Monday Open Thread (2011-04-18)

Here is your open thread for Monday April 18th, 2011. 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.

55 comments:

  1. 2
    Matthew says:

    http://www.businessweek.com/news/2011-04-18/u-s-stocks-tumble-as-s-p-cuts-nation-s-long-term-credit-outlook.html

    WINNING!

    We are near the tipping point. Event horizon for the U.S. Too bad so few seem to grasp the seriousness of our current economic situation.

  2. 3
    Kary L. Krismer says:

    RE: Matthew @ 2 – I’m a bit surprised by their wording. I can see the negative tag based on the debt limit coming up again.

    BTW, I think Greenspan had perhaps the best comment on that issue: Why do we have it? Every year we pass budgets and other legislation, and as the result of those items the deficit goes up (or in theory down). Then, when we bump up against the existing limit we go through a purely political even of considering raising the limit, when that was effectively already considered when the budget was passed.

    I heard elsewhere that we are the only country with this two step process. I’d also note that it’s sort of like war. If a D is President the Rs are against raising the limit, but if a R is President the Ds are against is (as demonstrated by Senator Obama’s voting record).

  3. 4
    The Tim says:

    RE: Kary L. Krismer @ 1 – Well I do know that at least one of their public record data providers gives them a style code indicating the style of the building. I have no idea whether they take that into consideration or not when throwing their electronic darts at the home valuation dartboard, though.

  4. 5
    Matthew says:

    It has nothing to do with the debt ceiling being raised. If you read the actual report, it has to do more with that fact that none of the budget proposals so far have made a real attempt to actually cut the debt. They are more concerned with 3 years from now than they are concerned with May 15. Annual deficits piled onto unmanageable levels of debt = bad news.

  5. 6
    Kary L. Krismer says:

    RE: Matthew @ 5 – Right, but what I’m saying is I could see them doing this for the debt ceiling. That it has “nothing” to do with the debt ceiling is surprising. They’re essentially assuming Congress will act.

    To use an analogy, it would be like issuing a warning about traveling in a certain car because the tires only have 6,000 miles of tread left, while ignoring the fact that current conditions involve freezing rain.

  6. 7

    RE: Matthew @ 2

    I Imagine A Lot of Our Nation’s Credit Rating Drop Was Caused By Japan

    Clinton was down there yesterday negotiating a reconstruction fund with US help….Obama already knew Japan holds much of our federal security debt and needs to cash in ASAP to repair the MASSIVE damage to their country.

    Be ready for a BIG jump in interest rates now and a BIG drop in Seattle home prices too.

  7. 8
    Pegasus says:

    Research looks at how mortgage delinquencies affect scores

    The magnitude of FICO® Score impact is highly dependent on the starting score.

    There’s no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure.

    While a score may begin to improve sooner, it could take up to 7-10 years to fully recover, assuming all other obligations are paid as agreed.

    In general, the higher starting score, the longer it takes for the score to fully recover.
    Even if there’s minimal difference in score impact between moderate and severe delinquencies, there may be significant difference in time required for the score to fully recover.

    http://bankinganalyticsblog.fico.com/2011/03/research-looks-at-how-mortgage-delinquencies-affect-scores.html

  8. 9
    Pegasus says:

    By softwarengineer @ 7:

    RE: Matthew @ 2

    I Imagine A Lot of Our Nation’s Credit Rating Drop Was Caused By Japan

    Clinton was down there yesterday negotiating a reconstruction fund with US help….Obama already knew Japan holds much of our federal security debt and needs to cash in ASAP to repair the MASSIVE damage to their country.

    Be ready for a BIG jump in interest rates now and a BIG drop in Seattle home prices too.

    Wrong again. The rating did not drop. It is just a warning of possible future potential weakness. Japan has nothing to do with it. Rates are not going to jump over facts that are already well known and already priced into to bond pricing. You have been predicting a big rate jump for a while and so far you are wrong. What happens when we get a deficit reduction budget in place and S&P removes their warning?

