Sunday, December 30, 2007

2007 In Bend: A Recap

First, I have to apologize to Dunc & BEM for not receiving a Christmas smiting! A wise man said: "Smite your friends hard, but smite your enemies harder". Dunc was implicitly smited, as I smited the UPSCALE wankers that now populate downtown. I guess I don't consider Pegasus a ridiculous upscale shithole, as there are no Koi ponds, Japanese rock gardens, or bonsai tree on the checkout counter. In other words, there is no frivolous shit.

And of course BEM, The Man (I think) Who Started It All. I'm not exactly sure, but I think I heard about his original blog on KTVZ during Winter 2005-06. Those were good times. We were fighting a completely lopsided, uphill battle. For every RE bear, there were at least 10 ravenous bulls, and I regularly got whaled on for even THINKING that Bend would EVER experience gains under 25%, much less slow down or go down.

Anyone remember Life Is Good? He was actually a well-spoken bull, who at times, broke down & felt the need to just whale on me & others. He was the quintessential Perma-Optimist. He simply refused to accept that Bend would succumb to anything negative. Well, hopefully he's still alive & kickin'. I sort of wish far more True Believer Bulls would leave comments. I know those types have probably largely FINALLY given in to the idea that Bend is NOT immune from the downward spiral that is swallowing the US residential home market, and there are just not many unabashed bulls left. Maybe that's why: A year ago they could make a case, now they just sound like idiots. Oh well.

Anyway, there is a poll in the Bulletin about the Top 10 stories in Bend in 2007. It is a 1-to-10 choice, 1 being most important, 10 least, from a limited array of stories (actually hosted by a site called Zommerang). I figure it would at least be interesting to enumerate them, and throw in my 2 cents. I will list them in order as posted in the poll.

1) After soaring for several years, Central Oregon real estate market joins in the national decline

Paul-doh's rating: 3

Maybe I'm compensating for what I know are inherent biases, but a few things kept this from being an easy "1". First medians held pretty firm. Granted it is damn near impossible to realize any sort of sale at any price post-subprime & Alt-A implosion, but I was very surprised about how firm prices held. I may actually lose a bet to BendBB on this count. Instead of fairly firm pricing & falling prices, which is what we had, I really thought we'd have constant volumes & falling prices.

But the market actually deteriorated in a way that is far more detrimental to the industry. No volume at any price. In a way this is worse than my prediction. Would you rather have a 1 in 5 chance of making $10, or a 1 in 20 chance of making $15? I would take the former, and that's what I thought we'd have visa ve Bend housing, but we in fact have the latter. The former odds ensure a "vital" marketplace, because people can make quasi-informed bets & hope to win. The latter marketplace ultimately will bankrupt any participants that choose to participate. Bend is the latter.

Bend's RE market will ultimately be THE most important story in Central Oregon history, but it will probably become so via a long, Long series of 3's & 2's, not catastrophic, one-time 1's.

What may ultimately be more important, or at least as important, than the Bend RE meltdown, is the actual ACKNOWLEDGMENT by Bend media that it is even happening. I tip my hat to The Bulletin for actually listing this as a possible choice, AND listing it first.

2) Awbrey Butte woman’s clothesline becomes focal point for national environmental debate

Paul-doh's rating: 2

I actually thought this was more important as the Bend RE meltdown, because it focused WORLDWIDE attention on the absolute sleaziness & hypocrisy of many so-called "Green Bendites", including Hollern & Brooks Resources. Of course my vote for slimiest, sleaziest hypocrite in Bend history is Randy Sebastian, whose forearms I smote with the flesh-eating virus every night before I went to bed.

This story put Worldwide focus on a shameful aspect of Bend that is clear to see for anyone here, but is obscured as much as is humanly possible with glossy magazine covers, and massive PR/Marketing campaigns, all of which is taxpayer funded, of course.

The secondary, between-the-lines story here, is that as ANY place becomes more densely crowded, there starts a dog-eat-dog mentality: resources become scarce, or at least it feels that way, and human ugliness comes out in high-relief. This is always apparent in big cities, where there is no vigilant, and I mean VIGILANT, law enforcement. Look at Detroit. This story is a product of HUMAN HIGH-DENSITY LIVING. People start becoming intolerant. It's a natural process. Unfortunately, look for it to continue & actually become a reason people start to leave Bend, which is why it trumps the RE implosion in importance.

Bicyclist Kimberly Potter is killed in a hit-and-run crash, and four men face charges related to the case

Paul-doh's rating: 7

Not much to say, other than this was Cali-fueled insanity come to Bend. Sleaze, drugs, crime, all part & parcel of growing.

4) Broken Top Club members win the battle over club’s ownership

Paul-doh's rating: 8

I know, I'm supposed to think this is important, but I didn't really give a crap about this. It ultimately never came to anything, and only rich, white, gated B-Toppers gave a darn about their serenity being spoiled. If I lived in BT, maybe this would have been a "4". Had the carnival & ferris wheel come to fruition? This would have cranked up by 3-4 spots.

Bend man flies across Eastern Oregon in balloon-powered lawn chair

Paul-doh's rating: 5

Hey, this was a fun story! Nutty bastard flew a lawnchair over Oregon for God's sake! It's not going to change the World, but this was, with the laundry flap, the only national news covering Central Oregon.

Cessna buys Bend-based Columbia Aircraft Manufacturing Co.

Paul-doh's rating: 1

I thought this was the most important story of the year. Well, at least a broadened & more generic version of this story.

First of all, Cessna bought Columbia, BECAUSE IT WENT BROKE. Columbia Aircraft going BROKE was The Story of the Year in Bend, or more broadly, Bend Industry Began A Long, Lingering Collapse. THAT is The Story Of The Year. The absolutely CRIPPLING EFFECTS of high real estate prices seeping into every nook & cranny of our economy became apparent. And this is only the tip of this iceberg.

Think about it: San Fran & other places have persistently high home prices, but they also HAVE INCOMES to support those prices (at least they have for about 15-20 years). We DO NOT. We have crap jobs, like housekeeping, landscaping, and cooks & waiters. High-paying, stable jobs WILL MAKE OR BREAK the RE market here. But what COULD be funneled into higher paying jobs, is being siphoned off by landlords. It's not greed per se, they just have to make a profit, like anyone else. So the inverse of what NEEDS to happen to keep RE firmly priced, is what is actually happening: We are creating shit jobs ($7.90/hr + tips) at a lovely rate, while REAL JOBS are running away at an alarming rate.

And note the DIRECT AND INVIABLE relationship between high wages & low RE "payments": Cessna said they would keep Columbia in Bend ONLY IF they got a huge break on rent. Less to landlord equals more to employees & owners. THIS IS THE PRIMARY & FUNDAMENTAL EQUATION OF BEND'S ECONOMY FOR THE NEXT 20 YEARS. If RE doesn't come down, hard & fast, we will go broke.

Deschutes County proposes property owners between Sunriver and Klamath County border upgrade septic systems
Direct air service begins from Redmond Airport to Las Vegas

Paul-doh's rating: 10+

Huh? Who gives a shit about these two? BFD. Should not even be on the list.

Fight over two proposed destination resorts near the Metolius River invades the Legislature

Paul-doh's rating: 6

Another story that is only important from the precedent that it sets, and the idea that there is starting to be some backlash against mega-resorts populating every bare inch of pristine forest left in this place. Everyone who comes here wants to slam the barn door after their ass, but it's starting to gain traction sufficient to actually gain legislative attention.

Again, had this been stated more broadly as the Slowdown & Possible Collapse of Mega-Resort Building All Over Cent OR, I would rank this higher, maybe a 3.

10) Madras native Jacoby Ellsbury helps Red Sox win the 2007 World Series

Paul-doh's rating: 3

What can I say, I'm a sucker for a feel-good story! I felt this was a win for Warm Springs & native Americans in an arena they have not excelled at much. I thought this was a real "Colin Powell" moment for a lot of people, who really need a hero. Is there anyone who didn't feel real damn good about this story? C'mon! I thought this was a great one!

Oregon Legislature creates domestic partnerships for same-sex couples

Paul-doh's rating: 8

Who cares about a bunch of fags getting married? Yeah, FAGS. And maybe militant liberals and political-correctness Nazi's. Maybe this would rank higher had this not been undone this week by the Feds.

Property owners and public officials debate the expansion of Bend’s urban growth boundary, which dictates the areas for future growth

Paul-doh's rating: 4

This is the chokehold on bringing down prices on raw land in Bend. Should have been 3X as much, should have encouraged sprawl on a massive basis. Would it have uglified Bend? Hell yes! But the uglification of Bend is now going to happen anyway, it will just be uglified by upscale Yuppie crap service businesses that fail at n alarming rate & provide no living wage jobs.

13) Redmond hits some milestones of growth with opening of a Wal-Mart Supercenter, Home Depot and construction of Lowe’s and the Highway 97 reroute

Paul-doh's rating: 2

What? 2? Redmond? Wal-Mart?

I know. But this garners a "2" on the "Redmond Rising" theme. Redmond is actually Doing The Right Thing. They are expanding come hell or high water, uglifying an area without the preconceived Preserve Beauty At All Costs futility-laden idea that seem to imbue Bends City Fathers & most of its citizens.

Redmond is IT. Redmond doesn't give a shit about that soft-headed crap. Redmond will mow down Bend & it's artsy, fartsy anti-business, everyone is a non-profit or service business model. Madras & Prineville are too far away & too small. Sisters will implode simply due to inane prices. This leaves Redmond, which is going to KICK ASS.

Relationship between City of Bend and Juniper Ridge developers falls apart

Paul-doh's rating: 5

This soap opera was important only to the extent that it shone an uncomfortable light on the sleazy underbelly of Bend City Council & other ILLEGAL actions by said councilors. 2007 marked a year when the old boy network ran aground on the shores of progressively more acute PERCEIVED SHORTAGES created by the RE bubble. The piranha started to eat each others.

15) Six broken-down Bend Area Transit buses sit while City of Bend sues company that sold them

Paul-doh's rating: 2

Similar to the previous story, this one cast an unfavorable light on the dysfunctional nature of this city's inner workings. No due-diligence, no nothing, just DO IT NOW. Ultimately cost the city manager his job. This one is more broadly about the FLAGRANT WASTE of taxpayer monies. Should have included the cripple ramps, and other old-boy bullshit projects that infect virtually every decision made by the 100% CORRUPT CITY COUNCIL. This will maybe become a "1", when our beloved town ultimately goes broke. 2008? Maybe.

