Weekly Open Thread (2013-09-30)

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Here is your open thread for the week of September 30th, 2013. 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.

Note: I’ve upped the comment limit in open threads to 25 comments.

Be sure to also check out the forums, and get your word in the user-driven discussions there!

NOTICE: If you have comments to make about politics or economics that do not somehow directly relate to Seattle-area real estate, they may be posted in the current Politics & Economics Open Thread.  If you post such comments here, they will be moved 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.

71 comments:

  1. 1
    Blurtman says:

    Question: When was the last time most Americans were happy with the direction of the country?

  2. 2
    Blurtman says:

    IKEA starts selling solar panels for homes

    http://finance.yahoo.com/news/ikea-starts-selling-solar-panels-103416645.html

    Should provide marginal help for the grow lights.

  3. 3

    RE: Blurtman @ 2
    Are they going to give the solar panels the same stupid names they give their furniture?
    This is the “Torvald” panel, this is the ” Lena”.

  4. 4
    Blurtman says:

    RE: Ira Sacharoff @ 3 – MBA hater!

  5. 5
    Blurtman says:

    Citizens thank Jamie Dimon:

    http://www.liveleak.com/view?i=319_1380522846

    Kill the bankers!

  6. 6
    Macro Investor says:

    By Blurtman @ 2:

    IKEA starts selling solar panels for homes

    I refuse to shop there because their stores are laid out like a maze. They force you to walk around and around in circles, thru every product display. Then it’s a 2 mile walk to the cash registers. And for some weird reason you can’t get a bag. So if you have a lot of items you better have lots of pockets.

    Everything you need is online — better, cheaper and more convenient.

  7. 7
    David Losh says:

    What will the budget battle do to the housing market?

    Even if there is a deal made in Congress tonight we have the debt limit debate coming on October 15th.

    I don’t think this looks good for consumer based assets, or even commodities. When the consumer is just getting comfortable with rising costs, then the government says they won’t fund themselves, it’s a mixed message.

    Would you step up to a mortgage when we have the Fed, now the government working against you?

  8. 8
    Macro Investor says:

    By David Losh @ 7:

    What will the budget battle do to the housing market?

    How does closing the parks for a few days affect the housing market, commodities or consumer inflation? Because that’s about the only thing that happens. Most gov workers stay home — but they’ll get all their back pay once the shut down is over. It basically means free days off for them.

    Entitlement checks like social security and food stamps are unaffected.

    You must be watching a pretty silly TV program to get ideas like that. The whole thing is a big nothing.

  9. 9
    redmondjp says:

    RE: Macro Investor @ 8 – As one who will be potentially affected, I don’t know if I would say it’s a big nothing – the uncertainty causes even more than the normal level of gov’t inefficiency for tens of thousands of gov’t employees. It’s 8:25pm now, and I can’t even tell you for sure if I’m going to be flying to Denver tomorrow afternoon for work. I have purchased (fully-refundable, I hope) tickets and have a hotel reservation.

    If the shutdown happens, I will still go into work tomorrow (for a few hours) in order to effect an “orderly shutdown,” including cancelling my airline tickets and room reservation. It does affect productivity, especially for ongoing construction projects for which the government incurs substantial delay cost penalties if the job must be shut down because the government’s resident engineers cannot work (we hire private-industry companies to do most of our design and construction work for us).

    Despite the soul-crushing bureaucracy, the government actually does get things done. I’m upgrading the electrical power infrastructure to support the “Next Gen” air traffic control equipment. Well, at least, I’m trying to!

  10. 10
    David Losh says:

    RE: Macro Investor @ 8

    Tonight is a big nothing, but what I said was: “Even if there is a deal made in Congress tonight we have the debt limit debate coming on October 15th.”

    So you think that a deal will be reached in the next few days, and the debt ceiling debate will just follow right along.

    What we have is a nothing debate about a budget that is on the table, and can be passed at any time. Republicans are screaming about a budget, they proposed one, it’s on the table to be voted on without the ObamaCare provisions. Boehner isn’t allowing the vote because he is afraid he will lose the role of Speaker.

    It’s a budget, on the table, it’s a clean bill, and we can’t get a vote on it.

  11. 11
    Ron says:

    RE: Macro Investor @ 8

    Macro Investor

    You are either very young or you are a moron, my guess is the later. The last gov shutdown had a significant impact on the economy. I doubt that you are an investor because everyone with a stake in the game is very concerned right now. Who in their right mind will close on the largest loan of their lives to buy a home when the gov is shut down? rather than debate the shut down impact, let’s discuss this in one month after the data comes in. If this thing goes on for over a week, it will have a chilling impact on the housing recovery – you can quote me on that.

  12. 12
    Erik says:

    RE: Ron @ 11
    Good job Ron. I confirm that Macro Investor is an idiot.

