BendBubble2

BendBubble2 Now Redirects to BendBlogs.com

2010-01-01T09:16:00.000-08:00

When this page finishes loading, you will be redirected to bendblogs.com.

Thanks Bend & all others for a great 3 year run.

BB2 - Read Only

2009-12-19T15:04:00.001-08:00

NEWSFLASH:

Cascade Bancorp Announces Withdrawal Of Common Stock Offering
6:00pm EST

Cascade Bancorp announced that it has withdrawn its registration statement with respect to the public offering of $93 million of its common stock. The Company plans to continue to pursue capital raising opportunities once market conditions become more favorable. On October 29, 2009, the Company entered into securities purchase agreements with David F. Bolger (Mr. Bolger) and an affiliate of Lightyear Fund II, L.P. (Lightyear) for the purchase and sale of an aggregate of $65 million of shares of the Company's common stock. Mr. Bolger and Lightyear are permitted to terminate those securities purchase agreements on December 31, 2009. Lightyear and Mr. Bolger have indicated a willingness, under certain conditions, to amend these arrangements in order to provide the Company additional time to implement a capital raise.

Hi All...

Turned off comments, a little late. I'll take down the blog at years end. Also got an XML download of the blog, which clocked in at just over 80 megs. Not sure if that includes comments... seems like it should, at that size. Maybe try to upload it to a file storage site.

Rest assured, Bend is still #1!

Bend reports nation’s biggest home decline in Q3

December 18, 2009, 1:37PM

1. Bend reports nation’s biggest home decline in Q3:

Yes, prices are still falling the Bend. They tumbled 5.6 percent between the second and third quarter, the biggest decline in the country. Las Vegas was right behind Bend, down 5 percent. That’s according to the IHS Global Insight “House Prices in America” report out today. Much of the nation is starting to emerge from the depths of the housing recession. But the Northwest, late to the housing bubble, continues to be the last to see the price declines wash through. IHS still considers much of the Northwest to be overvalued. Of the top 20 overvalued markets, nine are in Oregon or Washington. The Portland-Vancouver market ranks worst in Oregon at No. 7. Corvallis is No. 9, Salem is No. 10 and Bend is No. 19. IHS says home prices nationally halted a two-year slide in the third quarter, rising .2 percent from the second quarter. California led the way with a 2.1 percent increase. Nationwide, the U.S. housing market is down 10.7 percent from the 2007 peak. Despite the upbeat news, IHS also warned of potential troubles ahead given the still high unemployment rate and the temporary boost the market got from the federal tax credit.

Bend Bubble 2 -- The Final Curtain

2009-11-22T08:00:00.000-08:00

Welp partners, it's been a hell of a ride.

A 3 year ride to be exact. As it started on Sunday December 17, 2006, so shall it end. This time for real.

Why? Well, I suppose in part for the same reason the original & kick-ass Bend Bubble Man shut his down: You just get caught up in other things. It's hard to keep up sometimes.

And I suppose I was much more interested in "Calling The Top", than cataloging the long, slow, agonizing demise. Face it, store closure after store closure, foreclosure after foreclosure, perp walk after perp walk, BK after BK, suicide after suicide... it can get monotonous & depressing.

But I suppose mainly it's because, to paraphrase a retarded asshole:

Mission Accomplished.

Yeah, The Bubble proper is over. We're not in a bubble anymore. Haven't been for awhile. We're in the deflationary phase. Well into it. And unfortunately for a lot of folks, it's not even close to over.

This thing will be an "L" shaped recovery, At Best. At Best.

"But, Bend is still one of the most overvalued RE markets in the country!", you say.

True. Especially true if by "overvalued" you mean "it has the farthest still to fall", because Bend is not even close to a "bottom".

And I can't help but keep quoting the word "bottom", because I see a painful and very long-lasting decline as the horizontal part of that "L" bottom. The sharp downdraft may be over... now the teeth-pulling life-sucking slow bleed-out begins. That's what I mean by "bottom". This thing is far from being over.

Just a quick review of where we've been:

So, as stated, we were here in Dec 2006. Gloom-and-dooming pretty well. Raising more hackles than awareness. Most of the comments have progressed with almost textbook precision over the past 3 years in parallel with the 5 Stages of Grief:

Denial
Anger
Bargaining
Depression
Acceptance

Woo... we took it hard in the Denial & Anger phase. There were some upset Realtors & Builders that this blog even existed.

Bargaining? "OK, fine... there is a slowdown, but we'll bounce back better than ever!" Costa, DuBois, and many other Kool-Aid addicts are still riding that horse.

We've hit Depression & Acceptance. Perhaps another reason to shut'er down...

I started this thing to raise awareness that something is severely wrong with the mindset of Bend. It went beyond the Bubble here, although it was almost certainly a root cause. Ironically, it was best stated by one of our best known RE cheerleaders, Mike Hollern:

Developer Mike Hollern blames the Doctrine of Bend Exceptionalism – the peculiar notion that Bend is so special that it’s immune to outside economic forces. “We were overwhelmed by the amount of money pouring in,” Hollern told Costa. “We thought that we were different from the rest of the country. It turned out that we are not so much [different].”

I talk about this pretty extensively in my Feb 29, 2009 post.

The Doctrine of Bend Exceptionalism

What a great term for something so widespread, so insidious, and so economically deadly to a place, that even it's main proponent could no longer deny it's lethality to his company, his town, his region, his World.

The Doctrine of Bend Exceptionalism encapsulates So Much of what is wrong with this country. We have been convinced, All Of Us, that We Are Owed More. Always More. More. More. More. Never Less. No Matter What. No Matter The Cost. We are God's Chosen Flock. We have a Date With Destiny. We Are Rightful Heirs To A Kingdom. Nothing is to good for us.

1 house? Pathetic. I have 2.

2? I have 3, and I've never been to 1 of them.

3? What a loser, I have 5, none are rented out, and I only make $22K/yr!

And so it goes.

Our problem is not so much economic, as it is pathological. I know people don't like to hear that, even on this blog, because it goes after everyone, it is not analytical and it's fatalistic in a way.

But it's true. We've got an extreme case of Cultural Hedonism. We're a nation of Narcissists.

We've learned that All Our Whims (not "Needs") Should Be Satisfied. No Matter What. Now.

"What the fuck does this really have to do with the housing bubble?", you ask.

Hmmmm... let's see.

It's still going on in case you're interested. The above one-upping and keeping up with the Jonese, was the Consumer Side.

But we're starting to find that the Producer Side was at least as Greedy, Corrupt and Criminal. Think it's just Tami Sawyer, or 1031 Assfuckers? Think again:

13 indicted in Bend real estate case
By Jeff Manning, The Oregonian

In the largest fraud case so far to arise out of Oregon's real estate boom and bust, a federal grand jury on Friday indicted 13 people on a variety of bank fraud and conspiracy charges stemming from the 2008 collapse of a Bend real estate development company.

The grand jury indicted Desert Sun Development founder Tyler Fitzsimons and several of his former employees as well as two mortgage brokers, former loan officers with West Coast Bank and Umpqua Bank, and others.

Banks loaned about $41 million to Desert Sun or its employees through a series of falsified loan applications and ultimately lost $19 million on those loans, prosecutors allege.

The Oregonian first broke the story of the problems at Desert Sun in May 2008. The grand jury charged Fitzsimons, a 31-year-old Prineville native, with multiple counts of bank fraud, conspiracy to commit bank fraud, money laundering and making false statements to banks. Also charged were three other former executives of the now defunct company, Jeremy Kendall, Shannon Egeland and Garret Towne. "The conduct alleged in these indictments is typical of what has caused so much havoc in the mortgage and financial sectors," said Kent Robinson, acting U.S.Attorney in Portland.

Fitzsimons, Egeland and Towne declined comment. Kendall and the numerous other defendants could not be reached.

Desert Sun, a developer of both residential and commercial real estate projects, embodied the land-rush mentality that arose during the economic boom.

Desert Sun offered to build at cost new homes for its employees and certain friends and family. In return, the company said it wanted to split profits 50-50 with the owner should they choose to sell their homes.

In central Oregon's red hot housing market, it seemed like a sure moneymaker. More than 30 people signed up. Financial institutions like Columbia River Bank, the now-defunct Community First Bank, West Coast Bank and U.S. Bancorp eagerly participated, lending $16 million to participants.

Desert Sun clerks and construction workers making $20,000 a year soon found themselves on the hook for mortgages of up to $400,000. According to the indictment, Desert Sun executives helped falsify loan applications, forged employees' names and put thousands of dollars into the workers' individual bank accounts to make them seem more credit-worthy than they actually were.

Desert Sun got the construction loan proceeds. But it never built many of the promised homes. Some participants found themselves owing hundreds of thousands of dollars with nothing but a vacant lot to show for it. In addition to the Desert Sun employees, the grand jury indicted Bend resident Jeffrey Sprague, 46, who was a loan officer with West Coast Bank. He and Barbara Hotchkiss, a loan processor who worked with him, were charged with bank fraud for allegedly helping prepare and submit false loan applications.

Also charged were two Bend mortgage brokers, Shaun Little, 41, and Del Barber Jr., 44, for allegedly participating in the scheme.

Barber has already been banned from the mortgage business by state regulators for unrelated violations. Prosecutors appear to be sending a strong signal with these indictments that they intend to crack down hard on even relatively minor transgressions.

Among the indicted was Terri Ausbrooks of Bend, who was among the victims of the Desert Sun home loan program. She found herself more than $300,000 in debt for a house that Desert Sun never built.

Yet, the grand jury charged Ausbrooks with bank fraud for overstating her income and not listing a debt she owed to Fitzsimons in her loan application.

Inflated loan applications abounded during the real estate boom. The biggest, most respected banks in the industry began to accept "stated income" loans, sometimes called "liar loans" because they allowed the borrowers to list whatever earnings they saw fit.

Apart from the home ownership program, prosecutors also leveled additional charges against Fitzsimons, Egeland and Kendall for allegedly defrauding a number of banks in a series of commercial construction loans.

Prosecutors allege that Desert Sun repeatedly secured construction loan draws from a number of different banks based on phony construction progress reports. Without the falsified reports, the banks wouldn't have released the money.

Robert Brink, 58, then a loan officer at Umpqua Bank, allegedly helped Fitzsimons pull off the scheme. The grand jury charged Brink with making false statements to the bank, alleging on five different occasions Brink filed bogus construction inspection reports with the bank.

"The economic hit that a community like Bend takes in a case like this one is very real," said Arthur Balizan, special agent in charge of the FBI in Oregon, which helped investigate the case along with the IRS and the Oregon Division of Finance and Corporate Securities.

"When a development company collapses under the pressure of fraud – as alleged in this case –we are left with millions of dollars in losses, empty lots and abandoned buildings. Everyone loses."

And there is just so much more of this to come. Remember the local piece where an appraiser basically stated that he stopped getting hired because he would not produce fraudulent appraisals at the BEHEST OF LOCAL RE BROKERS?

Yeah, when you HAVE TO commit fraud to survive in your business, you know that you & your industry are well & truly FUCKED. RE in Bend is STILL 100% FUCKED.

But not Garden Variety Fucked.

Fucked Long & Hard for the rest of our lives.

And it is due to the people, mortgage & RE brokers, appraisers, The Fucking Media, CACB, COBA, and every other cheerleading fraudster that made a buck from this disaster.

Let me inject another Bully story that has just come up this morning:

Homes for auction, buyer be prepared
It’s been a busy year on the Deschutes County Courthouse steps, where foreclosure auctions are conducted. Few auctions end in a sale, but every once in a while, a fantastic deal comes along. Of course, you need to have the money on you.

By Andrew Moore / The Bulletin

Before the housing bubble, Paul Helikson, a Bend-based process server, would conduct foreclosure auctions on the Deschutes County Courthouse steps every Friday at 1 p.m. On a busy day, there might be five auctions.

Now, Helikson conducts foreclosure auctions every day at 10 a.m., 11 a.m. and 1 p.m., with an average of 20 homes on the block each day.

With more than 3,100 notices of default — a filing that initiates foreclosure proceedings — recorded in Deschutes County so far this year, Helikson is busy. By comparison, there were 221 notices of default filed in 2006.

But where there’s crisis, there’s opportunity. Usually gathered on the courthouse steps along with Helikson are a small band of investors ready to scoop up properties for cents on the dollar.

They have to pay cash on the spot if they win. They also have to do their research, as a home sold at auction is sold as is, meaning broken pipes, missing appliances and even tax liens are their headaches if they submit the winning bid.

“Caveat emptor fully applies to all the auctions we do, and I think that’s the biggest thing,” Helikson said.

Helikson estimates only 3 percent of the auctions he conducts end with a sale, with the remainder either postponed or concluded without a buyer, meaning the property is turned over to the borrower’s lender.

Occasionally, however, a gem — a home in a good neighborhood or priced far below market value — goes under the gavel.

“There are (incredible deals), said Gene Norton, a Bend investor who’s been attending auctions for the last three months. “But you have to do your research ... it’s a pretty interesting scenario.”

Foreclosure process

Generally, a notice of default is filed against a borrower by the lender’s trustee after the borrower is 90 days delinquent on his or her loan, said Tami MacLeod, an attorney with Karnopp Petersen in Bend who specializes in foreclosures.

The notice must be sent to the borrower via certified mail as well as physically served to the property. On occasions when the home is vacant, the notice is posted on the property after the third attempt. The notice also must run once a week for four weeks in a local general circulation newspaper.

In addition to notifying the borrower that his or her loan is delinquent, the notice also lists a time, date and location for a sale of the property by auction if the loan is not brought current.

By law, the trustee must wait 120 days from the date the borrower is notified to conduct the sale. Therefore, the sale is set roughly 150 days in advance of the filing date, in case there are delays in notifying the borrower, MacLeod said.

During those 150 days, borrowers can attempt to remedy their default by bringing the loan current, either by catching up their payments or by working out a loan modification with their lender. A borrower also can sell the home to satisfy the default.

In cases where the likely sale amount is less than the loan amount — which has become common in the last two years due to the steep depreciation of home values — the borrower also can work out what’s called a short sale with the lender, whereby the lender agrees to forgive the amount of the loan not satisfied by the sale.

In years past, such forgiveness was treated as income by the Internal Revenue Service, but the rule was relaxed by Congress in 2007 and applies through 2012.

If there is no remedy for the loan in default, the home or property goes to auction.

Auction process

Before the auction, the trustee, in consultation with the lender, sets a minimum bid, according to Helikson, who is hired by trustee companies to conduct their auctions. The amount is either posted a few days before the auction or, in some cases, is phoned in to Helikson minutes before the auction.

Most trustee companies have Web sites where they list foreclosure auction properties and their minimum bids. A prominent site is www.usa-foreclosure.com.

Generally, the minimum bid is the amount of the outstanding loan plus any interest, late fees, lien amounts or costs the trustee accrues arranging the auction. By law, banks can’t ask for more than that, MacLeod said.

However, Ryan Strasshofer, a principal with Gorilla Capital, a Eugene-based company that buys homes at foreclosure auctions in Deschutes County and 14 other counties in Oregon, said more lenders are discounting their minimum bids to entice buyers.

“(Banks) are essentially trying to recoup as much money as they can and are using trustee sales more than ever before to get rid of these properties,” Strasshofer said. “They are maxed out on inventory and would rather take $50,000 at auction than spend $20,000 to clean (a house) up and list it to make $60,000.”

Strasshofer said his company, which also operates in Idaho and Arizona, has purchased homes at auction for as little as 30 cents on the dollar.

“The fact is that with most notes out there, the note is worth more than the value of the property,” Strasshofer said.

MacLeod confirmed that she’s noticed more banks lowering their minimum bid to less than what they’re owed on the mortgage.

“I saw one where the (minimum) bid was $100,000 less than what was owed,” she said.

Walter Molony, a spokesman with the National Association of Realtors, said the foreclosure auction market nationwide remains small, comprising only 1 percent of sales volume, he said.

While foreclosure auction prices may sound appealing to some, MacLeod warns anyone interested in purchasing a home in a foreclosure auction to research the property as much as possible. This can be difficult considering it’s impossible to authorize an appraisal without the owner’s permission.

“Bidders on the steps need to be careful about it (because) these are not your typical sales,” she said. “Odds are you have never set foot inside the house, have no idea what condition it’s going to be in ... and it’s not uncommon for people to strip their houses (before they leave), so it’s a buyer-beware situation.”

Said Strasshofer, “We put a lot of time into research.”

Reading the scripts

Helikson said a common misconception among people new to the process is that bidding starts at zero, which is never the case.

When the hour of the auction begins, Helikson begins reading the “scripts,” as he calls them, the legal documents that announce the sale, identify the property and spell out the terms, mainly that a successful bidder has to pay in cash and is purchasing the property with no guarantees.

Helikson speeds through these, having nearly memorized them in the 20 years he has conducted foreclosure auctions.

The “script” also calls for any interested bidders to pre-qualify for an auction. In other words, bidders must prove to Helikson they have the money on their person and can turn it over immediately after the sale is concluded. Only cash or cashier’s checks are accepted.

“Most people know what the (minimum) bid will be and come with that plus a buck,” MacLeod said.

But sometimes, knowing how much cash to bring can be a quandary for bidders if the minimum bid is not made known until minutes before the auction or if they suspect a bidding war might break out.

In such cases, bidders usually bring a cashier’s check for what they guess will be the minimum bid amount as well as cashier’s checks in smaller increments that they can add on.

Helikson doesn’t make change, so any amount submitted over the winning bid is returned when the title is transferred, which must occur within 10 days of the sale, MacLeod said.

As Helikson works his way through his auction scripts, a familiar refrain is, “Going once, going twice, going three times, going back to beneficiary,” meaning the property has not sold and becomes the property of the lender.

Another familiar refrain is the announcement of a postponement. Banks often postpone auctions because they are still sorting through a short-sale offer or some other contingency, MacLeod said.

But banks can’t postpone an auction forever. If they have not conducted an auction within 180 days of the auction sale date listed on the default notice, they are required to rescind the notice and start the whole process over, MacLeod said.

If a home isn’t sold at auction, the lender takes ownership.

Tom Unger, a Portland-based spokesman with Wells Fargo Bank, said the bank tries to list a property after the auction “as soon as possible.” Unger said some homes are easier to list than others depending on what sort of cleanup needs to be performed, but the goal is to get houses listed with a local real estate brokerage quickly.

Molony, with the National Association of Realtors, pegs the number of bank-owned properties currently sold nationwide at 20 percent of all properties.

Sheree MacRitchie, a Bend Realtor who will assume the presidency of the Central Oregon Association of Realtors in 2010, said the number in Bend is roughly 35 percent.

Foreclosure impact

Helikson, whose company also serves notices of default to borrowers, estimates half of the notices he serves are on vacant homes, indicating to him they were either purchased by investors or homeowners who have walked away from their home.

Of the remaining half, 25 percent are served to owners still in their homes and the other 25 percent on renters living in a home that is being foreclosed on.

There have been lots of investors who have defaulted on homes, said Helikson. He can tell because he’ll recognize the same name on different properties. Some names he’s read 10 or 15 times, he said.

He said he doesn’t feel sorry for them, but he does feel for the families that have lost their homes.

On occasion, homeowners will come to their home’s auction to witness the event but generally do so quietly, Helikson said.

“They’re wanting closure, or want to know how long they have to move out, but typically people aren’t too mad because the process has been drawn out so long,” Helikson said.

The flip side, he notes, is all the homes that go through foreclosure re-enter the market at prices that are more affordable, which helps the community in the long run.

“First-time homebuyers are doing very well in this market,” Helikson said.

The median price of a single-family home in Bend rose in October to $220,000 on sales of 175 homes, the most in any month since August 2006, according to the Bratton Report, a monthly real estate sales analysis released by the Bend-based Bratton Appraisal Group.

Median prices for single-family homes in Bend have twice dipped below $200,000 in the last six months. At the market’s peak in May 2007, the median price was $396,000.

The collapse of the housing bubble also has helped Helikson’s company, Tri-County Legal Process Services. It has doubled in size the last two years, from approximately six employees to 12. Helikson estimates he conducts 75 percent of the county’s foreclosure auctions.

Another company that conducts foreclosure auctions in Deschutes County is Central Oregon Legal Services.

MacLeod’s firm, Karnopp Petersen, also conducts some foreclosure auctions for Bank of the Cascades.

Strasshofer said Gorilla Capital is the state’s largest buyer of homes from foreclosure auctions. While the company is profit-driven — its goal is to resell properties within 30 days after purchasing them at auction with a markup of as little as 10 percent of the purchase price — the company helps communities by quickly converting foreclosures into occupied homes, he said.

Gorilla, whose business model is dependent on volume, often resells its homes to buyers who have secured traditional financing, which includes many first-time homebuyers, Strasshofer said.

“We’re getting these things cleaned up and back on the market,” he said.

For investors like Norton, homes purchased at a foreclosure auction can be lucrative as rental properties. That’s because most of the rent is positive cash flow since there’s no underlying mortgage to service after buying the home with cash. Also, because of the discounted purchase price, the homes have a better chance to be sold at a profit as the market rebounds and home prices increase, Norton said.

“You have opportunities for short-term gains and long-term gains,” he said. “You make a little bit of money while waiting to make larger sums of money later, and that might take eight to 10 years, so you have to be prepared, (but) I’m a very conservative investor. The best deals may still be down the road.”

Nationally, more than 14 percent of homeowners were behind on their mortgage payments or in foreclosure in the third quarter, the Mortgage Bankers Association reported Thursday, indicating many more foreclosed homes could yet hit the market.

In Deschutes County, the pace of notices of default filings appears to be slackening, though it’s not yet a trend. There were 310 notices of default filed in September, 261 in October and 180 through Nov. 19.

With unemployment figures still high and affecting a broad group of homeowners beyond those who took out risky loans, Helikson looks to remain busy for a while.

“The thing that sticks out the most is a year and a half ago, it was usually lower-end homes (at auction) and now it’s homes over the whole spectrum,” Helikson said. “There’s not a community that hasn’t been affected by this, from million-dollar homes to $100,000 homes to business complexes to apartment complexes. The whole spectrum is being foreclosed on.”

The Doctrine of Bend Exceptionalism. Look what it's got us. 20 homes a day getting foreclosed. Don't buy the bullshit that Bend isn't shrinking. It is. BIG TIME.

Bend Exceptionalism: We're Always Right. Doing what we're doing CANNOT be wrong, because we are God's Chosen People. So this isn't STEALING or FRAUD or MONEY LAUNDERING. No. I'm Tami Sawyer (YOUR NAME HERE), so this is OK.

Our Exceptionalism validates, buttresses, and finally supports our LIES & OUR CRIMES.

Guaran-fucking-tee you that Tami Sawyer, Sun Development, Epic Air, and 1031 Butt-Fuckers (and a hell of a lot I'm not including) ALL thought they were doing nothing wrong. Maybe that changed a little when the FBI came calling.

Narcissism. Exceptionalism. Egoism. Hubris. Belief that we are better than anyone else, we deserve the best of everything, NOW, and no cost is too high to get it.

That was how this bubble got started by both consumers (RE buyers) and producers (fee earning intermediaries). It is also the philiosophy fueling the Current Bubble... which I will try to talk about later.

I tended to never broach this Narcissism subject, because it struck many as WRONG for this blog. Maybe they're right. It's a really amorphous term with no really strong direct link to the creation of the RE-Asset Bubble in this country.

But it is my belief that it is the CORNERSTONE of the creation of the bubble. And it's CULTURAL. It's become PART OF THIS COUNTRY'S ETHOS.

Which makes me think we have more Bubbles to face in the future.

I wanted to divert next into something that I call The 1% Business Plan.

Bend is The Home of The 1% Business Plan. What is it?

Well, you know that if you are starting a business, you map out your idea, the finances, and all the niggly details about what you think will happen, right?

And there are always the "unknowns". How much demand, the costs of items, the ups, the downs, various projections, and all that. Pretty standard.

But most places plan for something like, say a 20-25% downturn as their "PESSIMISTIC" scenario. A real ball breaker.

Conversely, they plan for similar sized (maybe slightly more... these are business people, they're supposed to be optimistic) upside, say 25-30%.

This is Everywhere Else.

Not Bend.

No. In Bend the Pessimistic Scenario is PLUS 20% EVERY YEAR FOREVER. That's the DOWN SIDE.

The upside starts at 40% a year, and typically goes up from there.

Yes. In Bend, +20% is the new DOWN. Even when things are falling apart.

Maybe this concept is best explained by... surprise... a Bully article!

Over next 10 years, Central Oregon expected to see strong job growth
Economists say it will be fastest rate in the state

State economists estimate that 11,000 new jobs will spring up in Central Oregon by 2018, while the state as a whole will see an increase of about 163,000 total jobs.

Job growth in Central Oregon’s three counties — Deschutes, Jefferson and Crook — is expected to rise the fastest in the state, increasing from 2008 staffing numbers by 14 percent, to 92,340 jobs. That’s compared with statewide growth estimated at about 9 percent.

“Over the last 10 years, Central Oregon has grown tons faster than the state,” said Carolyn Eagan, Central Oregon’s regional economist, who helped compile the projections for the region. “There was nothing to me that would indicate that wouldn’t happen after the recession.”

The region could use some of those jobs today. The three counties suffer from some of the state’s highest unemployment. In September, the latest data available on a county level, seasonably adjusted unemployment rates were 15.9 percent, 15.9 percent and 19.7 percent in Deschutes, Jefferson and Crook counties, respectively.

The state, in its job growth projections, didn’t say when those jobs could be expected to start showing up — only how many are expected to be added, in total, over the years leading to 2018. But state economist Tom Potiowsky, in a speech last week in Bend, said he didn’t expect any job growth to occur until, at earliest, 2011 or 2012.

According to Tuesday’s Oregon Employment Department estimates, the education and health services industry is projected to grow the most in the three counties: by more than 2,900 positions, or a 29 percent increase, to nearly 13,000 total jobs. Both the professional and business services industry, and the food and beverage industry should grow by about 18 percent.

Construction will likely continue to lag behind other industries, growing at only 1 percent. Eagan said that construction statewide was at an unsustainable level before the recession, adding that it’s unclear whether the state will reach those levels again.

The projections — used to track job openings, the size of industries and the fastest-growing industries — are released every two years. This most recent projection uses 2008 employment levels as a starting point.

State economists make projections based on factors such as input from the industries and staffing patterns they observe, Eagan said. The projections track jobs in nearly a dozen general industries: everything from manufacturing to leisure and hospitality to government services.

These forecasts can vary, depending on the stability of the economy, Eagan said. When economists made projections based on 2006 staffing levels, they estimated Central Oregon would have about 100,000 jobs in 2016, she said. After the 2008 job losses, the area is now expected to staff about 92,000 positions by 2018.

Besides the creation of new jobs, the state also expects 21,112 positions to open up because people will either retire or move to a different line of work.

Only one industry, information, is expected to decline by 2018. Most others, such as manufacturing, government, leisure and hospitality, and trade, transportation and utilities are expected to grow by between 9 and 14 percent.

During 2008, 4,113 people who worked in construction filed for unemployment insurance, more than any other industry. More than 3,200 people from the manufacturing industry and 1,800 people from retail trade filed for benefits.

U.S. Sen. Jeff Merkley, D-Ore., co-sponsored legislation Tuesday to reauthorize the Economic Development Administration, an agency that aims to promote economic development in communities whose unemployment rate for the past two years is at least 1 percent higher than the national average or whose per capita income is 80 percent or less than that of the national average, according to a news release from Merkley’s office. The Economic Development Administration has created an estimated 392,000 jobs nationwide since its last authorization, according to the release, and has funded 11 projects in Oregon, totaling $10.58 million, since 2007.

Note that the SLOPE OF BEND GROWTH was NOT ALTERED ONE IOTA.

No. Growth, my friend, is STILL HERE. Despite the fact that... there... is... no... growth.

No, what we'll do is simply slide the Still Ridiculously Optimistic Growth Projections down just a bit on the Y-axis. So.... instead of 100K, we're down to 92K. But for the love of Christ, MAKE SURE WE STILL HAVE GROWTH!

This is The Bend Way. Always Exceptional.

This is why The Most Pessimistic Plans are for PLUS 20%. That's The Worst that could happen. The upside is UNBOUNDED really.

Hence, The 1% Business Plan. Bend is The Home of Unbounded Business Failures, because a smaller & smaller number of entrepreneurs are actually even remotely close to the True Crux of Bend Growth... which is honing in on MINUS 20%.

This brings me to another idea:

Too Big To.... EXIST.

We've heard a lot now about the astronomical costs of saving firms that are "Too Big Too Fail". These costs will ultimately bankrupt this country, but that's another blog...

But I don't hear much about what seems to be the Inevitable Conclusion to this idea: Too Big To Exist.

How do we "cure" Too Big To Fail? Well, it seems the only Sure Way is to not let it happen in the first place.

But, doesn't that mean some sort of Quasi-Socialism? Some sort of "invisible" government hand moderating, or flat out quashing success, and possibly nurturing failure, if for no other reason than to serve as a dampener to a firm that may be endangering our "National Stability" because of it's size & importance?

Have we actually reached the Limits of Capitalism?

I find this to be a fairly facinating question. It is strating to seem like that "Cowboy Capitalism" (fairly unregulated) seems to breed "concentration" of wealth, assets, and opportunity.

This flies in the face of the "democratization" of opportunity that it seemed the internet would make all but inevitable, only a few years back. I was utterly convinced of this in 2000.

I thought The Big would get smaller. Much smaller. Competition would come out of the woodwork. Regulation would be like trying to herd a swarm of bees. The elephants would fall.

Wrong.

Bank deposit concentration has increased enormously over the past 2 decades.

Increased Concentration in Banking: Megabanks and Their Implications for Deposit Insurance

During the past two decades, the U.S. banking industry has experienced an unprecedented wave of consolidation, marked by a substantial decline in the number of insured depository institutions and the emergence of banking behemoths with assets totaling in the hundreds of billions of dollars. This unparalleled concentration of assets and deposits among a handful of megabanks has important implications for deposit insurance. Most importantly, the Federal Deposit Insurance Corporation (FDIC) now faces a situation in which the failure of even a single megabank could overwhelm the resources immediately available to the deposit insurance system and expose both the banking industry and the government (i.e., taxpayers) to huge potential liabilities. This article highlights the current structure of the banking industry, examines the threat that this structure poses to the deposit insurance funds, and suggests possible approaches for dealing with megabanks and the increasing concentration of insured deposits.

And banking is just one industry in which this has happened.

Virtually the entire chain of financial services has been joined into one huge inter-linked system in which all the participants either sink or swim.

Is this Too Big To Exist? Or is it that the inexorable binding linkages of successful firms are flawed, and the entire system is bound to implode & destroy itself?

I don't know honestly. It does seem inevitable that Like Everything Else, the FDIC will ultimately fail & have to be bailed out to save its industry. They will try to extort premiums from members, which will weaken their insureds balance sheets, which will increase failures, resulting in a vicous Drag-Me-To-Hell scenario of failure & bailout.

I just know there is something Deliciously Ironic in the idea that all the Too Big To Fail firms will at some point be subjected to a Too Big To Exist philosophy that will shape up over the next coming years in our beloved government.

This will alter the very idea of Capitalism in this Country. Many firms are too big to exist. Perhaps it's true of everything.

I wanted to mention something briefly that just irks me....

What's Been Destroyed In Bend By The Bubble

A lot has changed since the inception of this blog in this town. Increasing prices seems to do funny things to people.

Things that are "OK" at one price point, are torn down at another. Prosperity has a price. Especially if you are in the way of a Tear Down.

Increasing prices for homes in Bend accomplished much of what Bend's Monied Gentry truly wanted to happen in the first place: Apartments, low-income housing, and vast swaths of trailer parks were either converted to high-priced condos, or bulldozed altogether.

A similar fate awaited much of Bend's undeveloped land on the fringe of the City.

We've popularized (I like to think) the term STD, or Siberian Tract Development.

This is typically an amalgam of dense-development, low-to-no quality slave-labor huts that are best suited to cooking meth, growing Mary Jane, and finally blowing up in a fireball of decapitated Maxicans, tiara's, satin proms dresses, and fucking 75 kids and infants.

And worse still, the 1977 Mercury Grand Marquis Station Wagon in the garage cannot house the survivors.

Sure, this sounds like standard issue shit for Madras (and La Pine) for the last 50 years, but the immense fields of STD shit shacks populating the East side (mostly) have made this a common occurence in our own beloved Bend.

This is a real monkey in the wrench for people like Costa who are summarily thrashing the Exceptionalism Doctrine for all it's worth.

But worse, is that after all the Meth-Cooking-Mexicans have burned these shitholes to the ground in what is really a public service... we are stuck with these ass-end of the World shithole homes that I wouldn't let a maggot live in... on postage stamp lots.

Ummmm... didn't we all COME HERE for The Scenery?

Didn't we all come here to Breathe The Air In The Wide Open Spaces?

Didn't we come here so that when we look out our window, we DO NOT SEE INTO OUR NEXT DOOR NEIGHBORS KITCHEN, GAT DAMN IT!

I mean, WHAT THE FUCK.

This is just another reason this fucking Bubble PISSES ME OFF.

This place has been CUT UP into ANT-SIZED plots of dirt, NEVER TO BE UNDONE, in an attempt to profit as much as is humanly possible from what is now an asset that only a FUCKING PSYCHOPATH would want -- a house. But not just a house, a house that is practically INSIDE the fucking house next door.

Fuck you fucking builders, and the Bend City Councilor SELL OUT MOTHERFUCKERS for doing this. There is no UNDO button for this. These shitholes will act as a blight FOR DECADES on this town.