State returns largest kicker in history to taxpayers
Teenager Tyler Eklund paralyzed while snowboarding
The Tradition, a major PGA tournament, comes to Crosswater Club in Sunriver

Paul-doh's rating: 10

Yawn, double yawn, and triple yawn. Why Eklund made the news is still a mystery to me, I guess just endless PR by the parents for want of a new double-wide. Of the 3, the "Crosswater" golf story is important to the extent that it illustrates WHY marketing & PR money spent on promoting One Time Events is a waste of money: It was hailed as a BOON for local hospitality & restaurants & RE. Was it? Hell no! Short-lived, fleeting, and all but forgotten. Maybe -- MAYBE-- it sold one house. Millions blown to sell one house. Worth it? According to Bend Visitors Bureau, I'm sure they will justify such money-hemorrhaging efforts till the cows come home. As will the city. Maybe I should rank that higher, simply because it illustrates well a mentality that'll bust this town.

Tire baron Les Schwab dies

Paul-doh's rating: 4

I don't know, I just think this guy achieved singlehandedly an incredible amount for the city of Prineville, more than anyone else in history. He WAS Prineville in my mind. Just picture Priney w/o Les Schwab, and you got a markedly different place. His death was mainly symbolic in nature to LS, as virtually all operating decisions had gone to others, but Les Schwab was probably the most important business person in Central Oregon over the past 50 years.

Voters approve Measure 49, narrowing impact of M-37 property rights law

Paul-doh's rating: 6

This was important mainly because it undid something that could have left a lifetime blighting on virtually ALL of Oregon. Since many filed & got M37 approval, we'll still see a lot of ass-ugly & financially idiotic projects go up. Maybe. Since rationality has returned in some measure to the development trade, most of these will go down in flames, Thank God. M37 was a potential LIFETIME deal-breaker for Oregon. Blighting this place with pock-marked development would have driven many, including me, from Oregon ultimately.

And that's it!

I know, I know, I was supposed to be rabidly anti-RE, and all that. But I think putting RE before the perilous state of living wage jobs is putting the cart before the horse.

A Healthy RE Market is the product of Good Jobs, NOT THE CAUSE!

We need to focus on attracting living wage jobs. Someone earning 125% of the median wage in Deschutes county cannot afford 93% of the homes here. THAT will be the death knell of this place. We are attracting $8/hr jobs just fine. But that simply ensures a mass influx of illegal immigrants visa ve Whitey. It also ensures gold-rush shacks will be inhabited by 25 people, not 3-4. Crime, unemployment and the like will go up. Quality of life will go down. It's already happening. We're already seeing stories whose real driving cause is HYPER-DENSITY LIVING. This ALWAYS causes problems. People NEED space, and when they don't have it, they turn on each other.

And don't think the Bend media BS machine has stopped either, after a heinous year of being called to the mat on LIE-PACKED stories. The Dec 26 story in The Bulletin, was case in point:

Remodeling business is booming
Area contractors don’t feel pinch of industry downturn

I mean, you can tell the gist of the story solely by the headline, and it's available in it's totality online, so I'll spare you the slimey excerpts. But contrast it to the following blog post by Bend refugees who moved to Baker City:

A slowdown in Bend

December 22, 2007

A group of guys came into the restaurant last night who knew Whitey from when we lived in Bend. They had heard that we opened our place, and sought us out while in town for work. What kind of work?


JP said that he and his crew have been out of work, and he was able to find a job in Baker City. So they’re staying at a local hotel while doing a house remodel, and that they plan on coming back in a couple of months for another big job. He said that Bend has changed; whereas he used to turn away jobs because he was so busy, now everyone he knows in the business is scrambling for work.

Now, I know for a fact that there are perfectly capable contractors that live here in Baker. Knowing that this crew had to travel, pay for a hotel, and eat out every day while they are here makes me wonder how competitive their bid was to convince someone to not hire someone in area.

Right. According to the Bulletin, the remodeling biz is chugging right along. Modus operandi for justifying such BS is SOP: Find idiot who will say just about anything to get free PR, and conduct lopsided interview based on 1 observation.

There is a VERY INTERESTING quote in the piece that highlights how The Bulletin has chosen to cover the total & complete collapse of Bend's primary industry: AMBIVALENCE:

Whether there’s more or less money, overall, going into local remodels than there has been in recent years is hard to say, but companies that have specialized in remodels for years say they are seeing little drop-off in activity.

Is it going up? Down? Well, let's just say IT'S IMPOSSIBLE TO PREDICT. I've started to see this in more & more stories. Look for this sort of language to permeate Bend RE coverage.

"Where's the industry going?"


When things were going well, or even starting to flatten out, by God, there was no end to the number of interviewees that predicted nothing but nosebleed acceleration to the upside. Now that shit has completely hit the fan?


That's what I call fair & balanced.

Now to end the year on an upnote, THIS has my vote for best story of the year. Paul-doh had to fight back a lump in his throat on this one:

Happy Holidays All.

Monday, December 24, 2007

A Prayer for Bend

Dear little tiny Baby Jeebus,

Thank you for blessing Bend with your bountiful love & goodness. Thank you Baby Jeebus for keeping medians high and volumes low so that Realtors don't have to work so hard.

With the blessings out of the way, I would like to ask, itty bitty tiny Baby Jeebus, that you exercise your religious powers and smite the following intolerable bullshit:

First, little tiny Jeebus, please smite all the motherfuckers that park in handicapped spots who can walk just fine. Please smite them with a car key up the side of their Cali-plated Escalade. And Baby Jeebus, smite the bitches who wait forever in parking lots for other people to leave parking spots, blocking all possible forward motion, so that they might not have to walk an extra 10 feet. Smite the fuckers who leave their shopping cart in driving lanes. Smite the dumbshits who frantically climb over people to buy stupid video game consoles. Smite the dog owners who let their motherfucking dogs bark all night, and shit in the park & don't clean it up. Bless you Baby Jeebus for smiting the fuck out of the dogs & owners who are in constant violation of this simple human decency. In general, tiny Baby Jeebus, smite selfish rude assholes, and smite 'em good.

Little tiny Baby Jeebus, please smite all lawyers. Thank you for smiting Africa with John "Hum-Job" Hummell, asshole lawyer extraordinaire, and please itty bitty Jeebus, give that cocksucker The AIDs or some other bodily-fluid transmitted disease he gets from butt-banging some underaged Afrikaner. But little bitty Baby Jeebus, please smite every motherfuckin lawyer with the AIDs & gonorrhea. I hate those fuckers & they should all die.

And little, tiny Baby Jeebus, smite all the fake-tittied, big-haired Cali skanks that have ever come to Bend. Smite these bitches, and smite their plastic surgeon as well. Smite their augmentation procedures, and little Baby Jeebus, smite their silicon implants with weak spots that burst while they are being titty-banged. Old bitches that look like Frankenstein prostitutes are an abomination, and we both know it. Little Baby Jeebus, it'll simply be easier if you smite every female Realtor in and around Bend, because they are all sleazy ex-Cali-bangers trying to look 20 while they 95. Please make them die, Baby Jeebus.

And Baby Jeebus, thank you for smiting The Plaza, The Shire, and other completely fucked-up retard projects. But Baby Jeebus, I ask you to smite the motherfuckers who lent them the money as well. Smite everyone up the financial chain responsible. Fuckers need to learn some fiscal responsibility, itty bitty baby Jeebus. But Baby Jeebus, I just ask that you not smite Patty Moss, Cascade Bancorp's CEO. It is pretty clear, little Baby Jeebus, that you done smote her ass with an ugly stick unmerciful.

Holy Shit, stop smiting this woman Baby Jeebus!

And in a related non-smiting, for the love of Christ baby Jeebus, do not smite Hillary anymore either.

Little Baby Jeebus, please discontinue the smiting of this woman.

And we thank you Baby Jeebus, for beginning this macro-smiting of all the greedy-ass builders, Realtors, crooked mortgage brokers, and every other get-rich-quick motherfucker that has moved to Bend solely to make a quick buck. But Baby Jeebus, please reserve a special smiting for Randy Sebastian, hypocritical homo-erotic mega-fag. Please, itty bitty Jeebus, smite this fucker with the flesh-eating virus, so they we never again have to endure his smug motherfucking crossed arm bullshit. Please smite Sebastian, Ron Garzini, Ray Kuratek, Jeff Holzman, Larry Craig, and maybe some other in-the-closet Republican faggots, by getting them all caught in a public toilet giving each other the circle jerk. Let Larry Craig be caught looking at Garzini's asshole, Garzini looking at Kuratek's asshole, Kuratek looking at Holzman's asshole, Holzman looking at Sebastians asshole, and Sebastian looking at plans for Shevlin Reserve, which we all know is The Asshole of Bend.

And itty, bitty precious Baby Jeebus, please smite the motherfuckin road between Bend & the Cali border. Smite every North-bound motherfucker on this road with disease, pestilence, and a shotgun blast to the head from some gun-toting LaPine "Minutemen", charged with killing the shit outta Cali bangers come to Bend & fuck it up. Please give Cali-bangers the knowledge that they are to Bend, as the US is to Iraq: Well-meaning selfish fucknuts that are wrecking the place by imposing their will on a blood-thirsty insurgent population that will slaughter their ass at all costs to get rid of them. Please little itty bitty precious Baby Jeebus, smite Cali-bangers, George Bush, fake tittied Realtors, and the US Army in one big motherfucking smiting to give us victims some measure of your intolerance, hatred, and cruel irony in wiping out unwanted invaders.

Little tiny, itty bitty Baby Jeebus, please smite the big box retail invasion of Central Oregon as well. Smite Trader Joes, if only so they'll close & take at least a few consumerist freak Cali's with them. Smite the Porsche dealer, the Mercedes dealer, and Pronghorn. Smite all upscale restaurants, like Deep and the lame ass Merenda. Smite all upscale consumerist bullshit, which as you know full well itty bitty Jeebus, would be the smiting of 95% of Bend. Please baby Jeebus, smite the consumerist nightmare that is America.

And little tiny, itty bitty Baby Jeebus, despite the fucker cutting & pasting some of the same bullshit over & over & over, do not smite BendBust. Only smite him a little when he uses the words "cunt" or "twat", or posts a link to technicolor hemorrhoids. Which of course means he would receive the All Time Mega-Smoting of the Universe. If he does it again, for the love of Christ, itty bitty Jeebus, just shove a shotgun up that cunt's twat, and pull the trigger. And little precious Baby Jeebus, do not smite Timmy. Or Bruce. Or BendBB, despite the fact that he likes to chain his nipple rings up to a paint-shaker. He's an OK guy Baby Jeebus, and I hope that you let me throw him a burrito before the years out. He's lost $200K of the $220K that he paid for his westside sugar shack, and is keeping a stiff upper lip about it. Baby Jeebus, just so you know him when you see him and will avoid smiting his ass, here is a picture of BendBB laughing uncontrollably at the funniest joke he's ever heard:

BendBB: "A girl from Nantucket. That's a good one. I cannot stop laughing."