  9. 10

    Backyard Cottages Cooling Off Housing/Rental Unit Demand In Seattle

    The Seattle repression gypsies don’t have to pack into one house, just one lot…LOL

    Article in part:

    “…If you’re thinking about potential income properties, you may want to take another look at your backyard. Backyard cottages – sometimes referred to as accessory dwelling units, laneway housing, or granny flats – have been cropping up all over the Pacific Northwest, and cities across the nation have started updating zoning rules to allow for dwellings where your swing set used to stand. Seattle, considered a pioneer of the movement, now welcomes Portland, Miami, Berkeley, Denver and Burlington, VT, to the backyard cottage club….”

    http://news.yahoo.com/s/time/08599206520900;_ylt=Apl5oeTHOS572XzrJQ5yd5lv24cA;_ylu=X3oDMTMzajEydjlxBGFzc2V0A3RpbWUvMjAxMTA0MTgvMDg1OTkyMDY1MjA5MDAEY2NvZGUDZ21wcmQxbmJlBGNwb3MDNwRwb3MDNwRzZWMDeW5fdG9wX3N0b3JpZXMEc2xrA3doeWJhY2t5YXJkYw–

  10. 11

    RE: Pegasus @ 9 -LOL Japan had Nothing to Do With It

    And you have a bridge you can sell ole SWE? LOL

    http://www.guardian.co.uk/news/datablog/2009/mar/13/useconomy-china

    And this is 2009 data, its worse today, i.e., Japan’s approx $1trillion chunk of America’s debt to cash in soon, IMO.

  11. 12

    RE: Pegasus @ 9

    Let’s Put It Another Way

    Who in Hades is gonna lend Japan any money with reactors melting down with no end and an infrastructure severely crippled? I know, they’re resilient magicians, that’s why their nuclear safety was subpar.

    Article in part:

    “…That damage — sometimes referred to as a partial meltdown — had already been widely assumed, but the confirmation, along with the continued release of radiation from other areas, serves to underscore how difficult and how long the cleanup process will be. In fact, government officials themselves have acknowledged that there are still many setbacks that could crop up to slow down their timeline….”

    http://news.yahoo.com/s/ap/as_japan_earthquake

    And as far as SWE [France too] being “wrong again”….I was predicting this nuclear predicament “Chernobyl sized” a month ago [March 11th actaully] when the MSM and Japan falsely preached “minor setback”, not as bad as Chernobyl and with no nuclear safety technological justification. Reminds me of their safety recalls records on their cars too…LOL

  12. 13
    pfft says:

    By Matthew @ 2:

    http://www.businessweek.com/news/2011-04-18/u-s-stocks-tumble-as-s-p-cuts-nation-s-long-term-credit-outlook.html

    WINNING!

    We are near the tipping point. Event horizon for the U.S. Too bad so few seem to grasp the seriousness of our current economic situation.

    why do you believe “ratings” agencies?

    it didn’t say much about the fiscal situation. it said there are too many crazy tea partiers messing up the budget process.

    our fiscal situation is fine. the market says so.

  13. 14
    Pegasus says:

    By softwarengineer @ 11:

    RE: Pegasus @ 9 -LOL Japan had Nothing to Do With It

    And you have a bridge you can sell ole SWE? LOL

    http://www.guardian.co.uk/news/datablog/2009/mar/13/useconomy-china

    And this is 2009 data, its worse today, i.e., Japan’s approx $1trillion chunk of America’s debt to cash in soon, IMO.

    The fact they already own that big chunk has no impact on the credit rating of the US. It has already been issued. If they choose to sell it all in a hurry it will impact pricing for a while.

  14. 15
    pfft says:

    By Matthew @ 5:

    Annual deficits piled onto unmanageable levels of debt = bad news.

    the market says the debt is manageable. who cares about the rating agencies?

  15. 16
    pfft says:

    By softwarengineer @ 7:

    RE: Matthew @ 2Obama already knew Japan holds much of our federal security debt and needs to cash in ASAP to repair the MASSIVE damage to their country.

    a majority of the debt is owned by the US. Japan holds less than 10% of our debt.