  13. 13
    redmondjp says:

    Shutdown happening! Have to cancel my trip now . . .

    With my free half day tomorrow, I will work on my house (no kidding).

  14. 14
    ARDELL says:

    RE: Blurtman @ 1

    Define “most”.

  15. 15
    Dirty Renter in Banjo Country says:

    RE: Erik @ 12
    Macro is surly and sometimes nutty, like me…but he is not an idiot. :)
    Hey Macro…are you buying mREITS yet?

  16. 16
    pfft says:

    By Blurtman @ 1:

    Question: When was the last time most Americans were happy with the direction of the country?

    a cursory google says 2001 or 2002.

  17. 17
    Erik says:

    RE: Dirty Renter in Banjo Country @ 15
    I was kidding. He is rude to me, so I saw a chance to take a jab at him, so I took it.

  18. 18
    Blurtman says:

    RE: pfft @ 16 – Bill Clinton afterglow or great expectations about the guy you would like to have a beer with?

  19. 19
    David Losh says:

    RE: Blurtman @ 18RE: pfft @ 16

    It was after 9/11 which unified the country.

  20. 20
    Blurtman says:

    RE: David Losh @ 19 – Yes, when Iraq attacked the USA. Oh boy, did we teach them a lesson!

  21. 21
    pfft says:

    By Blurtman @ 20:

    RE: David Losh @ 19 – Yes, when Iraq attacked the USA. Oh boy, did we teach them a lesson!

    this current crop of GOPers almost make me wish for the bush years. almost.

  22. 22
    Macro Investor says:

    By Dirty Renter in Banjo Country @ 15:

    RE: Erik @ 12
    …are you buying mREITS yet?

    Watching them closely — but not yet, Banjo. I am a very patient macro investor. I buy when things are deeply on sale. And there’s always another sale.

    I see Losh didn’t explain how the gov vacation would affect the housing market or the economy. So I will explain why it doesn’t. People don’t buy houses because of political posturing in DC. It is irrelevant to the decision. They do delay purchases because the media says things that scare them. So the shutdown does not affect the economy, but scaring people about it does. Those of you who are angry at my comments have simply been tricked into believing your livelihood is harmed by a shutdown. IT DOES NOT… even if you are a direct employee/contractor.

    The scare stories you see in the media are all about the struggle for power and influence in DC. To get an extra vote, they will say and do anything. So they go on TV and make it sound like the world will come to an end and it’s the other party’s fault. It would be much better for all of us if we could have a real debate about the need for any of these bozos.

    In all seriousness, I do see some use to dot gov. Mostly at the state and local level. The federal gov can completely go away and hardly be noticed. All that is needed is a few treaties between the states… military cooperation, etc. Think outside the box. It’s all duplication of effort, which YOU ARE PAYING FOR.

  23. 23
    David Losh says:

    RE: Macro Investor @ 22

    Wow!

    First the Federal Government does employ a lot of people. According to government estimates, 800,000 of the more than 2 million federal workers will be furloughed.

    Second is we are a Government by, and for the People. We are a Federal Government with a Constitution, which you seem to want to ignore.

    There is a big disconnect between what the Federal Government does, and what the States do with the money they are given. It’s one of the reasons we have a Congress.

    Congress today showed it wants to play with the money we give them so they can press a personal agenda to block legislation that the House proposed on two fronts.

    Let me repeat, ObamaCare is RomneyCare. Congress voted it in, Congress has been fighting about ObamaCare since the Republicans voted in a group of radical Tea Party members.

    The attack on ObamaCare is a personal agenda for the Republicans who I guess think they will get more votes in 2014 Congressional elections as a prelude to the 2016 Presidential Elections.

    So, this isn’t a little delay in funding, it’s a dysfunctional Congress, in particular the Republicans.

    There is no negotiation to be had here, this is a budget matter of which ObamaCare isn’t even a part of. If ObamaCare is hurting the economy I don’t see how shutting down a budget debate helps that.

    Let me repeat, this is a budget debate, not another referendum about RomneyCare.

    In terms of housing I don’t see signing up for a mortgage as a great idea today. All the workers who are furloughed perform work that is essential to other forms of employment, both public, and private. Even if this was only a delay of a day, or two it will have a ripple effect, but as I pointed out this is just another salvo in a long battle for the control of Congress.

    So you tell me, what can we expect from our Federal government in the next year, to three years? Does this look like more business as usual? Is this the kind of thing that makes you more, or less risk adverse?

  24. 24
    Blake says:

    RE: Macro Investor @ 22
    >> “The federal gov can completely go away and hardly be noticed.”
    … yes, Macro Investor appears to be a dogmatic ideologue, hence idiot!
    Saw CNN interviewing an idiot from CATO this morning… free market fundamentalist spouting typical anti-government BS. Pure ideology… Gov=bad!! Interviewer quoted a report about how much damage the shutdown would do to the economy, so the CATO guy started attacking her source… she noted it was the Republican-dominated Chamber of Commerce!! CATO fool didn’t miss a beat and just started lamenting that the Federal government had so much power to affect the economy.
    If there were no Federal government it would be a utopia – – and we’d all have ponies too!

