Sunday, March 29, 2009

Bend -- Uncertainty Capital of the U.S.A.

Wow, what I thought would be The Big News Of The Year, seemed to get the collective yawns of everyone in Bend.

16.1% Unemployment in Bend

No one seemed to really care about that. Well, here it is in graph form:
Bend Unemployment, unadjusted -- Jan 1990 to Feb 2009

Folks, something is seriously wrong with that.

This isn't some run-of-the-mill downturn, you can see one of those culminating around 2001, where unemployment locally almost hit 10%.

This doesn't look or feel like a little cyclical downturn, and I suppose it'd be odd if I said it did, considering the reason I started this blog... cataloging the worst financial catastrophe of our generation.

No, you can see that Bend's Small Wave days are over. The nominal yearly tops & bottoms that change with the seasons around here used to be bounded by peaks & bottoms that were between 2-4% apart.

You can easily see this on the graph. The sharpest turnaround to date was the plummet in unemployment from 11.1% in Feb 1994 to a mere 5.5% the following September.

You can see what is happening now is unheard of in modern Bend history.

The absolute low in unemployment in modern Bend history was reached October 2006, 3.8%.

There was the usual seasonal jump to 5.7% in Feb 2007.

Then something very strange happened: The usual yearly cycle of peaking unemployment in Feb & bottoming in September began to break.

The subsequent low in unemployment for 2007 didn't happen in September, as it usually does. It happened in May at 4.3%.

In Feb 2008, unemployment reached 8.1%, which proved to a high water mark that was actually breached later in the year. You can see it on the above graph.

After a short jaunt down to 6.4% in May again, unemployment figures in Bend did something they have rarely done in recorded history: They breached the standard seasonal highs that are virtually always set in February.

The high water mark for unemployment for 2008 was actually set in December at 11.9%.

Look at the graph, look at where the peaks are: They are just right after the vertical bars, which I think are December.

Unemployment peaks in February in Bend like it has eyes. It's such a reliable cycle, you can set your watch to it.

But look at 2008-2009: The cycle breaks horribly.

Here's a look at this graph, with a YoY comparison thrown in:
Bend Unemployment, with YoY comparison.

That red line is just the current months unemployment divided by the unemployment rate 12 months prior. Then I subtract 1, to get a percentage, then I multiply by 5 so that it doesn't end up being a tiny squiggly line right around zero.

So when the red line is at zero, it just says that this years unemployment is the same as last year. When it's above zero, it means this years unemployment is higher than last year, possibly indicating a downturn in the economy. And the converse when the line is below zero.

You can see there have been 3 fairly typical downturns since this series began, 1991, 1995, and 2001. The upturns were in 1994, 1997, and 1999.

The Long Boom, starting in 2003, and ending in 2007 was itself a curious anomaly. Most of Bends cyclical turns were fairly benign & short-lived. But these Bubble Years certainly made it feel like This Time It's Different.

It wasn't that the peak was so sharp, it's that it was so durable. Things seemed to get better every single day. For years. Unemployment never seemed to get worse than it did during the previous year. Only better. For 4 solid years.

And you can now see the price we will pay: An explosion in unemployment to rival anything this area has seen in modern, and probably not-so-modern history.

You wonder why I dismiss talk about How Bad This One Is Versus The Last Bust: This One Is Nowhere Near Over. This one may very well still be getting worse.

We can talk about that when the red line hits zero again. Well, actually when it is well below zero, we can talk about recovery. Because even if unemployment goes back to a yearly average of 12%, that's going to look like a recovery compared to a 15% year.

But that won't be much of a recovery. Which is what I've been trying to convey for a long time now. That blue line isn't coming down anytime soon. And it'll probably NEVER come back to where it was only 2 years ago.

It's going to stay up in it's new rarefied plateau, well above 10% for years. And years. The best of the future's seasonal upturns, will actually be WORSE than the worst downturns we've seen in the past 20 years.

We'll start becoming THRILLED with yearly low unemployment figures at 10-11%!

This graph says it all: The past 20 years of comforting cycles, up & down like gentle waves on a beach, have been replaced by a tsunami.

And possibly worse than the outright level of unemployment itself, is the yearly amplitude will increase markedly. There will be wild swings each & every year.

This is manifested in UNCERTAINTY. People will never know, from year to year, is this My Time? Will I lose my job?

This cyclicality will drive people out over the long haul, probably as much or more than the outright level of the seasonal bottoms. People HATE uncertainty. And folks, Bend is the Uncertainty Capital Of The U.S.A. for the coming 20 years.

People will leave when their job has been gone for a year. But the real outmigration will be because of the never-ending uncertainty. That's what is not going away.
BB2 Be The Best Pimp Ever!

Sunday, March 22, 2009

Ripoff Outrage Boils Over

Doesn't it seem like we're entering a sort of malaise period with this economic collapse? The biggest worry of the week, was the 1/10% of 1% of AIG's bailout is going to bonuses, so the DC scapegoating/grandstanding machine went into overdrive.

Funny that just about a year ago when I said they'd be perp-walking people out of their offices, I thought it'd be almost all real estate-based types, like Summit 1031... not Madoff. It's like this thing has turned into a roiling spectacle, like The Jerry Springer Show, everyday claiming some new victim.

I have some weeks where I don't really know what to write about because things seem to be going so irrevocably wrong. This is one of those weeks, so maybe I'll keep this short.

We are in a near-manic effort to get "credit flowing" again. Everybody says that the lack of credit is the problem, and in this de-leveraging nightmare, we have to get it going again.

And funny, but the purported solution is to borrow FROM OURSELVES (our future selves) via the government, in attempt to make us take the money, now.

It's like the governement is saying, "We will take everything you ever make, to force you to take it & spend it right now"!

Very strange. Strange because the reason it is not working is so obvious, that I can't help but think the current strategy is purposefully flawed. That this is being done on purpose to achieve some ulterior motive down the road.

The AmeriKKKan people are either, A) Credit Score depleted via default, and cannot borrow, or B) So tapped out & carrying such a heavy debt load now, that they are unable to borrrow anything else.

There's nothing left in the AmeriKKKan consumer pack mule, yet the government is piling on more with every monetary tool in its arsenal.

It's ridiculous. The government is flooding banks with money, and they are incredulous that it isn't being loaned. Of course not. The people who are showing up to borrow are the worst credit risks in The World. But the government wants them to be lent money.

Uhhhh, that is exactly how this debacle got started.

This is so blindingly obvious that I can only assume they are attempting to achieve other ends via this "stimulus". It seems a simple reallocation of wealth from future generations to the wealthy of today.

That's where most of the money is going. Most of the "stimulus" that went to AIG went to extraordinarily wealthy counterparties. Many in foreign countries.

We're making the rest of the World solvent, while bankrupting ourselves. And our kids. And their kids.

Most of the people who walk in to buy homes simply do not qualify. What did some one write in the comments? 9 out of 10?

Banks are simply returning to prudent lending standards. All else would kill them. Yet the government is trying to insist that they return the Gold Rush Days that have brought on this debacle.

We're a country at odds with itself.