  16. 17
    Pegasus says:

    By softwarengineer @ 12:

    RE: Pegasus @ 9

    Let’s Put It Another Way

    Who in Hades is gonna lend Japan any money with reactors melting down with no end and an infrastructure severely crippled? I know, they’re resilient magicians, that’s why their nuclear safety was subpar.

    Article in part:

    “…That damage â�� sometimes referred to as a partial meltdown â�� had already been widely assumed, but the confirmation, along with the continued release of radiation from other areas, serves to underscore how difficult and how long the cleanup process will be. In fact, government officials themselves have acknowledged that there are still many setbacks that could crop up to slow down their timeline….”

    http://news.yahoo.com/s/ap/as_japan_earthquake

    And as far as SWE [France too] being “wrong again”….I was predicting this nuclear predicament “Chernobyl sized” a month ago [March 11th actaully] when the MSM and Japan falsely preached “minor setback”, not as bad as Chernobyl and with no nuclear safety technological justification. Reminds me of their safety recalls records on their cars too…LOL

    Are you trying to switch the conversation to Chernobyl and the Japan nuke problem or you willing to debate your wrong statement that our credit rating was cut?

  17. 18
    pfft says:

    By softwarengineer @ 12:

    RE: Pegasus @ 9 -Let’s Put It Another WayWho in Hades is gonna lend Japan any money with reactors melting down with no end and an infrastructure severely crippled?

    I love how you make these wild obligations.1. prove Japanese infrastructure is crippled.2. prove nobody will lend Japan money. was there some kind of bond market collapse I missed?3. do you just state what you think(or is it wish?) would happen or do you actually research things before you say them?

    I meant wild allegations!

  18. 19
    pfft says:

    By Pegasus @ 14:

    By softwarengineer @ 11:

    RE: Pegasus @ 9 -LOL Japan had Nothing to Do With It

    And you have a bridge you can sell ole SWE? LOL

    http://www.guardian.co.uk/news/datablog/2009/mar/13/useconomy-china

    And this is 2009 data, its worse today, i.e., Japan’s approx $1trillion chunk of America’s debt to cash in soon, IMO.

    The fact they already own that big chunk has no impact on the credit rating of the US. It has already been issued. If they choose to sell it all in a hurry it will impact pricing for a while.

    if japan is selling your want to be buying towards the end. once japan is done sellng there is nobody left to sell.

  19. 20
    Matthew says:

    By pfft @ 15:

    By Matthew @ 5:

    Annual deficits piled onto unmanageable levels of debt = bad news.

    the market says the debt is manageable. who cares about the rating agencies?

    Really? The market says the debt is manageable? Like who? Bill Gross, Warren Buffet?

    “Warren Buffett, Bill Gross and UK fund stars including Jim Leaviss have seen their warnings on US treasuries proved right as S&P downgraded its outlook for US credit.”

    “PIMCO’s Gross, manager of the world’s biggest bond fund, sold all his treasuries last month after questioning exactly who would buy the securities when the Fed stops QE in June.”

    Yeah, the market says the debt is manageable alright… Have another glass of the Kool-Aid.

  20. 21

    RE: pfft @ 18

    OK Its Fine and Rosy

    Move to Japan and thrive….I’d bring a geiger counter with me [BTW, they’re selling like hotcakes over there right now] though, so you can make sure the food and water isn’t contaminated and teh government won’t admit it.

    But none of this has nothing to do with anything. Ports being destroyed by a a earthquake wave will never hamper Japan…LOL

    Loss of electrical power is just an inconvenience, rolling blackouts….with no end in sight.

    If you think its so rosy over, there move there [albeit, their immigration laws are enforced and they won’t let you….LOL] :-)

    10% of the total American debt is insignificant….it won’t impact America at all…LOL

  21. 22
    Matthew says:

    The market = the fed. PERIOD. They are the buyer of US debt right now.

  22. 23
    pfft says:

    By Matthew @ 20:

    By pfft @ 15:

    By Matthew @ 5:

    Annual deficits piled onto unmanageable levels of debt = bad news.

    the market says the debt is manageable. who cares about the rating agencies?

    Really? The market says the debt is manageable? Like who? Bill Gross, Warren Buffet?