  25. 25
    Macro Investor says:

    By David Losh @ 23:

    RE: Macro Investor @ 22
    First the Federal Government does employ a lot of people…

    I still just see scared and emotional comments, without one single logical reason why the fed gov needs to exist. Not one. Name one thing they do that each state does not also do.

    We are a Federal Government with a Constitution, which you seem to want to ignore.

    The constitution only empowers the fed gov to run a military, make treaties with foreign govs and regulate interstate commerce.

    EVERYTHING ELSE is supposed to be the power of the states or the people. That is a fact. Read it for yourself.

    You claim to care about the economy. How about if everyone got to keep and spend all the money they earn, instead having 1/3 taken away? Maybe more houses would be bought.

  26. 26
    Blurtman says:

    From a concerned younger citizen….

    Dear Mr. Boehner,
    You don’t know who I am but I know who you are and I know what you done. You had sex with my mother and then you stole my dad’s money all away. So he got angry and he killed my mother and then he killed himself, too. All I know is your name. But one of these days I’m going to find you and I’m going to give you this letter so you’ll remember what you done to me. You killed my parents, Mr. Boehner

  27. 27
    David Losh says:

    RE: Macro Investor @ 25

    It’s called the Constitution of the United States, and second is:

    Article. I.

    Section. 1.

    All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

    So I don’t see how you get passed that, and that all power should go to the States. It makes no sense, it’s not logical, and as you read through the document you can see that we are a Federal Government:

    Noun 1. Federal Government – a government with strong central powers federal government – a government with strong central powers

  28. 28
    pfft says:

    By Macro Investor @ 25:

    By David Losh @ 23:

    RE: Macro Investor @ 22
    First the Federal Government does employ a lot of people…

    I still just see scared and emotional comments, without one single logical reason why the fed gov needs to exist. Not one. Name one thing they do that each state does not also do.

    We are a Federal Government with a Constitution, which you seem to want to ignore.

    The constitution only empowers the fed gov to run a military, make treaties with foreign govs and regulate interstate commerce.

    EVERYTHING ELSE is supposed to be the power of the states or the people. That is a fact. Read it for yourself.

    haha, you are kidding right?

    The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence[note 1] and general Welfare of the United States

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

    Obamacare falls under the general welfare clause.

  29. 29
    ARDELL says:

    RE: Blake @ 24

    Seems to me if there were no government of any kind, the poor people would just take everyone’s stuff. Might be better for lots of people. A lot of government protects the rich…to a point…until it stops helping the poor too.

  30. 30
    One Eyed Man says:

    RE: Macro Investor @ 25

    “The constitution only empowers the fed gov to run a military, make treaties with foreign govs and regulate interstate commerce.
    EVERYTHING ELSE is supposed to be the power of the states or the people. That is a fact. Read it for yourself.”

    Next time you’re studying the Constitution Macro, you might want to read up on the Sup Ct opinions on the “Taxing and Spending power” in Art. I and the interpretation of the “General Welfare” clause rather than listening to the Fox News, Tea Party pundits or others promoting a limited interpretation of said clause that’s at odds Supreme Court precedent. The Sup Ct has interpreted the “General Welfare” clause to mean that the Congress can tax and spend not only for the so called other “enumerated powers” you mentioned, but also for the “General Welfare.”

    Here’s a Wiki summary of the historic Sup Ct case on this issue from the 1930’s.

    “This narrow view was overturned in 1936 in United States v. Butler. There, the Court agreed with Justice Story’s construction, holding the power to tax and spend is an independent power; that is, the General Welfare Clause gives Congress power it might not derive anywhere else. However, the Court did limit the power to spending for matters affecting only the national welfare. The Court wrote:
    [T]he [General Welfare] clause confers a power separate and distinct from those later enumerated, is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. … It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution. … But the adoption of the broader construction leaves the power to spend subject to limitations. … [T]he powers of taxation and appropriation extend only to matters of national, as distinguished from local, welfare.
    The tax imposed in Butler was nevertheless held unconstitutional as a violation of the Tenth Amendment reservation of power to the states.
    Shortly after Butler, in Helvering v. Davis,[23] the Supreme Court interpreted the clause even more expansively, disavowing almost entirely any role for judicial review of Congressional spending policies, thereby conferring upon Congress a plenary power to impose taxes and to spend money for the general welfare subject almost entirely to Congress’s own discretion. Even more recently, in South Dakota v. Dole[15] the Court held Congress possessed power to indirectly influence the states into adopting national standards by withholding, to a limited extent, federal funds.”