I'm not sure how this will play out, but the fact that we are A) Borrowing from ourselves & our kids at a terrible rate, and B) Distributing it to the most wealthy all over the World, does not make me feel anything but sick to my stomach over this countries long term future.

Another statement I made well over a year ago was that the USA would lose it's predominant economic might on this planet, seems now a foregone conclusion.

As a segue to that, I read a little piece about how the US Debt Passed $11 trillion this week. What took GeeDub 3-4 years back in the early part of the decade, has been done in a couple of days now. We blasted through a TRILLION DOLLARS.

And it looks to get much worse before it gets better.

The dollar got crushed as a result.

Here's a good summary of what is going on with our government's attempt to rescue us (from the $11 trillion piece):

Monetary Policy Under the Bernanke Fed our monetary policy is to print massive amounts of currency in order to head off asset price deflation. Falling asset prices, combined with way too much leverage, are the chief reasons the financial system is in such deep trouble.

Over-leveraged banks have very little tangible common equity to absorb losses in the value of their assets. If asset values were allowed to fall to market clearing prices (say another 25% decline in home prices), this would mean banks’ remaining assets aren’t sufficient to pay off their liabilities.
Assets = Liabilities + Equity.

As the left side of the equation falls, so must the right. Liabilities are ostensibly fixed, so a decline in assets must be matched by a decline in equity. Again, financials are ridiculously over-leveraged, which means they have very little equity cushion to absorb losses on assets.

In other words, allowing asset prices to fall will bankrupt the financial sector, leading to systemic meltdown and worldwide bank runs.
To fight the fall in asset prices, Bernanke has made clear the Fed will print money at a very rapid clip in order to buy assets like Treasurys, mortgage-backed securities, asset-backed securities, etc.

The best way to track how much money is being printed by the Fed is to watch the expansion of assets on its balance sheet. (second chart above, click to enlarge)
The balance sheet equation (A = L + E) applies to the Fed just like it applies to banks.

The difference is the Fed has this magical machine called a printing press which means it can manufacture its own debt in order to finance purchases of assets. The debt it manufactures are simply electronic dollars that it puts in the accounts of those from whom it buys assets.

This is not hard to grasp actually. The Fed said yesterday that it wants to buy $300 billion worth of long-term Treasurys (in addition to another $750 billion of MBS). As an example, pretend you owned some Treasury bonds that you want to sell.

Since the Fed wants to buy them, it will conjure dollars out of thin air and put them in your bank account in exchange for the Treasury securites you’re selling.
As the Fed prints money to buy assets, look for total assets on its balance sheet to expand dramatically.

An Economist article published today (see links) included an estimate from Capital Economics claiming the Fed’s assets are likely to expand to $4.5 trillion. That’s an awful lot of new dollars!

As I’ve argued before, this strategy is badly flawed. The Fed thinks the economy’s problem is falling asset prices. That is wrong; the economy’s problem is too much debt, which over-inflated asset prices to being with.

The only “solution” is to let asset prices fall. Unfortunately, this will be very painful.
Pumping more borrowed money into the economy via fiscal and monetary policy won’t actually stop that from happening, it will just delay the day of reckoning and make it far more painful when it arrives…

We're attempting to stop the implosion of one bubble by replacing it with another.

This just makes it feel like there will be nowhere left to hide when we finally Man Up & just let the shit hit the fan.

I'm not sure what the ultimate outcome will be, but again, my old outrageous claims of olde seem to be apropos. Remember Zimbabwe?

I think I'm also a little "down" because I'm starting to know more & more people who are being sucked into this RE debacle.

They are decent people who did not go in over their head, kept their nose to the grindstone, and didn't go on spending binges.

But the one unfortunate thing they did was buy a house in Bend in the past 3-4 years.

And again, they are not having problems paying the mortgage. But they are becoming poor at an untold rate.

These are people who have slowly but surely just worked the the American Dream as methodically as possible, working 2 jobs, kids, etc.

But they bought a $350K house that is now worth under $200K.

That slowly but surely ascending line of net worth that took 20 years to get where it was, has plummeted to Less Than Zero in 18 months.

A lifetime of work, wiped out.

And these people are understandably upset. They are 100% broke, and they went broke engaging in the most Apple-Pie & baseball American Dream transaction that there is: buying a house.

That's what you're supposed to do when you've worked all your life in this country... you buy a house.

And so they did it, and the American Dream has turned into a nightmare.

And after going through the various stages of loss, I'm seeing a lot of these people simply resign themselves to 10 years of Bad Luck, and they are simply going to Walk Away, and Not Pay.

They have the money, mind you. But they are not going to throw 2-3X what it costs to rent each month for the priviledge of losing $2,000 per week. They're just walking away from their White Elephant.

Walk Away, Don't Pay.

Yet another prediction that seems to be coming true in spades today, that seemed ridiculous just 12 months ago.

And here's the reason:

Marge said...

The RE optomists quoted last month are from Mars:

March 09 sales to date

13 Sold @ $221k med

March 08 to date

47 Sold @284k med

I see that the steam building up in the market is just hot air.

Kinda like Dorn making a deal a day.

March 17, 2009 9:06 AM

This is just brutal. Not even 1 house per day is selling. We're starting to get to numbers that are so low volume-wise, that we're going to have to combine 2 or 3 months to get medians that even are meaningful.

My response to marge:

Wow, 70% REO & shorts.

So, the traditional 6% on those sales is $172,380, for about 17 days or $10,140 per day for brokers.

For 1,500 brokers (?), that's $6.76 per day.

Gross profit. Net might be a few bucks less.


The Realtor profession is going away in Bend. There is going to be a skeleton crew left when this is over. Gardner, DuBois, and a few others.

And even these people will be starving. RE will never return to it's Glory Hole Years.

But luckily we have the Doctrine of Bend Exceptionalism that will keep these people feeding this beast until it collapses of it's own weight.

Ahhhh yes. There is just no Good News in me this week folks. No bloodlust for the devouring of The Stupid, no outrage over bonuses, no disgust over our governments incompetence.

Just a general hazy malaise & despair that we are doing everything wrong. Just the unfortunate idea that as a country, as a state, as a town, and as people living in our neighborhoods with friends who are being steamrolled by this thing, that our futures are, at this very moment, being destroyed. And the same goes for our kids.

I'll end with a piece from The Bully:

The Great Depression
How they lived, what they learned — and what they say about today’s tough times

By Erin Golden / The Bulletin
Published: March 22. 2009 4:00AM PST

Vadabell Brumblay has always been careful with her money.

At 88, the Bend woman lives comfortably in the same home she’s had for decades, but she doesn’t take anything for granted.

She makes her grocery lists only after scouring the week’s advertisements and circling the best deals with a felt-tipped pen.

In a notebook, she carefully records each purchase she makes and charts all the bills she’ll need to pay during the month.

They’re the kind of habits that come from growing up in the midst of the Great Depression, a time when Brumblay watched her parents lose everything they had in a bank collapse and then rebuild their lives with the help of a small dairy business — a venture they eventually had to quit because so many people in Bend fell on hard times and couldn’t afford to pay for milk.