Speaking of whacko's you can smite on an individual basis, please smite everyone on Bend City Counsel... AGAIN. You done smote 'em once it's clear, as they are the most incompetent pack of dumbfucks to ever walk this planet. But please, just one little extra bit of smiting in 2008, so that Bend is striken with some of the most fucked up shit ever, like ramps for gimps that have 1,000% markup, and even then it ain't to code.

And smite Cushman & Tebbs, pictured here:

Cushman & Tebbs (aka Crockett & Tubbs) right after a closing. Tebbs is the black dude.

Little tiny Baby Jeebus, this ain't exactly Cushman & Tebbs, but if they were dudes, this is exactly what they'd look like. So mow the 2 fuckers down whenever you have a minute.

And little, itty, bitty, tiny Baby Jeebus, smite the shit out of The Bend Bulletin, Cascade Business Buttfuckers, and KTVZ. Smite David Fisher & Anna Sowa, and smite everyone on KTVZ, even the hot chicks, for all those heinous self-serving bio pieces where we have to endure total bullshit like Christian Boris claiming he spends his days in the Cascades when we know full well that metrosexual fucker spends his nights watching gay porn. And little Baby Jeebus even smite the mega-hot Molly Hendrickson, and quasi-weird-hot Nina Mehlhaf for even participating in KTVZ's tired as shit self-serving "We're Local, so don't watch KOHD, and we were first in hi-def so try to forget the 'HD' part of KOHD, we need to keep this monopoly so we can cycle through as many hot-chicks as possible paying them rock ass bottom wages, cuz the station manager is a motherfuckin pervert" bio pieces. Please Baby Jeebus, smite that shit hard. And baby Jeebus, don't forget to smite the Bulletin for only putting RE pieces in the online version of the paper on the way up, and worthless ass bullshit pieces online now that we've busted.

And speaking of bullshit pieces, thank you Baby Jeebus for the Bulletin piece basically printing that this place is a deluded bunch of drug-addicts, by printing this quote from Sandy Henderson, new head of the perennial money-losing BendFilm:

'You know what, there’s got to be Prozac or something in the water, because everybody is happy.’

It's called KOOL-AID Sandy, and it will soon render your mind whithered & useless. And thank you baby Jeebus for this series of idiotic quotes from the same piece:

"“The brilliant thing about L.A. is you see a lot of people at the top of their game,” Henderson says. “You see the very best of it, and you see the worst."

“My question was,” says Bailey, 'Are you too big for BendFilm?’ Given her background, it was like, 'Wow, this person is such a heavy hitter. This person has been in the big leagues. Does she come with a heft that would just overwhelm anyone here in town?’

He answers his own question: “It’s clear that’s not her personality. She doesn’t bring an L.A. personality to the job.”

“Yeah, that’s the best thing I can say about her,” said Bailey. “She doesn’t have an L.A. personality.”

“She came strolling right up to me and said, 'You don’t know me, but I’m going to be on the selections committee next year, because I worked in L.A., and I know film, and I want to be involved in BendFilm.’ I was like, 'Wow, who are you?’”

Again, Baby Jeebus, smite the living fuck out of self-loathing Californians who come here to "get away from Cali-assholes & that whole Cali thing", yet the second they're here they want Central Oregon to be a carbon-copy filled with a rude-ass pack of cocksucking cannibals, just like where they came from. Please baby Jeebus, kill these L.A. glorifying - L.A. hating conflicted motherfuckers. No, scratch that Baby Jeebus: Disfigure the fuckers first, then kill them.

And little Baby Jeebus, for the love of Christ, tell me why The Bulletin has turned into some sort of fucked-up match-making whorehouse, with quotes like this?

In 1987, she moved to the U.S. She would become a legal resident and settle in Los Angeles, “with the singular goal of being involved in film, because it’s always been my passion. It’s always been my first love,” says Henderson, who incidentally is not involved in a long-term relationship.

Baby Jeebus, please tell me why the fuck the marital status of some clearly lesbian Cali-bitch who has just been promoted from selling radio ad time to running a chronic money-losing 2nd rate piece of crap film festival, is the least bit important? Please baby Jeebus, Why?

In closing baby Jeebus, we thank you for the Smitings Of 2008:

  • Medians at $280K, down $100K from the all-time highs at $380K in Sept 2006.
  • Patty Moss losing her CEO job at Cracker-Ass Cracker Broke Cascade Bancorp.
  • The foreclosure on The Plaza, and most likely The Shire, The Garag-mahol & Tuscany Arctic Tropical Pines
  • Mike Hollern for his double-dipping of bullshit with his anti-clothesline Nazification of Awbrey Butte, and his Fake Titty Auction
  • Buena Vista homes rigged auction ripoff which resulted in 100% failure, which will be duplicated in their future Bend auction.

And little Baby Jeebus, please smite me & this blog, also. I'm an asshole & I know it. And itty, bitty Baby Jeebus, smite yourself & religion itself as well. What sort of fucked up indoctrination & brainwashing causes more suffering, death, and hatred than religion, I'll never know. Thank you tiny Baby Jeebus for inventing religion as the most inhumane method of population thinning ever conceived.

And Baby Jeebus, smite our fuckin troops in Iraq. And Jesse Jackson. And smite the bastards that don't want it to be "Merry Christmas", but "Happy Holidays" turning this country into some sort of Generic Religion-Agnostic Zone, fuck you & smite you in the ass. Go back to motherfuckin Syria, you Islamic fuckers. And smite all the black motherfuckers that blame Whitey for all their problems, and then while you're at it, smite Whitey. And smite liberals, conservatives, and for the love of Christ, just kill OJ. And Baby Jeebus, do not smite the Iran nuclear program, and please bring it back, so that we nuke those towel-head motherfuckers and we are dragged into a war-torn conflagration that drags our sorry ass down a peg. This country is fucked up & needs to be kicked in the balls. With a nuke.

In your name we pray, itty bitty tiny precious Baby Jeebus, AMEN.

P.S. And Baby Jeebus, tell all the commenters here that Paul-doh be on vacation for awhile & might not post for a week or 2, and if they don't like it, smite those fuckers hard.

Thursday, December 20, 2007

The Cult of Bend

After reading the Dec 18 piece in the Bulletin, "29 homes auctioned, not one sold" about the Buena Vista auction, you realize some pretty importsnt things not only about the Bend housing market, but the mindset of its participants. With respect to the 29 homes located in Bend:

"It was the only one of the company's nine sales area without a transaction."

This should tell you something: This was a rigged, sleazy auction ripoff, riddled with trap doors, but it STILL managed to attract a lot of people:

"The 2,209 people who swarmed into the Oregon Convention Center on Saturday and Sunday snapped up almost all of the unsold homes the Lake Oswego-based builder put up for sale in Portland's suburbs."

Now the Bend turnout was obviously lower, given the venue:

"Of the 385 people who registered to attend the auction and left their registrations at the Forum Meadows site in east Bend, only about 15% attended the actual auction in Portland..."

But this STILL MEANS about 60 people from Bend, interested enough to go register onsite, and then make the trek to Portland actually DID ATTEND. So this idea that because Bend had a fairly low turnout means that prices offered were NOT a reflection of market values for these homes is ludicrious. These were probably the most interested 60 people you could find, as they jumped through several hoops just to attend this event.

"Some of the Bend homes attracted bids, Higgins said, but none of the bids came close enough to meeting the reserve prices to justify finalizing sales on any of the homes, Higgins said."

First, David Fisher -- crack Bulletin reporter, Paul-doh said, we don't have to hear "Higgins said" twice in one sentence, Paul-doh said.

Second, you quickly see the completely FAKE nature of this auction revealed in this one sentence. Buena Vista SELECTIVELY picked & chose bids that it would accept:

"About 96 percent of the 141 homes that sold went for final bids below their reserve prices..."

This "auction" was a big sham by Buena Vista, as I said it was repeatedly. A TRUE AUCTION of a large number of properties in Bend would reveal what many on this blog have long known: Market clearing prices are FAR BELOW where they are today in Bend, that fact is EASY TO SEE in the volume numbers which have evaporated to DECADE lows; they may well be at ALL TIME PER CAPITA LOWS, as Bend was a far smaller town in 1997 when we last saw sales volumes this low.

The most interesting quote in the piece? With repsect to FEW the rejected bids that Buena Vista did receive on their Bend properties:

"'They were trying to steal them', Higgins said"


You hold an auction, that gets press coverage FAR & WIDE, you actually get a hard-core contingent of buyers to show up, they actually BID on these shithole, shoddy tubs of shit you call "homes", and you say they are trying to STEAL THEM?

This comes back to a point I've written about several times on here, despite it's unpopularity, the idea that Bend is a town that has been indoctrinated & brainwashed into thinking that WE ARE GOD'S CHOSEN PEOPLE. Not the "Jew Thing", but that as a town we are better than "The Rest". We deserve better. Hell, we deserve THE BEST, and by God, we'll wait until our dying day to get it. This is a mindset cultivated DAILY by ALL BEND MEDIA.


You can see this mindset CLEARLY reflected in Buena Vistas spokesmans statement. EVERYWHERE else, free market values were largely accepted. But Bend? NO. The fair market value bids received here were akin TO THEFT.

First this is a primary function of ignorance about ONE THING:

The fair market value of homes in Bend has RUN AWAY to the downside SO QUICKLY that MANY market participants REFUSE TO ACCEPT THE REALITY OF IT.

The Bend home market has changed so radically & quickly, that people simply refuse to accept it. It's like the tulip mania: It ended so abruptly that people simply refused to accept that prices could in fact go down at all, and also that they could go down with such breathtaking rapidity that peoples entire life savings could be wiped out in minutes.

It's only taken a few months in Bends housing market, which is really the blink of an eye.

The carefully crafted and continuously reinforced Cult of Bend has become the primary driver in a media-fueled mania which clearly did NOT understand the Law of Unintended Consequences.

Oh, we're Gods Chosen people all right... and neither WILL WE, NOR SHOULD WE drop our prices ONE CENT! Realtors cannot get their clients to drop price to effect sales. Why? They've told them day in and day out that NEVER, EVER will Bend RE drop in price, and that ANY DROP is temporary & they should hold the line, and they'll make it through to the other side just fine. And that's what people are doing.

Even Buena Vista homes believes it.

"All our other properties, well we got bids at or close to reserve, so the market must be fair & we'll sell. But Bend? HELL NO! We got bids there that ARE TOTALLY UNACCEPTABLE! These don't even reflect anything close to fair market value. FUCK THAT, we'll have another auction. Right, another 'auction', but this time it'll be in Bend. That'll set things right!"