You greedy fucks have cut up "paradise" (that's 1 STD above the mean), and made it a checkerboard of shit. The entire East side of Bend is going to morph into a decrepit pile of crap. Also happening to SW Bend, and (HORROR OF HORRORS), some sections of West Bend (yes, I put Tetherow in that bucket).

The pathetic afterbirth of Measure 37, and it's bastard bitch, Measure 49, can only serve to make this worse in EVERY WAY.

Of course, the Bully has given us a steady stream of GREEDY-ASS-CUNT-MOTHERFUCKERS who want to, INCREDIBLY, build trailers, air-drop rusted out Chevy Citations, and God Knows What The Fuck Else onto their pristine, undivided, and dare I say, picturesque farm land, and replace it with something NO ONE FUCKING WANTS ANYMORE.

Of course, the Bully portrays these people as VICTIMS:

Awaiting decisions in a land use limbo
One of the goals of Measure 49 was to streamline development claims made under Measure 37. With a key deadline looming, though, the law's meaning is still debated, and families like the Bolkens are increasingly frustrated.

But they could not sell the old house to their 41-year-old son because a zoning change on their land in 1979 prevented them from dividing the property. “By selling the one lot to our son, that would clear all our debts,” Olaf Bolken said. Instead, Torfinn Bolken chips in to help pay the mortgage, and Olaf said he has to count the payments as rental income.

Oh man. What a fuckin' load.

Poor fucking OLAF can't anally fuck the US Tax Code for all it's worth, so the Poor Fucker has to hold onto his PRISTINE FARM LAND BOUGHT FOR NEXT TO NOTHING, instead of subdivide it like a Narcissistic Greedy Fucking Douche, thereby increasing his own net worth by 50 FUCKING CENTS while wrecking everything around him.

Yeah, I feel REAL BAD for Olaf.

If Costa had his way, EVERYONE WOULD BE AN OLAF, and Cent OR would be a tax-evasion PARADISE.

But... yeah, that's right. This fucking place would be, instead of an outdoor paradise, a checkboard shithole of trailers, medieval-slingshotted motherfucking rusted out GMC Gremlins, hurled into low-Earth orbit and abandoned whereever OLAF-FUELED FUCKSTICKS have cut up their pastures for Meck-mobbed insanity. FUCKERS.

Costa, do you REALLY want to allow any dumbass hick douche to cut up their land, and house half of fucking GUATAMALA on thier dirt farm?

THINK, MC FLY. THINK.

Our fucking free public lands (Drake Park, the River, Taco Salsa, aka "Meth-N-More", and our forests) are already overrrun with the 3 worst demographic groups on this planet: Motherfucking lazy-ass meth-cooking Mexicans, Murderous Bums, and 800 lb White Trash Single Mothers. To date, we've contained this cancerous scourge to where it should be:

Deschutes River Woods.

But these little nipper fucks are devious, and all they need is 50 sq ft, and fucking 2,000,000 mexicans will invade & be living right next to Legitimate White People.

Think about it Costa, you brain-dead motherfucker.

Again, Narcissim, Greed, Obsession With Self. That's ALL this is. Fuck you, as long as I get mine. Not a brain cell anywhere concerned with the after-effects. Who cares what the costs are. Just GIMME. Now!

I can live with the RUDE SUV DRIVING CALI-BANGER ASSHOLES.

But we're all going to destroy this place we love, one subdiv at a time. And that shit cannot be undone, driven out, or fucking exterminated. We're going to have to live with that for a long damn time.

I guess I couldn't possibly go out without at least mentioning the Mother Of All Boondoggles, JUNIPER RIDGE.

In a piece that can only be filed under "I Guess You Never Know", The Incredible Hulce has allowed a piece titled "General Custer & Juniper Ridge" to somehow slip by her martini-addled editorial radar.

While it is far past time for the City of Bend to acknowledge that Juniper Ridge (JR) has failed to meet even minimal objectives in seven years, they are more likely to pursue "business as usual" because only taxpayer money is at stake. The purpose of this editorial is to explain in clear and simple business terms why everything associated with JR that could possibly go awry did go wrong, and why Juniper Ridge is now a tainted brand just like Ford's Edsel of decades ago.

Holy Fucking Crap!

Yes, this is in the current Cascade Business Buttfucker. Incredible.

Author Scott Siewert goes into a play-by-play of the utter failure that is Juniper Ridge.

And I can only assume that "Scott Siewert" is a pseudonym for someone I can't quite put my finger on right now....

Siewert goes on to just tear JR a new corn chute, and predicts it's complete demise only after, of course, swallowing as much money as Drew Bledsoe swallows donkey cum. That's a lot of fucking money.

Read the piece. Yes, throw The Incredible Hulce a fucking bone, and read her useless rag. This one article is actually a no-holds-barred look at the only place ON EARTH where a City deluded by it's own munificience manages to turn a$1 piece of shit volcano rock strewn Superfund shithole tract of 1,500 acres, into a sure-thing CITY of BEND BANKRUPTCY.

Believe it. Only in Bend. Nowhere else on EARTH are the elected officials STUPID ENOUGH to somehow turn an enormous FREE FINANCIAL ASSET (at bubbles peak, at least) into a complete City-wide bankruptcy in less time, than Bend Oregon.

Thank you, you selfish dumbfuck City Councilors.

What's the difference between a SELFISH fucker and a STUPID fucker?

Nothing. That little dicotomy is what will bring down this country.

Now, just a little summary of where we are & where we might go in the financial markets.

Well first, on the macro-scale, my super-duper, never-fail prediction for the stock market is.... {drumroll!}

meh

I mean, we're not extremely over or under valued from a L/T perspective.

DJIA, 80 year chart.

We're still in the dead middle of that trend line. Fair Value just floated above 10K for the first time ever 2-3 weeks ago.

If this were a "normal" economy, maybe there'd be reason to be at least hopeful.

But I have a sneaking suspicion that the damage from the Bubble imploding, and possibly the even worse side-effects of trying to AVOID ANY PAIN AT ALL COSTS, NO MATTER HOW HIGH under the Obama-Jeebus, will actualy make the current "fair value" a pipe dream in a scant few years.

I actually think we'll be re-visiting the lower band of that trend line before all is said & done.

That's why I am out of stocks for the foreseeable future. No IRA money, no taxable money. Nut'n.

Stocks aren't quite in a bubble, but they are much like RE: Stuck ina temporary holding pattern on a long, slow bleedout to horribly low levels.

So why the "meh"?

Well, at some point, in the far distant future, you actually will be able to make money in US stocks again. Not today, mind you. Not tomorrow. But someday. And when we break through to the horrible depths only touched briefly on a statistical basis way back in 1982, it will be one hell of a ride up. To...ohhhh.... I'd say a triple off the low, over the course of 10 years.

So 12K on the DJIA in 2025.

So don't buy stocks now. Or RE.

But there's an even Bigger Bubble out there.

US Government debt. This is the Ponzi scheme that is making MADOFF look like a piker.

It's really remarkable in it's simplicity. And it's evil.

See, you & me, are going to be sheered by the US Gov't over the coming decades. Our taxes are going to go apeshit. That's because today, our government is borrowing trillions to effect the largest Corporate Welfare Program the World has ever seen, or will ever see in the current living generations lifetime.

They are borrowing the money from our kids, loaning it to corporations, and requiring them to buy T-bonds, which pay interest via taxes.

It is incredible. The amount being transferred is staggering. It's trillions.

This is why in the midst of the most dire, job-crushing recession in 100 years, stocks are headed up. They are making billions on this Ponzi scheme.

But much like the FRAUD-U-NET RE Bubble, at some point even this Government-sponsored fraud must collapse on itself.

And there are 2 outcomes: We pay or we start shooting.

There is a hell of a good chance that we will go to war (and LOSE) over this currently collapsing RE Bubble. Yes. People will die because of this.

From the smallest scale (Tami Sawyer), to the largest (China has nukes), people want to get their money. And when you steal a few hundred grand, you just get a little alone time in the slammer.

But when TRILLIONS are on the line, the slants get their guns. And nukes.

You watch.

The US bond market will be the trigger for our next war. Watch for it to implode, that's the signal that you need to "Get Your Ass To Mars".

And with its collapse will come the dominant theme for the next generation: STAGFLATION.

It's a ways off now, because we are in the throes of deflation. But I have the feeling that Obama-Jeebus-Bernanke will be unable to turn off the spigot in time. They've already admitted as much. They are projecting low rates ad infinitum.

So what do you do when deflation rules the roost, stocks, bonds and RE are all a bust for the forseeable future, what to do?

Gold seems one possible play.

I read that (especially with gold at $1,150/oz), and I say "TOP!".

Which is why I'm still not crazy about gold. What I like more is "stuff".

Copper, non-ferrous mineral, timber, coal, water. Stuff. Basic stuff. I like the materials stocks. But they've had a hell of a run already, and they may well get knocked when the market as a whole is re-valued lower.

But if there is going to be some sort of Next Bubble, seems like they would be a good pick.

Basic Materials, Defense, and choice Pharma.

We're going to war, and old fuckers are going to live long enough to watch their spawn die.

Besides that, it's slim pickins'. I guess buy toys from the foreclosed on. Cars, trucks, stuff. People are going to leave Bend in droves for years, and they will want to sell their shit. WTF... buy it. There's nothing else to do with your money.

So, that's the MACRO.

The Regional?

California is going down.

Yes, the topic that caused almost as much loathing as all my Narcissism Yammering, was the idea that Cali in it's entirety, is becoming a second-rate piece of shit.

Seems logical, the state is following the path of it's citizens.

But think about it: Cali is a VC fueled economy, full of horribly over-priced trailers about to be overrun by the Mexican hordes.

Cali is only considered to BE a paradise, because it has BEEN a paradise.

Is Haiti a paradise? Fuck no. Jamaica? No.

Paradise is what you make it. Something we've all learned from hbm.

WHich I guess brings me to a little aside about weather, scenery and all the shit that makes a place "home".

I always said that bland places like Iowa would do the best in this current economy, because they never participated in the upside, they won't get killed in the downturn.

hbm always said he'd rather be dead in Bend than alive in Iowa.

But really, when I think back on my life, and the myriad of places I've lived, the weather, the scenery, and all the other externality bullshit that is so overly touted as an ABSOLUTE reason for moving to a place like Bend, somehow pales in comprison to the reasons that I truly enjoyed some of the places I've lived.

It was always friends or family that made a place. Not weather.

I love the place I went to college because of all the good times & friends I had there.

You could throw me in the middle of a cornfield to camp with my siblings, and I'd probably have a better time than I would camping alone in Yosemite.

Not only does scenery NOT pay the bills, it is cold & unfeeling. It's very nice to be in a new surrounding for a bit, and I've had some of the greatest times of my life out in the bush.

But being around people you enjoy is 100X more important in the long run.

Assholes can make paradise a total shithole, as has been demonstrated many times over by the equity locust invasion this place has suffered. Which is why I sometimes question the wisdom of moving to a place because of the outdoor activities.

I know more than one person (couple) that drank the Visit Bend Kool-Aid, moved here, bought at the top, and are now drowning in debt and DESPISE THIS PLACE. And they went out every weekend & did something real fun.

But they have had it. They want out.

'Course they can't get out. Bank won't short sale till they default, and once they default they can't get a job cuz they got fired when Epic/Cessna/Unicom/Equity Group/whoever went broke and stole their last paycheck & 401K.

But that's trivialities.

I think a lot of people go through life think all the external pieces of their environment are what count most; no, it's people. And on that mark, Bend is below average. And it will be until there are no H2 Hummer driving Cali-cunts who cut me off on Wall. Fucking cunts.

Hmm. Anyway, back to the business at hand. I suppose it only really matters that Cali is taking a financial bath in that Where Cali goes, so goes Oregon. 18-24 months later.

And if you want to see where we are going in the future, read this piece from Calculated Risk, "Unemployment Rate Increases in 29 States in October".

Even more interesting is this chart with the highst, lowest & most recent unemployment rates for all 50 states.

Click to enlarge...

You can see that California is suffering the highest unemployment EVER. It is maxed out.

Oregon is not far behind, of course, at #7.

This bodes ill for us. As recently as a year ago, COVA, Visit Bend, and all those other marketing schills were selling California Billionaires as Cent OR's economic saviors. Fucking ridiculous.

The facts: Bend unemployment will probably hit 20% one of these years. I guess that's pretty bad. But worse, it will NEVER go down. It will probably stay persistantly high. Why? People won't leave!

They've drank the Kool-Aid and actually think things are going to turn around here. They will not. Things are going to get far worse.

"Hey, but what about that Olive Garden? They must know something we don't!"

What about Gottschalks? What about Cessna? Oregon Woodwork?

This place is an investment SHITHOLE. Anything doing Bend-based business is a MIRAGE. When I came here, a business broker told me 80% of the businesses in Bend were TECHNICALLY INSOLVENT, being kept alive solely by spousal welfare.

There are very precious few companies actually making any money in Bend.

You want to know the Best Investment for anyone living in Bend? Buy a tankful of gas AND LEAVE.

People think that this blog & it's commenters are Broken Clock Bears, and are full of shit. OK. Fine. Take a sec to read a few pieces from someone who really knows how to throw down.

Wall Street's 2012 meltdown sweepstakes
Don't say we didn't warn you this time -- a new crash is dead ahead

By Paul B. Farrell, MarketWatch

LOS ANGELES (MarketWatch) -- It's coming in 2012: Another, bigger meltdown of Wall Street's "too-greedy-to-fail" banks. No, this is not another fanatical warning about that Dec. 21, 2012 end-of-days prediction based on the Mayan calendar, though you may well ask "Who will survive?"

Here is what's happening: History is repeating itself. Wall Street's soul-sickness is setting up a new meltdown. Dead ahead. Be prepared.

My track record speaks for itself. Back on March 20, 2000, my column headline read: "Next crash? Sorry, you'll never hear it coming." Bull's eye: The dot-com bubble popped at 11,722. The economy collapsed. A 30-month recession. Markets lost $8 trillion. Today the market is still below that 2000 peak. Factor in inflation and Wall Street's "too-greedy-too-fail" banks have lost about 30% of your retirement nest eggs in this decade. Incompetent? Clueless? No, Wall Street is a bunch of crooks without consciences.

Since 2000, my columns have covered many warnings of major debt accumulation, market meltdowns, and the psychological failings of Wall Street's greedy, myopic brains. Last June we summarized 20 predictions made between 2000 and 2007 warning of a subprime meltdown coming. Oddly, no one seemed to be listening to all the warnings from leading minds like Buffett, Grantham, Gross, Faber, Shilling, Roubini, Fed governors, and many more. Was that a repeat of 2000 with no one listening?

Suddenly it hit me: It's just the opposite: Everyone is listening and everybody knew a crash was coming -- but we were in a trance, including Washington's bosses. Bernanke, Bush, Paulson, Greenspan all heard it. So did Wall Street, and Main Street.

Unfortunately America's collective brain was addicted to the adrenaline rush of gambling in a risky bull. The euphoria is intoxicating. We were caught up in a game of musical chairs, squeezing out every last dollar of return, blind to the catastrophe ahead until caught by surprise. Unfortunately, Wall Street lacked a moral compass and stole trillions from American taxpayers. Today, the only lesson Wall Street has learned is "greed is good." Now the beginning of the end has become a moral tragedy that is setting the stage for an implosion of Wall Street, capitalism and our economy circa 2012.

Everyone's still listening, still in a trance

Yes, another meltdown is coming; it's inevitable. This time, I've decided to do more periodic updates -- a watch list of alerts, warnings and predictions. Just like the updates done for over a decade, except this time we're more aware that few in power will listen, not Wall Street, not Washington, not Corporate America. But you must.

Recently a bright idea came to me: a new way to present these predictions. My wife was working all day at a hospital in Templeton, Calif., so I parked myself in the Café Vio in nearby Paso Robles, with two huge briefcases of research files on bubbles, debt, derivatives, behavioral economics and lots more. While trying to make sense of the materials, the headlines themselves started telling a fascinating story. Here's an edited montage of their staccato warnings. Read fast and "feel" the message:

Financial Times: "Second Great Depression [is] still possible."

The economy's "spiral is captured in a Titanic metaphor ... unsinkable."

BusinessWeek: "Next bubble could come sooner than you think."

From Reinhart and Rogoff: "This time is different." But it never is.

Bloomberg: "Citi's 'near death' hoard signals lower profits."

Citi hoarding $244 billion in cash "as if another crisis were on way."

Wall Street Journal: "Three decades of subsidized risk."

Gasparino's "The Sellout:" Greed, mismanagement killed financial system.

SeekingAlpha: "Crisis lessons forgotten in new speculation."

We prop up trash stocks Fannie Mae, Freddie Mac, AIG; learned nothing.

USA Today: "Wall Street bailouts ... business as usual"

Warning: "Too big to fail" protections guarantee another crash down the road.

Boston.com: "Why capitalism fails ... why it will happen again."

Economist says American capitalism "contains seeds of own destruction."

MarketWatch: "Einhorn bets on major currency 'death spiral.'"

Hedger bet against Lehman. Now against dollar. Says "break up too-big-to-fail" banks.

Forbes: "Be prepared for worst ... repeating Great Depression."

Expect "GD2" says Congressman Ron Paul, author, "The Revolution," "End the Fed."

New Republic: "Next financial crisis coming; we made it worse."

Former IMF economist: "Bernanke soft landing, sowing seeds of next crisis."

Wall Street Journal: "The economy is still at the brink."

Moral hazard: No CEOs of failed banks indicted ... even paid millions.

BusinessWeek: "What happens if the dollar crashes?"

Trade wars break out, banks collapse. Cheap dollars are killing us.

Pimco Investment Outlook: "On the course to a new normal."

Gross's "new normal:" spending, stocks down, savings up, banks riskier.

Economix, New York Times: "Finance gone wild."

Simon Johnson: Wall Street's "pathological" power over Washington.

Vanity Fair: "Wall Street lays another egg."

Ferguson: "Math models ignored history, human nature," failed, repeating.

Clusterstock: "10 bubbles in the making."

Fed's toxic debt, gold, emerging markets, ETFs, China, securitization, more!

Rolling Stone: "The great American bubble machine."

Taibbi: Goldman's a giant vampire stealing trillions with "gangster economics."

Temasek Hedge: Roubini predicts bubble, hates equities.

Economist sees "bigger bubble than before" as Fed wastes taxpayer trillions.

CNN/HuffPost: "Wall Street made mess, big bucks on clean-up."

Michael Lewis says "they're too powerful ... we're in for day of reckoning."

Vanity Fair: "Wall Street's toxic message: capitalism failed."

Stiglitz: Wall Street writes self-serving rules, puts global economy at risk.

MarketWatch: "Wasting our chance to fix the banking system."

America's got a "banking system that's just a ticking time bomb."

Mother Jones: "Could cap'n'trade cause new meltdown?"

Yes, and Goldman sees huge profits if this $1 trillion market is created.

Fortune: "We owe what? The next crisis, America's debt."

Yes, "chronic deficits are putting America on the path to fiscal collapse."

Time: "America and its deficits: Are we broke yet?"

Justin Fox, author, "Myth of the Rational Market:" "We'll soon find out."

HuffPost.com: "Main Street jobs? First kill Wall Street jobs."

"Looting of America" author: Wall Street got rich destroying Main Street.

The Nation: "Creative destruction on Wall Street."

Greiner: They treats problem as "psychological," solved by "happy talk."

Kiplinger: New black swan triggers next financial crisis.

Money manager Bob Rodriquez: "Next bubble already growing."

The Atlantic: "Why Wall Street always blows it."

Blodget learned a lesson, but Street chief executives still clueless, no lessons learned.

Questions for today: Do you believe a new crash is coming in 2012, give or take a year? Will it trigger the "Second Great Depression?" And how big a factor is Wall Street's greed and lack of morals?

Well, that one is good. This one is Great!

20 reasons new megabubble pops in 2011
Greed blinded us to subprime meltdown, it'll blind us next time too

ARROYO GRANDE, Calif. (MarketWatch) -- You think I'm drinking that famous Beltway Kool-Aid, maybe because I'm predicting another meltdown coming in 2011? Well, you're being served from the same punch bowl, my friends.

Wall Street, Washington and the Fed are all praying the credit crisis is under control. Unfortunately, all their happy-talking is just a lot of hype, to hide their next bubble.

World markets are headed into another meltdown by the end of the first term of the next president ... and you won't even hear it coming under all the happy-talk.

Cycles happen. Bubbles blow, pop, meltdowns happen. Significantly, they're getting bigger and more frequent. Think 1987, 2000, 2007 -- the next in 2011. All the happy-talk from Washington and Wall Street gurus can't start the bull before it's time. Nor will a lot of non-happy-talker warnings make a bubble burst early.

For example, two years ago I analyzed the 2000-2002 bear phase of "The Cycle." We reported on 16 reasons why all the happy-talk failed to restart the bull market during that 30-month recession, while investors slowly lost $8 trillion.

Now you'll see how all the warnings of a housing bubble and a coming meltdown also had no effect on the 2004-2007 bull phase of "The Cycle."

Why? Because bull/bear, bubble/bust, expansion/recession cycles have a natural pattern that ebbs and flows on their own time, making fools of all gurus predictions. And all the happy-talk and not-so-happy-talk in the world has no effect: Happy-talk won't restart a bull. Nor can not-so-happy-talk warnings puncture a bubble. Cycles have lives of their own, they mature and die unpredictable, age and pop when they feel like it.

Another will happen, soon. A busted bubble and a new meltdown coming by the end of the next presidential term. Why then? Because the last few occurred with increasing frequency, separated by thirteen years then seven, and the next will come within four years. These trends are obvious from studying the works of masters like former Commerce Department chief economist Ed Dewey's classics, including his Cycles, the Mysterious Forces that Trigger Events.

Here's my list of warnings from 20 not-so-happy-talkers. Notice how they were as unable to pop the 2004-2007 bubble before its time, as the happy-talkers were unable to restart a bull during the 2000-2002 recession:

2000: Fed governor warns Greenspan. Former Federal Reserve governor Ed Gramlich served 1997-2005. He was warning Alan Greenspan as early as 2000 about the coming subprime crisis. See his book "Subprime Mortgages: America's Latest Boom & Bust."
2004: Nixon's secretary of commerce. In "Running on Empty," Peter Peterson says: "This administration and the Republican Congress have presided over the biggest, most reckless deterioration of America's finances in history" creating a "bankrupt nation."
June 2005: The Economist. Cover story two years before collapse: "The worldwide rise in house prices is the biggest bubble in history. ... Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000." Values increased 75% worldwide in five short years. "Never before have real house prices risen so fast, for so long, in so many countries ... This is the biggest bubble in history."
January 2006: Fortune. Interview with Richard Rainwater. "This is the first scenario I've seen where I question the survivability of mankind." He's 112th on the Forbes 400, worth $2.3 billion: "Most people invest and then sit around worrying what the next blowup will be. I do the opposite. I wait for the blowup, then invest." He waited with a half-billion-dollar war chest.
February 2006: Faber's Market Newsletter. "Correction Time is Here!" was Faber's headline: "If we combine the overbought condition of the stock market, investors' sentiment high optimism, equity mutual funds' low cash positions, and also heavy foreign buying, we have all the ingredients for a stock market correction in the US getting underway very shortly."
March 2006: Forbes. Economist Gary Shilling wrote: "The current housing weakness will develop into a full-scale rout ... It's clearly a bubble and is nationwide ... The house-price collapse will induce a painful recession that will send U.S. stocks into a tailspin ... China will suffer a hard landing ... and weakness in the U.S. and China will spread worldwide."
March 2006: "Sell Now." Former Goldman Sachs investment banker John Talbott's book: "Sell Now! The End of the Housing Bubble." His statistics covered America's top 130 metropolitan areas. The top 40 were facing an average 47.2% decline.
March 2006: Pimco Investment Outlook. In the quarterly newsletter, "The Gang That Couldn't Shoot Straight," Pimco's boss Bill Gross took a big swipe at a presidential economic report: "It's not so much that the report was a compilation of untruths or even half-truths. It's just that it failed to tell the truth," and hid the fact that Washington's "borrowed from the future to pay for today's party."
March 2006: Buffett in Fortune. Remember Warren Buffett's famous farmer story: "Our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than they 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."
May 2006: Harper's magazine. Michael Hudson wrote an article, "Guide to the Coming Real Estate Collapse," analyzing 20 trends: "Taken together, these factors will further shrink the 'real' economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagflation or worse."
August 2006: Wall Street Journal. Countrywide's CEO Angelo Mozilo: "I've never seen a 'soft-landing' in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen." He did little. A year later, he was in full denial mode.
November 2006: Fortune. Cover story asks: "Can the Economy Survive the Housing Bust?" They said "the correlation between current builder confidence and future stock market returns over the past 10 years is downright unnerving." The NAHB confidence index is a leading indicator because the stock market inevitably follows in lockstep a year later. The index had "plummeted 54%."
November 2006: The Economist. In a cover story: "The Dark Side of Debt," Timothy Geithner, president of the Federal Reserve Bank of New York, said in a Hong Kong speech: "The same factors that have reduced the probability of future systemic events, however, may amplify the damage caused by, and complicate the management of, very severe financial shocks. The changes that have reduced the vulnerability of the system to smaller shocks may increase the severity of the larger ones." Geithner later negotiated the Bear Sterns collapse.
January 2007: Los Angeles Times. Schwab "averaged 242,300 trades a day the first nine months of 2006. That was up 29% from the same period a year earlier, and a click above its 242,000 peak in 2000"and the last collapse.
April 2007. GMO Quarterly Newsletter. GMO manages $145 billion. CEO Jeremy Grantham wrote: "The First Truly Global Bubble: From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it's bubble time. ... Everyone, everywhere is reinforcing one another. ... The bursting of the bubble will be across all countries and all assets ... no similar global event has occurred before."
June 2007: Shilling's Insight Newsletter. "Just as the U.S. housing bubble is bursting, speculation elsewhere will come to a violent end if history is any guide. ... Richard Bookstaber, who designed various derivative-laden strategies over the years, now fears that financial derivatives and hedge funds, focal points of today's huge leverage, will trigger a financial meltdown."
June 2007: Pop! Then it happened! And Dan Gross had a well-timed book: "Pop! Why Bubbles are Great for the Economy." He says bubbles work miracles, so just let them pop, Pop, POP!
July 2007: Fortune. As the contagion spread, Treasury Secretary and former Goldman Sachs CEO Henry Paulson tells Fortune "this is far and away the strongest global economy I've seen in my business lifetime." He's repeated the same remark often since. Earlier, he and Fed Chairman Ben Bernanke said the subprime crisis was "contained." Clueless, Bernanke assembled hedge fund managers, asking them to explain the global derivatives market.
August 2007. Wall Street Journal. Former SEC Chairman Arthur Levitt wrote on the Journal's Op-Ed page: "In terms of market meltdowns and the degree of pain inflicted on the financial system, the subprime mortgage crisis has the potential to rival just about anything in recent financial history, from the savings and loan crisis of the late 1980s to the post-Enron turndown in the beginning of this decade."
August 2007: 60 Minutes. While Paulson and Bernanke were claiming the subprime crisis was "contained," the chief architect of the subprime-housing meltdown, Alan Greenspan, was on tour, making millions, hustling his new book, "The Age of Turbulence." On 60 Minutes he made a totally incredulous denial that he "really didn't get it until very late." He "didn't get it?" Yes, and to this day Greenspan rigidly maintains his blind faith in the free-market myth. His latest argument: Bubbles are a function of innovation, like the dot-coms and subprime derivatives. Regulators should trust the free markets, never micromanage innovation.

But what blinded Greenspan? His ideology? A brain quirk? Genetics? The president's reelection? It doesn't matter why: Whatever it was, it's bad news for America. Why? Because if the leader of America's monetary system for 18 years "doesn't get" that he was also the chief architect of the biggest economic blunder in American history since the 1929 Crash, can we ever trust any future leaders?

Scary, isn't it! How can we have faith in the next guy? Are our leaders the problem? Or is the system broken? Is capitalism itself at risk when the best and brightest are "blinded," unable to see disasters until it's too late?

But that is our "system," and in this system our leaders inevitably morph into bulls, ideologically blinded by their power. And like real bulls, all they see is red. So eventually ... they must run onto a sword, and self-destruct!

Really read some of this stuff. It's worse than we're just going to be a Little Poorer.

We're going to be a lot poorer. But worse, we've lost something.

50 years ago, people actually had some values that weren't financially based abominations. Today, no one cares about that. All they care about is money. If you have it, You're Good. If you don't, You Are Dogshit. That's it. That's AmeriKKKa.

And I'll save the best Farrell for last...

Death of 'Soul of Capitalism': Bogle, Faber, Moore
20 reasons America has lost its soul and collapse is inevitable

ARROYO GRANDE, Calif. (MarketWatch) -- Jack Bogle published "The Battle for the Soul of Capitalism" four years ago. The battle's over. The sequel should be titled: "Capitalism Died a Lost Soul." Worse, we've lost "America's Soul." And, worldwide, the consequences will be catastrophic.

That's why a man like Hong Kong contrarian economist Marc Faber warns in his Doom, Boom & Gloom Report: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today."

No, not just another meltdown, another bear-market recession like the one recently triggered by Wall Street's too-greedy-to-fail banks. Faber is warning that the entire system of capitalism will collapse. Get it? The engine driving the great "American Economic Empire" for 233 years will collapse, a total disaster, a destiny we created.

OK, deny it. But I'll bet you have a nagging feeling that maybe he's right, that the end may be near. I have for a long time: I wrote a column back in 1997: "Battling for the Soul of Wall Street." My interest in "The Soul" -- what Jung called the "collective unconscious" -- dates back to my Ph.D. dissertation, "Modern Man in Search of His Soul," a title borrowed from Jung's 1933 book, "Modern Man in Search of a Soul." This battle has been on my mind since my days at Morgan Stanley 30 years ago, witnessing the decline.

Has capitalism lost its soul? Guys like Bogle and Faber sense it. Read more about the soul in physicist Gary Zukav's "The Seat of the Soul," Thomas Moore's "Care of the Soul" and sacred texts.

But for Wall Street and American capitalism, use your gut. You know something's very wrong: A year ago, too-greedy-to-fail banks were insolvent, in a near-death experience. Now, magically, they're back to business as usual, arrogant, pocketing outrageous bonuses while Main Street sacrifices, and unemployment and foreclosures continue rising as tight credit, inflation and skyrocketing federal debt are killing taxpayers.

Yes, Wall Street has lost its moral compass. It created the mess, but now, like vultures, Wall Streeters are capitalizing on the carcass. They have lost all sense of fiduciary duty, ethical responsibility and public obligation.

Here are the Top 20 reasons American capitalism has lost its soul:

1. Collapse is now inevitable

Capitalism has been the engine driving America and the global economies for over two centuries. Faber predicts its collapse will trigger global "wars, massive government-debt defaults, and the impoverishment of large segments of Western society." Faber knows that capitalism is not working, capitalism has peaked, and the collapse of capitalism is "inevitable."

When? He hesitates: "But what I don't know is whether this final collapse, which is inevitable, will occur tomorrow, or in five or 10 years, and whether it will occur with the Dow at 100,000 and gold at $50,000 per ounce or even confiscated, or with the Dow at 3,000 and gold at $1,000." But the end is inevitable, a historical imperative.

2. Nobody's planning for a 'Black Swan'

While the timing may be uncertain, the trigger is certain. Societies collapse because they fail to plan ahead, cannot act fast enough when a catastrophic crisis hits. Think "Black Swan" and read evolutionary biologist Jared Diamond's "Collapse: How Societies Choose to Fail or Succeed."

A crisis hits. We act surprised. Shouldn't. But it's too late: "Civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power."

Warnings are everywhere. Why not prepare? Why sabotage our power, our future? Why set up an entire nation to fail? Diamond says: Unfortunately "one of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions."

Sound familiar? "This type of decision-making is the opposite of the short-term reactive decision-making that too often characterizes our elected politicians," thus setting up the "inevitable" collapse. Remember, Greenspan, Bernanke, Bush, Paulson all missed the 2007-8 meltdown: It will happen again, in a bigger crisis.

3. Wall Street sacked Washington

Bogle warned of a growing three-part threat -- a "happy conspiracy" -- in "The Battle for the Soul of Capitalism:" "The business and ethical standards of corporate America, of investment America, and of mutual fund America have been gravely compromised."

But since his book, "Wall Street America" went over to the dark side, got mega-greedy and took control of "Washington America." Their spoils of war included bailouts, bankruptcies, stimulus, nationalizations and $23.7 trillion new debt off-loaded to the Treasury, Fed and American people.

Who's in power? Irrelevant. The "happy conspiracy" controls both parties, writes the laws to suit its needs, with absolute control of America's fiscal and monetary policies. Sorry Jack, but the "Battle for the Soul of Capitalism" really was lost.

4. When greed was legalized

Go see Michael Moore's documentary, "Capitalism: A Love Story." "Disaster Capitalism" author Naomi Klein recently interviewed Moore in The Nation magazine: "Capitalism is the legalization of this greed. Greed has been with human beings forever. We have a number of things in our species that you would call the dark side, and greed is one of them. If you don't put certain structures in place or restrictions on those parts of our being that come from that dark place, then it gets out of control."

Greed's OK, within limits, like the 10 Commandments. Yes, the soul can thrive around greed, if there are structures and restrictions to keep it from going out of control. But Moore warns: "Capitalism does the opposite of that. It not only doesn't really put any structure or restrictions on it. It encourages it, it rewards" greed, creating bigger, more frequent bubble/bust cycles.

It happens because capitalism is now in "the hands of people whose only concern is their fiduciary responsibility to their shareholders or to their own pockets." Yes, greed was legalized in America, with Wall Street running Washington.