“You didn’t have much, but neither did anybody else,” she said.
These days, with the economy in a slump and people around the country grappling with unemployment, plunging stock prices and higher living expenses, the Depression has made its way back into the news and dinner table conversations with some people wondering how it compares with today’s economy.

For the most part, Brumblay — and other Central Oregonians who lived through the period — say we’re not in a crisis like the one that swept through the country in the 1930s. But as government officials and families make tough decisions about doing more with less, they say the lessons they learned from surviving those times have become more relevant than ever.

A tough time
In Central Oregon, as in other parts of the country, the Depression began in late 1929 and continued at least in part until the U.S. became financially involved in World War II more than a decade later, said Daniel Pope, a history professor at the University of Oregon who teaches a class on the subject.

At the time, many people in Bend and other cities in the region were involved in agriculture or the timber industry, including Rosanna Duberow, 86, of Bend, who lived with her parents and four brothers and sisters in a Shevlin-Hixon logging camp about 13 miles south of Bend.

For much of the Depression, Duberow’s father was able to keep steady work, but she remembers a few months when the company stopped cutting timber. Because he had a large family, Duberow’s father was given some money for taking care of company livestock, but it wasn’t always enough.

In town at Erickson’s grocery store, they let people charge groceries, and Mother had a huge grocery bill by the time (the loggers) were working again,” she said. “I know each month, she’d take so much extra to go pay that bill, and Mr. Erickson said when she finally did pay the last bit, ‘You wouldn’t believe, you’re one of the very few to even try to pay that bill.’”

Brumblay, who also lived in Bend for much of the Depression, remembers similar stories about people who were unable to afford food for their families and had to depend on credit from the grocery store owner.

“He eventually would take their homes,” she said. “They’d owe him so much, he’d have them sign their homes over. And the talk was that he owned half of Bend.”
Brumblay’s family avoided falling into serious financial trouble, but it wasn’t always easy.

In the late 1920s, the family was living on a ranch near Tumalo when Brumblay’s parents decided to sell nearly everything they owned and move into a house in Bend, where Brumblay’s father worked at a mill.
Shortly after they sold it all — the house, the cattle, even a player piano — the bank where they’d put all their money collapsed.

“My mother had a dollar and a little bit of change in her purse, and that was it,” Brumblay said. “They still had all their bills, and they had just sold all their assets.”

Brumblay’s parents got back on their feet with the help of a friend who was living with the family and had invested his money in a different bank. Her father kept working at the mill, but he had to compete with many other men who were also looking for jobs.

“I remember he would go down to the mill in the morning and take his lunch, and if there was work, he’d stay, and if there wasn’t, he’d come home again,” she said. “Then he’d go back at noon, because maybe there would be a half-day’s work.”

To supplement his income, Brumblay’s father purchased some cows and started a dairy business. Several days a week, her mother would pull down the seats in the family car and load it up with bottles of milk, which Brumblay would carry up to people’s doorsteps.

But as the Depression wore on, the business slowed down.
Brumblay said she remembers going to houses where she knew the families had fallen on hard times and couldn’t afford to pay. For a while, her parents tried to help, but eventually it got to be too big of a burden.

“The problem was, Dad had to buy hay and grain, and some of the people weren’t able to pay for their milk, and we couldn’t afford to give it to them, so (my parents) eventually quit that,” she said. “And how can you refuse to take milk to families that have kids?”

Without savings or job prospects, some people in the area resorted to begging for food or work.

Cora Houston, 100, of Prineville, spent some of the Depression working as a teacher at the Bear Creek School, near Paulina.

In the most rural parts of Crook County, she said, many families were able to get by because they’d raise and grow their own food.

But when she’d travel back to Prineville to visit her mother — who lived in the same house Houston now calls home — she saw many people in need.
“People came to the door asking for food, several times, right here,” she said.

Lessons learned
Though many people have been hit hard by the current downturn, Pope, the history professor, said it’s not quite on the same magnitude of what happened in the 1930s.

“I think people are talking about it as a potential depression, but I don’t think we’re there yet, and I don’t think most people would claim we’re there yet,” he said.
Some of the locals who lived through the earlier downturn agreed, saying the pain doesn’t seem to be quite as deep — or widespread — as it was when they were young people.

Art Welch, 90, of Prineville, said he volunteers at a local food bank and has seen an uptick in the number of people looking for help, but he doesn’t think the economic situation has reached a crisis point.

“As far as it being a depression? Not yet,” he said.
Welch, who was born and raised in New York City, came to Prineville at 17 as a member of the Civilian Conservation Corps, a work program for young men that was organized by the federal government.

He and dozens of other men stayed in barracks-style lodging and worked on a variety of projects, from cutting down trees to building houses for U.S. Forest Service staff.
In his time with the CCC, Welch made between $30 and $45 per month, though most of it was sent back to his family in New York.

With housing and meals taken care of, Welch said, the program provided a big boost to young men like himself who might have otherwise found themselves out of work and on the bread lines, waiting for a free meal from a charity group..
Welch said he thinks a similar program could be the answer to some of the current unemployment problems.

They put the people back to work, and that’s just about what’s going to have to be done here this time,” he said. Others who remember the Depression said they worry that people today might not have the tools to stay on track if the economy gets worse.

Georgia Gallagher, 87, of Sisters, lived on a ranch two miles outside of Sisters during the Depression. She said her family got by in part because her mother was skilled at sewing, cooking and other tasks — and knew how to make a little go a long way.

“People are quite a bit different now, been used to not doing any of those things. ... I think people would have a harder time now because they don’t know how to can, they don’t know how to sew, they don’t know how to economize,” Gallagher said.

“So many of them are losing their homes, and there’s no place to live that is really inexpensive now, so it’s real hard on those people.”
But some of the local Depression survivors said they think people dealing with the current downturn should follow some of the habits of people who grew up in the 1930s.

Gallagher said she canned food every year up until very recently, and Duberow said she and her husband still maintain a large garden, growing all of their own vegetables and some fruit.

Houston said she believes many people fall into trouble because they spend far more than they actually have in the bank.

Houston said she’s had just one credit card in her life, and she used it for a single purchase — $60 for a hotel room on a vacation to the Oregon Coast.
Saving, rather than spending, she said, is the way to stay secure, even when the economy takes a turn.

“I would say definitely to build up a savings account if possible; even if you only had $5 a year to put in, try to have a savings account,” she said.
Brumblay said she remembers a popular Depression-era saying that’s still as relevant as ever: “Make it over, wear it out, make it do, or do without.”

Though she said it’s hard to tell when the economy will make a recovery, Brumblay said the simple choices we make can go a long way in tough times.
“First there’s wants and then there’s needs, and you have to learn to separate the two,” she said.

I love spending on the essentials in life! That's why I live in Bend, Oregon!
Me so horny for AmeriKKKan Debt!

Sunday, March 15, 2009

Welcome to Mumbai, Oregon!

Can't do a full-scale rant today, so I'll just post some interesting snippets, so we can all get right to the comment-goodness.

A Long Time Ago, In a Town Not So Far Away, I bought a really old Sci-Fi book at a place called The Bookmark. It was like a lot of buys that happen at places like this: It was a little treasure, a little gateway back to my youth, a book I read in my teens, a little reminder of the naive me-of-olde, and it was only $1.50.

