Monday Open Thread (2011-12-12)

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

39 comments:

  1. 1
    Cheap South says:

    “Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs”

    http://articles.businessinsider.com/2011-12-10/news/30500948_1_entrepreneurs-and-investors-capital-gains-and-income-jobs

    “….Hanauer takes home more than $10 million a year of income. On this income, he says, he pays an 11% tax rate. (Presumably, most of the income is dividends and long-term capital gains, which carry a tax rate of 15%. And then he probably has some tax shelters that knock the rate down the rest of the way).

    With the more than $9 million a year Hanauer keeps, he buys lots of stuff. But, importantly, he doesn’t buy as much stuff as would be bought if that $9 million were instead earned by 9,000 Americans each taking home an extra $1,000 a year.

    Why not?

    Because, despite Hanauer’s impressive lifestyle — his family owns a plane — most of the $9+ million just goes straight into the bank (where it either sits and earns interest or gets invested in companies that ultimately need strong demand to sell products and create jobs). For a specific example, Hanauer points out that his family owns 3 cars, not the 3,000 that might be bought if his $9+ million were taken home by a few thousand families.

    If that $9+ million had gone to 9,000 families instead of Hanauer, it would almost certainly have been pumped right back into the economy via consumption (i.e., demand). And, in so doing, it would have created more jobs.”

  2. 2

    This Article Sums It Up for SWE

    “…Attempts to tackle the debt must address the fact that America faces unprecedented income inequality. We hardly have a middle class: Average household income for 90 percent of America is $31,244. The bulk of America’s growth over the past 30 years has gone to the top one-hundredth of one percent making an average of $27 million per household….”

    http://www.huffingtonpost.com/rep-mike-honda/republican-budget-exacerb_b_846031.html

  3. 3

    I mentioned OWS and their attempt to close down the ports. That’s today.

    http://www.komonews.com/news/local/Occupy-protesters-turn-sights-on-disrupting-port-operations-135437443.html

    It will be interesting to see how this turns out, but I’d be very surprised if they get any support at all from the Longshoremen and Teamsters. It might be eye-opening for them to learn they are not the 99%.

  4. 4

    RE: Kary L. Krismer @ 3

    Yes Kary

    When the dogs are hungry, they bark….

    I imagine the ports are like the Postal Service though, people aren’t spending money like they used to and these agencies need to down-size.

  5. 5

    RE: softwarengineer @ 4 – Fed-Ex is predicting this will be their largest day ever.

  6. 6
    Pegasus says:

    MF Global: A Romance With Risk That Brought On a Panic

    As the firm spun out of control, it improperly transferred some customer money on Oct. 21 – days sooner than previously thought, said people briefed on the matter. And investigators are now examining whether MF Global was getting away with such illicit transfers as early as August, one person said, a revelation that would point to wrongdoing even before the firm was struggling to survive.
    The consequences of the firm’s collapse have been severe: Some $1 billion in customer money remains missing and thousands of clients, including small farmers in Kansas or hedge funds in Connecticut, still do not have nearly a third of their funds.
    Some of that money may never be recovered if, as some regulators now fear, MF Global used it to cover trading losses and replenish overdrawn bank accounts.
    The bet on European sovereign debt is not thought to be directly connected to the missing money. But the fears about the firm’s exposure to Europe tipped an anxious market, causing a run on MF Global that regulators suspect led the firm to fight for its life using customer money.

    http://finance.yahoo.com/news/romance-risk-brought-panic-135508106.html

  7. 7
  8. 8
    hoary says:

    Edit:

    made a comment I now can’t find a source for, bbl!

  9. 9
    David Losh says:

    RE: Pegasus @ 6

    Why do you care? Why does any one care? Why is any one surprised that a Global Fund stole money? Why is any one surprised that banks stole money?

    How about the Insurance Industry? The Insurance Industry collects money that they pay to CEOs first. The Insurance Industry always has the fancy office, franchise fee, paper loss, and by the way your claim was denied because you just changed carriers.

    Why would you spend one second being concerned about what banditis do?