5. Triggering the end of our 'life cycle'

Like Diamond, Faber also sees the historical imperative: "Every successful society" grows "out of some kind of challenge." Today, the "life cycle" of capitalism is on the decline.

He asks himself: "How are you so sure about this final collapse?" The answer: "Of all the questions I have about the future, this is the easiest one to answer. Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent ... overspends ... costly wars ... wealth inequity and social tensions increase; and society enters a secular decline." Success makes us our own worst enemy.

Quoting 18th century Scottish historian Alexander Fraser Tytler: "The average life span of the world's greatest civilizations has been 200 years" progressing from "bondage to spiritual faith ... to great courage ... to liberty ... to abundance ... to selfishness ... to complacency ... to apathy ... to dependence and ... back into bondage!"

Where is America in the cycle? "It is most unlikely that Western societies, and especially the U.S., will be an exception to this typical 'society cycle.' ... The U.S. is somewhere between the phase where it moves 'from complacency to apathy' and 'from apathy to dependence.'"

In short, America is a grumpy old man with hardening of the arteries. Our capitalism is near the tipping point, unprepared for a catastrophe, set up for collapse and rapid decline.

15 more clues capitalism lost its soul ... is a disaster waiting to happen

Much more evidence litters the battlefield:

Wall Street wealth now calls the shots in Congress, the White House
America's top 1% own more than 90% of America's wealth
The average worker's income has declined in three decades while CEO compensation exploded over ten times
The Fed is now the 'fourth branch of government' operating autonomously, secretly printing money at will
Since Goldman and Morgan became bank holding companies, all banks are back gambling with taxpayer bailout money plus retail customer deposits
Bill Gross warns of a "new normal" with slow growth, low earnings and stock prices
While the White House's chief economist retorts with hype of a recovery unimpeded by the "new normal"
Wall Street's high-frequency junkies make billions trading zombie stocks like AIG, FNMA, FMAC that have no fundamental value beyond a Treasury guarantee
401(k)s have lost 26.7% of their value in the past decade
Oil and energy costs will skyrocket
Foreign nations and sovereign funds have started dumping dollars, signaling the end of the dollar as the world's reserve currency
In two years federal debt exploded from $11.2 to $23.7 trillion
New financial reforms will do little to prevent the next meltdown
The "forever war" between Western and Islamic fundamentalists will widen
As will environmental threats and unfunded entitlements

"America Capitalism" is a "Lost Soul" ... we've lost our moral compass ... the coming collapse is the end of an "inevitable" historical cycle stalking all great empires to their graves. Downsize your lifestyle expectations, trust no one, not even media.

Faber is uncertain about timing, we are not. There is a high probability of a crisis and collapse by 2012. The "Great Depression 2" is dead ahead. Unfortunately, there's absolutely nothing you can do to hide from this unfolding reality or prevent the rush of the historical imperative.

OK, well maybe it's time to wind down this post, and this blog.

Let's say goodbye to the Good, The Bad, and The Ugly.

Well, The Good certainly includes marge.

She was really the only woman I know who could tolerate this band of smelly cunts for 5 seconds and held her own better than any man here. Here's to you marge.

To Tim: His apostrophatic proclivitie's kepts' me tune'd to his's every word's.

To round out The Good, who could forget Brucey? Always on the verge of doing Great Things... but never quite getting there. Maybe that is all you can do in a place like Bend.

Finally the Duncster, the only dude who I thought should really be mayor of this place, and still the only merchant downtown who I don't think is a total shyster.

The Bad almost certainly has Buster at the top of the list. He was the one person who probably wrote more here than I did.

You might only remember the profanity & Thai Sex fantasies... but the guy tuned in to JR when it was a nothing, and nailed it.

We salute you Buster, you lying fucknut, may Thai-middles-schoolers forever be spelunking into your wretched-smelling cavernous twat, you nasty sunofa bitch.

And I am forgetting a lot of people here, but God love you, you crazy bastards.

Now The Ugly, we need only review the RIP list, which I might say with some pride was surprisingly accurate in predicting the demise of some of Costa's media sweethearts.

Becky Breeze & The Plaza. Little Baby Jeebus, please see clear to smiting this Old Mill Pile Of Defaulted Dogshit and push it into the Deschutes, along with the rest of the Old Mill, where it all belongs. Condos in Bend is the worst RE idea in Bend history.. except for The Shire & Tuscany Buttplugs. And those shitty row houses on Colorado. Geez... always gotta act like this is Frisco.

Let's stop acting like this town is something it's NOT GAT DAMMIT!

Tetherow, Thornburgh Ranch, Brasada, Pronghorn, and all the rest of the Greed-Fueled chameleon subdivs that now pockmark our pristine landscape in either semi-finished or litigation-hamstrung limbo, Fuck The Lot of You. I hope you all get the financial AIDS and die of gonorrhea.

The Shire: The Epitome of Moronic Faux Pretentious Intellectualism. What a Bunch of fucking idiot douches. The Shire. Get a lobotomy you moron dipshits.

Forum Meadows: Pollock looks like the quintessential dumbass now, holding back every single house in this tubleweed strewn pile of crap. Feelin' pretty smart Pollock? The only thing Forum Meadows is good for is illustrating how HORRIBLE a place Bend really is to do business. Don't buy a house there, unless you want to DOUBLE DOWN on fixing it up. Those places will fall to the ground in under 5 years, like half of the STD riddled East side.

John Costa: Well, dude, you suck ass. You run a paper that has been discredited 100X over. And still you stand tall. I have to admire Blind Idiocy like that on some level...maybe in the fungal-ridden flap of skin between my asshole & my balls. You & your retarded fucking whore sister, The Incredible Hulce, should move to Burns & fuck each other in the ass until you die, Hulcey using a gigantic black strap-on, of course.

Randy Sebastian: What a stupid cunt. This cross-armed mega-faggot finally succumbed to the Bend Taint, before the flesh-eating virus devoured his puffed up chest. I am only certain of one thing in this life: This guy gets pumped up the ass by a brigade of gigantic black felons every night.

Bend City Council: Fuck you losers. You fuckers are actually still in a place to do something good, but are too retarded & convinced of your own munificence to do anything of the kind. So FUCK YOU for whatever boondoggle you are about to undertake, cuz I know whatever it is, it's utterly IMBECILIC, and will take this City one step closer to inevitable BK.

Thank Jeebus, that the Tuscan Mania finally bit the dust. Tuscany Buttplugs, now a long distant memory is just a bunch of Tyvek flapping in the wind. Better that than even one of those moronic Tuscan themed condo turds getting sold.

Good riddance to Communal Frisk Bankers (Prineville Bank), which finally bit the dust. And don't worry Mossy, Sheila BearHug will be coming for you. CACB will go down in flames sooner than later. You ugly wretched cunt. Gat damn you ugly.

And as an aside: Who in the fuck is crazy enough to buy in on that recap of CACB? Notice the incumbent ID investor who lost his ass because of Moss, will not put in another cent, unless a lot of other dumbfucks throw in like $70 mill first. DUH! Why throw 1 red cent into a bank that is technically insolvent! And not just insolvent, but with a HUGE NEGATIVE NET WORTH. He might as well start from nothing. CACB is going down. Soon.

Patty Moss should be reviled as one of the WORST BUSINESS PEOPLE THIS TOWN HAS EVER SEEN. Will she be? Fuck no. Old Boy Network will see to that. Once you're in the Inner Sanctum of this Backwoods Butt-Fuckery shithole, you're gold. They take care of their own here, no matter how brain damaged (see Mark Capell, City Council, and half of the officials in City Hall). God, this place sucks. Anyway...

COBA, COVA, Visit Bend, EDCO and the rest of the Government funded ripoffs that continue to this day to rob taxpayers: Fuck you goons, I hope Jeebus smites you fuckers good. You wanna CUT something City Council? Start with these FUCKERS.

deep, Merenda, Volo, Bluefish, and the rest of the pretentious upscale bullshit restaurants that briefly made us feel like the Big Time, and not a bunch of Invaders living in a mountain trailer park. Good Riddance you fuckers. But next time... take a Cali banger or two with you on the way outta town.

OK, that be about it, my Niggaz.

I'm going to leave this post up a bit longer than usual, seeing as how it's the last one. I'll probably shut off comments on Dec 17, 3 years to the day this fiasco got started. On Dec 31, I'll probably redirect the site to BendBlogs.com.

I'm hoping to somehow spider the site & it's comments, and maybe try to save it for posterity. Maybe it's safe with the Goog's, who knows. It is probably the most work I've ever put into a single project. If I do manage to get it all saved, maybe I'll post something on Dunc's blog about where to download it, if you're interested. There's some pretty wicked shit in this thing.

Time to start a New Decade fresh. Don't know when, but there's going to be Good Buys in the next 10 years ahead, but we're not there yet. Stay frosty... stay liquid... buy when people have 100% and completely given up, and they don't care about what they get... they just want out. That day is coming.

Remember: Bend is 99% Empty Marketing. We're going to have to burn through that Falsified Image with years of persistently high unemployment, before people finally succumb to the idea that BEND SUX. Then you'll see H3 Hummers for a buck.

The Decade of Hubris is ending. The Decade of Humility has begun.

But one more time: Right this minute, we're in the Obama-Jeebus Last Hoorah. This country cannot survive what's happening now, and have even a semblance of it's past financial "glory". We're the Worlds Debtor. We're The Poorest Country on Earth... soon.

I still think there is a lot of demand for some kind of unmoderated, no-holds-barred forum about this town. Fuck, maybe it'll be me who starts it. But it probably won't be a blog, if I do. Maybe along the lines of what BendBB has going... except it would of course, NOT track IP's, nor filter comments. Again, I'll probably post anything like that at Dunc's blog, if he'll post it.

It doesn't have to cover the Bubble... really we're facing the Final Collapse. It'll last for years & years. The Bully will implode, so will CACB. It'd be a shame to leave reporting it to the Yellow-Kangaroo Journalism of this one-horse shithole. I'm sure the Bully will find the Silver Lining in it's own demise.

But that's it. The Bubble is Over. Long live The Great Unwind, the long slow bleed-out of Bend.

And one more time... don't "Buy" this current "recovery": Wolf in sheeps clothing, and you my friends are paying for it. Largest redistribution of wealth in history. You're getting sheared.

Well, siyonara brothers & sisters...

Paul D.

Bye bye Busta! I miss you ravaging my twat!

Won't someone please titty-fuck me soon!

Dunc, please bring back Japanese porno VHS tapes. Me love you wrong time!

Gat Damn. That's the one I'd take, right dare.
You white Supremacist Bend motha fuckas don't deserve my black-ass snatch!

They might be fake, but they fuckable!
How many fishnet MILF's it take to change a lightbulb?
Woof.
Timmy, I cant's find's me apostrophes's!Sunafa Bitch. I'd fuck that right there.

I've had black, so I can't go back to this.... unless I been in prison.There you go Buster. Last one's for you.

Bend Finally Get's It's Perp Walk

2009-11-01T04:38:00.000-08:00

I don't know about you, but I'm just about to pee myself with excitement over the Tami Sawyer perp walk!

I mean, how long have we been waiting for this? Years? For an honest-to-God, real Bend realtor to give us the walk of shame we've been waiting for? Seems like forever.

But, unless Sawyer gives up the ghost between now & Nov 6, she'll be going to do some time in the pokey for not telling Judge Stranglenuts where she put kindly old Doc Redwine's retirement money.

Of course, both Sawyer and hubby both think they are above the law, since they got bigger fish to fry with the FBI. Hmmm... that ain't right either. They ARE the bigger fish to fry, and they are going to get cooked by the FBI.

They think that gives them special rights, like telling Stranglenuts & Red-whine that they ain't gonna help them get their cash back.

And of course, Sawyer's lawyer probably convinced them they'd never serve a minute in the old Corn Chute Parade Of Assshole Wideners.

So wait for it folks... by next Sat. We might get our long-awaited Perp.

OK, moving on from Tami Sawyers inevitable ass-reaming in prison....

I keep trying to find people who are as worried about what is going on as I am.

It is clear to me that the US has taken the "No Pain" exit-strategy from our already fleeting Great Recession. This is that strategy in a nutshell:

Despite the fact that DEBT was the Root Cause of what is pretty much acknowledged as the worst economic meltdown in a generation, we have taken the following remedial actions:

1) Cash for Clunkers: A failed program, that cost far more on a per-vehicle basis than anyone is willing to admit, and did almost nothing except make it's participants more indebted than they were before.

2) $8,000 tax credit to home buyers. This program is the most insidious of all. It's plays on peoples ignorance in thinking that they are getting a good deal, when really they are just indebting themselves to buy a house that has had it's price artificially inflated by the credit they are receiving.

3) The vast billions spent on "job-creation". Wow. This one is just mind-boggling in it's scale. What is happening on this one is so incredible, it deserves a little expansion...

See... they are counting every single person who even receives a nickel from the Obamanator Largess, as a "new job".

Doesn't matter what they do or for how long, it's a "job".

And the shysters getting the money, are almost certainly being encouraged to "shade the truth" about everything having to do with dispensing this money.

So what is really happening, is plain to see: There's a terrible overcounting of the "benefits"of the Obama-Jeebus's turning water to wine going on.

We're spending trillions -- TRILLIONS -- on fake jobs that don't even exist.

Since the jobs are fake, you can bet your ass the "Recovery" is fake.

We are simply experiencing the effects of a "Bloody Mary" recovery; a quick jolt of that which ails ye. A shot-glass of trillions that we are borrowing from ourselves (well... our kids), so that we might put off our ills just one more day.

Here's a quick eye-opener from my best-est politico buddy, Ron Paul:

Be Prepared for the Worst

The large-scale government intervention in the economy is going to end badly.

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.

This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?

What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.

Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.

The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar's purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year.

First, you just gotta love this guy. No one in DC cuts through the bullshit like Ron Paul.

And you might be wondering what he means by this:

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate.

What bubble? Hey, I don't see no bubble! There's no bubble. Right?

Oh yes, there is an enormous bubble right before our eyes. It's called this (fake) Recovery.

It's this Bloody Mary hangover cure.

And it cannot end well. There are two end-game scenarios, and both end badly.

In the first, you have to imagine that our economy is like a big bathtub. Usually, it's nice, full and soaky-warm, everyone just having a good old time.

Now sometimes, Mean Old Mr Recession comes along, and starts to drain the tub.

Well, that's when Supermen from the old Fed come along, and put a spigot right over the tub, and start to fill the tub at --hopefully-- the same rate that water is being drained.

And that is what Superman Bernanke-Span has been doing for lo these many years.

Except in the past the spigot was your garden-variety water hose. And our Supermen have been able to shut off the water just in time to keep the warm, happy tub from overflowing... cuz this means something actually worse than sitting cold in an empty tub: It means people start drowning of INFLATION! Oh no!

But in the past, due to a number of factors, not the least of which was Chinese-fueled deflation, the monster of inflation has been pretty easily avoided.

But this time is different: the drain that opened up wasn't the usual inch or two in diameter. No, it was like the entire bottom of the tub opened up. Water didn't really "drain" out; it fell out. One second it was there, and the next it was gone.

THIS is what all the talk was about our economy "collapsing" last Fall. It wasn't getting "uncomfy" in the tub... it looked like the tub itself was going away.

But our Supermen have rushed to action to do what they always have: Keep the tub full.

But what's different this time is the size of the spigot. It's not a garden hose. It's an enormous pipe.

Bernanke's Enormous Pipe

But the problem with trying to keep the tub full with such a giant pipe, is exactly what Ron Paul says it is Runaway inflation.

Not wimpy, 4-5% inflation. But real-economy-wrecking inflation.

Cuz all it's going to take is for the drain to close even a little, Bernanke to miss the signs, keep the pipe open just a hair too long, and the tub goes from empty to overflowing all over the place, and people drowning.

This is actually the worst case scenario. One that Ron Paul thinks is inevitable. I happen to mostly agree, and think it is highly likely.

The second "Good News" scenario, is that Bernanke Get's It Right.

He turns off the gigantic spigot just in time when the drain closes up.

But the problem is that All That Water comes at a price. And the price is that all future tubby-time is a little more empty. More succinctly, we are draining future growth, so that we do not have to suffer today.

The trillions we are spending today HAVE TO be repaid one way or another. We are "investing" them today in an attempt to have the payoff tomorrow be large enough to make the payments. If the jobs created today create enough of a tax-base tomorrow, we'll be OK.

But as I said earlier, and as the Bully as much as admitted yesterday, we're wildly over-counting the job creation. The costs per job are far higher than Obama-Jeebus or anyone else will admit.

Just like everything else in this "recovery". It's fake. The cost per job is far higher than anyone admits, the cost per car sold under Cash-for-Crushers is far higher than anyone is admitting.

And Yes, the prices being paid for homes in the $8,000 tax credit regime are higher than they should be.

And we have a good predicting omen for what will happen when all the fakery stops... just look at Cash-for-Crushers: demand 100% evaporated.

We were sold the idea that somehow C4C would somehow "ignite" a New Age of Automobile buying that would last forever. GM would be fine. Chrysler would be fine. You would be fine. I would be fine.

No.

No, all they did was spend a ridiculous amount to get a very few incremental sales TODAY... AND FUCK TOMORROW.

THAT is what happened.

And it wasn't long before people realized this:

Lithia Motors (LAD), 1 yr

I, for one, barely dodged a bullet on this one. Since I sold LAD at $16 and change, it has fallen off a cliff, for almost a cut in half.

THIS, though, is what we should expect post-stimulus: When and if they discontinue the $8,000 tax credit for home buyers, we should expect a post-stim hangover... DUH!

What if they don't stop it?

Then it just becomes a permanent built-in part of the price.

So... what is that called when prices just go up forever?

Right. Inflation.

And so that brings a third scenario: STAGFLATION.

Not only could we have prices that go through the roof, as Ron Paul postulates, we could have little to no growth for a generation.

WHAT does this sort of scenario look like?

Zimbabwe.

OK, to finish off this week, I guess I want to address the idea that I am a big stock-broker type... or other such bullshit.

OK, I'm not. I'm just a working dude. I do have a business degree that probably "went to far" for it's own good.

So I'm intersted in stocks, they always seem to be the Canary In The Coal Mine with respect to the larger economic picture.

Plus, I do have my pittance of a retirement fund in and out of stocks (and rarely, bonds) as I see fit.

And as I said over the past year, I went from long-on-the-sidelines, to all-in late last fall.

And people, I can tell you it was harrowing.

There was a stretch when I mentally walked away from ALL of my retirement money. It was THAT gone.

Mercifully, Obama-Jeebus & Bernanke-Span have swooped to the rescue of their Wall St brethren. Thank God. As a side-effect, I was also largely spared.

So I managed to escape this past years investment debacle pretty much unscathed.

BUT, like most things in my life, the Real Gain was the lessons learned.

One, I tried to Catch Falling Knives again. I well and truly got stabbed on most of these.

All the gains of Lithia... well, they went to cover the heinous losses of now-bankrupt Monaco Coach & Fleetwood.

And I fully understand that Lithia itself was the one instance where I did catch the knife... but just barely.

Lesson 2: This thing ain't like the others.

This time IS different. It really is. This is The Black Swan of our lives. This IS The Big One.

It's going to end badly. Again.

The ARM resets are coming. The bank failures are coming. The rising tide of unemployment is coming. The government debt crisis is coming. And the foreclosures will keep on coming. The Zimbabwe-esque End is coming.

I don't know if DJIA 3,000 is coming. But DJIA 5,000 is.

Lesson 3: Stocks may have started off missing it, but I still think they are the Canary in the Coal Mine.

I see this thing ending, on a mega-wave scale, with stocks bottoming FIRST, then RE.

Well, if you can call DJIA range trading between 3,500 and 6,000 a "bottom", and residential home prices NOT FALLING 20% a year a "bottom".

That said, I think that the former will happen first. Then the latter. For decades.

I talk about stocks a lot because it is Part I in my attempt to avoid the scourge of inflation I see coming. And it's an inflation I don't see housing participating in.

I will want to hold something that is not Cash In The Bank, when Bernanke's giant pipe-laying experiment goes bad.

I want "stuff". Gold, copper, timber, oil. Stuff. Specifically, I want companies that produce (or own) this stuff.

I still think the Play is to hold cash. For now. Until there is proof that the tub has closed up, and our economic cup will begin to runneth over.

At that point I want to own stuff.

I'm not sure how long that'll take to "play out". Probably years.

But my "real aim" is to buy back into RE... finally. Yup, to buy a house.

NOT as an investment. It won't "go up". But as a dwelling primarily (soley), but also as what I see as a decent post-speculative-busted Bubble asset that may just hold it's value over the remainder of my life.

But until that time, I wait. Cash is the place to be. Until there are "real" green shoots. Then own the "stuff" sellers. And when things have finally bottomed out, RE will have finally hit it's "L" bottom, and you can buy.

NOT "buy and make a killing!". No. Never again. But you can buy and not lose your ass.

hbm, you please Perp-walk me to bedroom?

How come no one like Whitey no more?

Buster, you type so much, my titties not sore anymore!

Lies, fraud and felonies in Bend Real Estate

2009-10-11T06:27:00.000-07:00

OK, I saw just about the worst thing I've ever seen in my life the other day.

Was it:

2 al Quaeda terrorists shooting a baby deer in the head, cutting off the head, and then skull-fucking the head while screaming their crazy-ass Allah whailings?

No. It was worse.

Was it:

Me attending my dear grandmothers funeral, and during the viewing with the grieving grandpa, yanking out the old ladies crusty used tampon, seeping it in some hot water, and telling the old bastard, "Gramps, it tastes like this smelly old twat fucked 100 guys... no... no, it was worse... 100 BLACK GUYS FUCKED HER IN THE ASS, before she died of cum poisoning!"

Nope, it was much worse.

No, what I saw was so atrocious it turned my stomach.

This is what I saw:

A GOOD LOOKING WHITE WOMAN WORKING AS A WAITRESS IN A ALL-YOU-CAN-EAT CHINESE BUFFETT

NNNNNNNNNNNNOOOOOOOOOOOOOOOOOOOOOOO!

MY GAAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHHHDDDDDDDDDD!

PLEEEEEEEEEZZZZZZZZZZZZZZZZZZZZZZZZZZZZZE! MY EYESSSSS!

OK. Sit down, relax, and try to recover. I know, that shit is harsh for a Sunday morning.

I felt awful for this poor gal. Working as a waitress was bad enough. Cuz you could tell she was used to better. But a waitress in a Chinese Buffett? Fuck... this poor thing looked sucidal.

And what's worse, is ahead of me in line, there was YET ANOTHER WHITE GIRL applying for a job. This girl was young, and still hadn't grown used to the finer things in life, but she was standing with something in her hand that almost made me throw up.

It was heinous.

It was...

a RESUME!

AHHHHHHHHHHHHHHHHHHHHHH!!!!!! MY GAHD!!!!!!!!!!!!!! WTF!!!!!!!!!!!FUCK MEEEEEEEEEEEEE!!!!!!!!!!SUNNUFFA FUCKING BITCH!!!!!!!!!!! WHAT THE FUCK IS GOING ON!!!!!!!!!!!!!!!!AHHHHHHHHHHHHHHHHHHHH!

Yes, you read that right. There was what had to be a 18 year old good looking young white virgin applying for a job at a Chinese Buffet with a fucking resume.

Dude, that is why Hitler made Eva Braun kill herself; otherwise she would be forced to make FILTHY JUZE GANG-BANG PORN for the rest of her life.

THAT, my friends, is what this town is CUMMING TO.

Now, let me be clear; I DO NOT blame the husband of that white hotness serving me water while I slopped at a trough of Chinese mixed-meat shit (yes, she had a ring). No.

I am saying that THIS is what we will have to endure in this place. White women working for motherfucking LING CHOW or some shit. Dude, Ling Chow, is worse than a Gat Damn Niggra when he gots a White Woman under his thumb. Mother fuck!

THIS is why Bend will fall. Some things can be tolerated: Get ass-fucked by a donkey and drinking it's cum from your own ass? Fuck, ask Bledsoe, that's easy.

But a fucking MILFy hot white woman working for fucking Ling Chow at a Chinese Buffett? No. This cannot stand. I mean, last time one of the MONGREL RACES got their mits on a fine white Piece of A, we ended up with fucking OJ.

No, this is what Bend is coming to. WHITE WOMEN marry WHITE MEN and live in nice WHITE PICKET FENCED homes, with WHITE DOGS.

But that shit is NOT going to happen here anymore. The NATURAL ORDER of things is getting butt-reamed, and God's Plan For Whitey is getting turned on it's head. And fucked.

I don't know about you, but I don't even want to live in a World where a hot, white P-of-A has to work at a Chinese Buffett. Fuck that. I mean, my God, that shit is for the Jethro Bodines, the Todd Bridges', and the Tooties of the fucking World. Fucking losers.

Bend is becoming a perversion of all that is good in the World. White women working in a Chinese Buffett? Fuck that. That's bad enough to clean out at least half this town. That shit is the saddest shit I've ever seen.

OK, moving on from that sad, sad shit...

There was a good piece in the Oregonian yesterday, here's some highlights:

Life after the bubble: From American dream to American nightmare

Kevin and Annette Martin celebrated their 15th anniversary by getting foreclosed out of their Newberg house. Kevin's homebuilding business collapsed in the recession, and they couldn't pay the mortgage.

Their bank, JPMorgan Chase, rejected the Martins' request for a mortgage modification and took legal possession of the house Aug. 19. On their anniversary two days later, the Martins and their two young children moved in with Kevin's aunt in her small condominium in Charbonneau.

They're broke, unemployed and visibly stunned at their rapid plunge from the middle class to the newly poor. A bomb of debt vaporized the Martins' once-comfortable life.

The heavy load of leverage they had assumed in hopes of grabbing their piece of the pie proved their undoing. "I believe in the American dream, the white picket fence and the whole thing," said Kevin, 38.

"But now, we're just in survival mode. For 14 months, it's been survival mode."

[... lot's of stats...]

The Martins now number among the grim statistics of the painful financial realignment. Maximum leverage was the norm in the high-stakes residential construction business when Kevin Martin started his company early this decade.

He and Annette first borrowed $120,000 in 2003 to buy land north of Newberg and build their own 2,600-square-foot house. Kevin went to work remodeling a historic home in Tigard and building spec houses in Yamhill and Washington counties.

But building the business required money. As their house gained in value, they refinanced their home loan multiple times. Kevin's grandmother and father co-signed on loans he took out to build homes in Tigard and McMinnville.

In the most recent home refinancing, the Martins took out a so-called negatively amortizing loan from Washington Mutual, one of those lending industry "innovations" that Lansing wrote of.

The loan was structured so that the amount they owed actually increased each month. By 2008, the Martins owed $512,000 on their house. They also owed $563,000 on a construction loan from Liberty Bank.

OnPoint Community Credit Union repossessed their three cars after the Martins stopped making payments on Kevin's 2008 Dodge truck. They didn't realize until afterward that their car loans were cross-collateralized: If they defaulted on one, the lender could seize all three.

OK, so these poor fuckers OWE over $1 million, own three vehicles, at least one of which is BRAND NEW. What I just love is the simpy-ass VICTIM SOB STORY here.

These fuckers, times several MILLION, are WHY this country is in the fix it's in. They borrowed a fucking million dollars, and LOST. And now the Oregonian is doing a VICTIM story on them. Here's a comment at the bottom of the piece:

Posted by beattlejuice

October 10, 2009, 8:47AM

WOW, SORRY, but very little sympathy here for one half the the interviewees. you borrowed a over a million dollars!? and your homebuilding bisiness went kaput and you bought a 2008 new truck? I could never do that.

It is because I have always lived within my means. I never even bought a kayak 20 years ago because i could not pay for it in full in 3 months or less with credit cards. I am one of those poor smucks who does not owe a dime to anyone and i have never "walked away from a debt or financial responsibility"...so please, please stop this "where is the american dream crap" because the dream is not stupidity.

I cannot relate, however, you have my sympathy or your troubles...trust me. The other interviewees are more sympathetic, but still 2500 to 3500 per month on a mortage, what were you thinking and where were you living and i could never afford that luxury; how could you? oh yes, your different.

I agree with Portowick here, some of you have a sense of entitlement that I never had, maybe it was upbringing, but I never thought i was entitled to anything. I worked. and when i was not working and unemployed i really worked double time searching for any job. I can see that our forefathers principles have eroded over time. Still, i feel your pain, but cannot relate.

I have to agree with this bastard. Here's another pissed off cunt:

Posted by jory

October 10, 2009, 10:53AM

Message to America: When you borrow money, you're taking on a big risk and you have to pay it back. Why is this concept so hard to sink in?

Plan for the unexpected. It is not if but when you get sick, when you get laid off, when the economy goes into recession. These are no unforeseen events. They happen all the time and for those caught unprepared it is disastrous to them. Tough luck. Learn from your mistakes and stop asking for handouts.

This is going to happen... and really already IS HAPPENING... by the MILLIONS.

VICTIM MENTALITY.

It's NOT MY FAULT. I just got caught up in something beyond my control. Couldn't stop it. Not My Fault.

This is probably WHY we have a shrieking pack of liberals in control... RePugs tell you that shit is YOUR FAULT. The Obaminator tells you Everything Will Be OK, I won the Nobel Peace Prize, so I oughtta know, right?

This whole country is losing it's sense of ACCOUNTABILITY. Do you know what that means? That means CONTRACTS RE-WRITTEN. That means NO TRUST. That means CONSTANT RENEGGING. No hbm, I didn't say "reniggering" or some such. But being a rePug Nazi, I was probably thinking it....

It means that we are NOT being forced to learn our lessons over this fiasco. All the PAIN will be papered over, and the gubmint will take care of it.

But I can tell you right now, that this shit will end BADLY. When the people lose accountability, the government loses accountability. And when the government loses accountability you end up with COMPLETE CHAOS.

There is some whacky shit going on in the World economies. Little irritating upstarts, are starting to bypass economic giants. China is going to make more fucking cars than Japan next year! I mean, WTF?

White women are working for Chinese fuckers...WTF!

NO ACCOUNTABILITY. This is our legacy to our kids. It has consequences on all levels from one-on-one dealings to global economic implications. It means YOU CAN'T TRUST ANYONE.

OK, I'm going to reprint the Atlantic Monthly piece in it's entirety, primarily because bend Media has it's head firmly in the sand and WILL NEVER address or even acknowledge that Bend is thick with thieves in RE, and that this is one of the most corrupt and sinister towns in the World:

Robust Oregon Real Estate Market Poisoned by Fraud

"People have tried to bribe me. I've been threatened, both verbally and with a gun," real estate appraiser Richard Hagar tells me, recounting the heady days of the Pacific Northwest's housing boom, when unscrupulous loan originators in places like Bend, Oregon would aggressively demand his work confirm a dictated appraisal value, often many tens of thousands above the actual market value.

In Hagar's view, "This recession we're in was triggered by loan fraud. That's the end of it." Situated on the northern tip of the Great Basin at the foothills of the Cascades, with lush evergreen forests to the west and high desert grasslands to the east, the small central Oregon city enjoyed a population boom through the last decade. Retirees flocked to Bend for its clean mountain air and slow pace of life, while moneyed adventurers--mostly from California--came for winter skiing and summer outdoor fun.

Ranked the sixth fastest-growing metropolitan area in the country by the US Census Bureau in 2005, Bend's population increased from 50,000 residents in 2000 to nearly 80,000 today.

Now that population is contracting slightly, largely as a result of the rampant wave of foreclosures.

In a community with such rapid growth, the bursting bubble reverberates powerful shock waves.

By this writing, the number of mortgage defaults had more than tripled from their 2007 end-of-year total. Roughly half the properties currently on the market in Bend are either bank-owned or going through the short sell process, in which the owners close deals for less than their mortgage's value.

So much discussion about the real estate boom and bust focuses on irresponsible buyers, who overextended themselves in purchasing homes they couldn't actually afford, often with dreams of re-selling and making fortune off ever-increasing market values. But during a seminar Richard Hagar gave in Bend Tuesday evening, he pointed his expert finger at one insidious culprit: fraud.

Hagar expounded on this theme for me in a two-hour phone interview last night, after which I hung up somewhat disillusioned that most of the crooks who created the housing bubble would likely escape punishment, while their victims will struggle for years to regain footing after foreclosure, bankruptcy, and complete emotional and financial destitution.

Hagar has more than three decades of experience in the real estate industry, starting out as an agent in the mid-1970s, then becoming an appraiser in the 1980s, eventually earning the highly-prestigious SRA designation by the Appraiser's Institute. He holds real estate investments and still works as an appraiser, though much of his time over the past decade has been occupied by advising government officials on legislative efforts to regulate the mortgage industry, assisting law enforcement with fraud investigations, consulting on related legal cases, and conducting lecture tours to educate industry professionals and the public on how to identify and avoid engaging in fraud.

Real estate and mortgage fraud can manifest in various forms, but the particular variety that significantly infected the market in Bend involved mortgage brokers pressuring appraisers to overvalue properties for sale.

According to Hagar, in the early 2000s he first started hearing from his law enforcement contacts about this kind of problem popping up with increasing frequency in Bend. The corruption seemed to grow a little more pervasive with each passing year, until 2004 when it accelerated rapidly.

"The definition of market value is a matter of federal law," he says. "If appraisers had been following that definition throughout this growth, we would not have created the problems we now see."

"It's almost unheard of for an appraisal to 'make value,'" Hagar asserts, but throughout the housing boom in Bend, that seemed to be the norm. For the Bend appraisers, "They'd have an order coming in with a 'minimum value needed,' and if you couldn't make the value, the mortgage broker would just go down the street. He wouldn't hire you again, or wouldn't pay you."

In Hagar's view, "Almost all the bubble is related to them."