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

  31. 31
    Blake says:

    RE: ARDELL @ 29
    Good point Ardell… our government is definitely run by and for the rich and powerful. It’s really been a 40+ year class war – – rather successful. The “war” was kicked off in 1971 and outlined in a memo by Supreme Court (and Corproate honcho) Potter Stewart:
    http://www.thenation.com/article/164349/how-wall-street-occupied-america#
    -snip – The rise of the money power in our time goes back forty years. We can pinpoint the date. On August 23, 1971, a corporate lawyer named Lewis Powell—a board member of the death-dealing tobacco giant Philip Morris and a future justice of the Supreme Court—released a confidential memorandum for his friends at the US Chamber of Commerce. We look back on it now as a call to arms for class war waged from the top down.

    Powell imagined the Chamber of Commerce as a council of war. Since business executives had “little stomach for hard-nosed contest with their critics” and “little skill in effective intellectual and philosophical debate,” they should create think tanks, legal foundations and front groups of every stripe. These groups could, he said, be aligned into a united front through “careful long-range planning and implementation…consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and united organizations.” The public wouldn’t learn of the memo until after Nixon appointed Powell to the Supreme Court that same year, 1971. By then his document had circulated widely in corporate suites. Within two years the board of the Chamber of Commerce had formed a task force of forty business executives—from US Steel, GE, GM, Phillips Petroleum, 3M, Amway, and ABC and CBS (two media companies, we should note). Their assignment was to coordinate the crusade, put Powell’s recommendations into effect and push the corporate agenda. Powell had set in motion a revolt of the rich.

    From Powell’s impetus came the Business Roundtable, the American Legislative Exchange Council (ALEC), the Heritage Foundation, the Cato Institute, the Manhattan Institute, Citizens for a Sound Economy (precursor to what we now know as Americans for Prosperity) and other organizations united in pushing back against political equality and shared prosperity. They triggered an economic transformation that would in time touch every aspect of our lives.

    Those “men of action in the capitalist world” were not content with their wealth just to buy more homes, more cars, more planes, more vacations and more gizmos than anyone else. They were determined to buy more democracy than anyone else. And they succeeded beyond their expectations. After their forty-year “veritable crusade” against our institutions, laws and regulations—against the ideas, norms and beliefs that helped to create America’s iconic middle class—the Gilded Age is back with a vengeance.”

  32. 32
    Blurtman says:

    RE: Blake @ 31 – It’s gonna take one of them to break up these trusts, just like the last time. The sheeple are too disorganized, ignorant, unconnected and impotent.

    http://greatamericansclass.blogspot.com/2010/03/trust-busting.html

    And Teddy did a lot for our National Park system, too.

  33. 33
    Macro Investor says:

    Ha ha ha… All this outpouring of emotion and NOT ONE SINGLE example of something the federal government does that the states don’t also do. I rest my case.

  34. 34
    pfft says:

    By Macro Investor @ 33:

    Ha ha ha… All this outpouring of emotion and NOT ONE SINGLE example of something the federal government does that the states don’t also do. I rest my case.

    you were proven wrong and so now you are bringing up a small point.

    FEMA.
    FBI.
    EPA.
    Highways.

    Basically anything that needs to be done on a national level and that an individual state can’t do on it’s own.

    I’ll throw it right back at you. Name one thing state governments do that counties or cities can’t do instead!

    There is a reason why the Articles of Confederation were scrapped. They didn’t work. We settled on a strong central government. That government actually disproportionately benefits red states, including those that are most for states rights.

  35. 35
    redmondjp says:

    By Macro Investor @ 33:

    Ha ha ha… All this outpouring of emotion and NOT ONE SINGLE example of something the federal government does that the states don’t also do. I rest my case.

    Sorry, I want to agree with you, but here’s just one example that I am directly familiar with:

    The state and local governments don’t specify, design, install or maintain the air traffic control equipment that makes up our National Airspace System (NAS). That is all done at the federal level. This means that the exact same equipment is installed at all major airport control towers, TRACONs, and Centers. Air traffic control is from the tower at takeoff, handed off to the TRACON next, and finally to the closest center, to the next center (and so on, all across the country), then to TRACON closest to landing airport, finally to tower at destination airport.

    Theoretically, the feds could just set the standards, and local airports could purchase, install, and maintain the equipment that meets those standards. But that’s not how it is done currently.

    Furlough Day two: I didn’t get anything done on my house today. I did discuss crawlspace water issues with my neighbor this afternoon. I think the contractors back in the mid-1970s were all smoking something, as I just learned that, like mine, my neighbor’s downspout drains also go right into the unvented crawlspace (has been that way for 38 years – my house is similar except I have a few more vents). She complains of a mildewy smell in the house (hmmm, with a swimming pool down under, I wonder why). Bid from reputable drainage contractor to correct the issue is $14K.

