Mid-Week Open Thread (2011-09-28)

Here is your open thread for the mid-week on September 28th, 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.

37 comments:

  1. 1

    I Hear Las Vegas Has the Answer to Their Horrifying Foreclosure and 60% Price Drop Housing Problems

    Build more new homes in a new location…..yes, you heard me right, “build new homes”.

    But you lament, “isn’t that like putting gasoline on a raging bon-fire?”

    The RE loons in Las Vegas don’t think so….they say the buying appeal to Las Vegas home shoppers is squelched when the unit they want is surrounded by destroyed empty homes infested with rats and bugs, the foreclosed neighborhoods looks like Hades….the answer, build more homes in a different desert location.

    Location, location , location….

  2. 2
    Dirty Renter says:

    Remember these days?

    –Writing an Essay
    About five years ago, before prices in the Los Angeles metropolitan area tumbled 38 percent, as measured by a Case- Shiller index, Sinai made an offer on a different property in Santa Monica that had several competing bids. The seller required an essay from all potential buyers saying why they should be allowed to purchase it, he said.
    “It was ludicrous,” said Sinai…–

    In other news, Martin Armstrong is out of the big house….God Bless America.

  3. 3
    ChrisM says:

    http://www.nakedcapitalism.com/2011/09/protestors-disrupting-foreclosure-auctions-in-california.html

    “On Monday afternoon at 12:00 p.m., a group of protesters organized under the umbrella of the “Make Banks Pay California” campaign picketed a foreclosure sale at the Alameda County Courthouse located at 1225 Fallon Street, Oakland California.”

    I’d rather have that than the thugs in Longview vandalizing railroad tracks…

  4. 4
    ChrisM says:

    It would be interesting to see a list of how easy it is to foreclose in the different states. Here’s an article on recent changes to Colorado laws:

    http://www.denverpost.com/business/ci_18967604

    “Until 1989 Colorado homeowners could only defend themselves against a foreclosure at a Rule 120 hearing by proving they weren’t in default on the loan or were in the active military.

    That changed, however, with a Colorado Supreme Court decision that said homeowners had the right to challenge whether the foreclosing party was legally entitled to go after their house.
    [snip]
    But subtle changes in favor of the banks began in 2002.
    [snip]
    the legislation included a critical new provision: foreclosure attorneys could attest in writing that their client — a bank or other lender — actually possessed the note or deed of trust to a house they were foreclosing.

    For the first time, a bank no longer had to provide an original deed of trust or note in order to foreclose, though they still had to show the original assignments — the proof that one bank sold a note to another, giving it the right to foreclose.
    [snip]
    Suddenly, with just a lawyer’s signature, a bank could foreclose on a house without ever showing any proof that it had the right to do so.”

  5. 5

    RE: ChrisM @ 4
    I Know a MSFT Professional

    Who put the Belgium Constitution on his office wall, highlighting the fact that the legislature had the constitutional right to change the Constitutional Laws.

    His point: we do it America and our Constitution doesn’t allow it.

  6. 6
    Blurtman says:

    Brutal Ahmadinejad Regime Cracks Down on Peaceful Protesters in Iran:

    http://www.washingtonsblog.com/2011/09/msnbc-covers-police-brutality-of-peaceful-wall-street-protesters.html

    I hear the country has WMD’s, too.

  7. 7
    pfft says:

    the truth hurts?

    It’s Time To Admit That House Prices Have Stopped Falling
    http://www.businessinsider.com/its-time-to-admit-that-house-prices-have-stopped-falling-2011-9

  8. 8
    Lurker says:

    RE: pfft @ 7

    didn’t prices stop falling last year during peak season as well?

  9. 9
    David Losh says:

    RE: pfft @ 7

    This article is exactly right, property prices have stopped falling, and that is a major drain on our economy.

    The Obama administration has thrown a trillion dollars at our national economy. The idea was to stop the decline of the financial markets. Stabilizing the price of property helps the banking industry, and all debt markets.

    We can go on living the lie of a solid financial footing based on mortgages that people will continue to pay. The big shift has been in what buyers are paying, the quality of what they buy, and the number of sales. What people are buying is the best of the price tier. There are few sales to be made, and we have even seen multiple offers on what is considered a good deal. Once the cherry picking is over discounts, and concessions will need to be made in order to get next years sales.

    The article talks about a bottom to the market place. What I see is a stalling of the amounts people, and banks, are willing to take in order to sell.