"There were people here forcing monstrous" overvalued loans, Hagar says. Once buyers signed paperwork on a loan larger than the value of their new home, they entered into the new purchase already completely stripped of equity, owing more on their mortgage than the house was worth.

Even before the market started to dive, these people couldn't sell their house for the amount they'd paid. At this stage, it's difficult to estimate what percentage of Bend's real estate bubble would be more appropriately described an illusion created by false valuation of properties.

In an environment plagued by an inflation deliberately orchestrated by a loose conspiracy of those profiting from higher prices, the term 'fair market value' becomes almost meaningless.

According to a 2007 report from the financial service companies National City Corp and Global Insight, Bend, Oregon overtook Naples, Florida to earn a dubious distinction as the metro area with the most overvalued real estate in the nation.

The median single-family house price had nearly doubled to $324,000 over the previous four years. Overall, the report estimated Bend real estate listings to run 78.7 percent over the survey's valuation price.

Mortgage brokers originated 70-90 percent of the loans, so Hagar places the largest share of blame on the unscrupulous in their ranks, though also points out many had to be complicit in order for the bubble to reach such extremes.

A modicum of vigilance would have immediately recognized corruption in the process, so the banks allowed it to happen, he says.

Most real estate agents wouldn't have known any better, but if they had figured it out, they wouldn't want to lose the higher commissions they enjoyed from the overvaluation.

At the request of state law enforcement officials, Hagar began making quarterly visits to Bend in 2005, offering his seminar on the basics of mortgage fraud to anyone who would attend. Unsurprisingly, many locals did not like him.

Blog postings and chain emails trying to discredit his work circulated through real estate industry networks. One time in late 2006 or early 2007, a Bend real estate agent reached him on his cellphone, launching into a full-throated tirade as soon as he answered.

"She yelled, 'There's no fraud in Bend. You can't say that. We're not scammers. We wouldn't do that. You'll destroy our real estate market,'"

Hagar recounts, adding his own response: "Hmmm, actually, you're destroying your market." That real estate agent, it later turned out, was representing a major housing developer (now bankrupt), which had begun offering illegal incentives to help close deals with prospective buyers--not an uncommon practice, but also, technically, a form of fraud.

Hagar guesses the woman didn't even realize she was personally engaged in fraudulent practices, ignorance being one of the primary causes for the crime's prevalence.

A legal team pursuing a mortgage brokerage accused of predatory lending in Bend recently requested Hagar review the company's files for evidence of fraud during the discovery phase of proceedings.

Hagar randomly reached into cabinets and started pulling out stacks of files. He'd found his first clear example of fraud within 15 minutes. By the time he worked his way through the files, Hagar had discovered about 80% of the loans involved some form of fraud, a percentage he says is in line with what the FBI discovered in a national audit of closed loans.

Those cases could represent a wide variety of fraud, but Hagar brings it back around to the role of appraisers, estimating, "There would have been 50-70% less fraud if appraisers had done their job."

Off the top of his head, Hagar can think of at least 30 Bend residents who would deserve to be indicted, tried, and convicted for their role in the fraudulent activities that artificially inflated the local community's housing bubble.

However, he says, "The reality is only about 5% will ever be caught."

"Poisoned by fraud"? Fuck man, that is a damning piece.

"Hagar had discovered about 80% of the loans involved some form of fraud..."

I think I stand corrected on something I said YEARS ago on this blog: That this bubble, in this town, was the result of financial "incentives" gone awry. That we were merely swept up due to "fortuitous" circumstances. That Bend was swept away due to serendipity as much as anything by the housing bubble.

BULL FUCKING SHIT.

We're now finding out something that is becoming clearer EVERY FUCKING DAY: This town is rife with corruption. There are thieves, scoundrels, and grifters in every corner of private commerce, media and local government that wanted this bubble to happen, and MADE IT HAPPEN through FRAUD, LIES, DECEPTION, and almost certainly FELONIES.

This town is RIFE with criminals; they are RUNNING this place. Look at Patty Smelly Cunt Moss: Besides having a cunt that smells like a hobo's boot, she has driven CACB into the ground with liar loans and fraud loans that have brought that bank to it's knees. She'll be gone in weeks, and the whole crumbling structure will fall into the abyss. And I'll cry crocodile tears for the investors who have lost HUNDREDS OF MILLIONS at the hands of this psycho bitch from hell.

And yet... The Bully still Hero Worships this psycho. Here's a nice ironic excerpt where Moss finds religion on credit quality

Businesses, banks alike caught in credit crunch

“Demand is still fairly strong for small-business loans,” said Patricia Moss, president and CEO of Cascade Bancorp, the Bend-based parent company of Bank of the Cascades. “But no matter what level of demand you have, a business still has to qualify. You can mitigate risk with price, but you can’t move away from the basic range of underwriting criteria because that demonstrates whether a bank can be paid back. A bank shouldn’t take an undue risk of not being paid back.”

I like the title... "CAUGHT in the credit crunch". VICTIM MENTALITY. "CAUGHT". Like it's a fucking coyote trap or some shit.

The people in the piece can't get a loan TO STAY ALIVE. Moss pipes up and says she can't give out loans, cuz THE SHIT HAS HIT THE FAN, the MINSKY MOMENT has arrived, and bullshit loans can't be issued like they once were, and the WHOLE FUCKING PIECE exudes the idea that ALL INVOLVED are VICTIMS, and are blameless for WHAT IS HAPPENING TO THEM.

If you agree with this, then you my friend, do not understand what it means to at least make a weak attempt at being financially prudent and living within your means.

I get the funny feeling that the financially prudent are actually going to get fisted most of all when this is done.

The government is loaning Corporate America TRILLIONS. They are taking the money at 0%, and buying treasuries making 4%. 4% of each TRILLION is $40 BILLION. THAT $40 billion has to be repaid. BY FUCKING TAXPAYERS! That's US. You & me, who did not Get Rich on this fucking fiasco, are lining the pockets of those who caused it.

I'm telling you folks, there is a transfer of wealth, the likes of which will never be seen again, going on right now. It's from our kids, and grandkids to todays wealthy. They are being decimated. This country is AGAIN mortgaging it's future for the sake of a chosen few to go from rich to ridiculousy rich.

Started under Bush, and is being staunchly perpetuated by the Obaminator. Fuck you if you think different.

That said, I think we're at an inflection point: This "recovery" is being sold like nothing before. To me, it feels like some sort of engineered recovery, so the rich would have one last chance to bail out on an imploding situation. Sounds ridiculous, right? Then I reiterate the fucking TRILLION DOLLAR LOAN SCHEME math again.

Trillions are being transferred to corporations. But this cannot go on forever. This is itself a LAST GASP of liar-loan fraud from the US government to corporate AmeriKKKa, before the whole edifice collapses into a smoldering heap.

So I tell you now: If you got stocks, SELL THEM NOW. If you got a house for sale, MARK IT DOWN AND SELL IT NOW. Got extra cars, PUT THEM ON CRAIGSLIST. SELL YOUR SHIT. BATTON DOWN THE HATCHES. Cuz this "recovery" will soon be exposed for what it is: The biggest FRAUD, LIAR LOAN ever perpetrated in the history of mankind.

hbm, please teach me to be liberal racist motherfucking nerd, like you!

I glad whitey working to fund these mega-jugs!

"Ling Chow? You hire the white bitches! KITTY MAU!"

The Incredibly Stupid Hulce

2009-09-27T07:36:00.000-07:00

OK, I'll make this a quickie...

I finally read the "editorial" piece by The Incredible Hulce. It's rolling along in acceptable fashion, cataloging past headlines from years gone by, until the final 2 paragraphs. Then she just completely blows up:

And here we are today, same issues, some different faces. But the economy still sucks and Bill Watkins, executive director of Center for Economic Research and Forecasting at Cal-Lutheran, says he doesn’t believe that sustained growth will occur any time soon. He said we may see small positive growth this quarter and the media will declare the recession over. However, the stimulus plan is not working. Government spending does not improve the productivity of private capital. Banks are still not lending. Houses, especially in Central Oregon, are selling for less than you can build them.

That said, we end this editorial with this: go ahead and declare the recession over. It’s not likely that there’s anything more that we can do to help the economy than to believe that it’s getting better and continue to operate our businesses lean and efficient and hold out for a recovery to eventually happen. If our community can lift itself up from the gloom and find some light even in the smallest of economic improvements, then that’s a very good thing. Let’s get this party started.

So everyone, including her hand-picked schmucks from some obscure-ass loser church-related global forecasting basement says that the shit is hitting the fan, and will continue to do so for the foreseeable future.

But Hulce, in her infinite wisdom, says "Let's get this party started"? Oh my God.

If our community can lift itself up from the gloom and find some light even in the smallest of economic improvements, then that’s a very good thing.

Really? So if we just click our heels together, we'll get back to Kansas... right?

This is Standard Issue Marketing Bullshit. That if you bullshit people enough, they'll start to believe anything.

But the real disturbing part of this, is the "Let's get this party started" bit. I mean, My God. Who talks like that? 85 year old white women trying to be "ghetto"?

And what's really wonderful, is that there is implied in statements like that, that The Bubble CAN, WILL, AND SHOULD get going again.

The PARTY was THE REAL ESTATE BUBBLE. And Hulce thinks the best medicine is to get it going again.

THIS is the reason Bend is doomed. There's a mentality there that isn't right. It's much like that of an alcoholic or chronic drug user: If I can just get the good feelings going again I had during the "high times", I'll be good, everything will be fine.

There are a lot of people in Cent OR who will be jonesing for a fix that never comes. "The party" is NEVER going to start again here. EVER. Well, not in my lifetime.

You've got to understand what is really happening to see why.

This is The Big Unwind.

We have made TRILLIONS in loans that will never be repaid. THAT was "The party". The seemingly unending river of credit which was used for almost everything from buying houses to paying off the old lines of credit so we could borrow anew, was "The party". The borrowing of a bit more to make payments on the old borrowings was when things started getting really dicey.

There was no more "party" at that point. Hulcey-mindset borrowers and others just started borrowing "to feel normal". This is where the drug & alcohol use is only hitting the "flatline" high... just feeling OK. Increased use, as always, is required to get "high" again.

And so you begin a spiralling vicious circle that can do nothing but end badly.

And so it has.

And Hulce wants us to ALL GET HIGH AGAIN... NOT finish rehab. The best way to handle what's happened, according to the Incredible Hulce, is we get a good shot of that what ails us, NOT quit cold turkey.

But what's just precious is THERE IS NO MORE, Hulce. That was it. We're in The Big Unwind. We're through.

So, I guess I will explain what is going to happen over the next several years, primarily for the benefit of dumbfucks like Hulce, in terms of what has already happened. And I'll try to make it painless & quick.

OK, our banking system is based on the Fractional Reserve System. If you ever had any sort of rudimentary finance classes, it's east to figure out: Let's say you deposit $100 in the local shithole collapsing bank, CACB. OK, they make money by loaning it out, but not all of it, more like $90. From wikipedia:

Central banks generally mandate reserve requirements that require banks to keep a minimum fraction of their demand deposits as cash reserves. This both limits the amount of money creation that occurs in the commercial banking system, and ensures that banks have enough ready cash to meet normal demand for withdrawals. Problems can arise, however, when a large number of depositors seek withdrawal of their deposits; this can cause a bank run or, when problems are extreme and widespread, a systemic crisis.

To mitigate these problems, central banks (or other government institutions) generally regulate and oversee commercial banks, act as lender of last resort to commercial banks, and also insure the deposits of the commercial banks' customers.

Really, those paragraphs embody a lot of info. There HAS TO BE reserve requirements, or else money creation is theoretically INFINITE (infinite inflation), and BANK RUNS can happen with ease. Imagine you have lent out all of that $100 deposit, if the person even writes a check for $1, you can't deliver.

Now, the "systemic crisis" part is what you should really be focusing on, because that is exactly what has happened.

If you read the wikipedia article in it's entirety (and you should), you'll see there is a very direct correlation between banking reserve requirements, and money creation. There is a very simple example with 20% reserve requirements which leads to a money creation multiplier of almost 5.

So the inverse of the reserve requirement is the money multiplier: 1 / .2 = 5.

You can see the actual reserve requirements for US banks here. It's a tiered system, but on all decent sized banks, it's about 10%. So the multiplier is about 10, but in actuality it is slightly lower due to other factors

Now, this system works great and can be actually used to spur spending by the Fed buying and selling a relatively small amount of bank-held securities, like government debt, some of which is always on the books of banks as "cash".

But there's something "Golden" about that 10% reserve number. It represents the amount beyond which losses become a vicious cycle of contraction vs it's usual virtuous circle of prosperity.

Once you loan losses go beyond 10%, you are pretty much fucked. Even if your losses approach 10% of your loan portfolio, you are in some deep shit. Because your depositors CANNOT get their DEMAND DEPOSITS. You are broke and cannot pay them.

You're in some Big Shit at that point.

Now, typically this sort of thing is a localized phenomenon. Big local business goes down, or some regional butter-fuck hits the local economy, like oil in the 80's or S&L commercial lending. And the shit goes down hard.

But this time it is WILDLY different.

The ENTIRE American housing base is down WAY over 10%. Commercial is down over 10%. THOSE 2 things represent TRILLIONS in loans.

The entire collateralized base of the American banking system is DOWN beyond the reserve point. This is the point where the "systemic crisis" begins.

The banks ARE NOT LOANING, not because they don't want to, but they can't. Even with the TRILLIONS flooding the system, the ENTIRE US BANKING SYSTEM IS STILL INSOLVENT. THAT is the problem. That is why we cannot "Get this party started".

We have gone WELL BEYOND the point of utter collapse. And the government response was really all it could be: FLOOD THE SYSTEM WITH TRILLIONS.

Because, you see, we have an entire banking system whose demand deposits are, say $10 trillion. But the loans and other securities that we have to pay each other off, are only $7 trillion. The gov't hawks were right: If we all tried to Get Our Money, the US banking system would have ceased to exist. Every single bank in the US would have to close.

So the governments only choice was to flood us with trillions.

But now the problem shifts from "I want my money" to "I want this economy to grow", and there my friends we are well & truly fucked. Because growth relies on money, and money comes and goes with the whim & weft of confidence in the fractional reserve banking system itself.

10% reserve requirements were NOT ENOUGH to avert one of the greatest crises in 100 years. So what do we do?

Lower it, as advocated by Hulce? THAT actually ENSURES it will happen again!

Or raise it? THAT actually ensures a TERRIBLE SLOWDOWN, by collapsing the lifeblood of our economy, money. A 20% reserve requirement would throw us right into a depression.

Even leaving it where it is portends that what we face today will happen again.

Fucking rock and a hard place, that is.

And so those are The Real Choices: Lower our reserve requirements to "Get the party started", but have an even more fragile banking system that will succumb to destruction almost instantly. Or raise reserve requirements, and face the prospect of a near-immediate and crushing depression, but a banking system that can in the far-future probably sustain almost any economic slowdown... once it stabilizes.

Or leave it as-is... and face a scenario that is a little of column A, and a little of column B.

Which is what we'll do.

So there will be no real growth in the next decade or so. And government will have to be on-call to forestall collapse for the foreseeable future. We will be in high-wire mode for at least 10 years, with even the slightest disturbance threatening our very existence.

Which is what will happen. We will be in low-or-no growth mode for 10 years, and banks will continue to fail. For years.

Look to Japan to see what happens. Moribund growth that never seems to take off.

When will it take off? When loan losses are so crushed that what actually remains is solid. And loan volume actually begins to exceed deposit growth, and money is created again. The Great Unwind ends when banks stop calling in loans (to pay depositors or "reserve" up), and actually start to lend again, which only happens AFTER we hit rock bottom, and they KNOW that their loans are solid, and repayment is assured. We aren't even close to that. AND THAT, my friends, is WHY banks are not loaning. They have raised their OWN implicit reserve requirements to SURVIVE.

It bears pointing out that I am not one of those psycho, Anarchy-types that believes the best thing is ZERO LOANS, and eating of home-grown beans & tomatoes. Well, I'm closer to that than many people I know, but I do believe there is a place for the modern banking system.

But I also acknowledge that this system can and will cause it's own implosions by it's very nature. And it's near collapse is what we are witnessing now. It makes the peaks and valley's higher & lower. But it does have it's merits.

But when it is systemically participates in a bubble, it literally ensures it's own destruction. There's really nothing else that can happen. And the bigger the bubble, the bigger the collapse IN PROPORTION to the leverage (financial crack-meth) used to create it.

And the leverage used to create our current debacle was almost infinite, because not only were banks going "off balance sheet" to create more money, the amount going into homes as downpayments was LESS THAN ZERO. People would actually get money at closing via all kinds of schemes, namely liar-loan fraud, appraisal fraud, and just about anything else they could get away with... ask Tammy Sawyer.

So our REAL reserve rate was far, FAR less than the OFFICIAL RATE of 10%. It was probably down around 0%, which means 2 things: Incredible fragility and the magnitude of the collapse will be unbelievable.

And THAT is where we are.

That there is GRILFY hotness, hbm.

Damn, I need to get laid.

Ahhhhh, the chubby quasi-pregger MILF. Is there anything better?

What exactly will happen for the next 20 years in the housing market.

2009-09-20T05:00:00.000-07:00

In trying to figure out what will happen in the future, I try to figure out if there is some sort of "model" that applies to the situation.

The housing bubble bursting is sort of hard to nail down, since it is pretty unprecedented. Housing prices as a whole have never really come down in this country. It's also hard to remember, but houses also used to not have such a "speculative" element to their pricing. House flipping was pretty marginal business, pretty much under the purview of sleazy infomercials until the late 90's.

But I think I have the housing market modeled pretty well, in a way that I think reflects the respective payoffs to the parties involved (and maybe I've talked about this before... I'm getting old).

It's our old friend, options.

See, when "we" build a house, we are "long" one house. Now, how it is financed is a secondary concern, but the asset, the house, exists, and we are "long" that house.

How it is financed does cleave the payoffs from this asset in a fairly interesting way.

When you buy a house, if you pay all cash, the payoff is simple: you gain and/or lose dollar for dollar whatever the house gains or loses. Pretty simple, the all-cash example is linear.

But when you buy a house, using one or more non-recourse mortgages (ie they can only take the house on default), you can't really lose monetarily anything once the house goes below the collective principle of the mortgage(s).

The "strike price" of the home is the sum of the mortgage principle. If you "cash out" (ie sell), you get the amount over and above the mortgage sum owed. If the sell price is below that, you simply get nothing.

Of course, it's more complicated than that, since there is also a cost borne of the hit to your credit record, and any sort of "psychic" or other costs, such as mental anguish, and such.

But this does model the purchase of a home using non-recourse debt.

So what is the payoff to the other side?

Well, if you study your options trading strategies, and I have, you know that to simulate a "long" payoff, you need to buy 1 call option (that's us, the home buyer), and sell 1 put option.

As an aside, a call option gives you the right (not the obligation) to buy a share of stock at a given price in a given period of time. A put option gives you the right (not obligation) to "put" a share of stock to someone at a given price within a given period of time.

So the "payoff" diagram of a call option looks like this (strike price = $30):

Call option payoff, $30 strike price.

So, say instead of $30 strike prices on shares of stock, think $300,000 mortgage on your home. Anything above that, you win, anything below... well, you just walk away.

So, we know we are "long" a house, financing ignored. And the home buyer is really long a call option, with a strike price of the mortgage amount. And for illustration purposes we'll ignore the fact that actually the home buyers "expiration date" and strike price change a bit everyday, since the mortgage is being paid off bit by bit thus lowering the strike price. We'll sort of look at it as a call option with a shorter expiration (like 1 year), with a sort of "blended" strike price of the average owed during the year.

So the other side of this transaction is the bank, and if you know anything about options, you know that they are essentially short a put option.

If they were long a put option, they could "put" the asset (ie house) to someone at a fixed price, something that's nice when prices are falling. But they aren't long, they are short, or the exact opposite. They can have the asset put to them at a fixed price, aka the mortgage principle.

So if the buyer owes $300K, and walks from the house worth $200K, the bank is out $100K. Simple.

So this is our housing market model: Buyers are long call options, banks are short puts the summation of these 2 positions equating to being long 1 house.

You might wonder, "Why in the hell would the banks ever go into a business with severely limited upside, and one hell of a lot of downside?"

Well, that's a good question. And the reason is simple, and was intimated to earlier: Banks receive "premium" (ie your mortgage interest payments) for bearing risk.

Think of an interest-only mortgage: The bank can receive (and invest) this amount every month for 30 years, and at the end they will either receive nothing (ie the house is worth more than the mortgage), or they will have to pay some amount that the house has fallen below the mortgage.

And before now, the idea that a house would be worth less in any decent period in the future was pretty absurd. In fact, this "bet" for banks was, and always has been, a pretty safe one.

But let's get back to our little housing model. To figure out the value of our home buyers "call option" we'd use Black-Scholes. I don't want to go into the mechanics of the formula, primarily because I don't fully understand them, but I do know a few things about option pricing.

When you are buying a call option, the price goes UP when:

The volatility of returns goes up.
The strike price goes down.
The time to expiration is increased.

These are all pretty straightforward assumptions.

When the price of a stock is all over the place, the options for that stock, both puts and calls, go up in price.

When the "strike price" goes down, the value of a call goes up, since it's intrinsic value goes up.

When the time to expiration increases, you have more time for the stock to go above your strinke price, and so the value of a call goes up.

So, let's think about the historical aspects of this state of affairs, a bunch of Americo's long call options, and a bunch of banks short puts on the largest store of wealth on Earth, the US housing market.

Well, with respect to Black-Scholes, we can say that the call option buyer probably wants lower volatility, since that lowers the price of their option. The put seller actually can charge more at times of high volatility.

But US housing was never really volatile before 1997. Up a few percent here & there. Maybe once in awhile there would be a regional spike higher or lower, but on the whole home prices moved very steadily, if not slowly, higher. Home volatility has been historically low.

Lowering the "strike price" on a home, basically means increasing the down payment. This pushes up the value of a home owners "call option". It means they have more to lose if the price goes down.

The fundamental thing a large down payment does is it moves the strike price to the left, while the home value remains the same. The home buyer already has built-in "intrinsic value", and a pretty good cushion on which to make money. Similarly, the banks "loss point" moves way down (to the left, to the left), and given fairly stable returns over time, can pretty much count on a long, stable stream of interest payments from a call buyer who has got their financial ass on the line.

OK, so we've had this regime of stable returns, steadily incraesing prices, and fairly hefty down payments until about the past decade.

Then, what happens in any speculative bubble happened to buyers of home call options: They started buying more and more, and banks having lost their senses, also started participating, despite the fact that the increased volatility had actually imperiled the "value" of their vast holding of short puts (home mortgages).

The volatility pushed UP what people were willing to pay for call options, and increased the "premium" received for short puts. And slowly but surely, down payments shrunk, literally to nothing; ie the strike prices on homes equaled their value, and call buyers had almost nothing at risk except the transaction costs, which had actually grown considerably... but were still dwarfed by the potential gains.

And while prices were going up wildly, no really cared. Call prices, bought at little or nothing due to shriveling credit standards, leveraged returns to the sky. Instead of putting 20% down on a home & living in it, people put 3% down on 10 homes (that's 7, plus 3 more on credit cards, so I can retire in the Bahamas!).

And if your house went up 10% when you put 20% down, that was a nice 50% payoff.

But hell, if you put 3% down on 10 homes, and prices went up 10%, that was over 300% on the same money! Even with thick 1%+ transaction costs, it was still worth it.

And so our bubble was created. As usual, with high volatility and increasing strike prices (leverage), and the inherent risk associated with both.

So where are we now? Yes, yes.

Strangely, we have too many homes. That would be that pesky pursuit of 300% returns on 10 homes, not 1, kicking in.

Yeah, should have seen that coming.

Second, the banks hold short put options on assets (those 10 homes no one wants) that have plummeted in value. Yeah, this would be that pesky mortgage crisis I've been hearing about.

Yes, banks ALWAYS have a fairly limited upside on speculative bubbles, but typically (and theoretically) unlimited downside... well, at least to zero, or 100% losses on the assets.

Given that the cumulative sum of US homes was in the low to mid $20 trillion dollar range when this party got started, and prices have fallen off 40%, AND banks had the good sense to spike the party punchbowl with down payments of near 0%, well you've got yourself a recipe for a financial conflagration the likes of which cannot be imagined.

That tells us where we are. And might I add that this blog was around before this monster catastrophe even got started, way back in Dec 2006. And I'll try not to pull a muscle patting myself on the back here, but put all these option analogies together -- the increasing volatility, the shrinking "strike prices" (down payments), and you can see that while the individual call option owners (that's us) had quite a bit to lose (the collective "net worth" of homes in 2006 was many trillions), it was ALWAYS the banks that had the most to lose in a truly colossal meltdown of home prices.

You and me? We can just walk away. The banks just keep losing. And losing.

Or do they?

Our True and Goodly leaders have seen their way clear to taking our money, yes all that medicade and social security cash, and give it back to the fine local put sellers who are losing their shirts (ie Patty Moss et al).

So actually, our model is somewhat off. Because way down in the depths of the left hand side of our option payoff graph, the banks own a long put: They are putting their losses to the American people.

Way, way off to the left... something strange is happening. The banks have received something of almost mond-boggling value: A "free" put option.

Or is it 2 free puts options?

Because, if you look at the payoff diagram of a short put, you see it is the "horizontal" mirroring of a long put. A short put option has a flat payoff as prices increase (simple interest payment collection), but bends lower as prices fall (foreclosure).

Let's say banks on the whole have $15 trillion in mortgages outstanding. That "bend" lower is at $15 trillion and lower. But somehow, banks losses are being capped at an amount equal to what is probably their total capitalization, or about $1-2 trillion, I'd guess.

So somewhere around the $13 trillion mark, the linear negative payoff flattens. More absurdly, it actually seems to turn UP, and head back towards ZERO.

So the banks REAL PAYOFF seems to be a flat line, with a "V" in the middle. It pays banks to be nowhere near the bottom of this V. Be far above, or far below... but not in it's deadly center.

This raises all sorts of issues of fiduciary peril, the likes of which I hope you can clearly see.

But what I find far more interesting is the "offset".

We're STILL only long that one house (or one hundred millions houses... same diff). And Obama Jeebus W Bush has issued the banks somewhere between 1 and 2 FREE put options, meaning their losses are CAPPED below certain loss levels.

So WHO is paying for that put option... or options?

Ah yes... the answer is, of course, us! The American Taxpayer is paying for it.

So, to balance the equation of issuing banks a put option, we are going SHORT a put.

So now the tables are turned. What we thought was our collective "long call"on our homes, with unlimited upside and limited downside, has transformed. Our government has FORCED us to issue a SHORT PUT on the American housing stock, subjecting US to the full brunt of losses below a certain strike price.

But we don't receive interest. And with volatility at it's maximum, the value being lost is worth TRILLIONS.

THIS is the legacy we are leaving to posterity: The payoff of buying a home in this country has been fundamentally altered. Your call option is still in place. You can still win when/if prices go up.

But lurking on the dark side of the mortgage collective is the implicit short put option that will bail out the banks, AND STICK YOU WITH THE FULL BRUNT OF THE LOSSES.

The FLAT left-hand side of the payoff matrix is A LIE. YOU own the losses down there, NOT banks.

Maybe we should have known. How can banks, with their relatively thin capitalization, sustain losses FOREVER? Answer, they can't and they never could. There was always an implicit saving put option owned down there for them in the form of a government bailout.

So you are, as a home buyer, buying a huge call option when you buy a house, and now you KNOW that you are also PAYING for a put option as well. Never really "knew" it before... circumstances had always let it expire worthless, cuz prices inexoribly & continually went up. Not anymore. Prices CAN go down. A lot.

That fucking put option can take EVERYTHING.

Hmmmm...

This whole housing "investment" scheme seems a LOT less attractive. My upside is "unlimited" yes... but my fucking downside is also UNLIMITED. There's a "flat spot" there in the middle... but damn, we sliced through that like butter, and went straight to massive bank bailouts like flies go to shit.

Yes, yes... I will think twice about ever buying into this payoff matrix. It's not as good as it once was. Before now, it was all caviar and Lamborghini's. Now there's real pain if things don't work out.

No... I don't think I'll be doing that again.

So now... You Will See It Coming. Because THAT is what is going to happen. No more difficult to figure out than simply modeling the situation, and analyzing the payoffs.

It was this easy in 2006. But strangely, Patty Moss and the vast pool of experts the Bully and the rest of Bend media relied on had a curious dearth of insight into the problem.

This is a problem No One Saw Coming.

I did. You probably did.

Know thyself, motherfucker.

So when, in 5 or 10 years, when housing demand has simply Gone Away, and the Bully is interviewing Experts Who Cannot Explain What Is Going On, you'll know:

The payoffs have changed. "We" CAN LOSE. We are losing. But the debt? It's our kids problem, so who gives a shit.

Well, you should, cuz it's not really our kids... unless you're damn near dead already. It's us. The debt bomb is ticking, and we owe. Civilizations always die impaled on the pike of debt. Always.

The problem isn't going broke, it's worse than that. We'll lose this country.

To see our "bankers", look East.

Both the borrower & lender have nukes.

And a lender with nukes will always recover the vig.

Cowboy hats & bikini's... cures anythingDamn...

Thumbs up to NUKES!

Goodbye Boys of Summer... that includes Patty Moss.

2009-09-06T05:06:00.000-07:00

I'll make this a short one, since it's the last weekend of Summer...

I saw a pretty amazing home offers over at Forum Meadows. Not "amazing" because they are Good Deals, but amazing because they show how terrible things have gotten in Bend, and amazing in illustrating the after-effects of copious Kool-Aid consumption.

From bend.craigslist.org:

$129990 / 3br - Finished Newer Homes-Ready Now! (Bend) (map)
Date: 2009-08-08, 8:05AM PDT

Introducing Newer Homes from 1113 - 2100 sqft at Forum Meadows in East Bend Near St Charles Hospital. There are 3 floor plans to choose from and all homes are complete and ready for occupancy.

These are well appointed homes with tile counters, solid wood floor entries, appliances, finished garages, window blinds, fenced yards, accented exteriors, landscaping and underground sprinklers. They are 2 blocks from shopping, restaraunts and movie theater.

These homes are now for steal at $200,000 below 07' listing price.

They are in better shape than any bank owned home and you will receive an answer within 2 days of your offer.

If you're tired of making rejected, competing offers on homes that need repairs, then call Nancy @ 541-480-4599 or Matt @ 541-280-9576 today for information on these clean and ready to move in homes.

These Forum Meadows shitshacks are down 63% from their original ask prices of $349,500. Remember Pollocks infamous statement about STEALING?

Oregon subdivision a ghost town
Saturday, December 22, 2007 at 12:00 AM

Buena Vista Custom Homes unloaded 141 homes last weekend in what company says was the biggest residential home auction in state history. But none of the 29 in Bend sold.

Still, in every place except Bend, the auction achieved what Pollock set out to do — get rid of expensive-to-carry housing inventory. And it gave him some cash to use on his next moves.

"The sale of the homes from the auction put us in a great position as a buyer," Pollock said in a news release. "There are some great deals to be had out there right now on lots."

Some of the Bend houses 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.

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

The company retained the right to reject any final bids below its unpublished reserve prices, Higgins said. It was obligated to close on any final bids that rose above that level.

Buena Vista had hoped to see bidding start at $189,000 for its 1,133-square-foot models in Bend and $229,000 on its 2,116-square-foot homes.

Original asking prices had been $349,500 and $443,950, respectively.

Tamara Christensen and her family live nearby. She had hoped the auction would work at least well enough to fill the houses with people who would landscape the bare-dirt backyards she sees out of her back windows.

But another nearby resident said she was OK with the way it is.

"I kind of like having fewer neighbors," Charlene Gossling said.

"It's quiet."

I'm not sure how many times I ranted about Pollock taking the low bids for those cracker-ass shitshacks, and being happy to get them, but it was quite a few. He's still on the RIP Hall of Shame masthead.

I'm telling you folks... this thing isn't over by a long shot. THIS is where some Realtor would jump in and say something about "nowhere to go but up", or some shit. They've been saying that for 2 years. Is this UP?

It's stupid ideas like Pollocks STD-fest that'll be taking down this town for decades to come.

Speaking about Taking Down, someone (Ballzee) posted a link to the actual Cease & Desist order sent to Cracker Ass Motherfucking Butt-Fugly Patty Moss, and that shithole Fraud-U-Net Bank she whores over, Cascade Bank.

Funny, but this is yet another example of The Guy On The Street Saw It Coming YEARS Before The Lying Dumbfucks Who Are Actually Perpetrating The Fraud. This raises the question whether Moss KNEW she was blowing up CACB, or whether she is a fucking moron. I vote MORON.

So anyway, back to the order. Click the link, and read it, but I'd agree with Ballzee, it is damn "harsh":

the Bank...cease and desist from the following unsafe banking practices...

operating with management whose policies and practices are determinetal to the Bank and jeopardize the safety of its deposits;
operating with inadequate capital in relation to the kind and quality of assets held by the Bank;
operating with a board of directors that which has failed to provide adequate supervision over and direction to the active management of the Bank;
operating with inadequate loan valuation reserve;
operating with a large volume of poor quality loans;
operating in such a manner as to produce operating losses;
operating with inadequate provisions for liquidity;

I mean Holy Shit! If that ain't a stinging rebuke for Moss, I don't know what is. The rest of the order is a bunch of micro-management directives about HIRING PEOPLE WHO KNOW HOW TO RUN A BANK, with the VERY OBVIOUS implication that those who are there now, DO NOT KNOW HOW TO.