It was a quasi non-fictional thesis called "A Step Farther Out" by Jerry Pournelle, an old 1970's era Sci-Fi writer who, when paired with Larry Niven, put out some good stuff. It was a survey of pop-tech and other sci-fi grandiose schemes that Pournelle thought would solve our problems.

Anyway, I guess what was sort of funny about re-discovering this book (it's been boxed up for 6-7 years now), is that Pournelle is addressing his audience as if there is this chronic & terminal disasterous condition with the World. It was written just after the Oil Shock, so I guess that's understandable.

But he writes also with the implied assumption that the Earth is going to become imminently unlivable due to pollution. He posits that population growth is completely out of control, and it'll lead to Standing Room Only within decades. He talks as if food-shortages in Africa are all but inevitable for the rest of the World.

He takes this stance that he is rebuffing The Pessimism Of The World. He's taking a stand, fighting back, and he's going to put out some Damn Pragmatic Solutions. Things such as mining asteroids, converting the Worlds oceans into farms, and quite a bit of other flying-car-in-every-garage-nuclear-power-plant-in-every-house stuff that never happened.

I guess what was really strange about this was the dissonance with what actually happened after Pournelle wrote this.

The malaise ended.

There was a huge explosion in growth, but it was not at all like Pournelle envisioned it. All the pessimism just sort of melted away.

But what's also funny is that some of the problems that he outlined as intracable, never went away. The Earths population has kept growing. Africa is still starving to death. We pollute more than we ever have.

The Oil Shock ended, but other problems of equal or greater importance remained. They're still here today.

But what fundamentally changed was The Attitude about our problems. They just changed. The pessimism just sort of went away. I guess other Feel Good topics like Growth just usurped the importance of Live Aid, and other stuff like that.

I'm not entirely sure what I'm trying to say about this, other than this planet has seen times when it looked like The End of Days before. It was just so long ago, no one except real Geezers remember it.

And I'm Not saying The Bad Times Manifested Themselves In 2 Years Just Like Now, So We Can Rest Easy because It's All Over. No. The malaise of the 1970's took a decade plus to work itself out. It took a long time. We're in the 2nd or 3rd inning.

I don't know, I guess it was sort of comforting to know that what is happening today is not totally unprecedented. We've been down before. We've been almost pathologically pessimistic about it, too.

But, it did end. After a long time, it did end.

Next --

We found out what we pretty much knew all along: Patty Moss & Co are frauds.

Cascade Bancorp posts wider adjusted fiscal 2008 loss

Friday, Cascade Bancorp Inc. (CACB), the holding company for Bank of the Cascades, said it made adjustments to its preliminary financial results to include goodwill and asset impairment charges, additional provision for loan losses, resulting in a wider net loss for the year.

Including the non-cash goodwill charge and other adjustments, net loss for fiscal 2008 was $134.6 million or $4.82 per share, compared to a net loss of $21.2 million or $0.76 per share reported in the preliminary unaudited earnings release dated January 29, 2009.

Right. All of a sudden, not in normal earnings season, MossCo woke up & found out that their Idaho acquisition of Farmers & Merchants bank was a 100% LOSER. They wrote off 100% of the F&M goodwill.

This is becoming Standard Op Procedure for MossCo. Last quarter it was "Hey, wow, whoa! You know we just found out due to SOFTWARE ERROR, we actually LOST A SHITLOAD MORE MONEY than we originally told you. Sorry."

Now it's a HUGE LOSS, that will result in the near-nuking of CACB's net worth:

Cascade Bancorp (Oregon) Announces Filing of Form 10-K Annual Report and Audited Financial Statements; Adjusts Preliminary 2008 Results Due to Goodwill Impairment and Additional Provision for Loan Loss

2008 return on book equity and tangible equity decreased to (47.90%) and (80.51%) respectively, from the previously reported (7.02%) and (11.79%). At December 31, 2008, the Company's reserve for credit losses was $48.2 million or 2.46% of total loans and NPA's are reduced by $22.9 million to $159.4 million or 7.0% of total assets.

SO they went from a small ding to earnings to a near WIPE OUT of tangible equity. When you lose 80.51% OF TANGIBLE EQUITY, YOU ARE FUCKED. One good point to this is the tax benefits, but you have to BE ALIVE to recognize such benefits, and CACB's stock price telegraphs a different story.

So you'd think the CEO would have a pretty sobering & concrete response? Hell No! This is Bend!

Patricia L. Moss, CEO said, "We are in serious times and actions will influence outcomes. The challenges we face reflect the stress the economic downturn has caused to our customers, businesses, friends and neighbors, and community at large. We are resolved to play our part in helping the community address the challenges we share, and to progress toward an improving economic future together." Moss continued, "Local deposits from our communities are essential to the economic health in the markets we share.

We are encouraging the community to keep their money local to the benefit of our shared economy. Community banks effectively redeploy their deposits back into our communities." To this end, Cascade has provided additional assurance to customers by participating in the Temporary Liquidity Guarantee Program which provides unlimited FDIC insurance for all transaction account deposits through 12/31/09.

Commenting on loan quality, Moss said, "We continue to fund our reserve for loan losses to ensure we have provided resources under the current adverse economic conditions. In addition, we have written down a substantial portion of the residential development loan portfolio that has proven to be most negatively affected by the downturn.

Residential development now represents just 10% of our credit portfolio while the majority of the Company's loans continue to perform well. I am gratified that we have taken these actions on the credit side and exceed benchmarks for a well-capitalized bank."

OK, there are several statements of concern, but this is the most startling:

"We are in serious times and actions will influence outcomes."

What the fuck! This is where you know you are dealing with a truly deranged lunatic. Moss has just LOST 80% of the net worth of the biggest bank in Central Oregon, and all she has is some sort of whacky identity logic?

"We're in the shit, and if A= B, and B = C, then A = C. Thank You."

My God, what a fucking idiot. Everytime Moss opens her mouth, I realize that the banking system of Central Oregon as we know it, is 100% DOOMED. This vacuous dumbshit is at the helm of a sinking ship. Know that CACB at $1.22, is INFINITELY OVERVALUED. It is worth NOTHING.

I formally retract all my previous statements that it is "almost worthless". It is 100% WORTHLESS.

Next --

There's some scapegoating going on with some pretty unlikely characters lately.

Someone posted the Jon Stewart crucifixion of James Cramer in the comments. I saw it, and it was pretty good. Jon Stewart is a relatively clear thinking guy, and he tears Cramer a new corn chute. He backs Cramer down pretty well, something Cramer richly deserves.

Then Dunc posted the tut-tut-tut titled Jesse, Jesse, Jesse..., about Jesse Felders point of view on his blog, My Back Pages:

You've been talking this way for months now, and the market continued to decline that whole time. (Don't forget to leave out that little fact.) You started talking about 'bottoms' and then it would drop some more, and then you'd talk about 'bottoms' again, and it would drop some more.

Now you've even gone so far as to post an article in the Bulletin.
Are you so sure it won't drop some more? Especially housing prices? Look at the Bend Economy Bulletin Board, and you'll see prices are still 99.9% down arrows.