    Do you go down town to watch crack addicts, and dealers? Do you have a police band scanner in your room?

    These are thieves, they stole money, it’s what they do.

    You probably think that Corzine guy knows something, hey let’s get him in front of Congress, that’ll do it.

  10. 10

    RE: David Losh @ 9 – The discussion of REO escrows made me think of Pegasus. For REOs the banks pick the escrow company probably largely on the basis of which one will perform the service for the least amount of money. What that means is that they tend to be worse in quality that your average escrow, and some are downright incompetent. Just recently on two days of one week I came across a deed and a deed of trust prepared by a REO escrow that did not have a legal description!

    I thought of Pegasus because of the foreclosure mess, with all the robosigning and bad transfer documentation. Pegasus attributes that to bad intent. I attribute that largely to banks being cheap and hiring incompetent companies to process their foreclosures.

    In the foreclosure area it’s possibly a bit of both, but in the escrow area the bank has no real benefit to doing things wrong. It’s entirely because the bank is cheap.

  11. 11
    Scotsman says:

    Apologies to my democrat friends, but this is too good:

    http://www.youtube.com/watch?v=RWttKddn_Hw

  12. 12
  13. 13
  14. 14
  15. 15
    Blurtman says:

    RE: David Losh @ 9 – Corzine was a former US Senator. The story is larger than your average swindle story. The sanctity of the customer account was violated. The 1% shuddered.

    I would imagine it may turn out that MF Global was using customer money to cover losses, with a lot of skimming, cocaine, and hookers in the mix.

    I think Corzine might call the Obama administration’s bluff to admit that financial fraud is untouchable. And, Corzine knows where the skeletons are buried.

    So Corzine walks, and gets a reality show.

  16. 16
    Blurtman says:

    RE: Ira Sacharoff @ 14 – That’s the thing with Newt – he can destroy himself by frequent ventures off the reservation. But that flaw is not necessarily fatal.

    Newt’s diatribe was a left, right jab – a quick hit to public unions, and a patrician and possibly racist viewpoint regarding the underclass that will actually score points with a lot of people.

    He is in the lead.

    George W was apparently elected twice.

    Living on either coast may alter your preception of reailty. Got quiche?

  17. 17
    whatsmyname says:

    RE: Ira Sacharoff @ 14
    Holy smokes, They also seem to be doing a remake of Benny Hill.

    http://www.youtube.com/watch?v=e9bvreW08X0

  18. 18

    RE: Blurtman @ 16
    You’re absolutely right. I was sure Michael Dukakis was going to be elected.
    BTW, I think we may be fans of the same movie. “They Live” continues to be one of my faves, despite the longest fight scene in history.

  19. 19
    Azucar says:

    By softwarengineer @ 2:

    This Article Sums It Up for SWE

    “… Average household income for 90 percent of America is $31,244…”

    http://www.huffingtonpost.com/rep-mike-honda/republican-budget-exacerb_b_846031.html

    I read on the internet that 87% of statistics that you can find on the internet are made up.

  20. 20

    RE: Azucar @ 19

    And Of Course the Ones You Agree With are the Other 13%?

  21. 21

    RE: Blurtman @ 16

    Attacking the Underclass Scores Points With People?

    By people, youre assuming voters?

    I’d reword it to “scores points with corporations/foreigners funding and picking out our candidates”, like Newt.

  22. 22
    Dirty Renter says:

    FDIC settles with former WaMu executives: sources

    By Tom Hals and Dave Clarke

    (Reuters) – Three former executives of Washington Mutual Inc have agreed to a payment of about $75 million to settle a lawsuit brought by the Federal Deposit Insurance Corp over their role in the biggest bank failure in U.S. history.

    The three — former Chief Executive Kerry Killinger, former Chief Operating Officer Stephen Rotella and the company’s former home lending chief, David Schneider — were sued by the government’s deposit insurer last March.