Uh huh. You don't get it Buena Vista: Bend has returned to NORMAL BEND, after about 5-6 years of PATTY HEARST BEND, where everyone is continuously brainwashed into thinking 30% appreciation is their GOD GIVEN RIGHT. That's The Cult of Bend.

Normal Bend is a radically different place. People slog to low-pay jobs, WHEN THEY CAN GET JOBS, and they live in shithole 800/sf dungheaps that are priced at a ridiculously high price given local wages. Where is that today? Down around $220K medians, AND SINKING.

Buena Vista GOT MARKET CLEARING BIDS, and they simply refused to accept them as REAL. They have a hell of a lot of company, as about 98% of all Bend home seller are doing the same thing. The Cult of Bend. Won't let them lower price. Been told TOO MANY TIMES TO HOLD TIGHT ON PRICE AT ALL COSTS, and now they are doing it.

I've said many times that we are just an "average place" (within 2 STD's of the mean), and took shit from all sides from Lake Wobegoners that everything in Bend is 77 standard deviations above the mean, as they've heard on TV, radio, and seen peed in the snow 24/7 for 5 years straight. Great. Now we'll pay. We will DIE HERE on the slopes of Everest because of a STEADFAST refusal to accept our human frailties & faults.

We OVERPAID. OK? Not by a little, but by a WHOLE LOT. An amount so far beyond the markets clearing price that we may NEVER see last years prices again in our lifetimes.

What's going to be the epitaphs on the tombstone of Bends housing market?

"This is Bend Oregon and people want to live here"

"Prices have to go higher, because they can't go any lower"

"They want to live in a custom home. And they don't want to sacrifice quality. They want to be close to walking trails and the mountains. They're really mobile and they have a lot of money,"

"They were trying to steal them"

So let me join the chorus, with The Bulletin, Cascade Business Buttbangers, and KTVZ, and just say;


Monday, December 17, 2007

Buena Vista Auction Update: 100% BUST

As was already pointed out here regarding Brooks Resources Fake Auction, if it's just a price cut in disguise don't expect anything but failure. I pointed out yesterday that I thought Buena Vista's 100% FRAUD AUCTION would fare even worse. And of course, it did.

141 homes sell for a total of $65 million at real estate auction

Housing - With 96 percent of the houses going for below the reserve price, "we lost money," says the builder
Monday, December 17, 2007

Roger Pollock said he wanted to sell a lot of homes at his two-day auction this weekend -- and he did just that.

Pollock said he sold 141 homes for a total of $65 million at the Oregon Convention Center in what was one of the largest real estate sell-offs in Oregon history.

Pollock's Buena Vista Custom Homes had advertised more than 240 homes to sell at auction. By comparison, Real Estate Disposition Corp., the Irvine, Calif. auctioneer, had never done a home builder's auction larger than 60 homes.

Pollock turned to the auction when the housing market slowed this fall and his sales turned to a trickle. Rather than pay interest on his construction loans for a year or more until the homes sold, Pollock opted for the auction.

Westside homes in Beaverton and Hillsboro sold best, Pollock said. None of the 29 Bend homes sold, and homes that are now rented didn't sell well, either. Pollock said the sales also will generate about $250,000 for charity.

Although the homes looked especially attractive with super-low starting bids, some brokers were concerned that the homes had a higher, undisclosed "reserve price" that was the lowest Pollock was obligated to accept. But Pollock said about 96 percent of the homes he sold went for below the reserve price. The reserve price, he said, was equal to his costs.

"We didn't make any money on these homes," Pollock said. "We lost money."

"There's been this perception that this wasn't aboveboard," said Pollock, noting that each home has a one-year warranty, standard for Buena Vista's homes. "But I think the results speak for themselves. I did what I said I would do."

About 1,900 people turned out for the auction.



Bend's Magic Number: 70

As I read about the demise of the Bend Mega-Bubble, I'm starting to notice the same number pop up over and over again, or at least damn close.


First, I saw a link posted by Timmy Tee over on Bend Bee Bee, House Prices in America by Median Price and Valuation. Besides having a pretty kick-butt interactive chart of overpriced areas all over the country, you can also find killer spreadsheet & PDF report. If you want long-term, good data on home prices in Bend, you cannot beat this National City page. Here's a really long-term chart of Bend medians:

Bend quarterly median home prices from Q1 - 1986 thru Q3 - 2007

Anyway, you can see that despite the fact that Bend is NO LONGER The Top Appreciating Housing Market in the US, we are STILL The Most Overpriced Housing Market by 70%. For those interested in the National City projection of "Fair Value", that 70% overvaluation figure is based on a $320,100 median(?) home price in Q3 of this year, which yields a Fair Price of $188,294.

That's a 50% haircut from the top of $380K in Sept 2006.

Moving on, I did my Google spreadsheet thing with Doug Farmers data this month, as usual. It can be characterized as pretty much The End Of The Real Estate Brokerage Business (and many other RE businesses) As We Know It. Here it is in graph form:
Monthly Dollar Volume Sold - All residential subtypes, Bend (Doug Farmer)

After the usual Winter slowdown in 2005-2006, volume went to a mega-spike high of $133,155, 206. That is a mind-boggling $491,218 AVG price, on 267 units sold. In November of this year we did 102 residential properties sold, at a still incredible $430,599. That's $43.9MM, knocking on a 70% reduction in sold dollar volume.

In a related stat, you can see from Doug's data that 303 units sold in Nov 2005, the earliest data point we have.
Residential Units SOLD in Bend

Again, we are sitting at 102 today, another near 70% decline.

Then there was the much ballyhooed "auction" by Brooks of their last 3 RiverWild condos, graciously highlighted As Usual in the Bulletin, How builders plan to face housing slide. We quickly find from the piece that it Never Really Was An Auction -- not surprising to any Bend resident with one wit of sentience, nothing IS EVER as it seems in this place.

Anyway, from the article we can see that when you run a Fake Auction, you will have Bad Results:

Frustrated by a season of sluggish sales, Brooks Resources Corp. put the last three unsold townhomes in its prime RiverWild subdivision at Mt. Bachelor Village up for auction Nov. 2.

It was a bit of a bust. Only one of the three sold, and at the minimum bid — more than $200,000 below list price.

The other two attracted not a single offer.

That, for Central Oregon’s largest land developer, was a sign of the times.

Sales in all of Brooks’ most active developments — IronHorse in Prineville, Yarrow in Madras and NorthWest Crossing in Bend — have come in well below projections this year, Brooks CEO Mike Hollern noted Wednesday.

Only 1 of the 3 "auctioned" units sold, or about a 70% FAILURE RATE.

In the same piece we heard about the Buena Vista "auction" that took place yesterday. This sham was even more dubious than Brooks farce auction, so we can expect the results to not even approach a 70% failure rate. The only people that would possibly buy Buena Vista shithole whacky shacks are out-of-state idiots who are totally ignorant of the market & probably haven't even laid eyes on these crappers.

I have. These are the "Yugo's" of Bend homes: Cheap, and for Good Reason. I would not buy these shitholes At Any Price. Not even as rentals. These BV dung heaps are the quintessence of Gold Rush mentality built crap. From the same Bulletin piece:

Buena Vista Custom Homes, a Lake Oswego-based company that billed itself as one of the nation’s fastest-growing builders when it moved into the Bend market in early 2006, announced Thursday that it will put all 200 of its unsold homes in Oregon up for auction next month, including 29 in Forum Meadows, its brand-new east-Bend subdivision.

“We were overaggressive and too slow to react to the changes in the market, and that has created an oversupply of finished homes,” Buena Vista President Roger Pollock said in a company press release. “Buyers are going to get amazing deals, but we simply have to reduce our inventory.”

Yes, they will be "Amazing Deals" all right. Amazingly CRAPPY. If you actually bought one of these Shitters, then I got a bridge to sell you.

Then there's the Home Builders. We can see from this 3 year chart, they have been decimated:

Sitting right at 70% DOWN. I actually think these stocks have been pounded so hard that they are getting pretty attractive on a valuation basis. A hell of a lot of Bad News has been baked into this industry. Coincidentally, -75% is about where the NASDAQ bottomed, post bubble.

Ahhhh yes. Now we come back to Becky & The Massively Imploding White Elephant -- The Plaza. She stated that she had SOLD 14 of these condo Crappers, which come with an optional rocket-propelled casket/bed that fires deceased owners straight into the Deschutes River when there is no longer a heat-signature. Plus, the caskets come with Auto-Listing Technology, so when the underside of the casket gets wet, the condo unit is automatically listed on MLS. Timmy said that the toilets come with high-pressure bidets using turbines co-developed with The Bellagio & NASA engineers that not only cleans those hard to reach geezer-flaps, but stands the old bastard up after they blow a crap.

That's real convenience.

Anyway, after much hand-wringing & gnashing of teeth, we actually come to find that Becky HAS NOT sold 14 of these masoleum's, but instead sold 70% FEWER, or only 4. It's arguable whether 2 of these 4 were really "Sales" in the proper definition, as they had the rotting scent of Flipper Bait when they went back on the market less than 45 days after Becky schlocked them off on some True Believer.

Finally, to round out our Lucky Number 70 Review, I saw this post on BendBB, by "bruce"

Post subject: $100,000 30% haircut leads to PENDING sale

There is a house about a block away, very similar to the one I'm renting for $850/mo, that was recently vacated after being on the market for many months. Almost directly across from another newer and larger house that was vacated last summer, and is on at least its second listing.

But today I saw something I haven't seen in quite awhile: "PENDING"

It seems these guys decided it had to be sold, so according to the new flyer I just grabbed it was marked down $100,000, to $229,900, and the seller also would pay up to $5000 in closing costs.

I think a lot of these Siberian Desert Tract Flipper Bait Buyers will need to realize that they need to mark their current price to 70% of where it is now to even get lookers. This equates to 43% overvalued. But this is short term. There WILL be buyers at Todays' Bargain Prices that will seem insane when they realize that todays market is NOT 43% too high, it is in fact 70% overvalued per National City.

So, as is my way, I will make a few predictions based on Lucky Number 70, with my prototypical 50% coin-flipping accuracy:

First, CACB will ultimately do a high-dive into the concrete for -70% from it's all-time top of $32.
5 year chart, Cascade Bancorp

This would put our beloved local bank down at post-mega-bubble lows towards $10. I said many times in the past that I thought CACB was worth in the low to mid teens... back when "CACB Shorter" manned-up & shorted this loser. It's easy to see from the above chart that after a 50+% beating, that $10 isn't that much of a stretch. $12-13 is probably fair value, but post Bubble implosions know no bounds to their ferocity on the downside, so CACB may even see single digits.