One of the directives from Sheila BEAR HUG Bair, is that Mossco get Tier 1 capital up to 10%. It is not even close now:

Cascade Bancorp (Oregon) Announces Filing of Form 10-Q Quarterly Report and Financial Results for the Second Quarter of 2009
At June 30, 2009, the Company's leverage, tier 1 capital and total risked-based capital ratios were 5.19%, 6.03% and 8.87%, respectively...

FDIC also lays out how Mossy can and cannot raise money, one of which is the hilarious "raise it from the Board of Directors"! WTF! I also believe that "Begging for the money in the local lie-filled rag" is another legit money-raising avenue.

Mossy can also issue new stock... but hmmmm... that is NOT happening. I wonder why? Oh right... Wall Street would rather buy large, puss-ee (pussy?) maggots and eat them. Wall St would no more buy CACB stock than it'd rise & fly. Even CACB's largest shareholder KNOWS that this bank is DEAD & GONE, and will not give a nickel to save it.

OK, so I think Mossy & Pollock have finally earned their badge of shame on our RIP masthead.

OK, just some interesting pieces I read this week. First, I can't help but reprint the BBC piece, since it's hard with the character limits in the comments, and I think it's just a great balance to what you hear from Costa (ie 100% BULLSHIT):

Economic crash in Oregon boomtown

By Adam Brookes BBC News, Bend, Oregon

Bend, Oregon was a 21st century American boomtown. It is a beautiful place, in the high desert of central Oregon, amid mountains.

The sunshine is warm, the air crisp and filled with the scent of bitterbrush and pine. Its people are gracious, their gorgeous surroundings imbuing them with a certain American languidness.

All these attributes were - in the minds of the city's ambitious planners and businessmen - what would bring the retirees and tourists flocking to Bend. To accommodate them, a boom in housing began.

Boom and bust

The population of Bend quadrupled in under 20 years - from 20,000 to 80,000. Between 2001 and 2005, the median value of a home in Bend rose by 80%.

By 2005, work was getting underway on 700 new homes each month.

Some of the developments are stunning: houses filled with mountain light clinging to craggy hillsides.

More than 17% of the workforce was employed in construction - far higher than the national average.

In what had once been an isolated lumber and mill town, high-end restaurants and brewhouses opened. Shops selling expensive bric-a-brac bloomed. Massage therapists and hairdressers proliferated.

Downtown Bend looks like a shrine to post-millenial bijou: pricey shoes, scented candles, fancy coffee. There is even a shop specialising in beachwear - despite Bend's location in the high desert.

But when the US slumped, Bend crashed.

The value of a home fell 40% in under two years. And unemployment nearly quadrupled from around 4% two years ago to 15% in the summer of 2009.

"Everything that Bend produced relied on the credit market", says Carolyn Eagan, an economist with the Oregon Department of Employment.

"Construction materials, doors and fittings, recreational vehicles: everything depended on people being able to consume more than they could use."

Now the credit has dried up, and the building of Bend has stopped. The town is dotted with developments that got underway, and then ground to a halt.

They are desolate expanses of weeds, dust and discarded construction materials.

Homeless shelter

In downtown Bend, we met Dan Hardt. Mr Hardt used to employ 20 people hanging drywall in Bend's new homes.

He owned three houses of his own, and a boat.

He used to go on elk-hunting trips. Now it is gone - all of it.

"When the building stopped, the lifestyle went very fast," he told us.

"It's a lifestyle I don't see coming back."

Dan now lives at the Bethlehem Inn, a motel converted to an emergency homeless shelter.

"Those who were living at the at the top of the heap and who have fallen to the bottom, they don't know where to go for help, they don't know how to get that help.

There's anger and frustration and a sense of entitlement," says Corky Senecal, who heads emergency housing services for Neighbor Impact, and has 30 years experience of providing services for the poor.

"The middle class is where it's really been decimated," she says. When you lose your job in America, you will receive financial aid from the government. But it is limited.

Typically, an unemployed worker in Bend will get state benefits for a period of six months to a year. After that, as many in Bend are discovering, you are on your own.

In addition, the loss of a job frequently means the loss of health insurance and payments into retirement funds.

This limited social safety net means unemployment in America can be devastating. "It's not just the job that stops," says Dan Hardt. "Everything else stops with it."

Ms Senecal introduced us to to Randy Worrell and his 11-year-old daughter, Patty. Mr Worrell, a burly 42-year-old former firefighter, was laid off from a variety of jobs.

He has not worked since the end of last year - and his unemployment benefits have run out.

"I don't know what I will do from one day to the next," he says.

Lesson learned Neighbor Impact has put him and Patty in temporary accommodation. He will look for work, he says, for six hours a day.

And he is deeply sceptical of pronouncements emanating from Washington DC that the US economy is showing signs of recovery.

"Lately it's all, 'the economy is turning around'. No, it's not. At least it's not for us," he says. "I don't think we've even hit rock bottom yet. I think we have some way to go."

Bend, Oregon has a great deal going for it, and will, no doubt, experience some sort of recovery. The population of the city has not noticeably shrunk, which is a good sign.

But no-one expects the housing market ever to revert to its previous, ferocious levels of activity. And many will tell you they have no desire for it to do so, that Bend has learned a lesson about bubbles.

But in the US, joblessness can alter a life trajectory for ever. Seven and a half million Americans have lost their job since the start of the recession.

And unemployment's clawmarks will be visible on the face of Bend, and of the US, for a long while to come.

Some of this reporting is a little misguided (gracious?), but it is definitely not a piece you would EVER find in any Bend media outlet. It's basically an onthology and cataloging of greed and it's after-effects. Again, you will NEVER see this sort of thing from the Bully.

Another good piece I saw was from Mish:

Friday, September 04, 2009

How Overpriced Is The S&P 500?

Inquiring minds are wondering How Overpriced Is The S&P?

It's an excellent question given bulls feel the market is headed much higher while the bears feel the opposite after a remarkable 50% rally.

Let's start off with a look at the financial sector where Allowances for Loan and Lease Losses (ALLL) have plunged even though non-performing loans soar.

To understand the importance of ALLL, inquiring minds are reading a description of Allowances for Loan & Lease Losses.

Businesses try to predict, on an ongoing basis, the amount of loss in their accounts. They take periodic charges to earnings to better match losses to periods when they occurred. Banks do this as well.

They use current income, through the provision for loan and lease losses, to create and build a reserve to absorb losses. The ALLL can be increased another way.

When the bank collects on previously charged-off loans, the amount recovered goes into the ALLL. Charged-off loans decrease the ALLL.

If a bank decides it has overestimated its potential loss exposure, it can choose to reduce its ALLL and add the amount to its income. This is known as making “reverse provisions” for loan and lease losses, because the bank decreases the allowance, or reserve amount, rather than increasing the provision.

It is rare for a bank to make a reverse provision, however, because of the imprecise nature of determining an appropriate reserve. One last point to remember with respect to the reserve is that the ALLL is a general reserve.

Therefore, even if a bank analyzes and estimates the loss on each loan, the allowance is there to absorb all losses in the loan portfolio and is not specific to a particular loan. Remember that allowances for loan losses will decrease as charge offs increase. However, the above charts are in relation to non-performing loans.

Because allowances for loan losses are a direct hit to earnings, and because allowances are at ridiculously low levels, bank earnings have been wildly over-stated. Bank Profits Too Good To Be True Flashback April 16, 2009:

Wells Fargo’s Profit Looks Too Good to Be True:

Jonathan Weil What sent Wells shares soaring on April 9 was a three-page press release in which the San Francisco-based bank said it expected to report first-quarter net income of about $3 billion.

Wells disclosed few details of what was in that figure. And by pushing the stock up 32 percent that day to $19.61, investors sent a clear message: They didn’t care.

Dig below the surface of Wells’s numbers, though, and there are reasons to be wary. Here are four gimmicks to look out for when the company releases its first-quarter results on April 22:

Gimmick No. 1: Cookie-jar reserves.

Wells’s earnings may have gotten a boost from an accounting maneuver, since banned, that it used last year as part of its $12.5 billion purchase of Wachovia Corp. Specifically, Wells carried over a $7.5 billion loan-loss allowance from Wachovia’s balance sheet onto its own books -- the effect of which I’ll explain in a moment.

Once it took control of the reserve from Wachovia, Wells was free to start dipping into it to absorb new credit losses on all sorts of loans, including loans Wells had originated itself. (Think of a child raiding a cookie jar.)

The upshot is that Wells could get by with reduced provisions until the $7.5 billion is used up, boosting net income.

Another quirk: The reserve was related to $352.2 billion of Wachovia loans for which Wells was not forecasting any future credit losses, according to Wells’s annual report. Weil goes on with three other highly suspicious (at best) practices by Wells Fargo, including a balance sheet holding of $109 billion of "other assets".

Weil writes: "The footnote says the largest component was a $44.2 billion bucket that Wells labeled as “other.” Yes, that’s right: The biggest portion of “other assets” was “other.” And what did this include? The disclosure didn’t say. Neither would Bernard.

Talk about a black box. That $44.2 billion is more than Wells’s tangible common equity, even using the bank’s dodgy number. And we don’t have a clue what’s in there.

FDIC Problem Bank List Soars To 416

For a nice discussion of some of the problems facing the financial sector, please consider For FDIC, a long tunnel and little light by Rolfe Winkler at Option Armageddon.

FDIC’s problem bank list grew to 416 at the end of last quarter. These banks have $300 billion of assets.

In total, FDIC estimates the banking sector is wrestling with $332 billion worth of loans and leases on which borrowers have stopped making payments. That excludes hundreds of billions worth of underwater loans that may be current now but will ultimately default.

Many banks, including the largest ones, are likely to struggle for some time.

How Big is the B of A, and Citigroup Problem?

Citigroup and Bank of America have received hundreds of billions of dollars of government support, but, precisely because of that support, they’re not on the FDIC’s list.

Adding them to it would multiply total problem assets 10 times, to $3 trillion. Asset prices aren’t going back to their highs of 2006-2007, so loans held against them will be generating losses for years.

The FDIC may raise enough cash from banks to fund depositor losses in small and medium-sized banks, but it is clear that the biggest banks are far too large for them to handle.

As a result, the government’s emergency rescue measures aren’t going away for a while. And taxpayers should expect to be writing fat bailout checks to the financial system for years to come.

America’s Japanese banks Inquiring minds are reading America’s Japanese banks also by Winkler.

A banking system loaded down with hundreds of billions of dollars worth of unrecognized bad debt — Japan in the 1990s? No, it’s the United States today. And where are American banks hiding their losses?

Among other places, in their loan portfolios. Banks have written down billions in toxic securities, but many toxic loans are still carried at close to full value. According to data published by the Federal Reserve late last year, banks are carrying $3 trillion of residential real estate loans and $1.7 trillion of commercial real estate loans on their books for a total of $4.7 trillion.

Dan Alpert at Westwood Capital thinks as much as a fifth of that total could be uncollectable. Banks argue that loans should not be marked down if they’re still “performing.”

As long as borrowers are meeting their contractual obligations, there’s no reason to take a writedown. The problem is, this gives banks an excuse to extend, amend and pretend. They can make concessions on loan terms or delay foreclosure notices, if only to maintain the fiction that borrowers will make good.

With real estate prices likely to fall, and stay, 40 percent below the peak, borrowers have a big incentive to renege on their side of the bargain. This is how we become Japan.

Emergency bailout facilities allow banks that otherwise would have failed under the weight of bad loans to hold those loans to maturity — pretending the bad ones will be paid off in full over time.

In reality, many loans will default and banks will bleed capital for years. Take commercial real estate. As the Congressional Oversight Panel has reported, few CRE loans that were originated at the peak will qualify for refinancing when they mature.

Banks can pretend they will, carrying the loans at values far above what will ever be paid back.

So what do we do? We can start by eliminating government guarantees that allow banks to avoid dealing with the problem.

As things stand, the biggest banks have no incentive to write down loans because the Federal Reserve, Federal Deposit Insurance Corporation and Treasury Department have, in effect, promised them unlimited financing to hold loans to maturity.

As the Japanese can tell you, this is just a recipe for stagnation. Thanks to a debt bubble that authorities refused to deal with decisively, that country is now entering its third consecutive lost decade.

S&P 500 Earnings Given that loan loss provisions directly affect earnings. Let's take a look a PE chart of the S&P 500 from Chart of the Day.

PE Ratio, S&P 500

That chart was from earlier in the month. Nearly all companies have now reported and the PE is down to 127.43.

If that sounds preposterous you can check the S&P 500 Excel Spreadsheet right on Standards and Poors. Real vs. Operating Earnings The chart above is based on actual reported earnings.

Unfortunately it's difficult to find anyone stating P/E ratios based on actual earnings. Instead, because the media and investor bias tends towards being 100% invested 100% of the time, nearly all estimates you see are based on "operating earnings".

Barron's had an excellent article on this subject in May of 2008. It is as relevant today as it was then. Please consider What's the Real P/E Ratio? There are two main earnings numbers that Wall Street uses when discussing valuations -- "reported earnings" or "operating earnings."

Typically, the bulls use "operating earnings," and the bears use "reported earnings" because operating earnings are higher and reported earnings are lower.

Also, it makes sense for the bears to use the past 12 months of earnings because they are usually lower, and for the bulls to use forward operating earnings to help make their case.

Using the last 12 months is much more consistent, since it avoids dependence on estimates of earnings. Operating earnings exclude write-offs, while reported earnings include write-offs.

That is the only difference, but it's a difference that is getting much more important.

As recently as the early 1990s, operating and reported earnings were virtually the same. But then we entered the greatest financial mania of all time, and the earnings numbers diverged.

There were so many write-offs by companies making unwise investments and then undoing them that operating earnings grew much faster than reported earnings.

The write-offs that had been sporadic and unusual became common for many companies. Using operating earnings is now like playing in a golf tournament that doesn't count any penalty strokes for hitting the ball into a water hazard or out of bounds.

Over the past 75 years, most market peaks topped at around 20 times reported earnings, and the troughs occurred at around 10 times earnings. The financial mania of the late 1990s pushed P/Es to over 40 times reported earnings, and the following bust never brought P/Es below 18 times reported earnings.

There's more we can do to make sense of earnings: The best way to measure present earnings and future earnings is to smooth them out over long periods.

Earnings can grow at only approximately 6% a year over the long term. The trend is limited by the growth in real GDP plus inflation.

And long term, real GDP cannot grow faster than the increase in the labor force plus the increase in productivity.

If you don't accept this, look at a long-term chart and draw a 6% growth line through the earnings. It is clear that earnings sometimes rise above the line and sometimes fall below it, but earnings always revert to the 6% mean.

Going back to 1950, every instance where actual earnings rose above trend-line earnings was followed by a period where actual earnings went well below trend-line earnings.

Creative Destruction

Please bear in mind that historical long term trends are just that. Intermediate-term, it is imperative to factor in demographics, changing consumer attitudes towards debt, willingness and ability of banks to lend, overall debt levels, etc.

I have discussed consumer attitudes many time, most recently in Creative Destruction. Factors Sealing The Deflationary Fate

The five month, 50% rebound in the S&P 500 was certainly spectacular.

However, the more important question is where to from here? Take a look at Japan's "Two Lost Decades" for clues.

Creative destruction in conjunction with global wage arbitrage, changing demographics, downsizing boomers fearing retirement, changing social attitudes towards debt in every economic age group, and massive debt leverage is an extremely powerful set of forces.

Bear in mind, that set of forces will not play out over days, weeks, or months. A Schumpeterian Depression will take years, perhaps even decades to play out. Thus, deflation is an ongoing process, not a point in time event that can be staved off by massive interventions and Orwellian Proclamations "We Saved The World".

Bernanke and the Fed do not understand these concepts, nor does anyone else chanting that pending hyperinflation or massive inflation is coming right around the corner, nor do those who think new stock market is off to new highs.

In other words, almost everyone is oblivious to the true state of affairs.

How Overpriced Is The S&P?

Take another look at those charts kicking off this article. Factor in the analysis of Winkler and Weil. Factor in demographics, consumer attitudes, etc.

Factor in global wage arbitrage. Factor in loan loss provisions that have only one way to go, up. Factor in consumer debt levels, realizing that consumer spending is 70% of the economy. Do the forward earnings estimates you hear from bulls make any sense to you? They do not make sense to me.

While it's hard to put a price tag on any of those components, we can look at Japan as a model as I have suggested on many occasions and Winkler is suggesting now. If you have not yet done so, please consider Effect of Household Deleveraging on Housing, Consumption and the Stock Market.

Here is a snip pertaining to Japan, but there is much more in the article to see.

Nikkei, 28 yrs

A look at the Nikkei shows that Japan has already lost two decades since the peak in 1990. It is likely the US follows the same general pattern.

Of course some huge innovation like the internet could come along that would create enormous profits and employ millions of highly paid workers.

However, the odds of that are extremely small. Thus, the risk/reward scenarios of long term investing are awful based on fundamentals alone.

Traders however, will have many opportunities in both directions. All things considered, I suggest the S&P 500 is easily 50% overvalued based on what we know now.

That is not a prediction the S&P will be cut in half, rather it is my belief that it should be cut in half. Given that I have seen estimates as low as 200, I am not "SuperBear".

However, the reality is no one really knows what innovation is (or is not) coming, nor can anyone say for certain what valuations investors are willing to place on earnings. There are also foreign Central Bank issues to fact in.

With that in mind, the S&P could easily meander around this level for a decade while earnings catch up to what are now very poor valuation metrics.

As always, traders need to keep an open mind and not get locked into any scenario. Long-term investors will have to take what they get.

Unfortunately, I suggest those results are not likely to be very pretty.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

The title of the piece is sort of misleading because it is primarily about banking. What I think is amazing is the B of A and Citigroup chart.

These 2 banks on their own DWARF the size of the S&L problem several fold.

The number of failed institutions going down right now is quite low. But the size is incredible. And this graph doesn't even include AIG. Or Fannie. Or Freddie. Add those in, and you get a real sense that this current problem is something that will not fade away quietly.

Our government is trying to keep these companies off the FAILED board, because the incredible upset caused by just letting Lehman go (a piker in comparison) was not acceptable, and truly would have melted down the Worlds economies.

And it could still happen. I honestly do not think the US Government can recitify the situation. It's my strong belief that the bursting of the housing & credit bubble is the most important event of our lives (economically), and it's effects will be felt for decades.

And finally, I wanted to post this Oregonian piece.

Increase in Portland-area home foreclosures worries analysts
Posted by mgraves September 03, 2009 18:06PM

Portland-area foreclosure filings have begun ticking up again this summer, reversing a spring trend that showed mortgage defaults had leveled off.

County records show that the number of mortgage defaults -- the first step in a foreclosure -- rose less than 2 percent in Clackamas, Multnomah and Washington counties between the first and second quarters of 2009.

But this summer, new foreclosures are on pace to jump 9 percent in the third quarter to about 3,500 for the tri-county region, or 38 filings every day.

"We're not seeing any relief," said Sande Sivani, a consultant who researches property records and records documents for title companies. "It's going up and up and up."

The uptick comes as lenders, which months ago had put a moratorium on foreclosures, have grown more aggressive with struggling borrowers.

The housing market has seen a mild boost from bargain-hunting investors and first-time buyers chasing a federal tax credit. But the renewed interest isn't coming fast enough or broad enough for some home owners.

Double-digit unemployment and falling home values have pinched home owners between shrinking income and homes that are worth less than the mortgage debt. The position leaves them few options to avoid a default. "It's the high unemployment that's driving foreclosures," said Patrick Newport, U.S. economist with economics firm IHS Global Insight.

Banks, despite political pressure from the White House, remain reluctant to modify troubled mortgages to try to save homeowners from foreclosure. More frequently, borrowers whose mortgage fall into default are not escaping trouble.

Fitch Ratings Ltd., a credit-rating firm, examined mortgages that had been packaged into securities. The firm found that between 2000 and 2006, 45 percent of borrowers who fell behind on prime loans -- those with the best credit -- were able to "cure" their delinquency by catching up on their payments. But that cure rate has plunged to just 7 percent for prime loans.

For Alt-A loans, those with a slightly higher credit risk, the cure rate has fallen from 30 percent to 4 percent. For subprime loans, the riskiest type, the rate went from 19 percent to 5 percent.

In the three-county Portland area, Sivani said she found 800 loan modifications recorded in the first six months of the year. But, she said, her sampling found about only one in 10 were modifications tied to a delinquent mortgage.

Either way, those modifications were dwarfed by the more than 6,300 new mortgage defaults the lenders had recorded in those three counties in the same time period.

Despite Obama's calls for banks to lighten up on troubled borrowers, Newport said: "That isn't going to happen. Usually it's in the banks' interest to take the loan into foreclosure."

A July study by the Federal Reserve Bank of Boston found that lenders expect to make more money on foreclosures than from a modified loan. That's because a large percentage of borrowers historically either "cure" the delinquency on their own or they receive a loan modification, then default on the mortgage again.

By many measures, Oregon continues to fare better than the nation that's been dragged down by Arizona, California, Florida and Nevada. But in some cases, the state's woes are unmatched in its own record books.

The Mortgage Bankers Association reported recently that about 8.5 percent of Oregon mortgage holders were at least 30 days delinquent or in some stage of foreclosure during the second quarter.

For the first time in this downturn, that figure has surpassed the previous high water mark set during the 1980s recession. The second quarter figure was the state's worst since the association started keeping track in 1979.

Those looking for a brighter outlook in the next year may have a difficult time.

Barclays Capital forecasts the number of foreclosed homes for sale will peak in mid-2010 at 1.15 million, up from an estimated 688,000 as of July 1, the Wall Street Journal reported.

IHS Global Insight's this week ranked Portland as the country's sixth most overvalued housing market. The firm says the Pacific Northwest is the final region to watch the froth of the boom years burn off.

Of the 11 markets labeled overvalued, seven fall in Oregon or Washington.

Dunc, please help me do horny FRASH-DANCE in this metal crib!

I wish I had a pearl necklace instead...

Now that the Downtowners gone, where we get an hbm sandwich?

The Latest Bubble? Recovery

2009-08-30T05:24:00.000-07:00

Wow, they are selling this thing hard.

I think the only thing I've seen sold harder than the current "recovery" was the recovery back in Aug 2006. Then the Jan 2007 recovery... and that July's recovery... then the Winter Recovery of 2007... and into Summer 2008's recovery.

Yes, the only "recovery" that hasn't been sold is the FALL of 2008 through Spring of this year. That's because only small-potatoes morons like John Costa were still peddling that shit.

Now, I'll admit right now (like I did last week), that some, including me, are experiencing something of a "recovery".

I am "asset poor". I don't own a house, and I have 2 would-be Cash-4-Crunchers. I have been saving my pennies, and threw all in late last year... and suffered the worst market losses of my life. Until just recently.

But that sort of "financial profile" I'll bet, is pretty rare. Most people have a big chunk of their assets in their house. For 75-80% of all people this will always be true. This "current history" is the only time in my adult life that hasn't been true for me.

So most people that are represented at all in financial society have their assets tied up in a home. Almost always with the attendant debt. And that asset value has been crushed by trillions of dollars. We are probably only about 55-60% through this thing... for Bend, far less. RE Bubbles NEVER end this fast, and the "recovery" is typically measured in decades... for Japs & Texas oil it's still 2 decades and waiting.

So the primary "net-worth" engine in this country, having gone strong for 100 years, is broken. TRILLIONS are gone, and won't be coming back anytime soon.

So "what" is this recovery we're being sold? Well, it's primarily a Pollyanna, The Sun Will Come Out Tomorrow scenario. And the media is pointing primarily to the stock market as proof.

But I've said over and over that the stock market didn't even see the enormity of the housing bubble, The Greatest Financial Bubble The World Has Ever Seen... and stock market types did not see it. They were too far IN it. They thought what was happening was fine, and would go on forever.

I started this blog in Dec 2006, and it was 11 months later until stocks peaked.

And I can tell you, preaching about The End Is Nigh is pretty damn tough, as the wealth tidal wave grows higher & higher. There seemed to be indications aplenty that things were not going well... but The Canary In The Coal Mine, stocks, were just fine.

So stocks are currently the primary divining rod for recovery prognosticators now. And they have done well. Quite well, having one of the greatest 6 month runs of all time. From about 6,500 to 9,500, or 46%. That's pretty amazing. That's the sort of gain that usually takes years.

So stocks are pointing the way, right. And that "way" is up... right?

Well, look at the curious phenomenon of Freddie, Fannie, and AIG.

AIG's current valuation is $6.76BB. Fannie & Freddie are worth $2.27BB and $1.56BB respectively

AIG 1 year

AIG, 1 month
FNM, 1 month
FRE, 1 month

These companies were actually the butt of some pretty sarcastic criticism in the Bully, no less, regarding their recent advance, several hundred percent in all 3 cases.

But folks, again the market has it wrong.

These companies own Unkki Sam HUNDREDS OF BILLIONS. They aren't just worth ZERO, they are in the red TENS OF BILLIONS.

But the market has caught some sort of Dengue Fever, and thinks that it can bring these financial zombies back to life. It has slapped a collective $10BB price tag on these corpses. Rest assured, they are dead. They are worth nothing.

So again, there is a Huge Gulf between what the market expects, and what is seemingly a blatant reality. Could there be the Worlds Largest Debt Forgiveness package coming? Maybe. But even then, the outrage seems like it would dictate a complete wipeout of equity holders.

As I said, this thing is 55-60% done; and that's time elapsed until we hit bottom. For Bend, add on the customary 2-3 years to that. This isn't done. On a opp-cost basis, we will eclipse the March lows.

More proof that the recovery is a sham? There's plenty.

Local unemployment came out last Tuesday at 15.3% (adjusted, 13.9% unadjusted) for Deschutes County. Again, the 13.9% is more salient, cuz you can't buy shit at Safeway with "adjustments".

To give you sense of this series, the July UE rates for Deschutes from 2006 to date, has been: 4.3%, 4.5%, 6.8%, 13.9%.

Do you see the recovery there? I do not.

No, I see Cessna closing.

I see Epic closing, shafting everyone in sight, and Schramek looting the company coffers and heading to Bermuda.

I see (from today's Bully):

New building permits continue to fall to such low levels that they are close to zero, from a seasonal-adjustment standpoint, Duy said. He credited the drop in permits to the region’s excessive housing inventory, both from overbuilding and from a steady stream of distressed properties entering the market.

Bend is for all intents and purposes, DEAD. We are an ecoinomic ZOMBIE. Accordingly, I take issue with Bubble-Head Duy:

“The good news is (building permits) are so close to zero there’s nowhere to go but up,” Duy said.

No, actually there is a FAR MORE LIKELY direction that ZOMBIE'S take: SIDEWAYS. Says Duy:

“Building permits followed a very nice pattern each year for years — around 175 homes a month — and it was only in the last few years as the bubble accelerated that (the region) had this weird situation where (it was) permitting 300, 400, 500 homes per month.”

Funny how this guy describes the WHITE HOT CENTER of the Worlds Largest Housing Bubble, Bend OR, as a "weird situation".

Bend Oregon is a fairly unique confluence of startlingly rare financial miracles that culminated in one of the greatest concentrations of fleeting wealth this country will ever know.

Yeah, it's "weird". But what will eclipse it in weirdness, has yet to come.

We will find out just how deeply it has been penetrated by the Tami Sawyers, Rick Schrameks, the Summit 1031ers, and all the other grifters that represent probably half this towns economy.

So we are to believe that a UE rate that's gone parabolic is "leveling-out". "Recovery right around the corner", and all that. Hmf.

In Thursay's Bully, Costa again displays a near catatonic penchant for Broken Clock-itis.

Both office & industrial vacancy rates in Bend have exploded higher, from 7% and 3.6% respectively at their nadir, to 19.1% and 17.4%.

Oh yes, thar be recovery there maties!

WTF! This piece had nothing but "RECOVERY IS IMMINENT" statements from start to finish. Have these fucking experts been over on Colorado recently? That fucking place is a ghost town.

Ironically, there is a huge piece just below it, "THE HOUSING INDUSTRY: SIGNS OF LIFE", and a huge pic of Vegas.

No, commercial is NOT where "The Elusive Recovery" is happening. In fact, it is the next shoe to drop. Commercial vacancies will go to 30% in Bend, mark my words.

Where next for this Fabled Recovery Fraud?

Oh, right, right, right, right, right... how could I forget the Biggest Mega Fraud In Town?

Cascade Bancorp.

We already had Priney Bank go down hard, and believe me folks, this shit comes in 3's. Past will be prescient, and you will see our dearest beloved CACB Fraud-U-Net Financial House of Cards go down.

CACB is headed for the financial dustbin of history, and skank-ass-butt-motherfucking ugly Patty "Beat With An Ugly Club" Moss has told us all as much, with her now weekly PLEADING FOR NICKELS segment in the Bully.

But the bigger issue is little killer bee stings like CACB taking down FDIC, which is all but inevitable at this point.

OK, so Unkki Sam will step in before this happens, but Nigga Pleeze, how the fuck many times can this happen before some major shit hits the fan?

All this leads to the Point About No Recovery Is Possible Because Our Debts Will 100% Wipe Out The Net Worth Of This Country.

In 10 years, the Obama-Jeebus tells us that we will owe something like $400K PER MAN, WOMAN, and CHILD in government debt. That's just GOVERNMENT DEBT. You will still owe on that fucking $400K mortgage for your $150K STD shitshack.

THAT is death. THAT is the End. We cannot, as a nation pay that off. No way.

We are riding a short, pleasant, but 100% unsustainable Bloody Mary recovery. At some point, we will all wake up to this 100% INEVITABLE FACT. We have, are, and will continue to BAIL OUT EVERYTHING.... but funny, it's still just us.

The Feds are us. We are AIG. We are all in this together, and pushing the burden from person to person, company to company, and quasi government institution to quasi govt institution does NOT get rid of it. The burden has just been moved, NOT destroyed.

As I've said here several times, what is happening is the greatest transfer of Wealth the World has ever known. The receivers are The Guilty, the perpetrators of the Greatest Fraud Ever Conceived. The Victims, are us, US taxpayers, a flock of sheep getting sheared and ready for the slaughter.

Your current debt load for this thing is near $100K, but it's about to EXPLODE HIGHER. Soon, we will all owe more than we can make in a lifetime.

So I say, take this recovery for what it is: A chance to sell, and cut your losses. I am.

hbm, can you help me get these pesky shorts off?

Dang!
Good things cum in 3's!

The Poor Get Richer.

2009-08-23T06:46:00.000-07:00

I swore I wouldn't jump into the muck & mud of politics on this thing, mainly because it is like religion, it's an argument that cannot be won. I just see people who engage in endless political debates on any side, as unable to divine the fundamental truth that whatever side they are on and whatever point they choose to argue, they cannot win.

Extended political debates are like watching 3 year olds argue whether green or orange is a better color.

That said, the political face of this country is starting to resemble the hated Cali-Banger. Extreme in all regards. Not just big titties, but only the Biggest Titties On Earth will do. Not just a nice big car, but a fucking SUV that blots out the Sun. Not just a house too big, but a McMansion that is an gaudy abomination to pocketbook & neighbor alike.

Politicos seem to think that they are in a tug-O-war, pulling mightily for the control of The Vast Center. That if they are extreme enough, they will influence the vast hordes of moderates to go their way.

Libs see themselves as enlightened scholars and the vast middle as mentally pliable dullards. The RePugs see the middle as politically nomadic wildebeats to be turned to their will, or eaten. Strangley, religion seems to be the weapon of choice for both.

But again, I simply see a contingent that is wandering away from the middle, which is fine. But there is no rope. Extremist loonies actually make me go the other way.

I don't have cable at home, but the short exposure on cable-TV-enabled vacations I had to the clearly obvious right-wing ravings of CNBC were the most convincing arguments for the left I've seen in a long time. Now, the "I Told You So, Those Right Wing Fuckers Are Wrong On Everything!" lib retort is the best way to push me back to my comfy, cozy rePug roots.

And I must say, that one of a few scenarios must be true: Either Bend is FULL of extremists, or I attract Lib's like flies, cuz I don't know anyone who is just a calm moderate centrist. And by that I mean someone who has a thoughtful reason for backing whatever it is their political beliefs are.

For example, not that I am thoughtful, but I am pretty party-line Reaganesque RePug, but I do not think abortion should be outlawed. Abortion is going to happen, one way or another. Period. RePugs who don't understand that are confusing their idealism with the pragmatism of the individual. Plus, I do not believe I should blithely make political decisions regarding a womans body. More accurately, I don't believe abortion should be a political decision. It's an individual decision, not mine or some politico whore.

And ALL my lib friends use THAT example as some sort of rationalizing for ALL lib political viewpoints, and that I should see the light on ALL OF THEM, like I have BABY KILLING. No.

And equally heinous RePugs, like my beloved sister, who was a devout Dem supporter until Monicagate, are aghast, wondering why I am in league with SATAN.

Oy.

I guess my opinion on politics is that the extremists seem to think that they are engaged in a titanic debate with the enormous mass of the middle ready to roll down one side of the mountain or the other, when in reality there is no vast middle being influenced. If anything, many are repelled to the other side.

Many are flying the flag of the Cal-Banger ethos, Extremis delectatio morosa. You can see the pointlessness when these sides clash:

http://www.youtube.com/watch?v=nYlZiWK2Iy8

OK, enough of that shit, that makes me wanna puke.

I saw a short, interesting piece in The Economist:

The housing wealth effect

ANOTHER housing crisis meme circulating is that much of the recession's pain can be explained by the consumption impact of falling housing wealth. It's a pretty attractive storyline; homeowners feel rich based on their home's paper value and therefore buy more, or they actively use paper housing wealth to fund consumption via home equity loans.