Is it really your advice to ignore that and buy now? Really?

Jesse's been calling a bottom since I've started wiping my own bottom: About 6 months ago. And let's face it, he's been dead wrong.

And finally, the vultures have descended on Buffett himself, with articles like "Warren Buffett has lost his touch", "Is Warren Buffett Crazy?", "Bill Gates' foundation dumps shares in Warren Buffett's Berkshire", and it goes on and on.

And to add insult to injury, Buffett's Bershire (along with GE), has lost it's Golden Boy AAA status. There were only a handful of companies on Earth that had been bestowed that honor, and Buffett used it every chance he got to peddle more insurance.

So we're all supposed to jump on the Cramer-Madoff-Felder-Buffett scapegoat bashing bandwagon?

No. Well, Madoff, Yes. But Cramer is a dumbfucking stock tout, he doesn't know what else to do. The fact that the dumbshit fucks chickens on his show to get ratings is more a reflection of American tastes than anything.

He's an entertainer more than anything. If you don't get that, and you actually take his advice, You Are A Dumbass.

Felder. Again, here's a guy just posting his opinion. And for the time being, he's wrong. Fuck, I threw my retirement in 100% a few months ago. 100% WRONG. So far. Sure as hell did not and will not buy at the bottom.

So Felders wrong too. Big fucking whoop. Again, if you take someone's advice to heart, it's not their fault, it's yours. Man the Fuck UP, and admit that you are responsible for your life.

I lost my retirement money, not Felder. Conversely, when (if) things turn around, I will not be sending Felder a commission.

This same thing goes for Buffett. He touted GE right before it took a huge dump, he even bought a shitload of it. So Buffett ate his own cooking, and he's now paying. Big F-ing Deal.

Everyone Loses In A Black Swan.

But we're starting to go after people indiscriminately.

OK, Madoff deserves to die. I mean he just deserves to be stoned to death, nude, over the course of weeks. With his dick in a meat grinder. And maggots eating out his eyes.

But Buffett, Felder, and Cramer are just fallible. Shit, that goes for all of us. These guys are just wrong, that's all. Is Felder digging his own grave deeper by the day? Hell yes. Nobody's perfect. Remember the Opening Of The Second Comic Book Store On 3rd? Hey, but for the grace of God....

That's the one thing ALL THESE PEOPLE have in common: NONE saw THIS coming. Look at Cramer's video: He calls this episode "one in a million". It's not that, but it's still pretty damn rare.

And by "THIS", I mean the utter meltdown of the World's financial system. Which brings us to...

Next --

I saw on NBC's nightly news that the total Worldwide toll of the financial meltdown has been approximated at $50 TRILLION.

$50,000,000,000,000 is a lot of money. That's like $8,000 for every single person on this planet.

I know, you're thinking, "I got way more than that!". OK, good. But the vast majority of the planets population doesn't even have a fraction of that. If you started at the bottom, and just systematically wiped out the net worth of the Earth's poorest, moving towards the wealthiest, with a $50 trillion dollar vacuum, you would probably wipe out well over 95% of all individual net worth on this planet.

95% of the World would be flat-ass broke. Probably more like 98-99%. 95% is extremely conservative. Extremely.

Just an illustration of The True Total Cost of What The USA Housing Bubble Really Is. It's set us back 2-3 decades. It's set others back 2,000 years.

Household net worth plunges 18% in 2008

Consumers pay down debt for first time on record in fourth quarter
By Rex Nutting, MarketWatch
Last update: 2:35 p.m. EDT March 12, 2009

WASHINGTON (MarketWatch) -- Hit by a double whammy of declining home prices and a falling stock market, U.S. households saw their net worth fall by $11.2 trillion, or 18%, to $51.5 trillion at the end of 2008, wiping out four years of gains, the Federal Reserve reported Thursday.

In the fourth quarter alone, household net worth fell by $5.1 trillion, a record 31% annualized decline. Consumers lost $937 billion on the value of their real estate. Their direct holdings of corporate equity dropped by $1.68 trillion, while holdings in pension and life insurance reserve dropped by $1.46 trillion. Mutual-fund holdings fell by $730 billion.

Net worth has fallen for six straight quarters since peaking at $64.4 trillion in the second quarter of 2007. Net worth -- defined as assets minus liabilities -- is down 20% from the peak.
The decline in wealth was accompanied by a sharp pullback in consumer spending at the end of the year.

According to Commerce Department data, real consumer spending fell at a 4.1% annual rate in the final six months of 2008, the sharpest decline since 1980.

Economists figure consumers will spend about 5 cents out of each additional dollar of wealth, or cut spending by about 5 cents for every dollar lost.
"Consumers have turned a lot more cautious and are saving more," said Richard Berner, chief economist for Morgan Stanley.

In the longer term, Berner sees a "sea change in consumer behavior" that will bring the personal savings rate to 7% or 8% within the next few years as consumers begin to understand that quick and easy increases in wealth aren't likely.
"Households are being forced to rely less on rising asset prices and more on their paycheck to fund everyday living expenses," wrote Drew Matus, an economist for Bank of America/Merrill Lynch. "In other words, frugality is coming back into fashion."

The decline in net worth raises the risks of deflation, Matus said. He said money supply growth turned negative in the fourth quarter, based on more complete information about the shadow banking system.

Lost decade

At the end of the year, households owned $9.9 trillion in equity shares outside of pension plans, less than the $11.3 trillion they owned in 1998. At the end of 2008, assets fell by $11.3 trillion to $65.7 trillion. Liabilities fell $87 billion to $14.2 trillion. Home owners' equity in their houses fell to a record low 43%.

"It's an old lesson: Asset values can fall quickly, but debt lingers!" wrote Bill McBride on his blog, Calculated Risk.

At the same time their assets were falling, households were taking on less debt, deleveraging their balance sheets after five years of double-digit growth in debt.

In the fourth quarter, households paid off more debt than they took on for the first time since at least 1952, when the Fed began reporting the information in its quarterly Flow of Funds report.

Household debts fell at a 2% annual rate in the quarter, including a 1.6% decline in mortgage debt and a 3.2% decline in consumer credit, including credit cards and auto loans.
For all of 2008, household debt rose just 0.4%.

Since the early 1950s, debt had never risen less than 5% in a year.

Businesses also took on less debt.

Total debt grew 4.8% in the corporate sector after a 13.4% gain in 2007.

In the fourth quarter, corporate debt increased at a 2.2% annualized rate, the slowest since early 2004.
The federal government made up for the deleveraging by families and businesses, however.

Federal debt increased 24% in 2008 and rose at 37% annual rate in the fourth quarter.
Total nonfinancial debt -- individuals, businesses and government -- rose 5.8% in 2008 and increased at a 6.3% pace in the fourth quarter. It was the slowest annual increase in debt since 2000.

I know hbm likes to think of the poor in America as being crushed by unfeeling corporate behemoth monsters. And that's fine. But in the grand scheme of things, WE are the richest 1%. America is ridiculously wealthy by global standards.

If you actually suctioned up the $50 trillion in losses, the losses suffered by this country as a whole have been miniscule. Worldwide wealth decimation by the poor has been catastrophic. And I mean people with only a few hundred bucks to their name after a lifetime of toil.