Prediction #2: The Real Psycho Ward projects; The Plaza, The Shire, Tuscany Pines, and Tuscany Shire Plaza Condos at Tuscany Pines, A Tuscan Themed Homeless Shelter (don't worry, If You Build It, They Will Come -- as proven by the Fakeroney "Borealis" macro-scam, that offered IGLOO's as "residences"), will get whacked for 70%. My Lord, they actually had takers too, on that Borealis Scam:

KOHD reports:

12/14/07 Bend

If you're making future plans to stay at the Borealis Resort near Mt. Bachelor, you're in for a surprise. It doesn't exist.

Tim Neville and a friend made up the resort to further the controversy surrounding the endless construction of new developments in Bend. They sent out a mass email with a description, website and phone numbers. Neville says the website was clearly meant as a joke and those who are upset haven't done their research.

"You see immediately that these things are igloos that all of our homes are igloos and they come in 7 to 11 foot diameter configurations," says Neville.

Within a few hours after sending the email, Neville received more than a hundred responses ranging from laughter to outrage. He says that was the point. Some out of state companies even offered to market the new project.

This exemplifies the current thinking in Bend: Lunatic fringe, half baked idiotic RIPOFF mega-scams are The ONLY THING WE GOT. This guy was OFFERING IGLOO's, for the love of Christ, and he had LEGITIMATE offers to MARKET IT, no doubt from desperate Realtors who learned Photoshop over the past 2-3 months, since they ain't eating, and WILL DO ANYTHING for food, including fart Happy Birthday at Old Folks Homes.

Anyway, these SCHIZO-DRIVEN FANTASIES which are quickly imploding will most likely see the most brutal price declines, what I predict are 70% BEATINGS. Siberian Desert tract whacky shacks will get spanked for slightly less, maybe 60%. The average pre-2000 Bend cracker-ass cracker, meth-cooker, Aryan-race ziek-heil, jackboot wearing, goosestepping, standard-issue batten-board shithole in DRW will probably get clocked for 50%. The same goes for gun-totting maniacs in La Pine. And Terrebonne. And Redmond too. And actually most of Bend, since we're mainly Niggra-hating Playa haters.

Yeah, I know, You Ain't... But Everyone Else Is. 2 words: Bend Buster. Yea, bitch. Mother fucker is an entrenched deep-equity type that'll outlast you, me, Cali's and the motherfuckin roaches in a direct nuclear hit. Motherfucker does NOT drive a Prius, takes rent in flatback crack ho fashion, and likes to blog when he drunk... so I guess he's a little more enlightened than he look.

Anyway, THAT motherfucker will be the ONLY one buying property when all the rest of us have been shuffled off to The City, holed up in a cracker-ass cracker 800sf meth-cookin' shithole, or have been unceremoniously shot into the Deschutes River. And that bitch will only buy at -70%.

Wednesday, December 12, 2007




I have checked MLS again this morning, and find ALL of Becky Breeze's Plaza listings REMOVED. There are 2 flipper bait resales still there, so THIS removal looks legit, because it IS RETURNING RESULTS.

Searching individual MLS numbers from BendBB prices changes returns NADA.

Monday, December 10, 2007

This Blog Is A Big Pile Of Shit

I heard from a wise, wise man that Shit Is Just A Fart That Refused To Give Up.

If that's so, then I hope this blog has achieved some measure of it's purpose, and can be best portrayed as a Gigantic Pile Of Shit. One of my primary goals was to give SOME alternative to the "Lake Wobegon" Kool-Aid Daze puked forth by The Bulletin, and other Bend media outlets:

The Lake Wobegon effect is the human tendency to overestimate one's achievements and capabilities in relation to others. It is named for the fictional town of Lake Wobegon from the radio series A Prairie Home Companion, where, according to the presenter, Garrison Keillor, "all the women are strong, all the men are good-looking, and all the children are above average." In a similar way, a large majority of people claim to be above average; this phenomenon has been observed among drivers, CEOs, stock market analysts, college students, police officers and state education officials, among others. Experiments and surveys have repeatedly shown that most people believe that they possess attributes that are better or more desirable than average. The term is also used to describe a perceived tendency to treat children as "special" in order to boost their self-esteem, even though the children may only be average or even underperforming.

I don't know who posted this, but this is the best description yet of Bend. EVERYTHING here is 9 standard deviations above the mean... at least according to the local media.

And Bend is pretty sweet. It's great. Hell, living somewhere & declaring it a shitpile is just pathological, unless you're trying to achieve some ulterior motive.... ahem. I still really like it here. It's just that we ain't THAT great. We are a solid, single STD above the mean, which is pretty damn good.

But we're pricing ourselves at $40/lb prime rib, when we're really $6.99 material. Bend simply isn't competitive anymore. How many times have you bought $1.99 ground beef in the past year, compared to $40/lb Ruths Chris hyper-premium prime rib? I'll bet not often. That's what's happening to Bend.

You can see it in Doug Farmers November numbers: 102 solds of ALL residential types in Bend in Nov. You can see in my Google spreadsheet, that this is The Lowest dollar volume EVER in Doug's data. This is DOWN almost 70% since June 2006 volume. Hyper-expensive goods ALWAYS sell in tiny volume, EVEN IF THEY'RE WORTH IT. "tucker" wrote in the comments that "82 sold Nov. 97".

I don't know where we're going, but at todays prices we will either become a FAR smaller town, or we'll suffer from a hyper-inflation induced depression. That's it. 70% of the commission dollars are gone from 1 1/2 years ago. Do you think a 70% revenue decline in what was far and away the largest industry in this town from 18 months ago is good?

Don't know if anyone's noticed, but Paul-doh been BUSY! Geez, never 2 seconds to post or comment. So I might take on a less "verbose" format in the future... like starting... NOW. At least I hope I will. And maybe a bit less ranting. It's NOT because of whacky comments asking for such, but simply that if people don't know to cut price by now, and they don't cut enough, their house simply won't sell. And I don't suppose a blog telling them to do so will convince them otherwise. So maybe I'll take Tim's advice & post shorter, but more frequent posts.

So for today, I saw this over on BendBB:

mookie: New changes to the lien at The Plaza as of today -- appears the buyers of the four sold units have been added to the claim against Becky and Tommy. Anyone got a better idea what this means than me?

Check the clerk's site:

Last name is "Harvest LLC" to access Plaza-related documents.

Then "Shot down in flames":

The way I read it, is the few unit owners have also been named on the construction claim of lien. So not only did they buy homes in a failed project, but now they are named in a lien. What a mess.

mookie: That's what it looks like to me as well...I guess the question is, is this typical? Legal?

It would seem like once Bex and Tom sell the unit, the buyer ought to be out of the way of any liens. But maybe things work differently in the condo world.

I'm not the most Plaza sympathetic guy out there, but I have a tough time understanding how a third party buyer would be on the hook for the seller's misdeeds.

Where's the bulletin board lawyer? Or maybe some all-purpose know-it-all like Timmy?

Bend Bear:
Completely legal, and very common in situations like this. What it means for the four owner/flippers, is that they are no longer able to even list their units. This one is going to get a lot worse, and standing by my prediction of apartmenting these things once Umpqua gets them back. The funny thing is Umpqua also provided financing for the most expensive unit that is/was listed. They were bullish on that project as recent as September.

bottom feeder: Problem is, other than a handful of units, none are finished on the inside. So to turn it into an apartment building is going to take another $20K or so per unit. The Plaza will is the monument to Bend's previous RE exuberance.

It's really too bad. I've said 100X, that I think Becky is a sweet, personable gal, and it's too bad this had to happen to anyone.

But there are people out there, who are still buying into The Bend Dream, and I've beat the analogy to death that dying on the slopes of Everest is a Good Reason to TEMPER CONGENITAL OPTIMISM. If you DO NOT, they will haul you out. Becky is learning this.

Anyone have any further info on this Plaza problem?

"optimist" posted this:

Bend is a marvelous place to invest. I read all of this, and up until now I withheld my opinion.

I'm an active Bend investor, and have bought dozens of homes in Bend during 2005-2006. I paid over $100k down for each home. I paid less than $150/sqft. I always borrow at 5.5% for 15 years. My units are 100% occupied with positive cash flows.

The negativity I read here leads me to believe that you are all renters, and have no idea of how profitable it is to own real estate in Bend. The values are not going to go down, and people can only make money, and lots of money by buying Bend Real Estate.

There has never been a better time to buy a home in Bend.

Huh. Actually there is a way to ALMOST ALWAYS be cash flow positive, as optimist defines it here: Simply pay cash. If you ever get anything back, you are cash flow positive. Can you pay $1,000,000 for a house & rent it for $100/mo & be cash flow positive? Sure, simply pay $1,000,000 cash. Whether it's a Good Investment & the slightest bit competitive with what you could get elsewhere is a totally different question. But more power to you optimist, if it makes you feel better.

My own feeling is that YOU HAVE NOT BOUGHT DOZENS OF HOMES putting $100K down. You're a desperate Realtor who is starting to get gaunt & thin. If you've even bought one home in 2006 & have not tried to sell it, how do you KNOW if you've made money? Of course you don't. But the idea that ANYONE has bought DOZENS of homes in Bend putting down MILLIONS & feels SANGUINE about the future & WILL NOW BUY MORE, is assinine. Go out & list a home dude. We've all been inoculated from Kool-Aid poisoning here.

"bruce" has put up good stuff on Juniper Ridge at It's probably a better source of info than here. The guys doing a lot of work on the topic. I get whaled on for not posting JR news 24/7. I am not well enough informed to do so. There are better sources. is another.

OK, maybe that's enough for today. I'll TRY a mid-week post & see how she goes....

Monday, December 3, 2007

CACB = Cracker Ass Cracker Broke

Man doesn't live by bread alone, so I will take a break from the "Scathing Rant" format that has come to dominate past posts, and just put in some varied observations, mainly from comments which is of course where most of the goodness of this blog lies. But first...

I've noticed on more than one occasion while dropping eaves, that Realtors will talk about Ye Olde Bend Bubble Blog to their listing clients. Usually I am at lunch somewhere (Old Mill lunch haunts?) & will overhear something -- sometimes I don't really catch it all -- but 3 times that I remember, I've heard Realtors in consult with a client recommend, or at least give clear direction to, reaching this humble blog. Usually, just before giving a clear URL or Google search directions, they will deride it as distasteful, disgusting & offensive, in so many words. But one thing is clear: they want their sellers to come here & read.