Then, when housing prices fall that wealth disappears and national consumption craters. The problem with this line of thought is that falling housing prices mean falling housing costs for renters, who experience the crash as an increase in their real wages. Rising consumption from richer-feeling renters should partially or entirely offset falling consumption from owners.

New research on the euro area by Ricardo Sousa seems to support this second view of the housing wealth effect:

This paper estimates the wealth effects on consumption in the euro area as a whole.

I show that: (i) financial wealth effects are relatively large and statistically significant; (ii) housing wealth effects are virtually nil and not significant; (iii) consumption growth exhibits strong persistence and responds sluggishly to shocks; and (iv) the immediate response of consumption to wealth is substantially different from the long- run wealth effects.

By disaggregating financial wealth into its major components, the estimates suggest that wealth effects are particularly large for currency and deposits, and shares and mutual funds.

In addition, consumption seems to be very responsive to financial liabilities and mortgage loans.

It isn't the case that falling housing prices can have no effect on the broader economy; they certainly do. It's merely the case that the effect of falling housing wealth on consumption is not the main pathway for an interaction between declining housing values and output.

I find this interesting I guess because it describes me. I don't own a home, and the attending mortgage, plus the recent stock market rebound has done wonders for my net worth.

All this plus the fact that I sort of positioned myself delta-positive for a decline, and I am better off financially than I have been in years. Maybe ever. Hard to say, as I have had homes & businesses acquired with debt, and getting a bead on these illiquid financial assets was only really possible upon their liquidation, which is strangely an event that makes me feel poorer.

So I am spending. A lot. And that's a relative statement, I guess. As I said I don't have cable. Until recently I had a 1950's era TV. But I am buying books. Going out to eat, once in awhile (Sno Cap in Redmond). I do more than single-mindedly walk through the grocery aisles at Costco. Bought my wife a blender a few weeks ago. All this, and I have enough in the bank to survive 18 months with zero income.

I guess THAT is what makes me feel rich: I can live a LONG TIME with what I have, and make all my financial committments. Which are not many. Well... maybe THAT'S what really makes me feel rich: I don't owe much to anyone.

And that was definitely NOT the case in years past when I had a nice big home I owned, or a business that certainly made me feel rich as I cycled through a fairly decent chunk of change each month. I could not have survived those times with my financial resources for more than a few weeks.

So my asset-base is far scaled down now. And maybe in some technical sense, my net-worth is lower now than it may have been in the past. But my debts are almost non-existent, which hasn't been the case since I started college. And THAT is what gives me a very serene state of mind.

And that is why I am "spending". Which basically means I am saving 50% of my income, not 55%.

And it took almost 2 years, but they finally dropped the prices enough for me to buy a game console! Wii-Hoo!

But I still don't have cable. That's a monthly check I still don't want to write.

So I'll end it this week with a great piece from The Economist:

Where it all began

Signs of stabilisation should not obscure the big problems still ahead

HE IS hardly your typical distressed seller. Hugh Hefner recently sold his personal residence in Holmby Hills, California, next door to the Playboy mansion, to a 25-year-old entrepreneur for $18m--some 36% below the asking price.

It will come as little solace to the ageing Lothario that the discount looked about right: house prices have fallen by one-third from their peak nationwide, and by much more than that in the worst-hit states, such as California, Florida and Nevada.

Although global financial sickness first erupted in American residential property, thanks to ludicrously lax subprime lending, policymakers have recently seemed more worried about asset classes to which the infection subsequently spread.

When the Federal Reserve this week extended the life of a facility to support asset-backed securities, for instance, it was more out of concern for commercial property than for housing. Nevertheless, observers agree that America's economy--and all those banks still saddled with underperforming mortgages--will struggle to recover while house prices are still falling.

The Obama administration's economic successes "will be for naught" if the housing free-fall continues much longer, says Mark Zandi of Moody's Economy.com. Hence the excitement over some recent, albeit tentative, signs of stabilisation.

The S&P/Case-Shiller index, which tracks home prices in 20 cities, ticked up slightly in May, its first gain in 34 months. New construction of single-family homes rose in July for the fifth straight month.

Sales of existing homes are expected to show their fourth consecutive month of gains when latest numbers are released on August 21st (see chart 1, right-hand side).

Toll Brothers, a big home-builder, just recorded its first gain in net orders (new orders minus cancellations) for four years. With homes now at their most affordable in living memory, relative to median income, "we've finally found a level where people want to do deals," says Pam Liebman, chief executive of Corcoran, an estate agency.

The revival is largely at the lower end, which helps explain this week's $1.4-billion acquisition of Centex, a home-builder which specialises in cheaper houses, by Pulte Homes. Dig deeper, however, and the recovery's foundations look shaky.

Rising joblessness will continue to weigh on demand for homes. The unemployment rate, currently 9.4%, is expected to peak at more than 10% some time next year.

The economic effect of unemployment is wider: as more and more of those still in work know someone who has lost their job, they will think twice before buying a property. Consumer confidence remains fragile.

For those seeking a mortgage, credit is still hard to come by. The two main federally backed mortgage agencies, Fannie Mae and Freddie Mac, have tightened their standards for new loans (though mortgages handled by their sibling, Ginnie Mae, have fallen in quality).

A Federal Reserve survey of loan officers, released on August 17th, suggested that banks will remain tight-fisted for some time. They are still grappling with growing losses from residential mortgages.

These will not peak until early next year, reckons Betsy Graseck of Morgan Stanley. Moreover, the positive signs in housing are partly driven by short-term factors. One is the tax credit for first-time buyers that was included in Mr Obama's stimulus package: some are rushing to buy now because deals must close by November 30th to qualify.

Annual tax refunds, handed out in recent months, may also have given the market a temporary lift. Attractive mortgage rates helped, too. But these have climbed off their historic lows, despite efforts to keep them down through the Fed's purchases of mortgage-backed securities.

Many expect them to rise further as ballooning government borrowing puts upward pressure on Treasury yields. A glut of supply will also weigh on prices, thanks to a wave of repossessions.

Foreclosures are running at record levels, with one in 355 of the nation's homes receiving a filing in July alone. Seized properties now account for almost one in four sales.

Increasingly, those losing their homes are supposedly safer borrowers with "prime" mortgages. They now account for more foreclosures than subprime borrowers, says the Mortgage Bankers Association (MBA).

With 1.8m homes already in foreclosure, a "similar amount" may be heading that way, reckons Torsten Slok, an economist at Deutsche Bank. Even those states that were the first to feel pain are still seeing a sharp increase in pre-foreclosure notices.

In California one type of notice, for "trustee sales", leapt by 32% from June to July, according to ForeclosureRadar, a website. Even more worryingly, delinquencies, the raw material for foreclosures, are still on the rise across much of the once-golden state.

In Orange County nearly 7% of mortgages are at least three months overdue but not yet foreclosed, up from around 5% at the start of the year. The rise in negative equity--when a borrower's mortgage debt exceeds the value of his home--is also fuelling foreclosures, not least because many would rather walk away than keep making payments on a home that is worth much less than the sum owed on it.

Zillow.com, a property-information service, estimates that 23% of homes with mortgages are underwater. Others put it higher.

A staggering 60% are submerged in Las Vegas. Deutsche Bank's securitisation team expects negative equity to peak at 48% of total homes by 2011.

That may be too pessimistic, but all agree that the number will rise further. This matters because negative equity weighs doubly heavily on home prices, by both weakening demand (it traps potential buyers in their homes) and adding to supply (it often ends in seizure and distressed sales).

Government efforts have done little to stop the rot. Under the main foreclosure-prevention programme, only 235,000 struggling borrowers have had their loans altered to make payments more affordable, out of 4m targeted for help.

Even with a financial incentive to modify, loan servicers remain reluctant. Many borrowers are too deep in negative equity and the redefault rate is too high. "It doesn't help if you're drowning in 20 feet of water instead of 30," says Jay Brinkmann, the MBA's chief economist.

Moreover, the typical troubled mortgage is getting harder to modify because it is more likely to be the result of unemployment than an interest-rate increase.

Bringing the monthly payment down by 20% does not help when the borrower has no job.

Even if the pace of modification quickens, the overhang of unsold homes will remain dauntingly large. The inventory represents 9-10 months of supply, three times the level in a tight market, says Stan Humphries, Zillow's chief economist. Paradoxically, a further wave of supply could crash over the market if it is widely seen to be stabilising. Many homeowners who sat tight while prices fell will try to sell at the first sign of a turnaround, according to surveys.

In one, conducted by Zillow in July, 29% of respondents were at least "somewhat likely" to put their home on the market once the market perked up. The release of this "shadow inventory" could smother the recovery before it gathers speed.

Just as worrying is the possible recurrence of "payment shock" as interest rates on adjustable-rate mortgages reset higher. Resets on subprime loans have mostly taken place, but the worst is yet to come for some other loans, especially the "Alt-A" category between prime and subprime and a nasty type of mortgage called an "option ARM" (see chart 3).

The impact may be muted, but only if the Fed can keep short-term rates very low for the next couple of years--or if the borrowers can refinance as the reset approaches.

Given these downside risks, the recent pop in house prices will probably fizzle. Most economists expect them to fall by a further 5-10 percentage points, to their long-term trend line at roughly 40% below their peak, and not to reach bottom until some time in 2010.

The pessimists predict they will go crashing through the trend-line to as little as half their 2006 high. Analysts at Goldman Sachs, no fools when it comes to housing, hint at several years of stagnation.

They argue that the rate of home ownership, currently just over 67%, will fall back to the 64-65.5% level that prevailed before prices took off in the mid-1990s, cutting deeply into demand for properties.

This view is supported by a recent Fed study, which found that more than half of the boom-era rise in ownership was due to "innovative" mortgage products, many of which are now history.

It could be even worse.

Now that the myth of ever-rising house prices has been shattered, it may be time to embrace another inconvenient truth: that prices can take decades to recover, at least when adjusted for inflation.

A study in June by the Federal Housing Finance Agency, a regulator, pointed out that in parts of Texas house prices still languish some 30% below their 1982 peaks in real terms. Mr Hefner may not have got such a bad deal after all.

hbm, political knob-wanking makes me wet!

Buster, I'm thirsty for verbal abuse!

Dunc watches poolside as women fight for scraps on Free Comic Book Day.

Goodbye Bend Aeronautical Dreams

2009-08-09T07:36:00.000-07:00

A short one today, I promise hbm.

Well, we basically are watching the demise of one of the biggest attempted grifts in Bend history, and that is saying something.

Epic Air finally folded. You may be able to detect my incredulity about this little wingding in my Oct 1, 2007 post:

How To Make $100 Million A Year In Bend, Oregon

Which one of these guys apparently invested $200,000,000 in a Bend aircraft maker this week?

1) Peter Tork of "The Monkees"
2) Rip Taylor
3) Liberace
4) Indian Billionaire, Vijay "Jazzy Jeff And The Fresh Prince" Mallya

I know, it's hard to figure cuz each has One Sweet Ass Fuckin' Hair Doo! I mean, WTF? Did anyone else see that pic in The Bulletin, and wonder what the hell is up with that dudes hair? I mean, DAMN.

ATTENTION INDIAN DUDE: That sweet-ass tight fro may have landed the ladies in 1973, but that thing is just weird!

Anyway, this is YET ANOTHER STORY THAT DOESN'T PASS THE SMELL TEST.

I wrote in the comments: This whole thing SMELLS BAD.

$200MM (if true), values Epic at $400MM. WHAT! No way. With 140 employees, that is almost $2.9MM/employee.

No freakin' way is that real.

Boeing market cap is $82.52BB
Employees: 153,000
Value/Employee: $540,000

Is this Indian Dude INSANE? He's valuing a po-dunk little maker of kit planes out in the desert at more than 5X the per employee value of BOEING?

Man, if this Rick Schrameck guy actually convinced this nut to pay $200MM for 50%, he is One Hell Of A Shyster. Valuing Epic at well over 5X the relative value of Boeing on an employee basis is straight up INSANE.

That Rick Schrameck dude has pulled off the Bend Enterprise Investment Marketing Boondoggle Of A Lifetime. He got rocks.

Bangin' a friend of his for $200MM, for only HALF of Epic, a podunk nut'n out in the desert. That's one thing. But he did it while RIGHT NEXT DOOR, there is a much larger competitor GOING BANKRUPT! Holy Shit! That is just brutal!

Seriously, it is stuff like this that reaffirms my faith in The Impossible.

If this is true, which I seriously doubt, this guy has pulled off a dot-com era boondoggle the likes of which this town will never see again. Good job Rick!

See, this was never possible. This Epic thing was EPIC: Epic-ly Impossible.

Now you might think, "What the fuck happened to the money?". Well, my dear friend, there NEVER WAS ANY MONEY. NEVER.

See if you can detect the misdirection by Costa:

‘A big shot in the arm for the Bend economy’
By Anna Sowa / The Bulletin The Bulletin

The $200 million investment by an India-based airline mogul in Bend’s Epic Aircraft could help the local airplane maker break into the commercial jet market by producing larger planes for larger companies, an Epic spokesman said Thursday.

“It’s extremely likely that the Bend facility will grow substantially and contribute more to the job market in Bend,” said Lyn Freeman, the Epic spokesman who revealed how much Vijay Mallya is investing in Epic.

“It will be a big shot in the arm for the Bend economy, but how big a shot it turns out to be ... I don’t know.”

Epic employs 140 people in Bend. Epic President and CEO Rick Schrameck announced Wednesday that Mallya, his friend and fellow aviation buff, was investing in the company, but Schrameck did not disclose the investment’s size.

Mallya representatives could not be reached for comment the past two days, but Freeman said Mallya’s office has confirmed the $200 million investment.

Mallya now owns 50 percent of Epic, Freeman said, adding that Mallya “has insisted” that Schrameck remain as company chief.

You see? There are about 46X where Costa intimates that the investment HAS ALREADY BEEN MADE. Or that it is already in check form, merely being flown to CACB at warp speed. Or that it is ABOUT TO BE MADE. Or that it is pretty much a foregone conclusion. Or that it will probably be made. And about 400 other states of progress on getting the money.

Seriously. This is our local paper's idea of "news".

What really happened here is our local guy got RICK Schmareck ROLL'D by a true global super grifter.

Vijay Mallya singing his one hit wonder to Rick Schrameck.

What's funny about this is that Costa bought into his own munificience, and thought one of his hillbilly stupid motherfucking drinking buddies could actually roll with the big dogs. Jeebus H Christmas, what a dumbfuck.

This is Bend, COSTA. NOBODY of any substance does ANYTHING in Bend. Small fish, small pond.

That 3 year bubble was a fluke, it wasn't you, or me, or anyone sort of "exceptionalism".

As we are all starting to see, Bend is Mortal. And we have built an enormous false prosperity based on an incredible set of lies: Summit 1031, Tammy Sawyer, Jay Audia, Juniper Ridge, Cessna, Epic.... and on and on.

This whole area is built on the idea that you can start something without any real substance, I don't know... such as... a wheel you drag behind your car that somehow powers the car... or a black box where you burn shit, and the ashes somehow turn to gold.

The Last Thing You Do In Bend is WORK. Start a business based on some definable need.

No you Do What You Love And The Money Will Follow, and things like that.

Bend is built on dreams, dreams that are bought and sold, despite having no real definable business objective or need, and certainly no revenue stream. We're in a state of suspended animation, always selling our speculative dream to yet a bigger sucker.

And here is where it ended. Epic really was going for the EPIC GRIFT. And you can FEEL THE DESPERATION of just how bad Costa wanted us to reel in and boat that Mallya Bass. He basically said we had already boated that bass, when in reality Mallya hadn't even bit.

And so with the collapse of Epic, and Cessna as well letting go the last of it's zombies, we see the end of the Bend Aeronautical Dream. And you certainly won't be reminded, but this Dream was our Big One. It was going to power Bend's economy for the next 1,000 years.

Epic was going to have 4,000 employees. But that was a piker, as Cessna was going to have tens of thousands. Not to mention the tens of thousands of "support" companies that would crop up by the hundreds at the Bend International Air Complex.

All gone.

No, now the Bend Municipal Airport will go down. It may well go broke. The virtuous circle will Yet Again, become a vicious cycle, as a vortex of death just drags down everything caught in it's rip current.

And history will RHYME yet again in the future.

Communal Frisk Bank (aka Priney Bank) was closed Friday. Eff-Dick swooped in and closed this little bank that could... not.

What should you look for now? Well my thick headed confidante, if you don't know the answer to that, you are well and truly a motherfucking retard.

The answer is that CACB is The Next To Fall. PERIOD.

In a pathetic Beg For Cash piece in the Bully (Cascade Bancorp: Where does it stand?), Patty "Horse Face" Moss answers the question:

CACB Stands In A Shitpile Of It's Own Making.

CACB cannot get money from ANY SOURCE. Not the government, not it's biggest owner, not the mafia, NO ONE.

And the piece is a non-stop BEG-O-THON for someone, ANYONE, to give Moss cash munee. It is quite clear that ALL SOURCES HAVE BEEN EXHAUSTED, and she resorted to a public PLEADING FOR MONEY. ANYONE. PLEEZE GIMME MUNEE!

You should know that most institutions don't even deign this sort of activity as acceptable, and they would rather SHUT THEIR FUCKING DOORS than publicly beg for munee.

Not Moss. Because she knows fully well that Eff-Dick is going to pay her a visit VERY SOON. She needs millions or CACB's charter WILL BE PULLED.

Prediction: IT, OF COURSE, WILL BE PULLED. The money is gone.

You see folks, the Grift Always Fails In The End. The Moving Around Of Money is just that. It doesn't DO anything. It doesn't MAKE anything. Lots of sound and fury signifying NOTHING.

But COSTA wanted us all to believe that it signified EVERYTHING.

That Mallya actually WAS Schrameck's FRIEND. No. They were NEVER FRIENDS.

That InEn Tec's Garbage To Gold Black Box was actually a Real Life Rumplestiltskin-esque spinning wheel that would turn shit into Gold.

That Cessna would plop down in the middle of ASS NOWHERE and start building planes.

That Patty Moss was actually some sort of financial genius, when she is really a horse-faced dumbass who drank her own Kool-Aid.

You have heard, and will no doubt continue to hear that Bend is Xanadu, a mythical place where all your dreams and flights of fancy will come true.

And everyone hears what they want to hear in that situation. You? You want to start a cooking supplies store? No problem, your wish is granted!

How about a furniture store or an art gallery? You can't fail!

Car dealership? A swipe of the magic wand guarantees success.

You see, in Bend, our Game Is The Grift. Has been for decades.

And by a miracle of happenstance, we were in the right country, the right era, and the right instant in time, and it actually seemed like all our dreams and flights of fancy could actually come true.

But of course, that's not true, and was the reason for starting this poor little despised blog. A little Wake Up Call to tell people that you can't Get Something For Nothing Forever. Much to hateful chagrin of those who hoped differently, we are starting to see the unraveling of the Bend Web Of Lies.

Epic Air, Cessna, the thousands of foreclosures, the tumbleweed ridden and abandoned developments, the mass of business closings, the incredible unemployment, the ridiculous movie-themed housing developments/amusement parks, the imploding prices...

All the lies that we've been sold are finally being exposed for what they are. And you need to realize that the Guilty Parties are:

JOHN COSTA & BEND MEDIA
BEND CITY COUNCIL
PATTY MOSS & CACB
EDCO & OTHER TAXPAYER FUNDED BOONDOGGLES
CROOKED DEVELOPERS & LENDERS (SUMMIT 1031 & RENAISSANCE, et al)

These people will leave this town completely broken and 100% busted. Get your fucking torches & pitchforks and run these motherfuckers out on a rail.

Costa, my nippies get hard when you get Rick Roll'd!

I got Epic Juggs!
In short hbm, I think you're all wet!

Recovery or Slow Bleed Out From Catching Knives?

2009-08-02T08:41:00.000-07:00

From my front porch, about half the homes I can see in my neighborhood are in trouble, whether foreclosure (recently past, present, or future), short sale, or a state of suspended animation where the tapped-out owner can't get out from under the thing to leave Bend.

So you might think, "Hey, it's half over! We're close to the end!"

Well, no. Remember the Sad Tale of Jay Audia, knife catcher extraordinaire, he was the second to crash and burn on that sad 38ac plot.

Maybe that's the plot of this short post this week: Land & RE crashes are long & drawn-out affairs that claim many victims with the same piece of property claiming sucker after sucker, all of whom think THEY are buying at rock bottom.

Do you think there's any Jap's who have made a dime in the past 18 years? No, and they just keep turning the same property over & over again. And all new owners just lose money.

Again folks, keep your powder dry. And keep it dry until people are literally paying you to take these white elephants off their hands.

You keep hearing about a "recovery". But this is just the after-effects of TRILLIONS of dollars of DEBT being printed & being handed out to AmeriKKKa's most deserving citizens: Those who got us into this mess to begin with.

And I guess they throw Joe Sixpack a bone now & then. "Cash For Klunkers" is a good example of that.

Or is it just YOU borrowing from YOURSELF (or your kids) to buy a car NOW that you don't really need, so you can pay it off later in higher taxes.

Folks, irresponsible lending got us into this, and it hasn't gone away. If anything it has been ramped up to unimaginable heights by the Borrower & Lender Of Last Resort; The US Government.

This entity (which is us, really) has gone catatonic. Borrowing & GIVNG us TRILLIONS of our own money in a economy warping & personal spending warping attempt to jump-start this economy.

But DEBT NEVER SOLVES FUNDAMENTAL PROBLEMS... it just delays them.

Debt can help, if there is a REAL & TANGIBLE plan for paying it off. We don't have that.

WE ARE THE ONES DROWNING IN DEBT, AND WE ARE THE ONES WHO WILL HAVE TO PAY OFF ALL THIS BORROWING.

There is No Plan, neither real nor tangible, for paying this off. We will all see this in a short while.

But, for now, it is having wonderful effects! Have a look at my DJIA update for L/T Fair Value:

DJIA Long Term Regression

It's hard to see, but we've had one hell of a rally. The "low" of the recent dip was Mar 9, 2009 at 6,547, or 32% below the long term best fit estimate of 9,627.

As of Friday, we had rallied to 9,172, or only 7% below the L/T regression estimate of 9,865.

Here is a graph of the "difference" between the actual price & the least squares estimate:

Actual - Least Sq Estimate

And for you pedantic types, that's actually ln(1 + (Actual - Est)). I use natural logs to do the work here, so you have to exp() things back out to get actual numbers.

Anyway, you can see that recent fall has been one of the most precipitous in history, and the subsequent rally has at least matched it in ferocity.

But you can see that the last time the market passed below it's L/T regression estimate, it took decades for it to get back above & stay there for any length of time.

My own feeling is that given the macro-view of the World, we are in a massive deleveraging the likes of which will never be seen again, that we could hit fair value (DJIA 9,865) or even a little above, before it dawns on market participants that the other shoe has yet to drop.

And we may never hit the recent March low of 6,547 again. Maybe. But we could go several years in the monster 3,500 pt trading range that we've been in for the past few months.

That's at least how I plan on playing it. I still hold all the stocks & mutual funds I bought late last year into the teeth of the decline.

But I am very inclined to start selling these things off between 9,500 & 10K.

Things turned out a lot the way I said they would, but not the way I thought they would. I was convinced that RV's would make a stunning reversal, at least valuation-wise.

Funny thing though: I bought them down 92% from their highs, which ended up to be a waystation on their way to a 99.8% decline after I bought them.

I put a lot in Monoco & Fleetwood. All gone. And I was really convinced those would be my big winners.

No, my big gainer was Lithia Motors, sitting right at $12, up around 700% from it's cycle low of about a buck fifty.

Lithia Motors, 1 yr

I have NO ILLUSIONS about this one though. Lithia has a business model that has been goosed by 2 things:

1) Cash for Klunkers
2) The mass wipe-out of competitors

Cash for Klunkers is giving the old girl a shot of Bloody Mary Kool-Aid in the midst of a multi-year hangover.

Lithia was also spared a LOT of the pain of having dealerships summarily closed due to their overall volume. This helped them immensely, probably revaluing all their dealerships up 50-100%. This helped them actually turn a decent profit, as reported Friday.

So at a market value of $252MM with 92 dealerships, the market values this beast at $2.74MM per dealership. But that's only equity & these guys have lots of debt.

But I think that we're in the early phase of a general topping out in equities, and the next leg down could begin at any time. I just see the lower end of the graph above being our range for the foreseeable future.

And the top of that range is around 10K, and the bottom is thousands of points below us now. The risk/reward doesn't look good.

OK, and just to be clear, I still own everything I bought last Summer & Fall... but I am looking at hard rallies from here to start to sell it off. And that looks to be between here & 1,000 pts above where we are.

OK, moving on...

I guess you have to be a real Bendite to see the Kool-Aid wishes and caviar dreams embedded in today's Bully piece, "Building up Bend’s business landscape".

It's just ridiculous, the amount of puff pieces we must endure from this pathetic rag. Tagline:

Are things finally looking up in Bend? Olive Garden, Dick’s and now Kohl’s are all coming to town. What does that say about the region? That it still has what retailers and others seek, some say.

Thy never stop running this sort of thing. When Gottschalks came to town, it was because Bend Is Special. As it is now.

Bend remains an attractive market, say people familiar with the area’s economy, as evidenced by news that two prominent national retailers — Dick’s Sporting Goods and Kohl’s department store — have plans to open here this fall and in spring 2010, respectively. Additionally, a prominent restaurant chain, Olive Garden, has launched construction in Bend and will open this winter.

My God, this is pathetic.

First, there is the TYPICAL UNSOURCED CLAIM that "Bend is an attractive market". Absolutely NO SOURCE for this QUOTE. Yes, "People Familiar With The Area's Economy". That means COSTA. That is COSTA editorializing PLAIN & SIMPLE.

Then we have the LEGITIMIZING that our Frog-town is actually a prince, where COSTA says that we have PROMINENT NEW ARRIVALS. PROMINENT.

Type "define:prominent" in the GoogleZzzz.

outstanding: having a quality that thrusts itself into attention
big: conspicuous in position or importance; "a big figure in the movement"; "big man on campus"; "he's very large in financial circles"; "a prominent citizen"

Sad little Costa. The ugly girl with braces always goes to prom with Judd Hirsch in that fuckers mind.

Then he just rolls out His Bitches for the obligatory statements on the "Bend Lifestyle":

“Just because we’re going through the bottoming of the cycle here and everywhere doesn’t mean the reason why people want to move here has changed.” Nyberg said

Bend will continue to be a desirable place to live and, as a result, businesses will want to capitalize on the region’s growth.

The downturn creates opportunities for those companies that can expand.

...companies didn’t close their Bend stores because Bend was a bad market but because the companies filed for bankruptcy due to national economic conditions, Powderly said.

That speaks to the area’s underlying economic attractiveness, Powderly said, adding that commercial real estate is picking up, especially for small businesses.

...the addition of Kohl’s speaks well to the region’s economic validity in that it is a store for residents, not tourists.

I think the assumption is long-term growth in Central Oregon will be above average compared with other cities across the nation because of the lifestyle here,” Powderly said.

God, this is pathetic. Passing this editorializing off as "news". Read the Bully critically, and you will see that it is AWASH in unsourced & unfounded statements.

It's always "Sources familiar with......". Never a name. That's because the name is COSTA. And if there is a source, it is one of Costa's Pro-RE bitches.

And if that's not bad enough, it is the UNENDING puffery. Stores that come to Bend are "Prominent"!!! They aren't just retailers... they are PROMINENT RETAILERS.

The fact is, they are not prominent. Costa WANTS anyone stupid enough to come here to FEEL IMPORTANT. Why? Because if you actually look at the economics of the region, you would be scared SHITLESS... something GOTTSCHALKS found out the hard way.

Costa GETS THEM HERE... and then doesn't give a fuck if they live or die. Notice they COME HERE because Bend is SPECIAL. But By God when they leave it has NOTHING TO DO WITH THE POOR FUNDAMENTAL ECONOMICS:

...the companies didn’t close their Bend stores because Bend was a bad market but because the companies filed for bankruptcy due to national economic conditions, Powderly said.

Costa say, "I'm a Good Boy, Mommy! I'm Good!"

The fact is that Bend has one of the highest unemployment rates for any MSA in the country. It has the fastest rising UE rate anywhere.

The boom turned the frog into a prince. For awhile. But the frog is back. Bend is a terrible, TERRIBLE place to do business.

It's horribly over-restauranted and over-retailed. It is a Me-Too business landscape where every successful business plan is subject to almost instant oversaturation.

Which brings me back to the main thrust of this blog now in the post-boom meltdown: Keep your powder dry. This thing isn't over, not by a long shot. Catch enough knives and you'll bleed to death, ask Jay Audia. The current "recovery" is nothing but a short term bump.

Costa, I need some good puffery...

hbm, please give my nipples a LIBERAL TWEAKING! Please!

Hey Dunc, we heard there was a Superman in this store... care if we look under his cape?

Bankrupt in Deschutes County? Impossible!

2009-07-19T06:25:00.000-07:00

I'm going to do a short one this week....

But I'll preserve for the ages a fairly good piece by the Bully on going BK... in Sisters, no less.

The human side of bankruptcy
Financial disruption is personal for the millions who file for it

By Lily Raff / The Bulletin
Published: July 19. 2009 4:00AM PST

At 64, Jack Gulick is starting over.

He buys groceries with cash instead of credit. He no longer buys lattes from Starbucks. He and his wife, Laura, share one car instead of two. He is grateful for things he once took for granted, like having health insurance. He follows the financial news more closely.

For the Sisters resident, this is life, post-bankruptcy.

When a bankruptcy makes the news, it usually involves a large corporation — think General Motors or Lehman Brothers. But the vast majority of bankruptcies are not filed by companies at all. Of the 1.17 million bankruptcy cases filed in federal court last year, 1.07 million, or 92 percent, were filed by families or individuals.

Bankruptcy is a legal process that helps people and businesses eliminate debts or repay portions of their debts under protection of the court.

Non-corporate bankruptcies are usually mentioned as statistics or trends. But for the individuals who file, bankruptcy is personal. Really personal.

The Gulicks had been living near San Francisco when they bought a half-acre lot in Sisters in 1997.

“I was born and raised in Portland and my wife in California, so this was kind of a compromise, I guess,” Jack Gulick said. “We both loved it. We’d been coming here for years.”

In 2001, they sold their house in California and hired a Central Oregon builder to construct a 2,100-square-foot custom home on their lot. In June 2002, they moved in.

“It was our dream home … and our plan was to retire in it,” Gulick said.

The couple saw no reason not to. Gulick had a steady job as regional sales manager for a large electronics company, with 30 years of industry experience under his belt. He traveled, two or three weeks a month, throughout the 13 Western states. He earned a six-figure annual income including commissions.

Then a lingering health problem flared up. For about 10 years, one of the discs in Gulick’s neck had been slowly deteriorating. In late 2003, doctors recommended a disc fusion.

“They told me I had about a 50-50 chance that it might work (to stop the pain),” he said. “So I got the wrong side of the coin, so to speak.”

By 2007, Gulick was unable to lift more than 10 pounds. He couldn’t comfortably walk more than 100 yards at a time. He could no longer handle the grueling travel schedule his job required.

In December 2007, Gulick was laid off. His long-term disability insurance now provides him with 60 percent of his base salary. But Gulick’s base pay rate does not include sales commissions, which made up half of Gulick’s income.

“I’m actually getting 30 percent of my ordinary pay,” he said. “So … all of a sudden my income gets cut by 70 percent and it’s like, ‘Wow, there’s no way we can pay for this. We can’t pay for the house.’”

Unable to pay their mortgage, the couple moved out of their dream home and into a nearby rental. The home was foreclosed and will be sold at auction next month.

Even with their housing costs cut by more than half, the Gulicks’ finances buckled under growing debt. They sold one of their two cars at a loss, just to get rid of one monthly bill. Meanwhile their credit card balances, which included many of Gulick’s medical costs, ballooned.

“We took all the cost-cutting measures we could, but we still had a lot of credit card debt,” he said. “That’s really what sunk us. You miss one payment and your low-interest credit card goes from 6 or 7 percent up to 19 or even 24 percent.”

Gulick called a counseling service and was told that even with more drastic cuts in spending, he would need to earn about $900 more per month to qualify for any sort of debt consolidation program.

“Their advice,” Gulick said, “was to get a hold of a bankruptcy attorney.”

Credit fever

Last month, 94,085 Americans called a consumer credit counseling service. That’s a 36 percent increase over June 2008, when 69,431 Americans phoned for help.

Kate Williams is vice president of financial literacy for Money Management International, a private nonprofit that oversees 24 nonprofit consumer credit counseling agencies. Before a person may file for bankruptcy, he or she is legally required to seek a one-hour credit counseling session and receive a certificate of completion. These sessions make up about 45 percent of consumer credit counseling calls, according to Williams.

She went on to estimate that about 90 percent of callers’ most troublesome debts are carried on credit cards.

“Credit cards become, in some cases, a third source of income. Mom works, dad works and then we’ve got Mr. Visa at our house,” she said.

Psychological studies have shown that consumers don’t feel as responsible buying an item with a credit card as they do buying an item with cash, Williams said.

She offered two pieces of advice to people who want to avoid bankruptcy: Save for retirement and save for unforeseen expenses.

“Every worker today should be (saving for retirement) because we know we want to retire. Even though the market is just brutal to everyone right now, make it a habit,” she advised. “And … even if you can only set aside $25 a paycheck right now (into a savings account), it’s not going to grow fast, but the $600 or $700 that you save in 2009 may be the set of tires that you don’t have to put on a credit card in 2010.”

Try to cut expenses in little ways, she urged, by packing a lunch instead of going out, for example.

“Most families can cut out $85 to $100 a month. It’s not going to be easy, and it’s not going to be one particular thing, but it’s a lot of $2 and $3 and $5 and $8 things that add up,” she said.