    When you live here, you must deal with water properly. Where I grew up, in a semi-arid desert with 6-8″ of annual rainfall, you can get away with a lot more (no houses even had gutters in my neighborhood where I grew up).

  36. 36
    Blurtman says:

    RE: ARDELL @ 29 – But WITH a federal government, the rich people steal everyone’s stuff.

    “A study by noted economist Dean Baker at the Center for Economic Policy and Research bore this out. In February 2011, Baker reported that, had public pension funds not been invested in the stock market and exposed to mortgage-backed securities, there would be no shortfall at all. He said state pension managers were of course somewhat to blame, but only “insofar as they exercised poor judgment in buying the [finance] industry’s services.” In fact, Baker said, had public funds during the crash years simply earned modest returns equal to 30-year Treasury bonds, then public-pension assets would be $850 billion richer than they were two years after the crash. ”

    http://www.esquire.com/blogs/politics/looting-pension-funds-092613

  37. 37
    Macro Investor says:

    FBI and a long list of other federal cops –> state police, county sheriff, city cops, port police, campus, and on and on and on.

    EPA –> WA state dept of ecology, does the same thing

    FEMA –> national guards, police/fire/paramedics

    Roads –> silly to even discuss… I-5 is connected to vancouver canada even though no authority exists over both countries. European cities are connected by roads/trains, also with no overall gov.

    Air traffic control, interstate commerce in general –> easily managed by state cooperation agreements.

    You guys lose. This is too easy. Federal gov serves no purpose any more. Any more takers? I’m still laughing.

  38. 38
    Macro Investor says:

    Once enough people agree, this is all it takes to do it legally and peacefully:

    Constitutional Convention — Proposed Amendment

    The United States of America will cease to exist as of January 1, 2015. All federal laws will be null and void as of this date. Powers delegated to the President and Congress will be returned to the states. The state governors will apply to the UN as new countries, and will form a committee to negotiate a military cooperation and trade agreement amongst the states.

    The supreme court will continue, only for the purpose of settling disputes between states or foreign countries.

  39. 39
    redmondjp says:

    RE: Macro Investor @ 38 – You remind me of my ‘flat tax’ friends.

    Nevergunnahappen.com

    The desire for power and control trumps all others . . . and those in control of our country have no intention of giving any of it up.

  40. 40
    ricklind says:

    By Blurtman @ 1:

    Question: When was the last time most Americans were happy with the direction of the country?

    Who was Eisenhower?

  41. 41
    No Name Guy says:

    And……getting back on the topic of Real Estate………

    http://www.realtytrac.com/Content/news-and-opinion/monsters-of-the-housing-market-vampire-reos-and-zombie-foreclosures-7892

    From the linked:
    “RealtyTrac has identified two monsters threatening the housing recovery: Vampire REOs and Zombie Foreclosures.

    Vampire REOs are bank-owned homes that are still occupied by the previous homeowner who was foreclosed on. On the surface these properties often will look like normal, non-distressed homes, but beneath the surface they represent a shadow inventory that is becoming more imminent as rising home prices motivate banks to sell off these homes to try to recoup their losses on soured loans.”

    In the Seattle market, per the linked:
    REO’s: 8,698
    Percent occupied by their now foreclosed on former “owners” (“Vampire REO’s): 43%

    Hmmmm…what would happen to the housing price “recovery” if those 43% were actually put on the market tomorrow? Mind you, that’s 3,740 units.

    The Tim at
    https://seattlebubble.com/blog/2013/10/02/september-stats-preview-one-more-inventory-bump-edition/
    notes that the entire current King County inventory is 4,953 units.
    Snohomish County is 2,161 units.

    What do you think would happen to pricing if King County inventory jumped 75%?

    Based on The Tim’s stats of what’s on market (e.g. 4953 units in King and 2161 in Snohomish) and Reality Track (8698 REO’s, of which 3740 are still occupied by their former owners) there is, in fact, substantial shadow inventory out there.

    Be wary of buying now……The REO to Rent clowns are getting out* and looking for a greater fool to be stuck holding the bag. Don’t be a slaughtered muppet by taking the other side of that trade.

    Edit to add link for *
    http://finance.yahoo.com/news/big-investors-breather-rental-market-125838523.html

  42. 42
    ARDELL says:

    RE: Blurtman @ 36

    Hindsight with 20/20 vision. Reminds me of the days when I was in the Trust biz. When the stock market goes down people wish they were in steady income securities. When the stock market goes up people complain that they were missing the boat by being in those same steady income securities. The disappearance of wealth was somewhat unheard of in my investing years except as to REITS, which really had no business being in Trust Funds at the time. Mostly holdover assets from back in the 60s, and acquired more for high income return than growth. They went completely belly up creating a shtstrm of should they have been there in the first place in court hearings.