If you're a longtime reader, it seems pretty clear why this would be so; BB2 ain't exactly sanguine on the prospects for Bend RE, and in fact the past few posts have been primarily dedicated to the Primary Objective Function Of Selling Your Home Via Extreme Price Cuts. And of course, there have been the requisite number of facts, figures, and diagrams to support this recommendation. And it's true: You can sing and dance and make groovy movie trailer posters & all that shit, but ain't nothing going to sell a home for $1,000,000 when No One's Got That Much.

But what's funny is that this blog has apparently become The Hatchet Man for local Realtors. When faced with listers who simply refuse to face the music, well then, with a healthy dose of disgust & the proper hesitancy, they promptly give them Detailed Directions for reaching this humble tome of despair.

And as I've said too many times to count, horrendous price cutting is ALL that will work at this point in moving inventory. That's it. As David Foster points out, without proper staging, you won't even be in the running -- of course this has ALWAYS been true for the past 1,000 years, except for a brief 2 year period starting in 2004 -- but cutting price TO THE BONE & BEYOND is really all you have. It's because The Money's Gone. It's NOT because your kitchen is too small, the paint is wrong, you got no granite, or any other nonsense. There's just No Money.

So it is with a certain sense of cruel irony that I welcome those sent here by their Realtor. They aren't trying to beat down your expectations cuz they're lazy sods. Hell, I don't know, they might be. But if your home is for sale, and it's been on the market for many, Many months (or years), or you've just gotten a lowball that's taken your breath away, and you've been referred here, it's cuz your Realtor WANTS to sell your home. But they've detected Kool-Aid staining about your mouth & nose area, and want you to get a shot of RE methadone. They KNOW full well that it's down to price, and that your anchoring on 2006 prices (plus a nominal 40% due to Bend Bulletin pump priming) will be twice as painful & almost as ugly as 1980's Big Hair Bangs & Cockle Shell Belts. Check the top right RIP/DOA tombstone on this page: Prices have GONE BELOW $100/sf! You check your $/sf ask, and I can damn near guarantee you are asking At LEAST 50-100% TOO MUCH for your house.

Just face it: If you've bought in the past 3-4 years, YOU WILL LOSE MONEY. And that's IF you can even sell. Don't believe it? Here's REAL LIVE examples of the CRUSHING losses already being sustained in Central Oregon.

About The Largest Asking Price Cut is the CUT IN HALF (-49.4%) on this Deschutes Market Road piece of shit.

This piece of shit is like some sort of Neverland Ranch done by hillbillies. It looks like a Fuqua Home was plopped down in the middle of topiary nightmare. I'm just kidding. This place is really not that bad. But the sellers have truly been poisoned by the idea where Juniper Ridge takes a shit, up pops a rainbow. You can readily detect the dollar signs cha-chinging in the sellers eyeballs the minute they THOUGHT they would be in the latest UGB:

INVESTMENT PROPERTY! This 3.86 acres should be within the Bend City limits when the boundary is changed in the near future. The value at that time should be around $2,000,000! The owner can't wait and has lowered the price to rock bottom for quick sale. Great IRC 1031 property to double your money in two to five years.Please See Virtual Tour.

Alas, it was not to be. This piece of crap, like many on Deschutes Market, is a Juniper Ridge fueled fantasy. If you look it up on DIAL, you see a few thing: First, is the Build Date discrepancy. DIAL says this shithole was built in 1977, while the Realtor states 2003. The current owner bought in 1998 for $155K, and so started his listing at a modest 1,000% markup (almost), or $1.5MM. Well, of course, REALITY got in the way, and as the Bursting Bubble hangover has worn on, this guy has blinked the sleep outta his eyes, and gradually dropped his price in half as he realizes What Has Always Been True: He lives in an Old Piece Of Shit Out In The Scrub which has been Overlandscaped, of which there are about 3,000,000 FOR SALE on Deschutes Market Rd. No offense Buddy, but that shit is a dime a ton around here.

I predict this place will soon go into the -50% price cut range... AND IT STILL WON'T SELL. You've gotta realize that anchoring on the Dead Top & even remotely believing that will EVER happen again, or even the faintest shadow of that event will happen again, is simply deluding yourself. Brooks Resources, who made more money than God FOR 20 YEARS cannot bail out fast enough. Here is the problem put MILDLY by big mucka-mucka Mike Hollern:

“Nobody quite knows where the price is going to settle down,” Hollern said. “I mean, pricing is so tough. But if you bought something in 2002 for $250,000 or $300,000 and you missed selling it for $750,000 two years ago, and now you have to sell it for $400,000, is that a bad deal? There was a peak there that some people missed if they didn’t sell. And if they bought on a peak, that’s kind of tough. So prices have to come back to, I think, to a somewhat more normal level.”

What's funny is Hollern is Just Like Everyone Else. He knows the shit has hit the fan, but He Still Is Anchoring On 2006 Dead Top Pricing. He dropped price on 3 RiverWild condos, got mega-free PR, frothing-at-the-mouth lowballers... and still a 67% FAILURE RATE. OK, if the Biggest Developer To Ever Grace This Scrub CANNOT sell after a 25% haircut, What The Fuck Do You Think Your Wimpy-Ass 3% cut will accomplish?

Still think you can "Hold Out" for "Better Times"?

Over on BendBB, a strange little trend is becoming evident. And much like BendBB's heart, it started out small & started to grow:

BendBB during a recent electrocardiogram taken at his Westside cave

It is summarized by BendBB himself, God bless his wretched heart:

Here's a table showing the percentage of new listings since July 2007 that are assumed to be lots.

Month % lots
July 24%

August 19%

September 21%
October 29%
November 40%

Lots as a percent of new listings have doubled in the past 2 months. Renaissance has gone WHOLESALE at Shevlin Ridge. This is shorthand for We've Stopped Building Homes Cuz We Don't Want To Go Broke, So We Are Selling Lots To Anyone & Everyone To Build Whatever The Hell You Want. Even my beloved Ranch At The Canyons, which may be primarily responsible for starting the DISASTROUS "Tuscany" themed insanity (mainly because they actually did it RIGHT), has started going wholesale on their lots. I hope that unlike other misguided attempts to liquidate their financial nightmares, that Ranch at the Canyons doesn't throw CC&R's to the wind to get'er done. The Shire, Renaissance Homes, and many others are Going Wholesale in an attempt to bail out on Bend ASAP. Of course this is Frying Pan Into The Fire thinking, cuz who wants to buy a nice 3,000/sf macroshack only to have a Fuqua shithole airdropped right next door?

And just to counter the idea that I am Captain Bringdown: I think I've made it clear that Becky Breezes cheap-ass AdvancedAccess website is about as ass-ugly as they come. But if you wanna see just about the best executed web design that reinforces (an admittedly flawed) concept, it is This website is absolutely beautiful! Congrats to whoever designed this beauty. That flash stuff up top is excellent, and this site really does make the concept palatable, and has probably done much to move any inventory over there, if indeed any has moved. If you're a Realtor, you'd do well to look at the difference between & this abomination.

Anyway, you can see from the MASSIVE swing from about 80/20 homes to lots, to 60/40 that builders are liquidating as fast as is humanly possible. If you drive around Bend at all, you see them everywhere: Vast Siberian deserts of lots sprouting rotted For Sale signs, with 1 or 2 spec homes manned by VERY lonely Open House squatters. They are tired of watching their burn rate blow through the Bubble Bucks & are going to dump their inventory of lots by hook or by crook. Of course, they like 98% of Deschutes County selling population is afflicted with Price Anchoring Syndrome, and think they will somehow come close to getting prices of the past few years.

Nothing is certain except this: YOU WILL NEVER GET PEAK 2006 PRICES AGAIN FOR YOUR HOME IN YOUR LIFETIME. Your Realtor won't tell you this, cuz you'll jump ship. Then neither will the next guy, cuz nobody in the RE industry has had 3 square meals in over a year. If you're here cuz your Realtor has "hesitantly" given you detailed directions to find this blog, IT'S CUZ THEY KNOW FULL WELL YOU CANNOT & WILL NOT SELL YOUR HOUSE UNLESS YOU WAKE UP FROM THE FOG OF 2006 PRICE ANCHORING. Cut 10%? Fuck, you might as well spare yourself the dashed hopes. 10% price drops are NOTHING. 20%? Go back to bed. 30%? See, you need to realize that homes ARE UNDER $100/sf IN BEND, AND HEADED LOWER.

BUT My House is (Custom|Built by BigWig Builder|On a Prime Lot|Surrounded By Whitey|All sorts of other IRRELEVANT SHIT)!

Take a look around dumbshit. Your RiverRim shithole is SURROUNDED by price-slashing equity locust, CC&R busting, "I'll rent this fucker if it'll make the mortgage" liquidators that have to sell in the next 60 DAYS or their 401K, their Cali shithole domicile, their 8 year old Mercedes will all go on the auction block. This fucking town is going WHOLESALE -- Sell It All, By Hook Or By Crook NO MATTER THE LOSSES -- at an astounding rate. You think YOUR HOUSE is "SPECIAL"? Look at the White Elephant:

I mean that is a sweet ass little fuckin shack. Nice little guest house to boot. This place has been listed since the Stone Age (judging by it's listing number), has suffered 7 price cuts totally 42.7% -- and still NOTHING. And it's STILL TOO HIGH at $255/sf! There's no doubt, this is a sweet little primo piece of ass, but that shit is a dime a TON. This sort of stuff will soon be under $175/sf. Look at this Traditions East piece of crap:

Listed by our favorite Becky Breeze, she let the seller Name that Tune, who promptly when bobbing for apples in the nearest Kool-Aid vat, and came up with $184/sf! $184/sf for a PIECE OF SHIT GOLD RUSH WHACKY SHACK piece of crap that wouln't even rent for $750/mo? C'mon Becky, grow a fuckin backbone, and tell dumbasses like this to go fish. This little micro crap shack is one of the snot tubs dotting the Triad Homes Siberian Desert East of town. Right next door is Darnel Estate Shitholes trying to blow 'em out for $112/sf! Not to mention the Desert Skeeze piece of crap featured in previous posts that just went to $99/sf.

This is what I mean: You've STILL got a town onerrun with builders, sellers, equity locusts, and Tuscany wannabes trying to get 100% more than what someone RIGHT ACROSS THE STREET is asking. $184/sf Triad? Fuck, you'll have better luck buying Powerball tickets.

Anyway... moving on.

You can see from last weeks comments that someone kindly pasted the recent Bulletin story, "Home prices in Deschutes flatten out". What's funny, and a little sad, is that they are doing EXACTLY what I said they'd do, well over a year ago.

"Still, there are some statistical bright spots in the general market gloom. For one thing, home prices in the Bend Metropolitan Statistical Area, which covers all of Deschutes County, have risen 91.03 percent over a five-year period despite the recent slowdown, and they have remained stronger than the once-hot markets of California and Nevada, where prices slid 3.6 percent and 2.4 percent over the last year."