    “Warren Buffett, Bill Gross and UK fund stars including Jim Leaviss have seen their warnings on US treasuries proved right as S&P downgraded its outlook for US credit.”

    “PIMCO’s Gross, manager of the world’s biggest bond fund, sold all his treasuries last month after questioning exactly who would buy the securities when the Fed stops QE in June.”

    Yeah, the market says the debt is manageable alright… Have another glass of the Kool-Aid.

    I have immense respect for warren buffet but who cares what they say in the end?

    interest rates are at historic lows stil. the spread between german bonds and US is basically nothing. interest rates aren’t even materially higher from a few years ago. they aren’t signaling problems.

  23. 24
    pfft says:

    By softwarengineer @ 21:

    RE: pfft @ 18

    OK Its Fine and Rosy

    Move to Japan and thrive….I’d bring a geiger counter with me [BTW, they’re selling like hotcakes over there right now] though, so you can make sure the food and water isn’t contaminated and teh government won’t admit it.

    But none of this has nothing to do with anything. Ports being destroyed by a a earthquake wave will never hamper Japan…LOL

    Loss of electrical power is just an inconvenience, rolling blackouts….with no end in sight.

    If you think its so rosy over, there move there [albeit, their immigration laws are enforced and they won’t let you….LOL] :-)

    10% of the total American debt is insignificant….it won’t impact America at all…LOL

    prove infrastructure is crippled.

    show bond yields sky-rocketing.

    Plans to reopen disaster-hit factories send Japan stocks up
    http://www.monstersandcritics.com/news/business/news/article_1632896.php/Plans-to-reopen-disaster-hit-factories-send-Japan-stocks-up

  24. 25
    pfft says:

    By Matthew @ 22:

    The market = the fed. PERIOD. They are the buyer of US debt right now.

    isn’t that always the excuse? it’s always the government. I guess that just shows there was always be demand for US debt. the Fed can always buy and hold it and refund all the interest payments to the government. problem solved! I know that someone will say hyper-inflation but that’s nonsense.

  25. 26

    RE: pfft @ 24

    I Don’t Need To Prove It

    When QE2 Ends This June.

    Ther’ll be no QE3, IMO….we’re now between a rock and a hard place.

  26. 27
    pfft says:

    By softwarengineer @ 26:

    RE: pfft @ 24

    I Don’t Need To Prove It

    of course not you just tell us what you think(or think?) will happen without any evidence.

    at this point the formula is well known.

    As soon as the Fed/Government stops buying/selling/manipulating the economy/stock market/bond market/mortgage market is going collapse/tank/soar.

    LOL!

  27. 28
    Scotsman says:

    This is sustainable? What happens when it eventually has to reverse?

    http://media.hotair.com/wp/wp-content/uploads/2011/04/bea-income.jpg

  28. 29
    pfft says:

    as they say here. LOL!

    dollar and bonds end the day up! #ratingsFAIL!

    Dollar, Treasuries Shrug Off U.S. Downgrade
    http://www.thestreet.com/story/11085991/1/dollar-treasuries-shrug-off-us-downgrade.html?cm_ven=GOOGLEN

    in other words it was just a risk-off day.

  29. 30
    pfft says:

    It is also worth noting that S&P has a horrible track record for judging credit worthiness. It rated hundreds of billions of dollars of subprime backed securities as investment grade. It also gave Lehman, Bear Stearns, and Enron top ratings right up until their collapse. Furthermore, no one was publicly fired for these extraordinary failures. Investors are aware that S&P’s judgement does not mean very much.

    If a Negative S&P Outlook for the U.S. Explains a Drop in Stock Prices, Why Did the Dollar Rise and Interest Rates Fall
    http://www.cepr.net/index.php/blogs/beat-the-press/if-a-negative-sap-outlook-for-the-us-explains-a-drop-in-stock-prices-why-did-the-dollar-rise-and-interest-rates-fall

  30. 31
    pfft says:

    By Scotsman @ 28:

    This is sustainable? What happens when it eventually has to reverse?

    http://media.hotair.com/wp/wp-content/uploads/2011/04/bea-income.jpg

    who said it was sustainable? it just shows that we’ve had a really bad recession and taxes need to rise once the recovery really gains steam.