    The balance is usually 60/40. 60 for stocks if the objective leans to growth vs income and 40/60 if the objective leans to income. But in the markets for the last 10 years the only way to lean to income is with risk, which was never the case for decades prior. Getting any kind of decent income return has been near impossible unless one was lucky enough to have some old, long term bonds.

    I’m surprised there is not more talk here about Yellen. If Yellen replaces Bernanke, and I expect she will, any hope of change in the fixed income arena is pretty much quashed. Good for housing maybe, but a shift to rates worthy of creating an upswing in people saving generally is pretty much out of the picture if Yellen takes over.

  43. 43
    pfft says:

    By Blurtman @ 36:

    RE: ARDELL @ 29 – But WITH a federal government, the rich people steal everyone’s stuff.

    “A study by noted economist Dean Baker at the Center for Economic Policy and Research bore this out. In February 2011, Baker reported that, had public pension funds not been invested in the stock market and exposed to mortgage-backed securities, there would be no shortfall at all. He said state pension managers were of course somewhat to blame, but only “insofar as they exercised poor judgment in buying the [finance] industry’s services.” In fact, Baker said, had public funds during the crash years simply earned modest returns equal to 30-year Treasury bonds, then public-pension assets would be $850 billion richer than they were two years after the crash. ”

    http://www.esquire.com/blogs/politics/looting-pension-funds-092613

    if most pension funds would index probably a quarter or a half of the shortfall would probably be gone. management fees over a long time are an outrageous drag on returns. most pensions could probably put 75% of their portfolio index one stock market index and one bond market index.

  44. 44
    pfft says:

    I can sum up my shutdown thoughts here. If someone wants to steal your car it’s not a compromise on the criminals part to only steal your car stereo and rims.

  45. 45
    pfft says:

    By Macro Investor @ 37:

    FBI and a long list of other federal cops –> state police, county sheriff, city cops, port police, campus, and on and on and on.

    EPA –> WA state dept of ecology, does the same thing

    FEMA –> national guards, police/fire/paramedics

    Roads –> silly to even discuss… I-5 is connected to vancouver canada even though no authority exists over both countries. European cities are connected by roads/trains, also with no overall gov.

    Air traffic control, interstate commerce in general –> easily managed by state cooperation agreements.

    You guys lose. This is too easy. Federal gov serves no purpose any more. Any more takers? I’m still laughing.

    “FEMA –> national guards, police/fire/paramedics”

    Don’t you remember New Orleans and the gulf coast? In times like that states, not to even mention cities, are overwhelmed. the Federal government is the only one that can coordinate multi-state responses. You can’t even comprehend that! Where do you think the money will come from to rebuild a state? the state itself? laughable.

  46. 46
    Blurtman says:

    RE: ARDELL @ 42 – Sure, but as you know, I have maintained that the banks and colluding ratings agencies purposefully misrepresented the risk of securities that they sold, which is pretty clearly fraud, and so basically had stolen money from the pension funds.

    Supposedly Yellen will continue the easy money program, but how long can QE continue, and can the Fed ever taper? And if the current stand off continues, will the 10 year rate shoot up, creating a nice buying opportunity for those so inclined?

    Stay tuned for the next installment of As the Fed Turns.

  47. 47
    Blurtman says:

    RE: pfft @ 43 – Yes, but MBS were fraudulently sold as being as solid as US Treasuries, but with a better rate of return. The sucker pitch, which worked quite well.

  48. 48
    Blurtman says:

    RE: pfft @ 44 – Are you dragging Darrell Issa into this?

  49. 49
    Macro Investor says:

    Remember when arming/training terrorists was treason? Our federal gov commits treason every day:

    Shut it all down FOREVER. This monstrosity is out of control:

    “The US government is shut down, which means only essential spending is permitted. So what does the US government, or rather its Central Intelligence Agency decide to spend precious, mission-critical taxpayer money on? Why arming the Qatari-supported Al-Qaeda “rebels” in Syria of course.”

    http://www.zerohedge.com/news/2013-10-03/training-al-qaeda-be-more-efficient-killers-now-essential-function-us-government

  50. 50
    ARDELL says:

    RE: Blurtman @ 46

    Define “shoot up”. I am tired of piddly up and downs being heralded as huge swings. Define “shoot up” please. Thanks.

  51. 51
    Blurtman says:

    RE: ARDELL @ 50 – No way of knowing. I am in at 3.00. It got up close to that on fears of the taper. 3.00 looks pretty good right now, compared to savings account rates, for a presumably secure investment.

  52. 52
    ARDELL says:

    RE: Blurtman @ 51

    Thank you for the reply, and yes, that is what I thought. I’m just too bleeping old to think 3% is meaningful. :) Remember, passbook savings accounts were pretty much fixed at 5% until the masses got “the opportunity” to participate in high earning money market funds by breaking up Glass Steagall. What a farce that turned out to be.