Williams recommends that consumers keep track of their income and expenses on one sheet of paper. Most people, when asked how much debt they think they owe, underestimate it by 20 to 33 percent.

Gulick said it was shocking to see a comprehensive list of his debts.

“My wife had been admonishing me for years about going on a cash basis and getting rid of credit cards,” he said. “I just, I didn’t listen to the advice that I got.”

Deciding to file

Brian Hemphill is a lawyer in Bend who did not work for the Gulicks but who specializes in bankruptcy cases. He keeps a box of tissues on his desk because clients are often in tears. Many clients, he said, feel overwhelmed and ashamed.

“I tell them, it’s not a magic wand and it can’t cure everything,” he said. “It does have a lot of negatives to it, and people have to decide, do the positives of bankruptcy outweigh the negatives? But fundamentally, bankruptcy is there to help.”

Hemphill said the social stigma attached to bankruptcy has faded in recent years as it has become more common.

Donald Trump told the New York Daily News in 2004 — during his casino company’s second voyage through bankruptcy — that there’s no shame in it.

“It doesn’t matter,” he was quoted as saying. “It’s a modern day thing, a legal mechanism.”

Many others disagree. Dozens of Central Oregonians who filed bankruptcy in the last year declined to speak about their experiences for this article.

When Hemphill’s clients decide to file, he helps them determine which avenues of bankruptcy they qualify for. Most individuals consider Chapter 7 or Chapter 13 bankruptcy, both named for the section of federal code in which they are described. In Chapter 7, some of the debtor’s belongings may be sold. Debts are then forgiven or discharged.

In Chapter 13, a debtor works out a payment plan and agrees to dedicate future earnings toward paying off some or all of the debts.

Not everyone qualifies for both types of bankruptcy, but some people get to choose. In both types of bankruptcy, the person files in federal court and is assigned a trustee, who acts as a referee between the debtor and the creditors.

In Chapter 7 cases, the trustee helps decide which assets to sell. In Chapter 13 cases, the trustee helps create a fair, feasible repayment plan. In both, the trustee helps determine how much money each creditor gets.

In all cases, a bankruptcy judge has final say. Filers must appear in bankruptcy court at least once, but few Central Oregonians must trek to federal court in Portland. Instead, bankruptcy judges or trustees come to Bend several times a month, to hold hearings in classrooms at the National Guard Armory.

Just before Gulick filed for Chapter 7 bankruptcy, he paid for an appraisal of his furniture and belongings to see what they could fetch at an auction. If certain pieces had been particularly valuable, Gulick may have been required to sell them. But there are legal exemptions to protect people from having to sell basic necessities.

“They can’t sell off every single thing you own,” Hemphill said, “otherwise you’d be naked, living under a bridge.”

Chapter 13 cases usually go on for three to five years as the consumer pays back his or her debts. The trustee oversees the case throughout that time, collecting money from the consumer and adjusting the agreement if he or she loses a job.

When people emerge from bankruptcy, they often feel relieved that the debt is behind them. A discharge from bankruptcy court is a document confirming that the debts are closed.

Life after bankruptcy

Bankruptcy is not just for low-income consumers.

“Most people who file for bankruptcy never, ever could have imagined that they’d be in this situation,” said Paul Stednitz, a senior vice president and regional manager for Central Oregon at Liberty Bank.

Williams, of the credit counseling group, said the process is, in some ways, more difficult for consumers with high incomes.

“Some of them are paying for private schools, for example, so their kids end up having to change schools,” she said. “It just upends their lives.”

Many people who go bankrupt lose their homes, although foreclosures — when banks reclaim homes whose owners fail to pay their mortgages — are often separate legal processes.

A bankruptcy remains on a credit report for seven to 10 years. But that doesn’t mean that a consumer is unable to obtain new loans.

“We have, at times, lent to people that have had bankruptcies,” said Stednitz of Liberty Bank.

Banks are usually notified when an account holder files for bankruptcy.

“People could have overdraft lines (of credit), for example. Almost everybody has some sort of line of credit attached to their bank account,” he explained. “And any sort of lending mechanism like that would trigger a bankruptcy filing to come to our bank.”

When a person with a past bankruptcy applies for credit, the loan officer looks closely at the details of the bankruptcy before making a decision, Stednitz said.

“In that person’s credit report, we can see all of the credit that was included in the bankruptcy,” he said. “And if we can’t see that, then we ask for a copy of the bankruptcy documents so that we can see it. Because some people will exclude items from a bankruptcy, so they might file for bankruptcy but stay (current) on some of their loans.”

Generally speaking, he said, a Chapter 13 bankruptcy looks more favorable than a Chapter 7 bankruptcy because it shows that the person or couple took some responsibility in repaying parts of loans.

“But there are times when people don’t have a choice. They have to file a Chapter 7,” Stednitz added. “They may have had a medical situation or an illness.”

Post-bankruptcy consumers can rebuild their credit with a secured credit card.

“It’s essentially a Visa card that’s issued with a savings account that is collateralizing the card,” Stednitz explained. “So if you have a $1,000 limit (on your card), you would have to have $1,200 in the savings account. It appears on the credit report as a regular credit card, so it’s a great way to rebuild credit. In fact, it’s hard to rebuild credit any other way.”

Experts agree that it is critical for a person who goes through bankruptcy to learn a lesson in the process.

Gulick said that for him, lessons were unavoidable.

“It’s really tough to go on a cash (only) basis; it takes more discipline than I ever thought,” he said. “But going through bankruptcy, you lose all your credit cards, and I’m not going to take any new ones out. So we live on cash only, and it’s a whole different experience. If you don’t have the money in the bank to do it with, you don’t do it. That goes from grocery shopping to taking a weekend away or anything that you want to do.”

Gulick has shared these lessons with his grown children to help them avoid his same fate.

“It’s been an education, and it’s been … very traumatic,” he said. “I wouldn’t say that I feel lucky in having gone through the experience but I will say this … it has been a great teacher. Unfortunately, I got taught pretty late in life.”

I linked to the print-version, since there's some good info there, including a graph for NW states of BK's per quarter since 2006.

The Bully also gets another notch to The Good for printing this. A nice reprieve from their candy-apple bullshit.

A warning though: The douche-lawyer they quote in there is a big asshole. And a total dumbfuck. Believe me, I know.

OK, I'll print the other piece in the Bully, since it's pretty rare for them to have ANY decent pieces:

Few loans to rely on
Scarcity of money making it especially tough for startups, so many turn to private financing

By Andrew Moore / The Bulletin

Before Terri Cumbie opened Dudley’s Bookshop Cafe in downtown Bend in December, she applied for business loans, only to be turned down. She self-financed her store instead.

Terry Rhode is a Madras farmer who has started marketing safflower oil, a cooking oil derived from crushed safflower seeds he’s begun harvesting. He also recently applied for loans to build a pressing plant, but said he was turned down. He’s financing it himself, but the meager amount he can invest is making it harder to launch the business.

Sky Pinnick, owner of the new downtown Bend bar Velvet that opened last month, said he and two business partners put up all the funds to open the business, not once considering a bank loan.

“Why go through all the hassle if they are just going to turn it down?” he said.

The credit crunch that ushered in the recession still seems to have a stranglehold on people who want to start new businesses.

While banks are making small-business loans, they’re fewer than in the past. Throw in the lack of capital once available from credit cards or home equity, and many would-be entrepreneurs are left with either dashed dreams or a scramble to secure capital from family, friends or their own savings accounts.

Under more scrutiny

Dennis Lloyd, director of lender relations for the federal Small Business Administration in the Portland district, said the number of loans guaranteed by the SBA this year in the district — which includes Deschutes County — is down “considerably.”

The value of the loans, however, is roughly the same.

From Jan. 1 through July 15, the SBA had guaranteed 21 loans in Deschutes County for $6.8 million, according to the SBA. For the same period last year, it guaranteed 34 loans for $6.7 million, and in the same period in 2007, it guaranteed 56 loans for $10.2 million.

Asked whether the decline in loans was due to fewer applications or more denials, SBA spokeswoman Sylvia Gercke said it was the latter.

“Because of the economic situation, making loans to small businesses is risky, so (banks) are preferring to monitor their existing portfolios rather than add new loans,” Gercke said. “I guess they are just being cautious.”

Paul Stednitz, a senior vice president for LibertyBank and the regional manager for Central Oregon, said banks are lending, but it has always been difficult for new businesses to secure startup financing — in the current recession, even more so.

Stednitz said there are some industries, such as restaurants, that banks rarely give new-business loans to because of high failure rates. But for other startups, the decision about whether to extend a business loan depends on the experience of the entrepreneur, the business plan and the viability of the idea.

“The economy hasn’t changed how we look at startups,” Stednitz said. “I think now we have to scrutinize collateral closer, cash flow, projected cash flow, what you’re selling — is it going to be able to sustain in this economy, because people aren’t buying things. You could have the greatest idea, but if no one’s buying … here we are as bankers trying to make these determinations and it’s not easy.”

A waiting game?

Money is tight, and that’s affecting the way new businesses are being launched, said Bill Saling, a volunteer with the Central Oregon chapter of SCORE, formerly known as the Service Corps of Retired Executives. Saling and local SCORE staff offer free advice to small-business owners.

“We’re already telling people early in the conversation that if they are saying they have to get lending from banks, not right now, I don’t care how good you are,” Saling said.

Saling said he is advising people interested in launching a new business to wait for the credit crunch to subside. He said prospective small-business owners should instead tie up all their loose ends and ensure they have a solid business plan so they can move quickly once credit normalizes.

Saling said it can be tempting to self-finance a business, but many would-be business owners miscalculate how much more money they will need.

“Not everybody is going to pay their bills on time, some people will stiff them, contractors change their terms, so all of those things without a cash reserve make it very difficult to survive,” Saling said.

Falling back on private funding

Stednitz said the loss of jobs is compounding the problem, as more people are forced to come up with creative business ideas to generate income. But with home equity no longer an option for most and retirement accounts battered by the stock market’s decline, those wanting to launch a business could find themselves in a pinch.

“The next fallback, unfortunately, it’s the credit card — and we would not recommend using a credit card to start a business,” Stednitz said.

What’s left is private money, he said.

Cumbie, at Dudley’s, tapped family, credit cards and a home equity line to open her store, she said. She also was frugal about the endeavor, furnishing her store with secondhand items and stocking inventory she collected for four years prior.

While initially disappointed she didn’t get a small-business loan, Cumbie wasn’t surprised, given the economy. In the end, she’s glad she didn’t get the loan.

“I think if I got a really big loan from a bank, the economy got worse after I opened, and it would have been really, really hard to make those loan payments,” Cumbie said. “I would have had to borrow more just to make the payments in addition to what I needed.”

These two pieces basically illustrate 2 sides of the same coin: Save Your Money.

People who are liquid in the future will run the show. Being "INVESTED" (as I have been admonished for not doing so in this forum... often) is NOT what you want to be doing now.

Putting your money "At Risk" has worked just peachy for 3 decades, it's all many people have ever known in their adult life. Buy a house, buy stocks... if you did these 2 things to the fullest extent of your ability, you've done as well as could be expected.

This formula needs to be turned on it's head for the next 10-20 years. This is not going to be a short-term phenom.

In the first piece you read the guy had to sell his STUFF at a LOSS. The second woman could not get a nickel, and went to CC's & HELOC... and family, who almost certainly did the same. So basically she doesn't "own" the place, others do.

Folks, Cash Is King. True today, true in 2019. This will not be over soon.

It's especially true here. We are STILL 24% overvalued! STILL! The pain is not remotely over here, in some ways it hasn't even gotten going.

We won't fall 24%, and that'll be it. We'll cut RIGHT THROUGH THAT, and keep going down. Then we'll just sit there, at dead-ass bottom.

THAT is when you break the piggy bank, and begin a slow, methodical process of accumulating stuff CHEAP.

What'd you pay for Pegasus, Dunc? $5K? That there is what I'm talkin' 'bout.

Things won't just be cheap, they will be ridiculous. All the current-day knife-catchers will have bloody, perforated hands, and will just want out. Soooooooo many people think they are catching the bottom now. Folks, that shit will not happen until the first digit in your age advance 1 or 2 digits... the second digit will stay the same.

This blog will be LONG GONE when it's time to buy in Bend. There ain't a chance in hell I can write this fucking thing for 2 decades. Neither will you have The Bully available to Ring The Bell... it'll be long gone.

Folks, they'll be GIVING shit away. I know this seems impossible, because things NOW are STILL so fucking (relatively) expensive. That's because we are still in the BEGINNING STAGES of working off a speculative bubble the like of which will nevere be seen again... EVER.

So assets are still ridiculously expensive. Compared to what they will be. At the end, cars, homes and small businesses will be given away practically. Big Assets, previously the domain of credit providers, will have to go for Cash Prices. And cash will be Damn Scarce. Scarcer than it is now. Lots.

OK, I'll end with some Great News!!! We are finally Number One!

Oregon homeless figure tops nation
Jobless rate still high; shelter worries about coming winter
By Amy Easley, KTVZ.COM

Oregon has the highest proportion of homeless people in the nation, according to a new report issued by the U.S. Department of Housing and Urban Development.

The study reveals more than one-half of 1 percent of Oregonians were homeless last year.

Chris Clouart, executive director at Bend's Bethlehem Inn, blames the troubled economy for high numbers. "We've seen a definite increase in need for beds," Clouart said Monday.

"We've seen a need in single individuals and families, and it all has to do with the fact that the economy is in such bad shape."

While all of Central Oregon's roughly 2,200 homeless may not be living on the streets due to financial hardships, the recession certainly hasn't helped.

Oregon's unemployment rate hovered at 12.2 percent in June - essentially unchanged from the previous month but more than double the jobless rate at this time a year ago, the state reported Monday.

The seasonally adjusted unemployment rate remained well above the U.S. rate of 9.5 percent, as Oregon's recession-bound economy shed another 7,200 jobs last month.

In all, there were 241,000 Oregonians on the unemployment rolls in June, compared with 114,000 jobless a year ago. Bill Seidel, says with all the competition, begging is the only job he can get.

"I wish something would happen with this economy so I could get into a place and wouldn't have to do this," he told me.

Others, like 17-year-old Haze O'Riley, chose to live on the streets, saying it's the only life they know, but admit it has its hardships.

"What I've seen in Portland, I saw about 400 or 500 kids my age and younger living on the streets," the teen said. " It's not a pretty sight, with drugs, fighting and hunger." Homeless shelters say during the summer months, the number of homeless is manageable, as more people opt to camp outside.

Staff at the Bethlehem Inn say the trouble will come this fall. "What we're hoping doesn't happen, but what will probably happen, is that when the weather starts turning cold this fall, we're going to see ourselves inundated,"

Clouart said. It's a problem with no easy solution. Because in this recession, no area is out of the woods yet.

Jam yesterday, and jam tomorrow, BUT NEVER jam today. ie, Don't worry about the homeless today, cuz their frozen corpses don't line China Hat Rd.

The homeless kid in Portland had what I thought was the most unsettling quote:

"What I've seen in Portland, I saw about 400 or 500 kids my age and younger living on the streets," the teen said. " It's not a pretty sight, with drugs, fighting and hunger."

WTF is going to come of this? 'Course the Bully won't print that essentially Bend has this same problem, because to do so would admit that we're facing some sort of Lord of the Flies-Escape From New York scenario.

Finally, I was walking downtown yesterday and I guess it was the first time I've seen that Tetherow's Sales Office in Franklin Crossing is closed. When did this happen? I tried searching the Bully, but didn't find it.

Life on the 'Berg: 90% of what happens is never seen.

hbm, will you ever let me grab your huge stick shift?Dunc, please tell me about Pegasus backorders... it makes me so HOT!Woof. This chick is HOT.

Deadbeat Government

2009-07-12T07:13:00.000-07:00

Funny, funny things are starting to happen in this country. The latest is that The Government and Banks are beginning to give (& take) IOU's from each other.

Citi, Bank of the West to keep taking IOUs

Citibank and Bank of the West will continue accepting California IOUs, State Treasurer Bill Lockyer’s office said late Friday. Citi (NYSE: C) agreed to accept the notes for another week -- to July 17.

Bank of the West, which initially told the Treasurer’s office that it would no longer accept the notes, changed its mind and will now do so “indefinitely,” according to the Treasurer’s office, which had urged all the state’s major banks to continue taking the IOUs.

More than 60 credit unions will accept the IOUs, according to the California League of Credit Unions. Some community banks said they’ll also accept the notes from existing customers.

Major banks which rejected Lockyer’s request include Bank of America, (NYSE: BAC) Wells Fargo, (NYSE: WFC) J.P. Morgan Chase, (NYSE: JPM) and Union Bank. Lockyer’s office said U.S. Bank (NYSE: USB) did not provide a “definite answer” on whether it will continue accepting the IOUs.

Most major banks in California had originally said they would accept California IOUs only through July 10. “Citi made a difficult but responsible decision, both from a customer and taxpayer perspective,” Lockyer said. “As for the other banks, their refusal to continue accepting IOUs is disappointing. I understand their position, but I don’t agree with it. “I continue to believe they would better serve their customers and the taxpayers of California if they continued to accept the IOUs,” Lockyer said.

“Hopefully, they will have a change of heart.”

I don't exactly know what to make of a situation where Government & Banks begin to exchange IOU's.

And these aren't traditional government "IOU's" (ie bonds), with a legally binding agreement to pay back the amounts, collateralized by some thing. No, these are just straight unsecured IOU's, like you'd get from your deadbeat brother.

I assumed that Government would only accept IOU's, NOT issue them. Strange Day's, folks, strange fucking day's.

I just wonder what's next? Because issuing IOU's starts to blur the line of just what "debt" is, and how trustworthy our governments promises are. The whole edifice is starting to blur... who is dependable, who needs money, who will go out of business?

Seems Cali would have issued bonds or something before this happened. That they didn't seems to indicate they couldn't.

And you can tell from the article that accepting them is a dicey business. Banks are in a precarious position themselves. They are supposed to owe Real Money to the US Government.

This gels with my thesis of Keep Your Money, and segue's into the local hilarity surrounding the failed establishment of Crown Point Bank.

Folks, Keep Your Money! When a snake oil salesman comes and tells you that they have the latest & greatest perpetual motion machine, for the love of God, don't buy it!

Here is Gerlicher & Costa's initial attempt to fleece the masses:

A new player in local finance?
Investors plan to start nationally chartered bank in Bend

Pending regulatory approval, Bend could soon be home to a new nationally chartered bank.

A group of investors led by Sisters resident Elijah Aldinger has proposed creating a full-service commercial bank that would be headquartered in downtown Bend with a branch in Portland.

The proposed bank, which would be called Crown Point National Bank, would specialize in servicing the banking needs of small businesses, said the bank’s president and CEO, Andrew Gerlicher.

“This is a great place to open a bank,” Gerlicher said. “People are discovering Bend, have been and continue to, and the opportunities are real and, we think, dependable.”

Gerlicher said the bank has 43 founders who have pooled more than $4 million to fund the bank’s organization, and that additional capital would likely come from a public stock offering sometime after the bank gains regulatory approval.

Gerlicher estimates the bank will open by the first quarter of 2009. Despite the current economic climate, Gerlicher said, it’s a great time to open a bank.

While many banks have slashed their lending in the wake of the housing and credit fallout, falling real estate prices have created demand for loans, which presents opportunities for banks with clean balance sheets, he said.

Gerlicher said the bank is not being created to take advantage of the current situation but because it believes in the long-term potential of the Bend and Portland markets. “The things we’re hearing in the news are temporary things ... cycles tend to work their way through issues, so you really want to look beyond that and not hang the whole prospectus of the enterprise on a point of time,” Gerlicher said.

“It’s the overall demographic changes, the continued growth and the people moving in, and, really, in Oregon in general. The same trends can be seen in the Portland market, so this is a long-term business that has a long-term view.”

The bank has applied for a national charter with the federal Office of the Comptroller of the Currency, which requires the applicant to include the word “national” in its name or the abbreviated suffix “N.A.,” which stands for “national association.”

Banks without a federal charter are chartered by states. Gerlicher, an attorney with 25 years of experience working for Umpqua Bank, West Coast Trust Co. and First Interstate Bank, said the bank chose a national charter partly due to his and other Crown Point executives’ experience in dealing with federal regulatory agencies.

Gerlicher said the differences between federally chartered and state-chartered banks are small. The bank’s headquarters will be in the former Washington Mutual Home Loan Center in downtown Bend, at 956 N.W. Bond St. Washington Mutual closed its home loan centers across the country in March, according to Darcy Donahoe-Wilmot, vice president of national public relations, Northwest bureau, for Washington Mutual.

Renovations on the bank’s future home, at the corner of Bond Street and Oregon Avenue, are under way.

Gerlicher said dedication to customer service and a community bank mentality will attract customers in a crowded field of banks downtown.

“Local businesses, I’ve found, prefer to work with people who they can get in touch with in person and who can give them the immediate, intelligent response to their requests,” Gerlicher said.

“We’re going to hire experienced and seasoned bankers, and help these businesses get that level of personal service, to be able to talk to someone on the other end of the line.”

Though it plans to specialize in small-business banking, Crown Point also will offer home and personal loans, and checking and savings accounts, and its deposits will be secured by the Federal Deposit Insurance Corp., Gerlicher said.

The bank expects to finalize a Portland location in coming months. Should it be approved, Crown Point will join the Bank of the Cascades, founded in 1977, and High Desert Bank, founded in 2007, as the only banks with headquarters in Bend.

Linda Navarro, president and CEO of the Oregon Bankers Association, isn’t surprised a new bank is opening in Bend. The region’s demographics make the area attractive, and speak to the fact that there’s a strong future for community banking in Bend and elsewhere, she said.

“Banks continue to provide viable services to their communities ... and even with consolidation in the banking industry, new banks continue to organize because there is a place for community banks, especially in local communities where management and employees are centralized in the community,” Navarro said.

“They truly embody the definition of serving and growing a community.”

Sorry, but the parrellels to earlier hucksters is just amazing.

“Local businesses, I’ve found, prefer to work with people who they can get in touch with in person and who can give them the immediate, intelligent response to their requests,” Gerlicher said. “We’re going to hire experienced and seasoned bankers, and help these businesses get that level of personal service, to be able to talk to someone on the other end of the line.”

OK boys and girls, it's time for NAME THAT HUCKSTER!

What huckster said this?

"They want to live in a custom home," _________ said. "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," _______ said.

If you guessed BECKY BREEZE, You Win!!!! Who could forget the salad days when articles with titles like Condo-mania appeared in the Bulletin with such regularity, that we didn't even think how preposterous they really were.

And if you just rolled in off the turnip truck, you should know that the "custom home" Breeze is speaking of was her very own Plaza condominiums, a disaster that went down to foreclosure.

OK, on to our next Huckster!!!! Who said the following?

In Franklin Crossing at the corner of Franklin and Bond — the downtown’s first new five-story mixed-use building — buyers lined up to snap up reservations on the buildings eight top-floor condominium units last spring, despite prices that ranged over $1 million, ___________ said.

If you guessed NORMA DUBOIS, you win!!! Ding, ding, ding, ding, ding, ding!!!!

Turnip truckster will be happy to know that Franklin Crossing NEVER "Sold Out" and still has cobwebbed units galore available to this day.

OK, our next Huckster is up! It's a toughie, so I'll try to give you more material...

"They told me, start conservatively," he recalled. "I just really didn't want to go there. I wanted to break down the barriers and go with the philosophy of if I build it right, they will come."

"The day we opened the doors, it had the buzz we were looking for," _______ said. "It could have been in Portland or San Francisco."

"Everything is going according to plan," _________ said, "and it feels good."

If you guess JODY DENTON, you WIN!!!!! Ding, ding, ding, ding, ding, ding... well, OK, you get it.

Turnipers, it should be obvious that Bend is all about PR & MARKETING PONZI SCHEME'S TO YOU, dumbfucks who just fell off the meat wagon.

That's ALL that happens here.

It's why this blog is periodically "written off" in the comments. The grifting crowd really, REALLY hates this motherfucker.

MOST of the failures of Bend are not even acknolwedged. Only the really zingers that are too big to coverup, such as Cessna's Complete Failure with Columbia Air, and others. Most of the small stuff simply closes, and goes out with a whimper.

Who are the Failures of Tomorrow?

Well, it is typically people who start a modest enterprise, in the same spot as something similar that has recently failed. Usually easy to spot because of lines in the Bully like this:

Bend and Redmond to get new restaurants

Longtime Central Oregon restaurateur Axel Hoch and business partner Mark Perry are planning to open a new steakhouse in Bend’s Mill Quarter district. The restaurant, to be called the River Mill Grill, will be in Fireside red’s old location, at 803 S.W. Industrial Way, Suite 202, in Bend. Fireside red closed in May.

So why do these people think they will succeed where others have failed miserably?
Why it's The Doctrine of Bend Exceptionalism, of course. That feeling that makes you want to piss away your life's work because your a Narcissistic Fop who thinks they will always succeed where other mere mortals have crashed & burned.

BUT, you have to appeal to THE NORMALS, and not come off like an asshole, so the Ace In The Hole always comes out:

Hoch, who previously opened Le Bistro, the Old Bend Blacksmith Shop and Barney Prine’s Steakhouse & Saloon, said the location — with its expansive deck and view of the river, The Old Mill District and Les Schwab Amphitheater — was too good to pass up.

Ahhh yes. The Olde Location That Is Too Good To Pass Up. Who has recently succumbed to this load Of Shit?

Let's play Guess That Dupe!!!!
“It is exactly the same food, same menu and the same staff — it’s just a new location,” said ____________, co-owner of __________. “We are excited to be a part of downtown.”

If you guess "Cheri Helt" and "Zydeco", then you win!

But then again, it could be 900 Wall, or a host of other Bend businesses that have frisked the owners CLEAN of all their Worldly possessions. No one says it better than Hot Young Margie:

Marge said...

The Shire shit, was a good one. Bottom? Not for 3-5 years. Their holding time. More Cali-suckers. I say, fleece em and eat em.

All these NOOBS jumping in, just because prices have fallen UNHEARD OF amounts. And their newest, best-est idea is some sort of VALUE-PRICED MENU.

Cessna? Value Priced Menu.
Zydeco? Value Priced Menu.
Crown Point Bank? Value Priced Menu.
The Shire? Value Priced Menu.
Tuscany BUTTPLUGS? Value Priced Menu.
River Mill Grill? Well, let's see:

“It’s a great location, great parking and good timing,” said Hoch, adding that the menu will be “value-oriented.”

Yup, same shit, different day. Everyone buys the infinite river of bullshit sluiced down their gullet by The Eternally Optimistic Bend Media Machine.

Not a single NEW IDEA in sight. Always the same BULLSHIT recycled in exactly the same spot, with exactly the same reason for WILD & ETERNAL SUCCESS: Value Priced Menu.

Same shit, just a little cheaper.

This is exactly the sort of thinking that will keep Bend in an eternal malaise.

Bend has exactly 3 BUSINESS PLANS:

Subdiv (or Bank or Restaurant or...) with New Value Priced Menu
Ski Hill
Perpetual Motion Machine (aka Garbage-Fueled Buttplugs)

These are the only things that have even been tried here for 100 years.

Bend's recent success is more indicative of a country that is DYING than anything. What do you do when you don't have a lot of time left?

Well, you gather up what you DO have, and go off and spend it in an orgy of hookers & blow, and basically come out the other side ready to die.

Bend is a community that revolves around HOOKERS & BLOW. Ski hills to find the hookers, homes to snort the blow, and buttplugs when your fucking mind is gone.

Bend is a side-effect of a country in decline. The last gasp of hedonists who implant pump-up cocks & fake titties, and squirt their love juice over anything that moves. Ask Bledsoe: he built the Magnificent Pleasure Palace Xanadu where he swallers donkey cum by the bucket & you can always stuff a 14" inflatable cock-balloon in your best friends wifes ass.

This is Bend.

"Where's the blow, Big Boy?"

hbm, do you have a dog that'll Fill me Up?

OK, this chick is just hot.

Bend's Newest Business Plan: Flip & Strip.

2009-06-28T05:55:00.000-07:00

OK, just when I think Costa has woke up & smelled the homeless, he puts out something like this:

Where all the jobs have gone

By Jeff McDonald / The Bulletin
Published: June 28. 2009 4:00AM PST

The meteoric rise and fall of Deschutes County’s unemployment rate has garnered national headlines as a prototypical boom and bust story, but what lies behind the county’s unemployment rate increase of 12 percentage points from May 2007 to May 2009?

Where have all the jobs gone? And how will the region look when it recovers?

Many companies reported difficulties finding employees in May 2007, when Deschutes County’s seasonally adjusted unemployment rate was 4.7 percent.

Now, with an unemployment rate of 16.7 percent reported last week in the county and rates of 16.4 percent in Jefferson County and 20.9 percent in Crook County, employers report an abundance of labor with companies slashing wages and jobs, unemployment rates at all-time highs and job-seekers going to great lengths to find work.

Experts who study the region’s labor trends agree that the region’s housing market and construction activity became overheated during the boom years between 2004 and 2006.

“I don’t know what we’re shifting to, but when you look at that loss in (mining, logging and construction) jobs in just the last two years, it is safe to say the development-based economy has slowed,” said Carolyn Eagan, the region’s economist for the Oregon Employment Department.

“The county and city of Bend (have) had to cut staff, engineering firms are operating on bare-bones staff and many Realtors are not renewing their licenses,” Eagan said. “I don’t know what we’re shifting to. I don’t think we’ll know until it’s happened.”

The collapse of the housing industry has resulted in a net loss of 3,050 jobs in the county’s mining, logging and construction sector from May 2007 to May 2009, a 36.2 percent drop, according to the Oregon Employment Department. Most of that sector is construction, according to the department.

The county has 4,860 fewer jobs overall than it did in May 2007, the department said.

Other sectors where job losses were reported included manufacturing; professional and business services; and trade, transportation and utilities. They lost 910 jobs, 530 jobs and 710 jobs over the two-year period, respectively.

Individual industries such as high-tech and biosciences, which are smaller in size, are grouped under larger sectors such as manufacturing or professional services, depending on whether they produce a product or conduct research or provide services, for example, according to the Employment Department.

Professional and business services jobs range from those in law offices and architectural firms to employment and janitorial services. The trade, transportation and utilities sector includes retail and wholesale businesses, as well as private utility companies and private transportation companies.

Educational and health services jobs were up by 400, and leisure and hospitality jobs by 240, from May 2007 to May 2009, according to the data.

Those sectors demonstrated growth, but at a milder pace than during the boom years, the department said.

Over the same two-year period, there were 360 government jobs added in Deschutes County.

In May 2007, there were 67,120 jobs, 8.7 percent more than May 2009, according to a report last week from the Employment Department. The county peaked in total employment with 73,510 jobs in June 2007.

Job losses alone do not explain the state and county’s record-high unemployment totals, Eagan said.

The civilian labor force — which includes anyone 16 and older who either has a job or is looking for work — has been growing in the county and statewide despite fewer jobs available, according to the Employment Department.

More people are postponing retirement and staying in the work force, and second-wage income earners such as spouses who previously didn’t work and retirees are re-entering the work force. Additionally, more people are continuing their job search longer than they would normally without finding work, Eagan said.

Unemployment trends

Oregon’s 12.4 percent unemployment rate is the second-highest in the nation, behind only Michigan, which had a 14.1 percent seasonally adjusted unemployment rate in May, according to a U.S. Department of Labor report issued June 19.

The Midwestern state, which has been decimated by the loss of auto industry-related jobs, has seen its civilian labor force shrink from 4.97 million in April 2007 to 4.78 million in April 2008, according to the state’s labor Web site.

Meanwhile, Oregon’s civilian labor force grew from 1.91 million to nearly 2 million over the same time period, according to the state’s employment Web site.

The collapse of the housing market — one part of the asset bubble that also included stocks, retirement savings and other investments — also contributed to the rise in the civilian labor force in Oregon and other Western states, said Timothy Duy, adjunct professor of economics at the University of Oregon.

People who were living off their assets, particularly in a resort community like Central Oregon, were forced to go back to work when they saw their houses and other investments lose value last year, said Duy, who follows the region closely and authors the quarterly Central Oregon Business Index.

“As assets became increasingly impaired and foreclosures started rising, the labor force started (increasing) quickly,” Duy said. “That started a process where the unemployment rate started spiking.”

Mounting job losses also contributed to the rising unemployment rate, which spiked nearly 10 percentage points over the past 12 months — from 7 percent to 16.7 percent, Duy said. Both trends, an increasing number of people who had lost equity in their homes and money in investments, and an increasing number of people who lost their jobs, increased the rate of unemployment, he said.

The county is on track this year — with 1,661 notices of default through Wednesday — to easily surpass the record 1,928 notices of default filed in 2008, but notices appear to have peaked in April. A notice of default is the first step in the foreclosure process but doesn’t always result in bank repossession.

While the unemployment rate could still go higher in coming months, the high unemployment numbers are more of a lagging indicator for the region, a fallout from the overheated housing economy, said Roger Lee, executive director of Economic Development for Central Oregon, which promotes development in the region.

“It cannot be overstated that while it is definitely a painful process, there is a purpose to the business cycle,” he said. “We’d like to have it a lot less deep and prolonged, but we’re seeing people get lean and mean.”

Hardest hit

Construction and manufacturing have been hard hit throughout the region, accounting for roughly half the region’s unemployed workers, but several industries, while battered, are still holding their own, Lee said.

Lane Lehrke, 42, who moved to Bend in 2003 with his wife and two children, bought a home and worked for a local builder as a production manager until October, when he was laid off due to lack of work. He had owned his own company in Oregon City before he joined the Bend builder.