    The payment will be largely funded by Washington Mutual’s remaining liability insurance for directors and officers, the sources said. The FDIC originally sought $900 million.
    One source said the personal contribution from the three, who collected $95 million in compensation between 2005 and 2008, would be “a meaningless amount.”
    The lawsuit was unusual in that it also named the spouses of Killinger and Rotella as defendants and accused them of helping their husbands hide assets, such as homes, from creditors. The claims against the spouses will be dropped.

  23. 23

    Since the Euro’s Peak at 1.6 Dollars in early 2008

    It’s regression analysis linear decline to approx 1.2 dollars today is as clear as a bell. Roubini called this one dead wrong.

    http://www.marketwatch.com/investing/currency/EURUSD?siteid=bnbh

    When America has a cold, the rest of the world catches pneumonia….

  24. 24
    David Losh says:

    RE: Blurtman @ 15

    For heaven’s sake look at the business model: MF Global: A Romance With Risk.

    It’s the end of the global market place era of high returns on investment. They hired the Senator to attract more investors and give the appearance of propriety. He’s a stooge, the same as Newt gingrich is a stooge, and a patsy.

    What you should be paying attention to is social, and health issues. There are seven billion people in the world. It’s about time all of these really smart guys figure out how to keep billions of people at bay.

  25. 25
    Blurtman says:

    RE: Ira Sacharoff @ 18 – Yes, “They Live” is a great movie. When it came out, it appealed to the anti-yuppie sentiment at the time. Now, at least for me, it appeals to the much stronger anti-bankster sentiment. And this time you don’t need the shades to see.

    Agree about the fight scene. Unecessarily long and not that spectacular. Perhaps they were playing to Rowdy Roddy’s strengths?

  26. 26
    Blurtman says:

    RE: David Losh @ 24 – I thought they already did figure that out – the internet, twitter, facebook, etc….

  27. 27
    No Name Guy says:

    http://blogs.wsj.com/economics/2011/12/12/realtors-to-revise-2007-2011sales-data-down/

    http://www.calculatedriskblog.com/2011/12/nar-downward-revisions-for-2007-to-2011.html

    Calculated Risk has been talking about this revision downwards for some time. Looks like the numbers will print in a bit over a week. It’ll be interesting to see plots of the pre revision to the post revision. The Tim – perhaps this would be a good topic for later next week.

  28. 28

    This is an interesting article, although the author doesn’t know what a “flipper” is.

    http://www.msnbc.msn.com/id/45644929/ns/business-real_estate/#.Tuek6bJAdmM

    What they’re trying to say is investors caused a lot of trouble in the market, because they were buying up a lot of the inventory. Later when prices fell, they made up a lot of the defaults. I’ve mentioned something on the latter in the past when I’ve said that a good percentage of bankrupt debtors now seem to own multiple properties.

    To use the term “flippers” though is crazy. They buy and then sell, and the net effect of their price increases is due to improving the property, not due to affecting the balance of supply and demand. And the first part of the equation should also be somewhat obvious. People thinking real estate couldn’t go down and buying rentals drove up the price.

  29. 29
    pfft says:

    By Blurtman @ 15:

    RE: David Losh @ 9 – Corzine was a former US Senator. The story is larger than your average swindle story. The sanctity of the customer account was violated.

    maybe not. might have been all legal. I’ll have to dig up the story though.

  30. 30
    pfft says:

    By David Losh @ 24:

    RE: Blurtman @ 15

    For heaven’s sake look at the business model: MF Global: A Romance With Risk.

    It’s the end of the global market place era of high returns on investment. They hired the Senator to attract more investors and give the appearance of propriety. He’s a stooge, the same as Newt gingrich is a stooge, and a patsy.

    What you should be paying attention to is social, and health issues. There are seven billion people in the world. It’s about time all of these really smart guys figure out how to keep billions of people at bay.

    corzine was CEO of Goldman Sachs. the big dog.

  31. 31
  32. 32
    The Tim says:

    Saw this interesting video game trailer yesterday:

    I think in the game you’ll play a military force working to suppress the “true patriots.” Seems like most people these days might rather play the other side…

  33. 33
    Dirty Renter says:

    RE: pfft @ 31
    Upon reading the article on hypothecation agreements, I realized, alas, I am a naive hick. The hypothecation forms we used were half page, fill-in the blank on copy paper. I had no idea I could use someone’s else’s asset as collateral for my own loan.
    At times, I think Peg & Blurt are right….we should destroy these banks and start all over. Did I just say that?