  53. 53
    ARDELL says:

    RE: Blurtman @ 51

    PS I would not go long at 3%. How long do you have to go to get 3%?

  54. 54

    By ARDELL @ 50:

    RE: Blurtman @ 46

    Define “shoot up”. I am tired of piddly up and downs being heralded as huge swings. Define “shoot up” please. Thanks.

    Oh, that’s an easy one.
    “Shoot Up”-
    v. To inject drugs intravenously.

  55. 55
    Blurtman says:

    RE: ARDELL @ 53 – Nobody knows. Here is an analysis from the smart guys:

    “The CBO is predicting that 10-year Treasury notes — which, remember, are currently yielding 2% — will yield 3.2 % in 2015, and 4.1 % in 2016.

    Now, for the math. If you buy a 10-year Treasury today at face value, the interest you receive over its life will total 20% of what you put up: 2% a year for 10 years. But if the yield is 3.2 % two years from now, you would be better off doing nothing for two years, buying the note at well below face value, and collecting 3.2% for 8 years. That would produce 25.6% over 8 years (8 times 3.2), a heckuva lot better than 20% over 10 years.

    If the CBO is right and you wait three years to buy the note — at a steep discount — you would collect 4.1 % for seven years, or a total of 28.7 % on your money.”

    The longer rates do not rise, of course, the worse the decision not to jump in at an attractive enough rate, I guess. And then there is the Fed. If you surmise that rates should rise with risk, but the Bernank/Yellen mutters ipso facto taper no-no, they may not or may not rise as much as they might have in an un-manipulated market.

    So what are you happy enough to live with, irrespective of how things go in the future?

  56. 56
    Blurtman says:

    RE: Ira Sacharoff @ 54 – Or, how one might display disgust at the actions of the banksters. As in, “On vacation with his family in New York City, Bob decided to shoot up the Goldman Sachs building.”

  57. 57
    ARDELL says:

    RE: Blurtman @ 55

    “So what are you happy enough to live with, irrespective of how things go in the future?”

    My investment background is too deeply steeped in the differentiation between interest and principal ,where buying above par was never considered.

    When faced with the decision in a personal arena for family members, who are the only people I have assisted with investments since I switched to real estate, I opted for a staggered portfolio of corporate bonds vs treasuries. We are still riding out some 7%+ long bonds in that portfolio. Though the heavy participation in Ford at 7%+ became worrisome not too long ago…it all worked out., for now. When it comes to bonds, some risk vs treasuries is usually considered prudent, prudent enough for trust funds. I’d have to see the spread and it depends on the size of the portfolio, but corporate bonds should be considered when evaluating one’s options.

    Those same 7% bonds can be purchased at premium now, so why would you wait two years to buy low yielding bonds at below par pricing? How would the math work if you bought high yielding notes at premium prices? We bought them slightly below par, and as I noted earlier never could consider above par given often the income recipient was not the same person as the eventual heir of the principal. Mixing the two on best total return was not an option, so I really don’t know the answer as I’ve never done the math of buying high yield above par.

    I will add a reply to pfft’s comment:

    “…most pensions could probably put 75% of their portfolio index one stock market index and one bond market index.”

    One doesn’t invest in a stock index fund unless they can go all in and all out like a day trader from time to time, and that is usually not appropriate for pension fund management. Bond funds vs individual staggered bond portfolios are almost never appropriate for pension fund management. Unless you are talking about a small privately managed personal pension fund, neither of these options would or should normally be considered for large scale pension investing.

  58. 58
    ricklind says:

    By Blurtman @ 56:

    RE: Ira Sacharoff @ 54 – Or, how one might display disgust at the actions of the banksters. As in, “On vacation with his family in New York City, Bob decided to shoot up the Goldman Sachs building.”

    He was quoted to say,” I wanted to hunt vampire squids.”

    Fel Temp Reparatio

  59. 59
    pfft says:

    By Blurtman @ 48:

    RE: pfft @ 44 – Are you dragging Darrell Issa into this?

    oh man it took me a second to remember that. great joke.

    “Yes, but MBS were fraudulently sold as being as solid as US Treasuries, but with a better rate of return. The sucker pitch, which worked quite well.”

    you are quite right.

  60. 60
    pfft says:

    By Macro Investor @ 49:

    Remember when arming/training terrorists was treason? Our federal gov commits treason every day:

    Shut it all down FOREVER. This monstrosity is out of control:

    “The US government is shut down, which means only essential spending is permitted. So what does the US government, or rather its Central Intelligence Agency decide to spend precious, mission-critical taxpayer money on? Why arming the Qatari-supported Al-Qaeda “rebels” in Syria of course.”

    http://www.zerohedge.com/news/2013-10-03/training-al-qaeda-be-more-efficient-killers-now-essential-function-us-government

    zerohedge? what’s the matter you didn’t read the blaze yet?