  10. 10
    Blurtman says:

    Federal Reserve Chairman Ben Bernanke said Wednesday that long-term unemployment is an American “national crisis” and suggested that Congress should take further action to combat it. He also said lawmakers should provide more help to the battered housing industry. Bernanke noted that about 45 percent of the unemployed have been out of work for at least six months.

    “This is unheard of,” he said in a question-and-answer session after a speech in Cleveland. “This has never happened in the post-war period in the United States. They are losing the skills they had, they are losing their connections, their attachment to the labor force.” He added: “The unemployment situation we have, the job situation, is really a national crisis.”

    Bernanke said the government needs to provide support to help the long-term unemployed retrain for jobs and find work. And he suggested that Congress should take more responsibility.

    http://www.ritholtz.com/blog/2011/09/a-plaintive-plea-from-mr-b/#comments

  11. 11
    MacroInvestor says:

    By pfft @ 7:

    the truth hurts?

    It’s Time To Admit That House Prices Have Stopped Falling
    http://www.businessinsider.com/its-time-to-admit-that-house-prices-have-stopped-falling-2011-9

    Simple then — go ahead and buy Pfft. Post the details like Tim did and we’ll all be jealous while your equity grows an grows until you are filthy rich.

    I say it is not safe to buy until interest rates stabilize. As long as dot gov is playing games to lower rates, the market is distorted by the same artificial demand that blew the bubble. But you go ahead and prove me wrong.

  12. 12
    MacroInvestor says:

    RE: Blurtman @ 10

    What more can congress do? They totally own the secondary mortgage market. They subsidize mortgages. They’ve pushed rates down to nothing. They pay people not to work in dozens of ways. They create tons of construction projects just to keep people busy. They directly employ tens of millions who arguably do very little.

    Congress to Ben… Dear Ben. Your fed caused this whole mess. Stop pretending it’s our job to bail out your banks.

  13. 13
    Blurtman says:

    RE: MacroInvestor @ 12 – Your questions refer exclusively to matters financial, but finance and economics are not at all divorced from the totality of what makes a society, and I am not insinuating that you would argue otherwise.

    The USA is a sick country beyond just economics. Guantanamo, blowing up civilians in a country that did not pose a threat to us, a recent president who laughed at his lying rationale for the Iraq invasion, leaders of both parties who profited by the financial crime wave, cabinet officials who worked for criminal enterprises, a two tiered justice system, zero accountability at the top for crimes including murder…

    These inescapable reailties do permeate the consciousness of even stressed out Americans. Without a solid core, society fails. We are an ill society. The financial/economic crisis is a symptom of a larger underlying problem that may be beyond curing.

  14. 14
    B&W Nikes says:

    I read yesterday that Wright Runstad defaulted on Amazon’s former Beacon Hill headquarters in the PacMed building. What caught my attention was that the building was valued at 31 million at the time of the loan, and is now valued at 11 million, while the loan is still 20 million outstanding, which is almost double the current property value. There’s probably no way out but to have one party or the other eat dirt on the deal. It got me wondering if this kind of thing is more or less widespread in the Seattle commercial markets. That price correction is way more painful than what’s happened to even the most over rated residential properties. Anyone have any insight there?

  15. 15
    Blurtman says:

    RE: B&W Nikes @ 14 – From your link:

    “All this could be saber-rattling: Owners of other financially troubled buildings, such as downtown Seattle’s Columbia Center, have engaged in “strategic defaults” to prod lenders to modify their loans.”

    Developers engaging is strategic defaults and it seems to be OK, a good business move. The little guy engaging in strategic defauls, and somehow he is a bad person.

  16. 16
    B&W Nikes says:

    RE: Blurtman @ 15 – It’s true that the elite play by dainty rules, and that corporations are mostly shielded from real liability by their nature. Why is the property value down >60%? Is that pervasive or isolated? Even at 11 million who can afford it?

  17. 17
    Blurtman says:

    RE: B&W Nikes @ 16 – Anyone who can convince banks to finance the loan, or who has connections to financing, can afford it. Better even if the taxpayer picks up the loss if things head south.

  18. 18
    Blurtman says:

    This may explain a lot:

    “Oborne has argued that much of late 20th/early 21st century disenchantment with politics is due to a postmodern design of political agendas and programmes with subsequent implementation that denies the existence of an ‘independent reality’. That is, that there is something that is called truth.