The poorest American's are 1,000X better off than them. At least we have something to lose.

Next --

Just a little note about the min wage dogshit jobs that iSky is bringing BACK to Central Oregon.

I mean, I don't want to look a gifthorse, and apparently neither do a lot of other hungry folks, from the 200 applicants TRG got on Day 1.


Central Oregon always has been and always will be about the EXPLOITATION of locals. You are dogshit to the machine. You're the fucking pigs anus, cat entrails, hobo arm, and leather boot that goes into Central Oregon's LOW WAGE SAUSAGE FACTORY.

This place takes YOUR LIFE & turns it into SAUSAGE. You are dog shit. If you went to iSky, you are on the road to DOG SHIT.

Please, even a single person tell me otherwise. PLEASE! iSky doesn't have a single Family Wage job available. Nada. They have SAUSAGE JOBS. They turn lives into DEAD DICKS.

That is REAL BEND. I don't really want to pick on iSky, when this same fundamental truth applies to about 107% of Central Oregon Employers. They are a meat grinder, and you are a horses asshole.

It's a commentary on the nature of this place. It's where we are going. The Bend of Olde. If you don't like the sound of working for peanuts, losing your house, and living on China Hat Road turning tricks with donkey's, then you need to get the fuck out.

Finally --

In what may have been the event that Turned Things Around, we all found out that Bristol Palin broke up with her longtime boyfriend, and father of her illegitimate child.

This could not be better news for borderline-perverts like me (borderline?) who love Gigantosaurous Boobs. I mean, Mom was doing pretty damn good in the jugular department, but daughter looks like Bend's balloon guy stuffed something under her dress.

Those are the biggest gat-damned teeny-bopper, single mom, mega-jugs I've ever seen. I'm drawn to that shit like hillbillies are drawn to all-you-can-eat buffet's, tractor pulls, fucking yer sister and alcoholism.

So in tribute to all the Mother-Daughter mega-hottie gang-bang 2 on 1 clusterfucks that I hope to have in Heaven, I present Bristol's now-single huge mega titties, swelled by many months of suckling for your viewing pleasure.

Bristol Palin's titties being crushed into all sort of unnatural shapes due to Milk Bustout.
"My hobbies include Mother-Daughter gang-bangs, 2 on 1's, and fucking liberals and eating them."
Hey hbm, when are we gonna fuck? I'm hungry!

Sunday, March 8, 2009

Bend: Doomed To Tear Itself To Pieces... Again.

Ahhhhhhhhhhhh, Bend.

I guess I've figured it out: Bend is a town doomed to tear itself apart.

Look at Buster; Here's a Bend Lifer who wants nothing more than The Good Olde Days to return in force. Guns, depression, liquor, downtown vacancies, flatbacking renters. Cowboy Capitalism at its finest.

Just about the polar opposite of today.

Now hbm; Surely there couldn't be someone more Buster's Polar Opposite, right? No.

HBM said:

"What I want to know is why is Bend considered the land of paradise?"

Bend isn't "paradise" and never was. When my family and I moved here in the mid-1980s it was a nice, pretty small town. Now, thanks to 20 years of uncontrolled, poorly planned (or unplanned) growth, it's just a sprawling ugly mess with a shitty climate.


Bend was fine for me at a certain stage in my and my family's life. It isn't anymore. I've changed, my family circumstances have changed (daughter has grown up and moved away), and Bend has changed -- a lot, and mostly not for the better IMO. Why not move on?

How about Dunc? Surely as a downtown business man, he wants things to somehow right themselves and continue his 3 decade upturn?

Laying out the odds

Scenario Three.

Things really crash, dropping 50% or even 60%. Storefronts empty and aren't refilled. People leave town. I start playing cribbage on the sidewalk with my neighbors, waiting for customers. Ironically, after the worst has hit, probably no more vulnerable than the above scenario, because concessions would be forthcoming, one would think. And I would just cut to the bone.

Tuesday, May 29, 2007

A series of
restaurants went into the space the Toomies is now in. Nothing like the haunted look in waiter's eyes, as they stood, tuxedo ed in the window waiting for customers. My neighbor, Jerry from the Sole Shop, and I used to sit out on the sidewalk and play cribbage for hours.

See the common thread? It's that way with everybody.

No one is happy with Bend, because it is never quite what they want. Hell, I got here in '01, and Bend has already become a horrible perversion of what it was then.

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties.

And I'm a fairly conservative, Olde School rePug. But even hard-core flaming liberals, like hbm, are fed up with the place. Why?

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties. Well, maybe not the liberal elitist dicks.

And Bend's anti-Christ, Buster... what's his fucking beef?

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties.

Right? Right.

That's what I see as Bend's main problem: No one will ever be happy with the place.

Papa Bear Buster: TOO HOT (liberal)

Mama Bear hbm: Too cold (conservative) (and too many Busters)

Brother Bear Dunc: Barely supports one store, and yet it always attracts locusts anyway.

No one ever seems to be happy in Bend. When it's growing, it's growing wayyyyyy too fast, at a pace that cannot last, and is doomed to implode at the end

When it implodes, it drives out everyone, and the whole place is economically gutted.

Dunc is a perfect encapsulization of Bend:
  • Buys first store at True Rock Bottom Price.
  • Does surprisingly well. Thinks it is personal genius, not cresting wave of fad.
  • Expands in short order. 4-5 stores
  • Fad implodes.
  • Stores implode.
  • Hanging by fingernails. For 20 years.
This is the nature of capitalism in the USA. And the nature of Oregon is the nature of the USA squared. And the nature of Bend is the nature of Oregon squared.

When the USA catches cold, Oregon gets the flu, and Bend gets the fucking AIDS.

And I can tell you EXACTLY WHY THIS HAPPENS. This is it. Are you ready, because this IS IT:

We never diversify.

Think of the US economy as a portfolio of business, because that is essentially what it is. All are, to some extent, interdependent. With some, the correlation is low, like aircraft & BBQ sauce. With some, the correlation is high, like furniture and housing.

OK, here's a graph of the fundamental nature of bonds vs stocks:
Risk/Return space for stocks, bonds, and riskless T-bills.

You want low risk & high reward, right? That's the upper left of this graph, and the maximum return per unit of risk lies on that brown line. It assumes there is some "optimal" mix of stocks, bonds, gold, and everything else, that lies right where that brown line touches it. What's that brown line? It's where the Ultimate Uncorrelated Asset (T-bills) intersects the Y-axis.

Strangely, you'll note that if T-bill rates go UP, that modern portfolio theory indicates you should buy more stocks. Imagine grabbing that brown line by it's left side & pushing it up... it "rolls up" that curve towards 100% stocks. Conversely, pulling T-bill yields down indicates more bonds should be bought. This is where we are now, extraordinarily low short yields.

I have to say, I spent a fortune on higher education, and this was about all I got out of it.

But maybe it was enough. Because while this graph illustrates that you can ALWAYS do better by buying a mix of stocks & bonds for maximizing your risk-adjusted return, it illustrates this fundamental truth for many assets classes in a huge variety of situations.

