masking the real issue which is a continued deterioration of the fundamentals.

    “itâ��s all over the world in just about every country large economy you can think off.”

    Pure B.S. Data? Good luck.

    the stimulus by it’s very nature is supposed to mask deteriorating fundamentals. the fundamentals are not deteriorating anymore.

    Latest Data Hints at a Recovery in World Trade
    http://www.nytimes.com/2010/02/11/business/economy/11econ.html?ref=business

    A Recovery That’s Factory-Built and Gaining Speed
    http://www.nytimes.com/2010/02/06/business/economy/06charts.html

    click on the charts to see the undeniable recovery.

  68. 68
    pfft says:

    By softwarengineer @ 52:

    RE: Scotsman @ 50

    You Got It Scotsman

    Article in part:

    “…”This is hardly surprising,” said Douglas Holtz-Eakin, an economist and former director of the nonpartisan Congressional Budget Office. “Under President Obama, only federal spending is going up; jobs, business startups, and incomes are all down. It is proof that the government can’t spend its way to prosperity.” …”

    http://www.washingtontimes.com/news/2010/apr/13/personal-income-falls-32-during-obamas-15-months/

    Even with all the bailout trillions “king’s horses and men” they couldn’t build up “Humpty Dumpty’s” income again [personal incomes down 3.2% since Obama took office].

    we just had a giant recession that obama spent it’s way out of so of course things aren’t going yet. I am was young but I remember the dire warnings of what would happen to the economy under clinton. how did that turn out?

  69. 69
    pfft says:

    By Scotsman @ 51:

    RE: pfft @ 48

    It’s straight from the mouth of the head of NASA, as put down in an email. I’ve provided plenty of links to this in the past. End of story.

    those emails were taken out of context. why are you so quick to believe that scientists can’t measure temperatures? no scientist on earth can?

    here is all the data you could ever want.
    http://www.realclimate.org/index.php/data-sources/

  70. 70
    Scotsman says:

    RE: pfft @ 68

    Pay close attention. The problem isn’t that there are no data bases. It’s that the data isn’t any good.

  71. 71
    Scotsman says:

    RE: sleepwalker @ 64

    Kind of like the “The National Inquirer” wasn’t a reputable source when it broke the Edwards story? That is, until it was (indeed) a very reputable source. In fact, the most reputabe.

  72. 72
    Mikal says:

    RE: Scotsman @ 70 – You just jumped the shark.

  73. 73
    Scotsman says:

    RE: David Losh @ 61

    “Maybe you should get one of those good paying jobs”

    Where? Bush has screwed this country over so badly it will never recover. Forget it. I’m gonna let those chumps who still think you can make it in Amerika, the small business owners with a dream, the young with a strong sense of “social justice,” pay for my food, my housing, my medical, my retirement. I deserve it, I’ve paid into the system for years. I’m not gonna fight change anymore, I’m gonna be a taker and die with a smile. Pay up, suckas!

  74. 74
    Daniel says:

    By Scotsman @ 70:

    RE: sleepwalker @ 64

    Kind of like the “The National Inquirer” wasn’t a reputable source when it broke the Edwards story? That is, until it was (indeed) a very reputable source. In fact, the most reputabe.

    One of the classic and most well known British tabloids is the Sun, known for its best researched and most valuable content: the page 3 nude girls. Compared the to Daily Mail the Sun is high class, well researched journalism. I write this independent of topic or the article you linked, as I have not even looked at the discussion but just skimmed the posts.

  75. 75

    By David Losh @ 62:

    RE: Gerald @ 60

    The war was supposedly to protect oil interests, and yes the price of oil fell when Obama was elected on the promise to get us out of Iraq. Nobody wanted to take the oil, the purpose of the war was to drive the price of the oil up.

    The price of oil dropped because the world was heading into recession. Supply and DEMAND.

  76. 76
    David Losh says:

    RE: Scotsman @ 73

    You are absolutely right Bush lost those jobs, we hope forever. Actually it was Bush the first that pushed the agenda to help the good old boys rather than lead the nation.

    The conservatives are right, pun intended, that had we followed the Reagan principles things would be better. Reagan had the massive military build up without a war. Reagan was looking to curb government spending. Reagan let the government go bankrupt rather than sign a budget that made no sense, asked for the line item veto, and was truly pro business.

    Bush the First was voted into office to carry on the good work. He didn’t. he mucked around, looked out for his buddies, ignored Hussein, invaded Kuwait, made an international mess, and then wanted to raise taxes to pay for it, what a clown.

    Clinton is a politician who knew at least to do his job. He followed some Reagan principles, but should have watched the financial sector. In hind sight Greenspan was like a person consulting an astrologer. We should have known better, but we didn’t.

    That brings us to Bush Light. That should be fresh enough in our memories to know that he followed the good buddy system even when we were under attack, both globally, and domestically. Banking was out of control at that point, Greenspan had run amok, Bush attacked Iraq, that’s got to be a gimme, and made an ass out of himself with both Russia, and China. The President of China visited Bill Gates before the President of the United States, come on, that should be another gimme.

    So between Bush I and II, in my opinion, the country has pretty much been raped. The conservative movement today is clinging to 1968 tactics that they hope will work for them. I heard about the Newt Revolution, and Hannity now has a book tour. He’s looking a little like Jerry Reuben at this point.

    So you’re concerned about your entitlements. Well you’re fifteen years too late. It can be fixed, it will take bold leadership, and thank God we have a President in office who knows enough to do his job.