  31. 32
    Blurtman says:

    Tim Geithner has repeatedly claimed that a failure to extend the debt ceiling would result in a default on our debt.

    This is untrue.

    Why is he intentionally lying?

  32. 33
    Blake says:

    RE: Scotsman @ 28

    Yes… we obviously MUST raise taxes!

  33. 34
    pfft says:

    By Blurtman @ 32:

    Tim Geithner has repeatedly claimed that a failure to extend the debt ceiling would result in a default on our debt.

    This is untrue.

    Why is he intentionally lying?

    why is he wrong? what is your source?

  34. 35
    Blurtman says:

    RE: pfft @ 34 – Well, think about it. If the entire debt were being used to pay off existing bondholders, Geithner would be correct. But it is used for a number of things, including paying off existing bondholders. So it is a complete and unecessary fabrication to claim that a failure to extend the debt ceiling would result in defaulting on payments to bondholders.

  35. 36
    Kary L. Krismer says:

    RE: Blurtman @ 35 – I thought we were borrowing something like 40 cents of every dollar we spend. Assuming that’s true, I have a hard time seeing how it wouldn’t quickly result in a default on debt. Maybe not the first day . . .

  36. 37
    pfft says:

    another week/month another austerity fail.

    ECB Trichet: Ireland Is Role Model For Greece On Deficit Plan
    http://imarketnews.com/node/10852

    He said the austerity plan being implemented by Greece’s government was “convincing and courageous.”

    a year later:

    Greek 2 Year Bond Yield Passes 20%
    http://www.zerohedge.com/article/greek-2-year-bond-yield-passes-20

    austerity DOES NOT WORK.

    thanks to all this madness spain’s CDS was up 7% today.

    in contrast the US 2-year yield with it’s out of control spending is 0.65%. you read that right. less than 1%.

  37. 38
    pfft says:

    By Blurtman @ 35:

    RE: pfft @ 34 – Well, think about it. If the entire debt were being used to pay off existing bondholders, Geithner would be correct. But it is used for a number of things, including paying off existing bondholders. So it is a complete and unecessary fabrication to claim that a failure to extend the debt ceiling would result in defaulting on payments to bondholders.

    at some point it would. no? I guess we could only pay the debt and the government could do nothing else. sounds like a good plan.

  38. 39
    Blurtman says:

    RE: pfft @ 38 – False choice. Pay the bondholders, and keep a lid on everything else, or cut everything else, or cut some things, and keep a lid on some things. My point is that Geithner lied. Why would he do that?

  39. 40
    Lurker says:

    RE: pfft @ 37

    I’m not following your comparisons to Greek and US debt. Greece yields are so high because default or restructuring is a definite by now, yes?

    And aren’t the low yields on UST party due to the issue of the Fed buying them all up?

  40. 41
    Pegasus says:

    Did The Realtors Screw You?

    They were pumping that $8,000 “credit” for buying a house, remember? How’d it work out?

    The median price of homes sold in March was $123,000, down from $136,000 in March 2010. Association president Bill Malkasian says buyers were “highly motivated” last year because of the federal homebuyer tax rebates.

    Yeah, they were “highly motivated” all right, and the Realtors were jumping up and down there (and here) about how “it’s a great time to buy with the nice tax credit!”

    http://market-ticker.org/akcs-www?post=184512

  41. 42
    Kary L. Krismer says:

    I just saw a listing where the marketing comments read: “many extras, like vinyl siding . . ..”

  42. 43
    Blurtman says:

    This guy just cannot tell the truth.

    WASHINGTON (Reuters) – U.S. Treasury Secretary Timothy Geithner on Tuesday said there was “no risk” that the United States would lose its prized AAA credit rating, saying political prospects for long-term deficit reduction were improving.