  61. 61
    ARDELL says:

    Just got a ripple of shutdown potentially impacting a real estate closing. Lender needs IRS transcript format of tax returns and that office is shut down. Closing is still pretty far out, but thought it was worth noting here that the shutdown could create some close date extension requests.

  62. 62
    pfft says:

    LOL.

    Cruz: GOP Already Compromised By Demanding To Defund, Not Repeal Obamacare
    http://talkingpointsmemo.com/livewire/cruz-gop-already-compromised-by-demanding-to-defund-not-repeal-obamacare

  63. 63
    ARDELL says:

    On the heels of my comment 61, some lenders are already trying to take advantage of the disadvantage caused by the shutdown. Doesn’t take some people long to start trying to capitalize on hard times. This in my email:

    “Hi Ardell,

    As the Government shutdown heads toward a long heated debate in Congress, the effects are being felt by your clients with delayed or cancelled closings due to 4506T Tax Transcript delays by the IRS.

    Premier Mortgage has ELIMINATED the 4506T validation during the shutdown!

  64. 64
    ARDELL says:

    Hi Blurtman,

    Just a heads up that I saw your reply to me on the other thread, your having run out of comments here. Didn’t want to run an off topic conversation over there, but did want you to know that I saw it and appreciate the further reply.

  65. 65
    Dirty Renter in Banjo Country says:

    RE: ARDELL @ 42
    There were still some horrific REIT managers as late as the 80s.
    Real crooks, they were.

  66. 66
    Dirty Renter in Banjo Country says:

    RE: ARDELL @ 52
    Checking & savings accts were deregulated ~ 10 years before Glass-Steagall was repealed, thus the S&L crisis of ’88-’92.

  67. 67
    Dirty Renter in Banjo Country says:

    RE: pfft @ 59
    What a steaming pile of cow patties.
    Who was pressing to increase the home-ownership society?
    Who was chasing yield?
    Who was saying real estate never goes down?
    Who was saying ‘Gawd ein’t makng no more land?

    This revisionist history is getting a bit long in the tooth, no?

  68. 68
    ARDELL says:

    RE: Dirty Renter in Banjo Country @ 66

    It was part of the unraveling of Glass Steagall, which began a decade before the final gavel on it. It was repealed in part so that by the end there was little left to take down. The de-regulation of the passbook savings was sold when interest rates went to double digits and people wanted short term money market high rates vs the regulated 5% passbook account. I was there. Short term rates were up to 13% making 5% look very, very bad at the time. It was part of the separation of products among banks based on type of bank…and also brokerage firms. It governed money market accounts and pooled investment funds. For me that was the end of Glass Steagall, though the official date was, as you say, a decade later.

  69. 69
    pfft says:

    By Dirty Renter in Banjo Country @ 67:

    RE: pfft @ 59
    What a steaming pile of cow patties.
    Who was pressing to increase the home-ownership society?
    Who was chasing yield?
    Who was saying real estate never goes down?
    Who was saying ‘Gawd ein’t makng no more land?

    This revisionist history is getting a bit long in the tooth, no?

    You obviously forgot history or are a banker.

    “It Could Be Structured By Cows And We Would Rate It”: How The Ratings Agencies Helped Cause The Financial Crisis.
    http://talkingpointsmemo.com/muckraker/it-could-be-structured-by-cows-and-we-would-rate-it-how-the-ratings-agencies-helped-cause-the-financial-crisis

    Why the Wall Street Perps Walked
    http://www.cepr.net/index.php/blogs/beat-the-press/why-the-wall-street-perps-walked

    Why are you standing up for criminals? Reaching for yield is not illegal.

  70. 70
    pfft says:

    By ARDELL @ 57:

    RE: Blurtman @ 55

    “…most pensions could probably put 75% of their portfolio index one stock market index and one bond market index.”

    One doesn’t invest in a stock index fund unless they can go all in and all out like a day trader from time to time, and that is usually not appropriate for pension fund management. Bond funds vs individual staggered bond portfolios are almost never appropriate for pension fund management. Unless you are talking about a small privately managed personal pension fund, neither of these options would or should normally be considered for large scale pension investing.

    no to everything.

  71. 71
    Dirty Renter in Banjo Country says:

    RE: pfft @ 69
    And Pfft couldn’t answer one single question. haha
    It’s cool that your criminal brethren solely blame the banks for the RE mania, but I reckon you could at least prosecute the guilty parties, not the 2 banks, BAC & JPM, who saved your rumpus during the crisis. I understand the guilty parties are no longer in bidness, and that makes it a bit tougher, but still……
    Honestly, I got to hand it to your buddies….their shakedowns would make the Gambino Family blush.
    Carry on.
    Stay thirsty, my friend.

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