    Truth gives way to (mere) credibility.

    Commensurate with the evaporation of truth is the condensation of narrative as a setting for events. This worldview is then put to use in legitimating claims of acting in ‘good-faith’ or within/according to ‘The rules’ (said ‘rules,’ of necessity, formulated, accidentally or otherwise, to admit more than one interpretation) when such actions are confronted by moral challenge.”

    http://en.wikipedia.org/wiki/Peter_Oborne

  19. 19
    Dirty Renter says:

    RE: pfft @ 7
    I hope I can find a ‘gem’ on my ‘feet first’ house.
    Yours truly,
    Still Dirty & Still Renting

  20. 20
    David Losh says:

    RE: Blurtman @ 13RE: MacroInvestor @ 12

    The governments never created this economic mess. The mess is the debt markets. Debt became a currency, and security for other financial instruments. The promise to pay is a tradable commodity. It creates profit out of thin air.

    We can all do it legally, but if you were to propose these same schemes to your buddies they would laugh you out of the cock tail lounge. If you do the same thing out in the street it’s called loan sharking.

    Governments engage in a side business of making legislation. They are not responsible for anything, you are.

    You are the people who continue to pay. You are the people who never stand up and say that’s enough. You go to your bank, with your pay check, and invest in your 401(k). You are the ones who are to blame.

  21. 21

    RE: David Losh @ 9

    I Hear Phoenix College Did the Same Sort of Thing

    Got students with college loans to enroll [buy] and pockets the money while the taxpayer has to pay off the college loan bubble [IMO, artificially driving up tuition costs too] when a lion’s share of the students default; i.e., I heard Phoenix had a 90% rate of veterans not finishing with GI Loans.

    The MSM jumped all over Phoenix college, but Hades, let’s be pragmatic, the U of W and all the colleges in America for that matter does/did it too.

  22. 22
    B&W Nikes says:

    RE: Blurtman @ 17 – Interesting article – reminds me some of the Situationists criticisms of control structures. I’m mainly curious what this valuation portends for the thousands of ‘For Lease’ signs hanging in the city’s retail and commercial floors, if anything.

  23. 23
    Blurtman says:

    RE: David Losh @ 20 – Yes, that is correct. If ony an overwhelming majority of Americans would have demanded that their representatives did not vote for the TARP bill, why, we wouldn’t be in this mess.

    Dave, you are living in fantasy land on this one. Our representatives have been co-opted. We are given no real choice in whom to vote for. The only prescription is something like a revolution, which might actually occur if the masses are not given a little more cake.

  24. 24
    pfft says:

    By Lurker @ 8:

    RE: pfft @ 7

    didn’t prices stop falling last year during peak season as well?

    we’re basically flat. the general media chatter is housing prices are dropping like a rock and hurting the recovery.

  25. 25
    pfft says:

    By MacroInvestor @ 11:

    By pfft @ 7:

    the truth hurts?

    It’s Time To Admit That House Prices Have Stopped Falling
    http://www.businessinsider.com/its-time-to-admit-that-house-prices-have-stopped-falling-2011-9

    Simple then — go ahead and buy Pfft. Post the details like Tim did and we’ll all be jealous while your equity grows an grows until you are filthy rich.

    I say it is not safe to buy until interest rates stabilize. As long as dot gov is playing games to lower rates, the market is distorted by the same artificial demand that blew the bubble. But you go ahead and prove me wrong.

    interest rates are low because we have a deleveraging economy that has produced an oversupply of savings. hence the low rates.

  26. 26
    pfft says:

    By MacroInvestor @ 12:

    RE: Blurtman @ 10

    What more can congress do? They totally own the secondary mortgage market. They subsidize mortgages. They’ve pushed rates down to nothing. They pay people not to work in dozens of ways. They create tons of construction projects just to keep people busy. They directly employ tens of millions who arguably do very little.

    really? we have 69,000 structurally deficient bridges alone in america. Our infrastructure ranking has tanked.

  27. 27
    pfft says:

    By Blurtman @ 23:

    RE: David Losh @ 20 – Yes, that is correct. If ony an overwhelming majority of Americans would have demanded that their representatives did not vote for the TARP bill, why, we wouldn’t be in this mess.

    you’re right we’d be in a even bigger mess with even more debt and unemployment.

  28. 28
    Blurtman says:

    RE: pfft @ 27 – Yes, the bankster bailouts really set things straight.