    “No risk of that,” Geithner told Fox Business Network when asked if the United States would see a downgrade after Standard & Poor’s on Monday slapped a negative outlook on its Treasury debt rating.
    ———-
    Whether or not you think much of S&P because of their (fading) reputation, there is a risk that the USA could lose its AAA rating. Things may change to make this risk negligible, but to say there is no risk is an outright lie.

    Geithner has made obvious lies in the past. Recall his claims that he did not know about the AIG bonuses in March, 2009, when it was all over the internet in late 2008.

    So the head of the US Treasury is a chronic liar. S&P is corrupt. Geithner’s predecessor committed felonies. Truly a very bad movie, or a slow motion train wreck.

    Citizens. start robbing banks. No need to obey the law any more.

  43. 44
    Kary L. Krismer says:

    By Blurtman @ 43:

    Geithner has made obvious lies in the past. Recall his claims that he did not know about the AIG bonuses in March, 2009, when it was all over the internet in late 2008..

    I think you’re confusing Geithner with Watson. :-D

  44. 45
    Matthew says:

    Not being able to raise the debt ceiling does not mean the U.S. will immediately default, it just means that it won’t be able to issue future debt. Basically, the U.S. will be like a heroin addict without another hit from the syringe.”MORE DEBT NOW, PLEASE JUST ONE MORE HIT, THEN I’ll STOP, I PROMISE!”

  45. 46
    Blurtman says:

    RE: Matthew @ 45 – Right, it doesn’t mean that the US will default on its existing debt, that is, it does not mean that the US will not be able to pay existing bondholders. So why is the US Treasury Secretary, Tim Geithner, lying about this? He has said on numerous occassions that a failure to extend the debt ceiling will result in the US defaulting on its existing debt.

    He has been shown to have made obvious lies in the past. So if the US Treasury Secretary constantly lies, and does make clever lies, just obvious ones, what is going on with this country?

  46. 47
    numbermonkey says:

    What do you think politicians would do if they faced a decision of severely cutting entitlements or defaulting some debt?

  47. 48
    Pegasus says:

    By numbermonkey @ 47:

    What do you think politicians would do if they faced a decision of severely cutting entitlements or defaulting some debt?

    I am sure Patty Murray can answer that for you. Give her a call.

  48. 49
    Matthew says:

    Um, Because he works for the President and is attempting to scare Congress into raising the debt ceiling immediately so there are no hiccups.

  49. 50
    Kary L. Krismer says:

    RE: Matthew @ 49 – I must say he’s lost a lot of credibility since going to work for the White House.

    On the other hand, I like the idea of just getting rid of the debt limit. It’s stupid. Congress passes budgets and other legislation that affect spending. Having this stupid debt limit vote periodically is like having a back seat driver nag at you. It doesn’t really help the process along.

  50. 51
    Lurker says:

    Debt levels have to be raised if there is a desire for QE3, correct? I think that may be the the real issue.

  51. 52
    Kary L. Krismer says:

    RE: Lurker @ 51 – I’m not sure it affects that at all.

  52. 53
    Lurker says:

    RE: Kary L. Krismer @ 52
    Right, I was getting some wires crossed. Thanks.

  53. 54
    Blurtman says:

    Some intelligent comments on the Ritholz website regarding Geithner’s lying. Again, failure to raise the debt ceiling does not mean a default on the debt. It means that we have to cut spending significantly. Regardless of whether such a spending cut would be good or bad, the fact remains that Geithner is lying in plain sight. It would be truthful to say that if we do not extend the debt ceiling, and do not want to default on our debt, we have to cut spending significantly. Big difference!

    “The theater aside, default is *not* a risk if the debt ceiling is not raised. Federal receipts are sufficient to pay interest. Existing debt could be rolled over without incident.

    However, it would immediately force a balanced budget and 43% reduction in spending because deficits could no longer be financed.

    The only default would be on mathematically unsustainable political promises.”

    http://www.ritholtz.com/blog/2011/04/playing-chicken-with-federal-debt-ceiling/#comments

  54. 55
    Scotsman says:

    RE: numbermonkey @ 47

    They’ll run cheesy attack ads like this- and kick the can even further down the road:

    http://www.youtube.com/watch?v=5z7FiBsR8OQ&feature=player_embedded

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