It's why there are Swim & Ski shops in town. Hiking shoes & snowboards.

When one is up, the other might be down, and vice versa.

But, by and large, there is a general ebb & flow to the economy as a whole, and everything either is doing OK, or everything is sort of doing crappy.

But the good thing about diversification, is that IF YOU PROPERLY REBALANCE, you can weather almost any storm.

Cuz think about it: What if you buy, say 70% stocks and 30% bonds. In 1933. Well, by about 1966, your stock portion is wildly overweighted. And on that graph above, you'll be off the optimal investment weighting, which is always that straight line that is resting on the risk/reward curve.

You can see on that curve, that the optimal mix is somewhere around 30% stocks, and 70% bonds. And it gets better when you can mix it with T-bills. The ability to buy T-bills, as well as sell them (buy optimal stock/bond mix on margin) is what constitutes this brown line. The brown line is ALWAYS the best investment. ALWAYS.

Same goes with a Swim/Ski store. What if your "Ski" section starts to overwhelm your "Swim" section? What if there is a Big Upswell in skiing for some reason?

Or closer to home: What if your Breakout Comic Section seems to justify opening a new comic store? And another. And another. And another.

What happens when you're "All Comics" (ie stocks, timber or ski's), and no "Games" (ie bonds, tech, or swimsuits)?

Your portfolio becomes unbalanced.

You become too tied to the whim & weft of One Thing. Too many comics, so when comics crash, you crash harder. Especially if you "averaged in". ie: You "bought" 4 stores at the top, borrowing to do so.

Solely Buying Buffett, while sensical from almost any rational backward looking perspective, NEVER makes sense from this perspective.

Diversify OR DIE.

Now, this doesn't mean Start An Aircraft Parts & BBQ Sauce store.

It means start with comics. Add games. Add used books. Add new books. Add things that "add value" to the other things.

So diversify intelligently. But also realize your Inherent Lack of Diversification. Realize you are in Bend. Realize you are selling a very targeted set of goods. Realize your customer base may have a high correlation to some sector of the economy (ie construction).

How to fix? Internet? I don't know. That space is already saturated. Start an "Awe Shucks" blog, and see where it goes? Maybe.

I guess that's my point: Success BREEDS it's own failure. Comics, Dunc's bread & butter, almost begat his collapse. Timber, once Bend's economic mainstay, very nearly put this place in a 20 year depression.

Then we made the jump to Real Estate. Ahhhhhhhh, yes. Surely Real Estate will be our savior. It never Goes Down!

And so it came to pass that RE, via a series of well-designed, planned & executed strategies using local government & media as puppets, has come to completely dominate this little towns economics.

Once again, Bend is a completely unbalanced business portfolio, ripe for a fall. We have almost nothing else to rely on to soften the blow.

This is why, and maybe you'll remember, I've said ad nauseum, that we should have taken our RE lottery winnings and Put Them Somewhere Else. NOT RE.

We should have charges $60K SDC's, and slowly but surely diversified into a number of POORLY CORRELATED investments: A 4 year college, tech, aerospace, medical, I-97 4 lanes, whatever.


We have more than enough "life style" bullshit to last us a lifetime.

But no. We doubled down on REd. Just like a lot of my friends doubled down on tech around March 2000. Borrowed to buy, borrowed as much as they possibly could.

Should have taken their early winnings, and bought something Very Poorly Correlated.

"You mean IHTBYB, they should have bought Losers? Cuz they were winning up to that point, and boring stuff like BRK was going down the drain! Why diversify into a Loser?"

Cuz, as Dunc illustrates, as Bend timber illustrates, as Japan RE illustrates, as dot-com-2000 illustrates: It is the nature of things to undo themselves. It is the nature of booms to bust.

Success begets more investment. More investment begets concentration. Concentration begets lack of balance. Lack of balance always fails.

Far worse than a bad investment, is ALL IN as an investment ethos.

When comics perform well, buy more games (or books, or pogs, or...)

When stocks perform too well... buy bonds, NOT MORE STOCKS.

When RE explodes, get tech, a 4 year college, medical, a 4 lane highway... NOT MORE RE.

But that is, in fact, what we've done. From all timber to all RE.

And it's NOT that RE is itself inherently bad, it's the timing. We went ALL IN so late in the game, we're DOOMED.

"ALL IN" as an investment theme has a 100% FAILURE RATE.

Dunc went ALL IN on comics late in the game. But really, that's the nature of the game. ALL IN AT THE END is almost ubiquitous, whereas ALL IN AT THE START is essentially unheard of.

How many failed comic stores did you say there were Dunc? Something like 80-90% have failed in the past 20 years?

It's not so much a bad Industry, as it was Bad Portfolio Management. ALL IN AT THE END. Again, ALL IN has a 100% FAILURE RATE.

So Dunc went ALL IN AT THE END 20 years ago in comics, just as Bend went ALL IN AT THE END 2 years ago in RE. Expect similar results.

Where are we now? Funny, but we are exactly where all my friends were about 90 days after the NASDAQ bubble topped. They'd mindlessly bought some Swedish telecom something for $220/sh, watched it literally go to $280/sh overnight, but then mysteriously fall to a harrowing $125/sh.

They were shaken, but Very Hopeful. Very HOPEFUL. VERY, VERY HOPEFUL.

"It's going to bounce back. I know it. It'll be back at $300/sh before you know it."

And this keeps up, as it seesaws its way to $2/sh, where it flatlines for a decade.

That's where we are. Very hopefully sitting on something at $125/sh that we averaged in at $220/sh. It'll NEVER get there again, but we don't know that. We're HOPEFUL.

So it is too late to change things. RE runs the show via City Council & COBA, COAR, and God knows what other acronyms. It's not like we can call a stock broker & bailout. It took us years (decades) to get here, it'll take decades to get out.

So what should we do, once this thing has played out, and The Hope Is Gone (15-20 years) sufficiently that people in unison shriek "NEVER AGAIN!"?

Easy, diversify. Start building a Real Economy With Real People And Real Businesses. Does it mean BEM's "5 Things Bendites Should Do Now"?

Yes, that's a start. But it should be diversification within some rational bounds.

Realize that untrammeled growth into natural areas is shooting the Golden Goose. I don't see eye to eye with hbm on a variety of topics, but even I understand that mindless growth into places like the Metolius is pathological.

Realize that people come here to LEAVE THE URBANE. They are trying to ESCAPE. Making this place more like your favorite Frisco hood is just idiotic.

I guess there should be some rational guidelines, and hope that minds greater than mine can figure out what that means, and implement it. I can only say it IS NOT BEING DONE NOW.

But the primary objective should be to DIVERSIFY our economy to the extent that is achievable. Not only is this NOT BEING DONE NOW, all measure of force, time, money and effort is going into EXACTLY THE OPPOSITE.

Our local government is 100% made up of RE stool pigeons. Bought & paid for for 5 cents on the dollar. Doing all in their power to keep the gears of RE grinding along. Wiping out SDC's, building "affordable housing" and God knows what else.

This is why I said there is "nothing to be done" to save Bend. It is owned. And it'll be owned until the local RE interests are 100% wiped out. And that'll take decades.