  34. 34

    RE: Dirty Renter @ 33 – I’m not up on them either, but isn’t the idea that if X owes Y money on a secured claim, that Y can use X’s collateral as collateral for Y’s loan? If so, I doubt that actually allows Y’s creditor to recover X’s asset, absent two defaults, one by X and one by Y. Absent the default by X all the creditor probably gets is the claim by Y against X.

    Stated differently, and more simply, how is it any different than a mortgage creditor using one of their deeds of trust as collateral for one of their own loans? If they default on that loan, the creditor would get the rights under the deed of trust, not the house. That’s something I’m familiar with. So how is re-hypothecation any different?

  35. 35
    CCG says:

    http://www.cnbc.com/id/45659547

    “Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.

    The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.

    “All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought,” NAR spokesman Walter Malony told Reuters.

    “We’re capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list.”

    The benchmark revisions will be published next Wednesday and will not affect house prices. (LOL, good to know!)

    Early this year, the Realtors group was accused of overcounting existing homes sales, with California-based real estate analysis firm CoreLogic claiming sales could have been overstated by as much as 20 percent.

    At the time, the NAR said it was consulting with a range of experts to determine whether there was a drift in its monthly existing home sales data and that any drift would be “relatively minor.”

    The depressed housing market is one of the key obstacles to strong economic growth and an oversupply of unsold homes on the market continues to stifle the sector.

    (Let me fix that for you: government interference in the depressed housing market is one of the key obstacles to strong economic growth. You can thank me later.)

    Malony said the Realtors group had developed a new model that would allow frequent benchmarking instead of waiting 10 years for the population Census data to revise their figures.”

  36. 36
    calvis says:

    National Association of Realtors cooking the books? Oh my, who would have guessed that?

    http://www.cnbc.com/id/45659547

    From the article

    Early this year, the Realtors group was accused of overcounting existing homes sales, with California-based real estate analysis firm CoreLogic claiming sales could have been overstated by as much as 20 percent.

  37. 37
    Natalia Orinko says:

    RE: calvis @ 36

    I’m not sure if my cousin and I should try to buy a house with fraud making the numbers so fake? What if prices have been artificially moved up by the book cooking??

  38. 38

    RE: calvis @ 36 – I know some of you want to make a big deal of this, but it’s an error in what is undoubtedly the more irrelevant number out there, except perhaps the percentage underwater studies. And problems with this data are not terribly unexpected because what they’re doing is collecting the sales figures from virtually every MLS out there. Tim has repeatedly pointed out changes of how the NWMLS collects and reports it’s data, and that affects the usefulness of the data. Apply that to every MLS out there, which do different things at different times, and you have no consistency whatsoever in the data.

    With this collective data you have each MLS reporting things their own way, and except for your local MLS(s), you have no idea what they are doing. That makes the data completely meaningless.

    Beyond that, they are national numbers. National numbers are virtually irrelevant to most local markets.

  39. 39

    By Natalia Orinko @ 37:

    I’m not sure if my cousin and I should try to buy a house with fraud making the numbers so fake? What if prices have been artificially moved up by the book cooking??

    This has nothing to do with the numbers released by the NWMLS for our local sales.

    Do keep in mind though that sales price data does contain any seller financing concessions. For example, yesterday an appraiser called me about a prior listing, inquiring as to whether there were any seller financing concessions. I told him that there were $5,000 of such concessions, meaning the real price obtained by the seller was $5,000 less. That does tend to inflate the price data, but you can often tell when that’s the case (e.g. a house is listed for $280,000 and sellers for $285,000).

    BTW, if you wanted you could easily check the King County system for the price paid for any of your comps used to determine value for a property you were interested in. That would still include the seller financing concessions, but you’d have a pretty good idea that if a seller is paying excise tax on a sale, that they were not over-inflating the sales price.

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