  77. 77
    David Losh says:

    RE: Kary L. Krismer @ 75

    It’s kind of like asking which came first, the recession, or the election. Had McCain chosen a running mate, rather than a personality, the election could have gone to him. In my opinion we would have had a period of high inflation and maybe, just maybe, the world would go on.

    Instead, the United States of America elected an outsider who, it was pretty clear, wasn’t going to be business as usual. I don’t think it’s a coincidence that both China, and Russia, two communist countries, are our allies in this global recession.

    We were in Iraq to help Haliburton, and the Bush family oil interests. War, the uncertainty, the massive inflation of values, the economic policies of the Bush administration caused exhuberance in the demand for oil. Bush wins, we lose.

  78. 78

    RE: David Losh @ 77 – There’s no way McCain had a chance in hell given what was happening with the economy. If Abe Lincoln had risen from the grave and been McCain’s running mate (due no doubt to their past friendship), he still would have lost.

  79. 79
    Daniel says:

    By Kary L. Krismer @ 75:

    The price of oil dropped because the world was heading into recession. Supply and DEMAND.

    And right before that the oil price rose for a long time with a supply that was increasing and a demand that was diminishing. But there is another part of the story (quoted from an article that I posted a link to last week in the mid-week open thread):

    “Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.”

  80. 80

    David Losh said” In hind sight Greenspan was like a person consulting an astrologer. ”

    You’re only saying that because you’ve got Mars in Leo in the first house conjuct Uranus.

  81. 81
    pfft says:

    By Scotsman @ 70:

    RE: pfft @ 68

    Pay close attention. The problem isn’t that there are no data bases. It’s that the data isn’t any good.

    why isn’t it good? NASA’s data is good, it just wasn’t right for whatever the researcher wanted in that email. that email was taken out of context.

    it’s so sad that you don’t think any of the data is good. the data just doesn’t support your conclusions so you think the entire scientific community can’t take the earth’s temperature. sad.

  82. 82

    By Daniel @ 79:

    By Kary L. Krismer @ 75:

    The price of oil dropped because the world was heading into recession. Supply and DEMAND.

    And right before that the oil price rose for a long time with a supply that was increasing and a demand that was diminishing. But there is another part of the story (quoted from an article that I posted a link to last week in the mid-week open thread):

    “Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.”

    I’m sorry, but anything that thinks that the number of times something is traded affects how much is paid by the end consumer isn’t worth the paper it’s printed on.

  83. 83
    One Eyed Man says:

    RE: Kary L. Krismer @ 82

    I’m not sure I agree Kary. While I’m also not sure that the huge number of trades relates directly to gas prices unless most of the trades moved price upward, I think its highly probable that most refiners hedge in the futures market and their overall costs increased as the price to hedge the commodity in the futures market rose.

    How’s that for a convoluted run on sentence!

  84. 84

    RE: One Eyed Man @ 83 – Just because someone buys something, that doesn’t mean that they can sell it at a profit later, or to the next person. Also, just because costs increase it doesn’t mean the costs can be passed on. People do buy things and lose money on them, and people do have their costs increase and as a result make less money (or lose more).

    Let’s look at an example of hedging. SW Airlines a few years ago made a bet that fuel prices would rise by buying futures. You could have two scenarios as a result. First, you could assume that would somehow increase the demand for oil because SW Airlines wouldn’t need to raise their rates at all and people would otherwise not fly would be flying a lot more on SW. Or you could assume that SW would simply use their advantage to slightly undercut their competition and thereby make more money. As I recall, SW was making a lot of money during that time, and they were called a hedge fund that owns airplanes, indicating mainly what happened was the second scenario. While there probably were a few people who flew on SW who otherwise wouldn’t have flown at all, I suspect most of SW’s extra load was just a shift from other airlines, and thus the effect on overall demand for fuel was negligible.

    The point is you don’t sell something for less simply because you bought it for less, and you can’t sell it for more simply because you paid more for it.

  85. 85
    One Eyed Man says:

    RE: Kary L. Krismer @ 84

    I don’t disagree with what you say concerning airline fares, but I don’t think that the SW scenario you describe is the only potential scenario. For example, what about the guy who sells a futures contract to deliver jet fuel (or a call option) when he doesn’t actually own jet fuel.

    If the market doesn’t turn before the contract or the call option is in the money, his speculation can drive up both volume and price as a result of short squeeze. Lets say SW bought a futures contract from someone who doesn’t actually produce or own any jet fuel. The guy who sells the contract may be fundamentally right to sell a commodity short or to sell a call option but if the price doesn’t turn down before the option is in the money (and perhaps called), they have to either buy a call option to cover the option they wrote or buy the commodity to make delivery. The bear is then forced to make a purchase at a price well above what they rightfully thought fundamental demand would justify. When they are forced to buy and cover it causes additional upward volume and price that can exacerbate a forming commodity bubble.

    If actual users where the only ones buying contracts for future delivery, there wouldn’t be much of a problem because their contracts for future delivery would offset their later demand. But when a speculator buys who has no interest in ever taking delivery, the speculative market can take on a life of its own that is unrelated to the true demand for the commodity.

    In the case of air flyers, SW might not have had pricing power and the air fare may not have gone up, I don’t know. But in the case of oil prices and gasoline prices, the market wasn’t efficient enough to turn down until gas hit $4/gallon and oil hit $148/bbl. I don’t have futures market statistics to prove it, but I think short selling (in the form of selling call options and/or contracts to deliver the commodity, by people who didn’t actually own the commodity) caused both futures prices and volume to move up.

  86. 86

    RE: One Eyed Man @ 85 – If the guy doesn’t have any place to store the oil when the contract is due, his speculation won’t affect the end price of anything anywhere. He can’t affect the supply at any point in time.

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