Then, AND ONLY THEN, will Bend be ready for a rebirth. people will have had it with RE, even RE, and they will start to rebuild. When they do, unlike after the timber bust, they should NOT let one industry come to completely dominate this town. If they do, it'll simply happen again.

Diversify. It's the only free ride out there. And it is the key to Bend's future.

Geez! 9:00AM! Geez, this time change stuff is death. Time to look for the boobies....
I diversified into both jugs!

Sunday, March 1, 2009

Bend Bulletin Stops Publishing, Cessna Closes

With the release of January's unemployment figures, I think it's pretty safe to say we've reached the End of Days here in Bend.

It hasn't happened but a lot of things we're all accustomed to are going to go away. And Buster is pretty infamous for saying we're reverting to Olde Bend. But I think it's going to be worse than that.

Bubbles have a funny way of bursting. And the bursting doesn't seem to go according to anyone's plan.

I don't think we're going to have a local paper much longer. The economics aren't there.

So much of this place, the Bulletin included, survived, and thrived, due to RE. They were conjoined twins in an ever-escalating swell of leverage-fueled prosperity.

Now though, we're in The Great Unwind. The Big Deleveraging. The Big One.

We're in the most vicious down-spiral ever witnessed in our lifetimes, and still most people in Bend don't get it. There's still this enduring idea that We Are Near The Bottom, and things are going to turn around momentarily, thank you very much Dana Bratton.

But, of course, this is not true.

The RE/Bend media conjoined twin is on life support.
CACB, 3yrs

We only really have CACB to go from as a barometer of local financial health (OK, we have Prineville Bancorp PNVL, but it ain't exactly busting out either). And the patient is near death.

CACB officially went to penny stock status this week. 90 cents. Look at that chart, it's almost zero. Down 97% from it's peak.

Now the question isn't If it'll be shutdown, but When.

And if The Bully was a pubicly traded company, you would see something similar. A company on the verge of collapse.

Same with construction.

Same with local manufacturing. Manufacturing actually lost more jobs this past month in OR than construction.

The seemingly invulnerable combination of Bend media & the local RE juggernaut aren't just going to get slimmed down, they are dying. They will be dead in a year or so.

The whole infrastructure of this place -- the constant influx of people, the building, the new businesses... the whole freshness & zest & zeal, for lack of better terms -- is stopping.

We had 1 in 9 people unemployed in December. It's about to go to 1 in 8 for Jan. And in the month just gone, it promises to get even worse. And there's no end in sight.

Even the perma-optimist Obama, said that 2009 is going to get much worse before it gets better.

And I think it just hit me -- I think it was Tuesday -- that Bend is turning into Burns.

People do not go to Burns.

But Wait, you say. Homes will become cheap enough that people will want to stay here. Look at sales, they do seem to be bottoming out, as local RE-types have said. Right?

Homes are cheap in Burns.

The problem in Burns is Not cheap housing. It's no jobs. What jobs that are there, are low-wage, go-nowhere jobs. You cannot Build A Life in Burns.

There's something far more important than rock-bottom low prices to living somewhere: It's Building A Life.

It's doing something this year that makes you more than you were last year. It's making yourself a better person. It's seeing that you are piling up a skill set that is actually valuable out in The World. It's about some sort of legacy, a Life That Matters.

You can't build a life that matters in Burns.

And like a desert sandstorm can reclaim and consume an entire region, the desert is about to reclaim Bend.

Bend had been pushing out -- extending its prosperity oasis towards Burns, towards La Pine & Christmas Valley, towards Madras. The shoots of growth that started 30 years ago actually seemed like they had conquered the unconquerable. They had multiplied a thousand fold.

No more. The desert is pushing back and is going to reclaim this place.

I think a lot of people think (I was one of them): "Great! After prices fall far enough, I'm going to snatch up my own sweet-ass, rock-bottom foreclosure and just lord it over all my stupid friends who bought at bubble tops. Awesome!"

No. You might want to think about that. You might want to make a visit to Burns first.

Because I think I have a fairly prescient idea of what's going to happen here, in broad strokes.

The City will go broke.

Local paper will go broke.

Local banks will go broke.

Local restaurants will go broke.

Unemployment will reach Depression era levels.

This place will become a ghost town of The Walking Dead.

Like Burns. No life, no future, no human legacy, no nothing.

That just sort of hit me this past week. I'm starting to see quite a bit of empty parking, where it was once so full so constantly, it was really annoying sometimes.

They say downtown is filling up almost as fast as it is emptying out -- whatever that means -- but it is a losing battle. Downtown is emptying out nonetheless. Same thing all over town.

You can see The Walking Dead all around. It's 1 in 7 people here.

But at least Burns is functional; Burns has a grip on reality. Burns isn't pretending to be something it's not.

Burns has crappy shit-jobs, and crappy shit-houses. Both are at the ass-bottom of the money scale, whether paying or pricing.

Look at Bubble Bend: The whole West side is populated with vacant 3,500 sf McMansions. They were $850K. Now they're $550K. And of course, no one is buying.

No one gets it here. We have an Aspenesque housing market, that has just been plopped into a Burnsesque economy. Bend is so self-conflicted, so paradoxical, inconsistent and incongruous, it's mere existence is almost impossible.

What happens to a place that is Wall-To-Wall with mansions, where The Money seems to have taken on a will of it's own and fled, leaving confused and penniless humans behind?

Yes. It hit me this week.

Bank of the Cascades is going to be extinguished. And the dominoes will start falling in rapid succession after that.

The Bulletin will close. Cessna will close. Even the mighty St Charles may fall. The Old Mill will implode. Most of the restaurants, boutiques, art galleries, festivals, fairs, parades, schools, police stations, and local governments will simply fold.

That doesnt just mean "Cheap". That means Burns. That means No Life. That means Get Out As Soon As Possible.

See, people don't care about cheap, when their lifes work is in peril. Again, drive to Burns to witness the phenomenon for yourself.

I can buy a house today Cash in Burns. No going to though. My life is more important than getting a cheap house. If that's all I cared about, I'd be in Detroit right now.

A lot of people around here have been drinking the RE Kool Aid for so long that they can't imagine a life that doesn't revolve around RE, it's their lifeblood. It's pricing, the sales volume, the transacting, the ebb & flow of it, it's every movement, no matter how inconsequntial, is of riveting importance. Been like that for 30 years.

But in the end, this mindset will prove to be a phantom, fleeting.

Bend went from Safety to Self-actualization so forcefully & quickly, that it seemed like it was preordained. We are God's people, this is our fate to live life at it's pinnacle.

But actually this place is about existing at the Physiological level. It's at The Burns Level. It's in the red.

This is why I say Burns is Honest. Burns knows it sucks. Bend also sucks, but we think that we'll be OK, because we have surrounded ourselves with the edifices of Self Actualization, of that Shining Golden City on The Hill.

What happens in a place surrounded by the edifices of opulence after a monetary neutron bomb has gone off? What happens when you realize a place cannot ever sustain a Life Worth Living? What happens when you realize that Bend has essentially turned into Burns?

You leave. The desert reclaims it's own.