Everyday, as RECENT HISTORY turns more & more disastrous, The Bulletin has saw fit to go farther & farther into the past to relive the glory years. Hmmmm... now who did I compare that to...

Oh right, UNCLE FUCKIN RICO who is constantly reliving his Glory Years Before His Life Went To Shit. Predictably, VERY PREDICTABLY, this is exactly how The Bulletin has responded to the RE Implosion: Continuously reminiscing about The Glory Years. I'm sure this is a sound strategy. All sorts of Equity Locusts will want to swarm the 188th performing housing market in the US, out of 287. Dang! That puts us in the 65th percentile! Not good. Better stretch our analysis back to before Oregon achieved fuckin statehood.

Of course, this DELUSIONAL BULLSHIT is at the ROOT of why people are unwilling to lower prices: Bend is a magical fantastical wonderland where Anything Is Possible! "Hey, we're at the 65th percentile, DOWN FROM THE TOP 1%, but we can RECLAIM THE GLORY YEARS IF WE JUST BELIEVE!" Of course this will not happen, and will only act to PROLONG THE PAIN. The faster we get cut in half, THE BETTER.

And just a note: If you bought in the past 3-4 years, YOU WILL SELL FOR A LOSS, about that there is No Doubt. But if you've been here before that, and have simply switched homes & are going to sell now & move into another Bend home, then really you are not losing anything. It's like watching a stock go from NASDAQ 1,000, riding it up to 5,050, then riding it back down to 1,500 or whatever. If you were in Bend 10 years ago, you are almost certainly still UP.. a lot.

If you bought in the past 3-4 years, and you own more than 1 home, well then Fuck You. I hope you lose your ass. You're part of the problem. You made homes unaffordable for NORMALS, and you are 100% RESPONSIBLE for the Economic Implosion about to overwhelm this place. Again, FUCK YOU.

But if you've been here long term as a homeowner, your inane gains of 2004-2006 were largely illusory anyway. Cutting your price in half will STILL almost certainly leave you above water. I know several properties where 90% could come OUT of their late 90's purchase price & they will still breakeven. Don't make the mistake several of my NASDAQ bubble playing friends made & Hold On For A Pop: WON'T HAPPEN. Every single person I know who did this lost 90-99%... and it's because they couldn't stomach losing 20%.... then 30%.... then 60%.... then 80%.

OK, Bend has been CUT IN HALF in places. The low-end is racing to the bottom, and that bottom is currently UNDER $100/sf. And it's JUST GETTING A GOOD HEAD OF STEAM. It'll be in the $70's later this year, and you will rue the day (That day being TODAY), when you didn't SLASH to $95/sf to get 'er done. You'll be sitting on your shithole, priced at $90/sf, and some fuckin nutcase in Darnel Flipper Bait Shitholes will be at $49/sf.

It's NOT PERSONAL, OK. It's that there is NO MORE MONEY. NOTHING, no force on Earth, will somehow magically shower speculaltors with dumptrucks of cash. Not gonna happen again in our lifetime. And if you do own a home in Bend, and you are trying to sell it now, well then, mark it up to heinously BAD LUCK, cuz you are going to get caught in the most talked about ROUT ever recorded in RE history. There are homes in Bend DOWN 50% TODAY. Tomorrow, down 75% will be The New Norm. That's YET ANOTHER CUT IN HALF.

Again, my advice is SLASH IT TO THE BOTTOM, THEN ANOTHER 10%. Sounds like I wanna Gut You right? Absolutely Not. This is Cutting Your Losses time. This is about Moving On. It's like winning the lottery, and subsequently having the winnings viciously taken from you: It Sucks, but you wanting it back ain't gonna make it happen. If you've been here pre-2002, then shut the fuck up & take your lumps. You'll be a buyer in a buyers market & you can ride this Cannonball Run motherfucker right to the bottom in a rental, which is at least another 50% down.

Finally, here's a nugg from Timmy, on page 8 of the Nov price changes page of BendBB:

Japan has less buildable land than any other place I can think of, yet it suffered through a near-twenty year real estate drop.

Here's a chart of Japanese land prices since 1980:

Look HARD at this graph. In Japan, there was roughly a DOUBLE from 1980 to 1991 in the Greatest Land Bubble EVER to date. Bend? Bend has DOUBLED since FEBRUARY 2004! THAT'S 2 1/2 YEARS AGO! As I have said AD NAUSEUM, Bend Oregon will go down in history as The Greatest Real Estate Bust EVER RECORDED in this country, and possibly the World. 24 Years into the greatest bubble and subsequent BURST, Japan is right back at DEAD EVEN. Where were we 20 years ago? Half the national medians.

Don't Think For 2 Seconds That Bend, Which Has Experienced The Greatest RE Bubble This Or Any Country Has Ever Seen, Will Not GIVE ALL OF IT RIGHT BACK. Does that mean medians HALF the national? Of course it does... that's $100K. Of course, NO ONE around here thinks that's even remotely possible, but BY GOD they believe there is some way this Souffle can reflate & they can sell their 1,100sf cracker shack for $650,000.

Well, you keep dreaming. Just don't start bitching when you're down to your last nickel, homeless, car-less, and penniless because you were TOO FUCKIN' GREEDY to take what in retrospect would be a bearable loss today.

Finally, let's have a look at the trials & tribulations of Cascade Bancorp, CACB.

Ahhh yes, I remember it well. Remember when CACB Shorter first arrived on BEM's blog, and announced that he was going to put his money where his mouth is, and short this bitch. And how we were all like, "Dang dude, that's ballsy. I don't know though. Hope it works", and so forth.

Well look at me now. CACB must stand for CRACKER ASS CRACKER BROKE, cuz that bad boy has been handed it's own cut in half in the past year. I will add to my litany of misguided predictions that Patty Moss will soon bite the bullet. Whether it's resignation for "personal reasons" (does anyone EVER buy that bullshit?), or a takeover, Moss will be shown the door before 2008 is out. She won't be alone though. The heads of Umpqua & WashMu are also headed for the chopping block. I should note that it really isn't their fault. We're headed for something akin to the early 90's S&L crisis, where banking heads rolled on a daily basis. Will there be a Bank Holiday, per BendBilboBuster? Doubtful, last time we did that it made things worse.

But I'll bet on this, we'll all soon be banking at the First National Bank Of Islam soon. Why this is so is best distilled by the awesome Warren Buffett in the Oct 26, 2003 article, "Why I'm not buying the U.S. dollar":

I'm about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits -- and, as you know, we've not only survived but also thrived. So on the trade front, score at least one "wolf" for me. Nevertheless, I am crying wolf again and this time backing it with Berkshire Hathaway's money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in -- and today holds -- several currencies. I won't give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline.

Both as an American and as an investor, I actually hope these commitments prove to be a mistake. Any profits Berkshire might make from currency trading would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar.

But as head of Berkshire Hathaway, I am in charge of investing its money in ways that make sense. And my reason for finally putting my money where my mouth has been so long is that our trade deficit has greatly worsened, to the point that our country's "net worth," so to speak, is now being transferred abroad at an alarming rate.

A perpetuation of this transfer will lead to major trouble. To understand why, take a wildly fanciful trip with me to two isolated, side-by-side islands of equal size, Squanderville and Thriftville. Land is the only capital asset on these islands, and their communities are primitive, needing only food and producing only food. Working eight hours a day, in fact, each inhabitant can produce enough food to sustain himself or herself. And for a long time that's how things go along. On each island everybody works the prescribed eight hours a day, which means that each society is self-sufficient.

Eventually, though, the industrious citizens of Thriftville decide to do some serious saving and investing, and they start to work 16 hours a day. In this mode they continue to live off the food they produce in eight hours of work but begin exporting an equal amount to their one and only trading outlet, Squanderville.

The citizens of Squanderville are ecstatic about this turn of events, since they can now live their lives free from toil but eat as well as ever. Oh, yes, there's a quid pro quo -- but to the Squanders, it seems harmless: All that the Thrifts want in exchange for their food is Squanderbonds (which are denominated, naturally, in Squanderbucks).

Over time Thriftville accumulates an enormous amount of these bonds, which at their core represent claim checks on the future output of Squanderville. A few pundits in Squanderville smell trouble coming. They foresee that for the Squanders both to eat and to pay off -- or simply service -- the debt they're piling up will eventually require them to work more than eight hours a day. But the residents of Squanderville are in no mood to listen to such doomsaying.

Meanwhile, the citizens of Thriftville begin to get nervous. Just how good, they ask, are the IOUs of a shiftless island? So the Thrifts change strategy: Though they continue to hold some bonds, they sell most of them to Squanderville residents for Squanderbucks and use the proceeds to buy Squanderville land. And eventually the Thrifts own all of Squanderville.

At that point, the Squanders are forced to deal with an ugly equation: They must now not only return to working eight hours a day in order to eat -- they have nothing left to trade -- but must also work additional hours to service their debt and pay Thriftville rent on the land so imprudently sold. In effect, Squanderville has been colonized by purchase rather than conquest.

It can be argued, of course, that the present value of the future production that Squanderville must forever ship to Thriftville only equates to the production Thriftville initially gave up and that therefore both have received a fair deal. But since one generation of Squanders gets the free ride and future generations pay in perpetuity for it, there are -- in economist talk -- some pretty dramatic "intergenerational inequities."

Let's think of it in terms of a family: Imagine that I, Warren Buffett, can get the suppliers of all that I consume in my lifetime to take Buffett family IOUs that are payable, in goods and services and with interest added, by my descendants. This scenario may be viewed as effecting an even trade between the Buffett family unit and its creditors. But the generations of Buffetts following me are not likely to applaud the deal (and, heaven forbid, may even attempt to welsh on it).

Think again about those islands: Sooner or later the Squanderville government, facing ever greater payments to service debt, would decide to embrace highly inflationary policies -- that is, issue more Squanderbucks to dilute the value of each. After all, the government would reason, those irritating Squanderbonds are simply claims on specific numbers of Squanderbucks, not on bucks of specific value. In short, making Squanderbucks less valuable would ease the island's fiscal pain.

That prospect is why I, were I a resident of Thriftville, would opt for direct ownership of Squanderville land rather than bonds of the island's government. Most governments find it much harder morally to seize foreign-owned property than they do to dilute the purchasing power of claim checks foreigners hold. Theft by stealth is preferred to theft by force.

So what does all this island hopping have to do with the U.S.? Simply put, after World War II and up until the early 1970s we operated in the industrious Thriftville style, regularly selling more abroad than we purchased. We concurrently invested our surplus abroad, with the result that our net investment -- that is, our holdings of foreign assets less foreign holdings of U.S. assets -- increased (under methodology, since revised, that the government was then using) from $37 billion in 1950 to $68 billion in 1970. In those days, to sum up, our country's "net worth," viewed in totality, consisted of all the wealth within our borders plus a modest portion of the wealth in the rest of the world.