  29. 29
    David Losh says:

    RE: Blurtman @ 23

    You don’t have representatives. What are you talking about. TARP? That had to be done. There was no other choice, the same as there is no choice in China, Europe, Russia, or South America.

    The financial markets are global. That’s what happened. We have a global economy where debt is transferred the way currencies used to. Banker, or more accurately financial institutions, sell your debt to markets globally. We are a prized debt market right now, everybody knows you are going to pay. You will pay, even though we have the right o bankruptcy, you will pay to protect your FICO score.

    I’m not off base at all. You can blame government, but government is about governing. Global Financial Collapse is about debt. Governments are in the same boat we are. We are all slaves to financial institutions because we allow it. We have to have it. We need to believe that our bank is a friend of the family.

  30. 30
    David Losh says:

    RE: pfft @ 27

    You would have to prove that, and you can’t. We could have defaulted.

    Greece needs to default, along with Spain, and Italy. They need to in order to help the globally economy survive. We need to deleverage, we need to do debt forgiveness, we need to hold financial institutions accountable.

  31. 31
    Sweet Pea says:

    By Blurtman @ 23:

    RE: David Losh @ 20 – Our representatives have been co-opted. We are given no real choice in whom to vote for.

    I think at one time we were given some choices. It’s just easier for people to make simple decisions than to pay attention and make ones that require thought.

    I’ve always remembered a documentary I saw in a college class; it followed a candidate in a House race in Rhode Island. The candidate was a doctor who had done fairly well for himself and also run low cost services for low income patients and done things to try to make a difference in the world. He wanted to do more and so ran for public office.

    He was unwilling to play dirty (go negative on his rival), and by the time he did, it was too late. He lost to a Kennedy that snorted coke and ran out on his landlord without paying all the rent he owed. But he was a Kennedy and the other guy was genuine and too nice, and well the people apparently got what they deserved. Too bad for the non-sheeple.

  32. 32
    pfft says:

    By Blurtman @ 28:

    RE: pfft @ 27 – Yes, the bankster bailouts really set things straight.

    they could have done better but it kept us from falling off the cliff.

    unless you think the banking system collapsing is expansionary? face it, it was a bailout of us too. we took out the mortgages.

  33. 33
    pfft says:

    By David Losh @ 30:

    RE: pfft @ 27

    You would have to prove that, and you can’t. We could have defaulted.

    we didn’t need too.

  34. 34
    Blurtman says:

    RE: pfft @ 32 – Oh yes, the folks with the mortgages were bailed out, too.

  35. 35
    Scotsman says:

    RE: pfft @ 25RE: pfft @ 7

    “a deleveraging economy that has produced an oversupply of savings.”

    Wow- classic pfffffffft- it sounds good, but the reality is completely bogus.

    Please explain how deleveraging, i.e. paying off debt produces a surplus of cash savings available to lend, especially when those same lending institutions are quietly becoming insolvent thanks to ongoing massive losses. No links, a paragraph or two in your own words, please.

  36. 36
    David Losh says:

    RE: Blurtman @ 23

    We are in a revolution.

  37. 37
    Macro Investor says:

    By Sweet Pea @ 31:

    By Blurtman @ 23:

    RE: David Losh @ 20 – Our representatives have been co-opted. We are given no real choice in whom to vote for.

    I think at one time we were given some choices. It’s just easier for people to make simple decisions than to pay attention and make ones that require thought.

    I’ve always remembered a documentary I saw in a college class; it followed a candidate in a House race in Rhode Island. The candidate was a doctor who had done fairly well for himself and also run low cost services for low income patients and done things to try to make a difference in the world. He wanted to do more and so ran for public office.

    He was unwilling to play dirty (go negative on his rival), and by the time he did, it was too late. He lost to a Kennedy that snorted coke and ran out on his landlord without paying all the rent he owed. But he was a Kennedy and the other guy was genuine and too nice, and well the people apparently got what they deserved. Too bad for the non-sheeple.

    You can’t get elected without millions of dollars. That means you have to be acceptable to large lobbying corporations who hand out donations. And you have to be acceptable to the party leadership. There are exceptions. But for the vast majority, your choice is a democrat or a republican WHO HAS ALREADY BEEN VETTED AND ACCEPTED BY CORPORATE GIANTS. Is that democracy? Judge for yourself.

    I say we have no real choice. It’s all been bought and paid for ahead of time. Hope this is the “eye opening” moment for you.

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