Additionally, because the U.S. was in a net ownership position with respect to the rest of the world, we realized net investment income that, piled on top of our trade surplus, became a second source of investable funds. Our fiscal situation was thus similar to that of an individual who was both saving some of his salary and reinvesting the dividends from his existing nest egg.

In the late 1970s the trade situation reversed, producing deficits that initially ran about 1 percent of GDP. That was hardly serious, particularly because net investment income remained positive. Indeed, with the power of compound interest working for us, our net ownership balance hit its high in 1980 at $360 billion.

Since then, however, it's been all downhill, with the pace of decline rapidly accelerating in the past five years. Our annual trade deficit now exceeds 4 percent of GDP. Equally ominous, the rest of the world owns a staggering $2.5 trillion more of the U.S. than we own of other countries. Some of this $2.5 trillion is invested in claim checks -- U.S. bonds, both governmental and private -- and some in such assets as property and equity securities.

In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4 percent more than we produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.

To put the $2.5 trillion of net foreign ownership in perspective, contrast it with the $12 trillion value of publicly owned U.S. stocks or the equal amount of U.S. residential real estate or what I would estimate as a grand total of $50 trillion in national wealth. Those comparisons show that what's already been transferred abroad is meaningful -- in the area, for example, of 5 percent of our national wealth.

More important, however, is that foreign ownership of our assets will grow at about $500 billion per year at the present trade-deficit level, which means that the deficit will be adding about one percentage point annually to foreigners' net ownership of our national wealth. As that ownership grows, so will the annual net investment income flowing out of this country. That will leave us paying ever-increasing dividends and interest to the world rather than being a net receiver of them, as in the past. We have entered the world of negative compounding -- goodbye pleasure, hello pain.

We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits. At a point, so it was claimed, the spree of the consumption-happy nation would be braked by currency-rate adjustments and by the unwillingness of creditor countries to accept an endless flow of IOUs from the big spenders. And that's the way it has indeed worked for the rest of the world, as we can see by the abrupt shutoffs of credit that many profligate nations have suffered in recent decades.

The U.S., however, enjoys special status. In effect, we can behave today as we wish because our past financial behavior was so exemplary -- and because we are so rich. Neither our capacity nor our intention to pay is questioned, and we continue to have a mountain of desirable assets to trade for consumables. In other words, our national credit card allows us to charge truly breathtaking amounts. But that card's credit line is not limitless.

The time to halt this trading of assets for consumables is now, and I have a plan to suggest for getting it done. My remedy may sound gimmicky, and in truth it is a tariff called by another name. But this is a tariff that retains most free-market virtues, neither protecting specific industries nor punishing specific countries nor encouraging trade wars. This plan would increase our exports and might well lead to increased overall world trade. And it would balance our books without there being a significant decline in the value of the dollar, which I believe is otherwise almost certain to occur.

We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties -- either exporters abroad or importers here -- wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance.

Because our exports total about $80 billion a month, ICs would be issued in huge, equivalent quantities -- that is, 80 billion certificates a month -- and would surely trade in an exceptionally liquid market. Competition would then determine who among those parties wanting to sell to us would buy the certificates and how much they would pay. (I visualize that the certificates would be issued with a short life, possibly of six months, so that speculators would be discouraged from accumulating them.)

For illustrative purposes, let's postulate that each IC would sell for 10 cents -- that is, 10 cents per dollar of exports behind them. Other things being equal, this amount would mean a U.S. producer could realize 10 percent more by selling his goods in the export market than by selling them domestically, with the extra 10 percent coming from his sales of ICs.

In my opinion, many exporters would view this as a reduction in cost, one that would let them cut the prices of their products in international markets. Commodity-type products would particularly encourage this kind of behavior. If aluminum, for example, was selling for 66 cents per pound domestically and ICs were worth 10 percent, domestic aluminum producers could sell for about 60 cents per pound (plus transportation costs) in foreign markets and still earn normal margins. In this scenario, the output of the U.S. would become significantly more competitive and exports would expand. Along the way, the number of jobs would grow.

Foreigners selling to us, of course, would face tougher economics. But that's a problem they're up against no matter what trade "solution" is adopted -- and make no mistake, a solution must come. (As Herb Stein said, "If something cannot go on forever, it will stop.") In one way the IC approach would give countries selling to us great flexibility, since the plan does not penalize any specific industry or product. In the end, the free market would determine what would be sold in the U.S. and who would sell it. The ICs would determine only the aggregate dollar volume of what was sold.

To see what would happen to imports, let's look at a car now entering the U.S. at a cost to the importer of $20,000. Under the new plan and the assumption that ICs sell for 10 percent, the importer's cost would rise to $22,000. If demand for the car was exceptionally strong, the importer might manage to pass all of this on to the American consumer. In the usual case, however, competitive forces would take hold, requiring the foreign manufacturer to absorb some, if not all, of the $2,000 IC cost.

There is no free lunch in the IC plan: It would have certain serious negative consequences for U.S. citizens. Prices of most imported products would increase, and so would the prices of certain competitive products manufactured domestically. The cost of the ICs, either in whole or in part, would therefore typically act as a tax on consumers.

That is a serious drawback. But there would be drawbacks also to the dollar continuing to lose value or to our increasing tariffs on specific products or instituting quotas on them -- courses of action that in my opinion offer a smaller chance of success. Above all, the pain of higher prices on goods imported today dims beside the pain we will eventually suffer if we drift along and trade away ever larger portions of our country's net worth.

I believe that ICs would produce, rather promptly, a U.S. trade equilibrium well above present export levels but below present import levels. The certificates would moderately aid all our industries in world competition, even as the free market determined which of them ultimately met the test of "comparative advantage."

This plan would not be copied by nations that are net exporters, because their ICs would be valueless. Would major exporting countries retaliate in other ways? Would this start another Smoot-Hawley tariff war? Hardly. At the time of Smoot-Hawley we ran an unreasonable trade surplus that we wished to maintain. We now run a damaging deficit that the whole world knows we must correct.

For decades the world has struggled with a shifting maze of punitive tariffs, export subsidies, quotas, dollar-locked currencies, and the like. Many of these import-inhibiting and export-encouraging devices have long been employed by major exporting countries trying to amass ever larger surpluses -- yet significant trade wars have not erupted. Surely one will not be precipitated by a proposal that simply aims at balancing the books of the world's largest trade debtor. Major exporting countries have behaved quite rationally in the past and they will continue to do so -- though, as always, it may be in their interest to attempt to convince us that they will behave otherwise.

The likely outcome of an IC plan is that the exporting nations -- after some initial posturing -- will turn their ingenuity to encouraging imports from us. Take the position of China, which today sells us about $140 billion of goods and services annually while purchasing only $25 billion. Were ICs to exist, one course for China would be simply to fill the gap by buying 115 billion certificates annually. But it could alternatively reduce its need for ICs by cutting its exports to the U.S. or by increasing its purchases from us. This last choice would probably be the most palatable for China, and we should wish it to be so.

If our exports were to increase and the supply of ICs were therefore to be enlarged, their market price would be driven down. Indeed, if our exports expanded sufficiently, ICs would be rendered valueless and the entire plan made moot. Presented with the power to make this happen, important exporting countries might quickly eliminate the mechanisms they now use to inhibit exports from us.

Were we to install an IC plan, we might opt for some transition years in which we deliberately ran a relatively small deficit, a step that would enable the world to adjust as we gradually got where we need to be. Carrying this plan out, our government could either auction "bonus" ICs every month or simply give them, say, to less-developed countries needing to increase their exports. The latter course would deliver a form of foreign aid likely to be particularly effective and appreciated.

I will close by reminding you again that I cried wolf once before. In general, the batting average of doomsayers in the U.S. is terrible. Our country has consistently made fools of those who were skeptical about either our economic potential or our resiliency. Many pessimistic seers simply underestimated the dynamism that has allowed us to overcome problems that once seemed ominous. We still have a truly remarkable country and economy.

But I believe that in the trade deficit we also have a problem that is going to test all of our abilities to find a solution. A gently declining dollar will not provide the answer. True, it would reduce our trade deficit to a degree, but not by enough to halt the outflow of our country's net worth and the resulting growth in our investment-income deficit.

Perhaps there are other solutions that make more sense than mine. However, wishful thinking -- and its usual companion, thumb sucking -- is not among them. From what I now see, action to halt the rapid outflow of our national wealth is called for, and ICs seem the least painful and most certain way to get the job done. Just keep remembering that this is not a small problem: For example, at the rate at which the rest of the world is now making net investments in the U.S., it could annually buy and sock away nearly 4 percent of our publicly traded stocks.

In evaluating business options at Berkshire, my partner, Charles Munger, suggests that we pay close attention to his jocular wish: "All I want to know is where I'm going to die, so I'll never go there." Framers of our trade policy should heed this caution -- and steer clear of Squanderville.

Here we see how Buffett fared on his 2003 prediction of a sinking dollar. As usual, he had The Long Wave dead right. And the attempted reflation of the Busting US RE market by Bernanke & Co will only make this problem worse. Read last weeks post on 17 Reasons We NEED a recession in this country. We need to break the back of this Consumption Monster. There needs to be a real Sea Change. Maybe one Good Thing that'll come out of this Economic Tsunami coming our way is we'll learn thrift again. We'll learn to save. We'll learn the maybe Really Being Green is NOT BUILDING OR BUYING 3 homes. Maybe we'll Getting Fucking Real.


I just wanted to post data/graphs from BendBB's Google spreadsheet. These figures exclude raw land. First is the PPSF indexed to 0% back in Feb:

Bend has clearly done the worst, having price per sf rise only 1 month, way back in March. Redmond after being strong for most of the year has collapsed in the past 2 months. Sisters, after having a mini-bubble this Summer, has collapsed to flat & stayed there. Sunriver is the steadiest, rising slowly but surely, and never really swinging up or down.

Here are raw home price medians for the area:

Hard to see much change which is why I post the PPSF indexed to 0% first. November LIST medians are as follows:

Bend: $399,500 ($399,500 last month)
Redmond: $305,000 ($320,000 last month)
Sisters: $459,000 ( $472,200 last month)
Sunriver: $469,000 ($459,900 last month)

Finally here are PPSF medians, which I find more interesting than raw medians, as the square footage of homes varies widely from month to month:

Raw data:

Bend PPSF median: $208 ($209 last month)
Redmond: $175 ($179 last month)
Sisters: $249 ($247 last month)
Sunriver: $284 ($284 last month)