But Lehrke has not been able to find work in the construction field, despite sending out résumés to five different Western states and online sites, he said.

“I have put in résumés in lots of places,” Lehrke said. “I have gotten a lot of nonresponses. Very rarely do I get a response.”

Lehrke, while collecting unemployment, still makes $400 monthly payments to pay for the cost of his builder’s license, insurance and bonding, he said.

“I’ve got some opportunities in the fall,” he said, referring to potential jobs in Portland. “A lot of it has to do with stimulus funding.”

What comes out of the current trough in the business cycle will depend upon how much the county diversifies its employment base, said Lee.

Construction was 11.7 percent of the total work force in May 2007, and is 8 percent today, according to the Employment Department. Manufacturing, meanwhile, was 7.7 percent of the work force in May 2007, and is 6.9 percent today.

“This place is not tanking,” Lee said. “There are indicators of economic activity still going on here.”

The economy needs more diversity, but is not on a tipping point like it was in the 1980s, Lee said.

That was when the region’s mills were crippled by changing forest policies and the area began to rebuild its economy, he said.

“There are a lot of examples in the West where the change in forest policy decimated those areas,” he said. “Central Oregon has done a decent job, but we still need to do better in targeting industries that have promise.”

The region needs to target companies in knowledge-based industries such as renewable energy, software and medical device manufacturing, he said. Global competition is fierce in recruiting “green” companies, which provide top wages and heavy capital investment, Lee said.

Central Oregon has been competitive in its recruiting efforts for those types of companies, Lee said, citing more affordable land in the region, a ready work force and quality of life. Lee expects to find companies that are the right size for the region, possibly landing suppliers for Portland’s growing green manufacturing base.

Companies such as Bend-based dog apparel manufacturer Ruff Wear and Warm Springs Composite Products, which both ship products overseas, are faring well. Others that have been hit hard by the national recession, such as Madras-based manufacturer Bright Wood and Contact Industries in Prineville, are retooling and will eventually provide jobs in Jefferson and Crook counties, Lee said.

“With very few exceptions, these are very sophisticated wood products manufacturing companies,” Lee said. “They will be back with those kinds of jobs. Our challenge is to diversify with other types of jobs.”

OK, without looking, was the title:

WHERE HAVE ALL THE JOBS GONE

WHERE ALL THE JOBS HAVE GONE

Right. The first one implies jobs that are gone. The second implies that the jobs are "still there", they are just hanging out somewhere smoking cigg's or something.

Very sleezy writing, and something I guarantee Costa jumped in to change. Sooooo... the first is a more appropriate title, but of course it is the second that was actually used. You can tell, because the writer uses the obviously "correct" title in his second paragraph:

You find, of course, there is no answer to either.

WHERE ALL THE JOBS HAVE GONE.

So it is a STATEMENT, not a question. And it appears that the answer is NOWHERE. They're just gone. They aren't hiding somewhere, waiting to be found.

You gotta love these softball pieces, where the reader is treated like they are 5 yrs old.

Where have all the jobs gone? And how will the region look when it recovers?

Here's the real answer: Most of that employment near the peak was FAUX JOBS & FAKE BUSINESSES, 100% fake and unneeded and unsustainable jobs, businesses that never had a chance.

Building houses no one wanted. Mortgage brokers hired, apprasiers for falsified appraisals. And all the "multiplier" jobs: All the jobs & businesses that were spawned from a credit-fabricated bubble, to feed demand that had no basis in reality.

Those jobs are gone. And the "multiplier" jobs; the coffee shack purchases, the Jamba Juices, the oil changes and all the other stuff that "fuels" those faux jobs will soon be gone too.

Remember the local business index that the Bully used to print? Well, one of the most out-of-control pieces of that index was the Help Wanted ad count.

Over the course of just a few years, it went from 1-2,000 to something like 12,000!

THAT was the bubble. Well, at least it showed the jobs bubble that happened here. We should have known FULL WELL something was wrong when we saw that stat.

But we didn't despite have sharp as nails local experts making the following observations:

Experts who study the region’s labor trends agree that the region’s housing market and construction activity became overheated during the boom years between 2004 and 2006.

Wow.

Do you think so, Costa?

Funny. In this sentence, it starts out regarding experts studying the "region's labor trends", and ends up with a conclusion about our "overheated" construction market.

Standard bamboozling bullshit.

And what's great is although we are promised some sort of insight into what the area will morph into, the piece never delivers:

“I don’t know what we’re shifting to. I don’t think we’ll know until it’s happened.”

Is this one of the "EXPERTS", Costa? Seriously.

She is really going out on a ledge here, with such forward-looking statements as:

...it is safe to say the development-based economy has slowed

Dang. I guess maye she looked over at the sidebar and saw the following stat:

Mining, logging and construction 8,420 to 5,370 (jobs) — Down 36.2%

Nice touch. The strangely globbed together industries of mining, logging and construction has LOST ONE THIRD of it's job base, and THE EXPERT has made the observation that THE DEVELOPMENT BASED PORTION OF OUR ECONOMY HAS SLOWED.

Never "shrunk". Not "lost". No, no. Slowed.

Q: "Dude, are you feeling better after that motorcycle accident where you lost your fucking arms and legs?"

A: "Fuck dude, I didn't LOSE anything! They were just slowed!"

Q: "Dude, did you also become retarded?"

So, needless to say there is a ton of Costa-fueled double-talk in this piece. But there are also outright contradictions of earlier "assertions":

Remember, way back when, we were told repeatedly that BECAUSE Cent OR had such a huge Asset-Rich retirement base, that we were essentially IMMUNE to unemployment anymore?

Uh huh. All those IDLE MILLIONAIRES just stuffing westside houses, didn't need to work, or do anything but cycle all day, and get their cocks sucked all night by their best friends wife, while Bledsoe swallowed donkey cum buckets.

Welp, all of a sudden those motha fuckas need money, and are starting to take jobs at McDonalds.

These are the WAKE UP AND SMELL REALITY Cali-banger dumbfucks who thought they'd come here and never work another fucking second in their lives... dead ass broke.

THAT is who is UNEMPLOYED, that is what's come outta the fucking woodwork. Costa told us we'd all ride a magic carpet of affluence FOREVER cuz these motherfuckers would never stop CUMMING here, and showering us with BILLIONS.

Yeah, these fuckers are BROKE.

Finally, we get Roger Lee's take, who basically says it was over months ago, and it's great that it happened:

It's all good with Lee. His mother could get her head cut off in a fucking car wreck, and Lee would spin that shit as something she really needed to happen anyway. Yeah, she gettin' "lean and mean", right Roger?

OK, enough about the Bully's non-stop bullshit machine. Not much to say about this next nugg, but man it hurts:

Graph of US Housing Equity

Woof, that is a hideous hit to US net worth, down from $12.5 trillion or so, to below $7.5T and still falling. Keep in mind that is a 57 year chart.

If you extrapolate out some sort of bottoming process, it could easily go on for 15-20 years.

And that's just "stabilizing": We'll NEVER hit the peak values of 2006 in our LIFETIMES.

Couple this with NAR, who continues to try to make the salad days appear by reinstating practices that caused this mess to begin with:

Real Estate Associations Want Appraisers To Inflate Home Prices

The housing is still struggling because appraisers are being too tough assessing the value of homes.

That's the self-serving argument being made by realtors who are complaining that lower appraisal values of homes are delaying deals, ruining sales and prolonging the housing crisis.

Appraisal fraud was an enormous contributor to the unsustainable run up in prices during the boom period. Many (but not all) mortgage brokers and realtors referred buyers to appraisers that ALWAYS hit the number of the home purchase price

Now, NAR and other real estate lobbying groups, who are trying to maintain stay in business despite the total destruction of their market, are mobilizing a major effort to reach out to Congress and housing officials.

As NAR economist Lawrence Yun said earlier this week, "Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales." Instead, Yun and his bunch want appraisers who won't be too tough. As Yun puts it, "There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected."

And what about the RIDICULOUSLY LUCRATIVE easy-life of local moving companies? Well, they are finally getting their comeuppance!

Housing, unemployment woes leave movers shaken

Sinking home prices and a weak job market have forced normally restless Americans to stay put in an uncharacteristic shift that has, among other things, clobbered the moving industry.

Yeah, basically the moving trade is imploding. But still we need local Government bureaucrats to save us from these sleezy fuckers, who are barely holding on by their fingernails:

'Sting' targets unlicensed movers, so you're not stung

You can read the piece direct, but the comments tell of the outrage over such bullshit:

Native Oregonian says:
2 days ago, 04:19:51 PM
"When I was a kid my brothers and I made money by doing yardwork for neighbors, babysitting, having kool-aide stands, washing cars. and doing housework for neighbors. I suppose most of the above would now require bonding, licensing, permitting, liability insurance, etc. Thankfully, we were never sued and all our "clients" seemed happy with the work we did and even tipped us sometimes.

Yes, all these monstrous state agencies are supposed to "protect" the consumer but they just create more out-of-control spending government with perks and pers. A claim against a contractor needs to go through a long process and even when the contractor is licensed and bonded, if he (she) files bankruptcy, your claim could be released in the process regardless of their bonding.

Oregon Construction Contractors Board allows the licensed contractor 6 months to pay a judgement or settlement agreement before a bonding company is involved if they fail to pay. Oregon licensed contractors can appeal the decision and again this takes months. Who pays for any necessary immediate repairs?

So, do you think this highly over-regulated state will pay your claim? Nada. Many bonds are for $10K and if you as a homeowner get a judgement over the bonded amount, all you are left with is a piece of paper that you likely will not collect on, over the bonded amount of money.

I tried to find someone to do some weeding for me this summer. Every licensed landscaper, or yard worker wanted from $40-$67 HOURLY. They explained that was because of the high cost of the state requirements for licensing. I did not use them.

Did all the people working at Cessna that are unemployed or soon to be unemployed make that much money? I personally would hire an unlicensed mover, yard worker or babysitter any time I could and use my own resources to determine if I feel they are qualified and honest to complete the job properly.

As for my weeding, I found a very dependable, responsible, hard-working and honest person that quickly completed the work I needed done. I paid him $25 an hour and he was not licensed. I am very pleased with his work and more pleased that he is not licensed.

Guest says:
2 days ago, 04:50:15 PM
"Let this be a very important lesson to all you kids out there running those lemonade stands in front of your house,,, If someone say`s "we`re here to help you" RUN !!!!

Guest says:
Yesterday, 04:16:23 PM
"wow that is lame. hurting the little man trying to make a buck! everyone involved in this should be ashamed and apply for work out of the country, karma is a bitch!

There were 18 vehicles caught in this "sting". How many got tickets?

In Thursday's sting, there were 18 vehicle-related violations issued and one was placed out of service for safety violations.

Fucking ODOT scumbags, and they used cops as their THUGS.

This is a bunch of rag-tag, broke ass broke down and out workaday bastards who are just trying to do something to put food on the table, and ODOT hands out tickets to each & every one.

They raise the SPECTRE of unlicensed BANDITS stealing your shit on a meth-fueled, gun toting bender, when that is 100% UNADULTERATED BULLSHIT. These poor fuckers can barely afford to pay attention.

And that's where this thing is going: Vultures stripping the meat off damn near dead carcasses. Cops & ODOT stripping the poor, NAR wants to steal from new homebuyers by inflating the bubble anew.

Everybody in strip-N-flip mode.

hbm, will you please flip and strip me?

Dunc, do you have paper or plastic for my comics?

The Bedrock Of The Oregon Economy? Wishful Thinking.

2009-06-21T05:55:00.000-07:00

Well, Summer is here & it's a truly glorious time to be in Bend!

Seriously! I don't know about you guys, but I am all about soaking up local fun stuff with the fam over the Summer. It's almost always some sort of "no-pay" non-Cali-banger chillax activity, costing at most $5 to park in some forest parking lot somewhere.

And it's sure as hell hard to write this blog. I'm being pulled to go for a walk in the cool morning air right now. Plus, things seem to go well in Bend over the Summer.

I think that'll change this Summer though.

Unemployment is coming out for Bend this week, and if it's anything like the State figures, it should be just awful.

Go to the OL-reliable OLMIS spreadsheet for State unemployment, and you'll see the 12.4% ADJUSTED rate for May was the highest on record, squeezing out the previous all-time high set in Jan 1983 of 12.0%.

The more-important unadjusted rate of 13.4% set in that same month, still stands as the record.

But we're getting there. We're still #2 in the nation, trailing only Michigan.

Which is pretty unbelievable. When you think of Michigan, you think of ---?

Right. Michigan has a single dominating industry that is kicking it's ass. Everyone knows what it is, and KNOWS that it is the one thing dragging down the WHOLE STATE.

But Oregon? What single industry "drag" do we have?

Is it tech? Well, sorta. RE? Yeah, sorta. The last gasping breaths of timber? Hmmm... maybe.

No, it just seems like Oregon AS A WHOLE, is just falling apart. This whole state is just reverting to it's mean.

And this may not be the WHOLE REASON, but it seems to me to spring primarily from one cause: Deluded narcissistic exceptionalism.

People here think their shit don't stink.

Everyone knows Mountain Comfort is going down the toilet. But still, the owner DeeDee Keith insists on sticking $1,000 SALE tags on plain-jane crap furniture.

She's going down, but she is still running insipid ads non-stop on KTVZ.

She's going down, but would rather PR-Market her way into oblivion, rather than cut prices.

She thinks her SHIT don't stink. And that if she pushes hard enough, she can convince you to buy her shit.

She went cracker-ass broke on Apr 14, but just a few months back, dished up a self-serving turd in the Bully, who was only to glad to oblige:

Divine downtown

DeeDee Keith jokes that she always promised Karma, her dog, that some day she would get them a better place to live.

And boy did she deliver, going from living out of a trailer at a KOA campground to becoming a successful Bend businesswomen.

... after a few years, Keith outgrew her leased spaces, so it made sense to her that when a large, prime piece of property on Wall Street became available, she would buy it.

And she did, explaining it this way: “I was young and dumb, but I had a good business plan.”

Keith was anything but dumb. She not only expanded her business, she also oversaw the construction and design of the new Mountain Comfort building from the ground up.

And speaking of up, this is where Keith made good on her promise to her dog.

She built up, as in a three-bedroom, two-bathroom luxury rooftop condominium above her store.

Taking the store elevator to the third floor, the elevator doors slide open and the Mediterranean-style design of the floor begins to emerge. The first doorway you pass is Keith’s manager’s condo, and between this condo and her condo door is a complete workout facility with an elliptical machine, treadmill and several weight machines. Keith explains this is where she alleviates some of her workday stress. Across from the workout area is a window door that leads to the outside deck facing Pilot Butte. This is Karma’s domain, where the builder constructed a 50-yard dog run and barking station. At the end of the run is a large, custom-built doghouse for the faithful dog.

The whole piece is just endless self-serving tripe. Standard Cali-Banger bullshit. Someone who just thinks they are God's Gift.

And about 6 months later, it was all gone. The TAINT of the Bend Bully PR AIDS strikes again.

Here's another Shit Don't Stink piece from the Oregonian:

Portland-area retailers try to retool leases

In fall 2008 when Storables' Fischer realized how the recession was hitting his newest store in Mesa, Ariz. -- where sinking home values and consumer confidence had tanked early on -- he tried to set up talks with his landlord, a mall operator he said already was struggling to pay for an expansion.

By January, when Fischer started trying to meet with landlords, he already was late to the game. Many of the larger tenants already had begun talks. Adding to the logjam, he said, larger chains such as Williams-Sonoma, Chico's and Anthropologie often start with more favorable leases tied to sales or whether certain neighbors stick around.

"It's the big national tenants, not the regional or small local, that can really work that," said Fischer, adding that one of his landlords told him that having an empty space was better financially than offering lower rates.

A drop-off in rents, Fischer said he was told, could leave a lender wondering about the value of the landlord's building. Such a scenario could trigger a review that could mean the landlord has to make up the difference to the bank.

WTF? So these landlords & lenders are in this game of chicken regarding pie-in-the-sky lease rates. They would actually rather have their space EMPTY, than a paying tenant.

The grass is greener thinking. Always jam tomorrow, NEVER TODAY.

This is just psychotic, yet widespread thinking. Hold out for $2.50 a foot, even though vacancies are 90%.

The thinking is, "I KNOW I could have gotten $2.50 a foot a few years ago, and the value of this building imputed at that rate is $X million, but if I were to actually take $1 foot, it would be $X/3 million, and since I owe $2X million, I can't take $1/ft or the bank will come after me".

So everyone in this weird fucking state is in state of suspended animation, always believing in some Pollyanna, dumbshit dream that TOMORROW WILL BE A BETTER DAY.

Always. Seriously, look at this headline from TODAYS Bully:

Summer is finally here — will the tourists come now?
Prospects for Central Oregon could be worse - July especially should see more visitors - but don’t expect a record-breaker

On the heels of an abysmal winter season, Central Oregon’s tourism industry is hoping for a boost in business during its ever-important summer season.

That could come from a range of events planned for July, as well as from perceptions of a rebounding economy, but tourism officials still don’t expect a full recovery or at least stabilization until at least 2010.

Earlier projections of a 25 percent drop in tourism this summer have softened somewhat, but most lodging operators still expect to be down from last summer, Audette said.

She expects the region’s resort properties to do well this summer because they offer the feel of a vacation getaway while still being a short drive from the Seattle and Portland markets.

Look at just how much HOPE & DREAMING there is in there. The whole piece is just hopeful bullshit. Bend is NOTHING but smoke, mirrors, and illusion. You can NEVER count on anything to be real. Here's a dreamscape excerpt, included in almost every Bully article EVER WRITTEN:

Room-tax collections are the most reliable indicators of the health of the tourism industry, which is estimated to have a $571 million annual impact on Central Oregon’s economy.

100% BULLSHIT. That $571 mill is 100% MADE UP. But it is printed damn near every day in the Bully. Why? Cuz this place is Kool-Aid crackerland.

DeeDee Keith PR-Marketing her store into oblivion, rather than just cutting price.

Portland commercial landlords & banks playing cat & mouse so that some effemeral and 100% FAKE building valuation can be hit with lease rates that aren't even being collected.

Bob Thomas filing appeals to keep open a dealership because he thinks he's entitled.

Roger Lee & Alana Audette lying day-in and day-out about how important they are to Central Oregon, and the City of Bend (you & me) are actually FUNDING THEIR BULLSHIT.

There's a fundamental thread here: Oregon cultivates DREAMERS.

Now this is great when things are going OK. Even dreamers have their place on the upswing.

But man, on the downswing, they do All The Wrong Shit. The HOLD OUT, when they should BAIL OUT. They don't know when to say WHEN. They don't know when to STOP THE BULLSHIT.

Audette STILL claims $571 mill in tourism, DESPITE THE FACT that even SHE ADMITS tourism is DOWN DOUBLE DIGITS.

"Yes, room rates are DOWN 25% YoY, but that $571 mill figure I 100% MADE UP last year STILL STANDS, YOU DUMBFUCKS!"

Roger Lee, same deal. EDCO has "helped" land blah-hundred jobs, bringing in blah-many-millions to the Cent OR economy. 100% UNADULTERATED BULLSHIT.

This fucking place is run by RETARDS. Pie-in-the-fucking-sky idiots. The whole fucking state is that way, it's just especially severe in Central Oregon.

And we're seeing the upshot. #2 in unemployment.

Can't really narrow down the cause... until you realize it is just general self-delusion.

OK, I can't let it go this week without a total reprint of the NYTimes piece on the CRACKAGE OF BEND. It's the only way I can circumvent the comment posting limits.

This is such a great piece, because it addresses something KNOWN to Cent OR locals for many moons: Cali-Bangers are the root cause of ALL EVIL.

What sweet fucking redemption to have a NYTimes piece that essentially blames these equity locust motherfuckers for ALL OUR ILLS.

Slump Dashes Oregon Dreams of Californians

By WILLIAM YARDLEY

BEND, Ore. — Susan and Mike Telford had a plan back in the boom years in California. They would sell their house outside Fresno at a solid profit and take their equity to this sunny mountain city to build a better life, a fresh-air future in Oregon.

“We wanted to lose the commute, to lose the smog,” Mrs. Telford said. “We wanted to lose California.”

They moved here in 2006, when Bend was one of the fastest-growing places in the West and money and migration from California fueled that growth. Now the Bend area’s unemployment rate, at almost 16 percent, is one of the highest of any metropolitan area in the nation. “For sale” signs dot desert-toned, unfinished subdivisions. Luxury furniture stores downtown are going out of business. San Francisco chefs have fled.

The freefall has made Bend a succinct symbol for the economic perils of “lifestyle destinations” in the so-called New West, recreation-heavy communities where jobs have been heavily tilted toward construction and services and where many of the new residents were self-made exiles from California cashing in on their overpriced real estate. Bend, a former timber town that now has 80,000 residents, was particularly popular among those drawn to the often rainy Northwest because it is located on the sunny side of the Cascade Range.

Now the Californians who contributed to Oregon’s growth are in some cases adding to its economic struggle. As of May, Oregon had the second-highest unemployment rate in the nation, at 12.4 percent, behind Michigan. California, which has not released its May figures, ranked fifth in April.

While some other states with high unemployment, including Michigan, have seen their labor forces shrink, Oregon’s labor force has grown. Economists say some of the growth appears to be driven by people who moved here with money they made in California, whether from real estate or stock market investments, and expected to get by but now must look for work.

“It’s just so depressing to hear them because they thought they had life handled and they don’t,” said Bobbie Faust, an employment counselor who works for the state in Bend.

The Telfords are among those facing trouble. They had presumed they would be able to sell their house in Fresno for more than $300,000 to help pay the mortgage on the new house they bought near the Deschutes River in Bend for $475,000. But the Fresno house has yet to sell, and Mrs. Telford, an accountant, has lost a series of jobs at small firms here that she said had downsized. The couple’s only income now comes from her unemployment checks and her husband’s salary as a high school teacher.

“The cash flow is negative,” Mrs. Telford said. “This will be the first time we’ve had to go into savings.”

Not all of the newcomers are from California, of course. Lost equity, lost jobs and the possibility of foreclosure also threaten people who moved here from just across the Cascade Range, on the wetter western side of Oregon, as well as some from Seattle or the East. Measuring California’s economic impact on Oregon and its struggles is difficult, and economists say that Oregon, which has less than a tenth of the population of California, has not always been directly affected by its neighbor’s fortunes.

Still, just as other places in the West have blamed California transplants for treading heavily into town, the words “California equity” roll off many tongues here in Deschutes County with particular resentment these days.

“California immigrants can never win in Oregon,” said Philip J. Romero, an economist who has advised governors in both states. “In a boom, ‘They are crowding the roads and bidding up house prices.’ In a bust, it’s: ‘They alone caused the price of my house to drop by hundreds of thousands of dollars. They came up here without a job, and now we can’t absorb them and they’re competing for my job.’ ”

Carolyn Eagan, a regional economist for the Oregon Employment Department, pointed to federal data showing that the overall percentage of personal income from dividends, investments and rental income in Deschutes County was almost 26 percent in 2007, the latest year for which data were available. Compared with an overall state rate of slightly less than 21 percent, the figures suggest that people here, more than elsewhere, have relied on income from sources other than a steady job.

“Shhh,” Biff Ingels, a transplant of four years, standing outside the main job counseling center here, said when asked where he had lived before. “California,” he said in a whisper.

A cultural shift appears to be under way. One of Bend’s leading restaurants had been Merenda, whose chef, Jody Denton, came from San Francisco in 2002. Under mounting debt, Mr. Denton closed the restaurant in January and left for a job in Australia. Several people involved with the restaurant before it closed have reopened it under a new name, 900 Wall, its street address. The menu has been recast from mostly French and Italian cuisine so that it now incorporates more ingredients from the Northwest and has slightly more approachable pricing.

“We’re trying to present ourselves as a local restaurant,” said Cliff Eslinger, the executive chef. “We’d relied far too heavily on outside forces.”

Another casualty was Bend Living, a glossy regional magazine driven by advertisements for high-end homes and luxury furniture. Kevin Max, the magazine’s former editor, is planning the first issue of a new magazine about Oregon culture and history, based in Bend and set to make its debut this summer. It is called “1859,” a reference to the year Oregon entered the union.

“Bend Living was about Bend’s emergence into 24-7, go-go-go, irresponsible construction and people living beyond their means,” Mr. Max said. “1859 is kind of National Geographic meets Condé Nast Traveler. It’s about Oregon, so it’s all about sustainability.”

Locally, sustainability is a challenge. Bend’s job market has not proved diverse enough or deep enough to provide jobs for the newcomers who suddenly need them. “Poverty with a view” is how many people describe Bend before the boom. Economists say the city’s sudden abundance of investment income and housing equity from newcomers made Bend seem more secure than it was. While experienced people like Mrs. Telford, the accountant from Fresno, struggle to find work, there are longer term questions over how the area will support its newest residents.

Zachary Lauritzen, a student teacher at Summit High School, on Bend’s west side — the side some residents call “Little California” — said he was teaching a lesson in government when the topic prompted him to ask how many students had lived in California.

“Half of them raised their hands,” Mr. Lauritzen said.

Buster, please uncurl from fetal position, leave LaPine, and come back!

hbm, I been saving special titty-fuck for you so long!

tim, please thwack my nipples for bad apostrophe usage!

"Bend is in a depression..." -- Bob Thomas

2009-06-14T05:16:00.000-07:00

Well, there you have it, folks.

Reputable business man telling a house subcommittee, and then printed in our local rag:

BEND IS IN A DEPRESSION

Wow. THAT makes it official. Although, we've been saying that for over a year.

I thought that was pretty stunning, to hear someone say that, much less have the Bully print it.

And not to belabor the point, and in case you've been in a cave for 2 years, the CAUSE of our current DEPRESSION is the REAL ESTATE INDUSTRY. Pure and simple, endlessly promoted and pumped and dumped on us, it was the real estate bubble, and it's inevitable collapse that is THE CAUSE of our current problems.

I feel like I have to say this sort of thing, because it's starting to spread & manifest itself in all sorts of collateral effects. Like Bob Thomas losing his dealership.

Almost any industry fueled by credit is getting it's ass waxed.

So you might think we're suffering a "credit bust", which we are, but it's primary vehicle for expansion was RE. We're not in a Depression because of zero down car deals.

The rest of the article about Thomas is standard self-serving tripe, standard issue when the Bully does it's usual BS. Even Greg Walden hops on the bandwagon, questioning the "wisdom" of closing ANY dealerships.

I just have 2 observations about this:

1) I still DO NOT understand why Gary Gruner in Madras is still alive.

I would have guessed they'd be The First GM dealership closed in Cent OR, GM bankruptcy or not. Gary Gruner? WTF?

2) Driving around auto row, and Bob Thomas' lots, there are NO CARS for sale in Cent OR.

Well, not "NO CARS", but a hell of a lot less than there were just a year ago. You could go to auto row on the East side, and see a ridiculous number of cars over there. THOUSANDS and THOUSANDS.

That was one of those businesses that was so irrational, I simply could not understand how any of those dealers survived. There are STILL too many.

And that doesn't count the innumerable used car dealers, whose numbers are now being swelled by new car dealers losing their franchises & joining their ranks.

I think you'll see a winnowing in the numbers of dealers, especially on auto row. There is just a ridiculous number of them. And the number of cars sold has already plunged, probably far worse than most people think. Ask Bob Thomas.

Proably the most amazing piece I've read since this whole RE Implosion began, is a piece posted in the comments by PopGoesBend. Excerpts:

Median home prices drop below 1989 levels in some parts of Southland

Properties in several areas are selling for less than they did 20 years ago, and that's not even counting the effects of inflation.

John A. Beatrice, 55, bought his spacious two-story Spanish-style house there brand-new for $120,000 in 1989. But he never imagined his neighborhood would drop off the charts. In April, a slightly larger home two doors away sold for $66,500.

That's just over half the $130,000 it went for new in 1992. In 2005, that house sold for $330,000. ...in 14 Southland ZIP Codes, mainly desert communities in the Antelope Valley and Inland Empire, median prices have fallen below levels recorded in April 1989, according to MDA DataQuick, a San Diego real estate information service.

That means thousands of homes in those neighborhoods -- even houses barely 20 years old and in decent shape -- have lost every dime of their appreciation, giving back not just the gains of the recent bubble but steady increases logged over a generation.

The April median price in Beatrice's Lancaster ZIP Code of 93535, for example, was $87,000. That's down 74% from a $334,500 peak price in 2007.

Even worse was the 92410 ZIP Code in the city of San Bernardino, which covers several older neighborhoods. Its $61,000 April median represents an 84% drop from the peak of $370,000 in 2007.

Prices also tumbled below 1989 levels in neighborhoods in Palmdale, Hemet, Barstow, Desert Hot Springs, Victorville, Highland, Santa Ana and Oxnard, according to DataQuick.

Several other inland communities, including parts of Moreno Valley, Banning and Rialto, had median prices that were only slightly above 1989 levels and below the April 1990 median.

I always thought that Cali-Bangers would take it the hardest. The California Miracle was just that; a mirage, a figment, a dream.

I honestly had no idea where Palmdale was, and come to find it is in the barely commutable quasi-desert outskirts of LA's Northern suburbs, if you can call living 2-3hrs from LA in gridlocked traffic a "suburb".

Sound familiar? Out in the fucking desert? 2-3 hours from any real metro area?

Although I was sort of surprised about Oxnard having fallen below 1989 levels. What the fuck is next? Santa Barbara?

I wouldn't give a handful of my own shit for a house in cracker-ass Victorville. But Oxnard? I've been there, and it was OK. Ocean's just right there. Oxnard falling below 1989 levels is pretty strange.

And it's happening elsewhere, including the central valley:

Back to the future home prices

Real estate bargain hunters in Stockton can buy property for less than the sticker price of a Cadillac Escalade in today's market.

San Joaquin County real estate listings contain at least two dozen homes priced less than $50,000 and at least one as low as $15,900. These are prices not seen in California since the 1970s, a decade in which home prices climbed from $23,000 to $84,000.

The 1,300-square-foot house is priced at $15,900, a 92 percent discount from what property records show as a $180,000 selling price in August 2005.

My main takeaway on this piece is NOTHING IS SACRED. "Rationality" least of all. Prices staying above some price point that "makes sense" is 100% Grade AAA Bullshit.

Prices can AND WILL go to INSANE price levels. Prices will slice right through the "Rental Arbitrage Point" like a hot knife through butter. People will start questioning EVERYTHING when all sorts of "logical" arguments start to fall.

You'll soon be able to BUY A HOUSE IN BEND FOR LESS THAN THE RENT. Why?

Because "prices" are always based on CREDIT. Credit is valuing a STREAM OF MONEY, NOT A PILE OF IT. Credit is "If I give you this PILE OF MONEY, you will give me 360 payments of $X EVERY MONTH".

THAT is what's going away. Not for everyone, but for a hell of a lot of people. THAT is the "rational assumption" that will fail. No CREDIT means people will go back to paying for stuff with PILES OF MONEY, not streams. And there ain't much money left.

For now.

I think, FOR NOW, the primary economic theme is DEFLATION.

But our government is altering the natural course of things by throwing TRILLIONS OF DOLLARS at an essentially stagnant economy.

Not today, but soon, there will come a day of STAGFLATION. And it will boggle the mind. Money in this country will be worth nothing.

Houses probably WILL go up at that point. Well, at least compared to holding cash. Better to have your cash in some shack losing 5%/yr, than in the bank losing 15%. A 5% LOSS will actually feel like a good deal. People will treat cash like Ebola.

But not now. But folks, watch the dollar, and watch long government bonds.

The dollar index, after a long plummet from 120 in 2002, fell to as low as 70 last year. It had a dead-cat rally to 90, but has now fallen back to the high 70's. The World is getting nervous about the Obama Jeebus Printing Press.

Similarly, 30 year government bonds, declared DEAD a few years back when the US Gov't was never going to borrow money again (man, that never gets old), has fallen from it recent EUPHORIA DEFLATION FUELED all-time highs over 140 (My God!), clear back to pre-panic prices, around 115.

I would watch this. The dollar has long been signaling an incredible devaluation in our currency. But luckily, the Chinese & others have seen these losses counter-balanced by recent huge gains in treasury prices.

At least till recently. Now the double whammy of declining dollar and treasury pricing could cause a Worldwide credit panic, as the US has to print its way out of bankruptcy.

And that means STAGFLATION.

Portland is finally starting to really hurt in the current RE Depression. There were some good pieces recently.

Stalled Portland luxury development shows depths of recession

(Tom) Moyer's four decades of empire building smacked into a wreck of a recession April 10, when he halted construction on his $170 million Park Avenue West tower.

That morning, Moyer paid 100 workers in the pit spiked with rebar. On Wednesday, the final three workers climbed out of the hole for the last time.

Commercial lending has gone net negative.

I thought that graph was interesting. Lenders have gone net negative on commercial RE, taking more out in payments than they are lending. Again, the whole concept of STREAMS OF MONEY, is dying.

In another piece, we see that residential in Portland is also moribund:

Portland housing market still gloomy

Portland-area home owners continued to weather a gloomy market in May, another sign that talk of a economic recovery is premature for the region's housing market.

The Regional Multiple Listing Service reported today that the median price for homes sold in May was $250,000. That's down 13 percent from May 2008 and 17 percent from the August 2007 peak.

But the number of closed sales in May lagged last year by 23 percent. Pending sales, seen as a predictor of future closed sales, was down 7 percent from a year ago.

The inventory of unsold homes -- the time it would take to sell all homes on the market at the current sales paces -- dipped, but remains high at 10 months.

Portland is actually holding up pretty well since it does have... stuff. Unlike Bend, which only has RE, and nothing else.

Folks, don't believe the calls of a "RE-bound", and "we've GOT TO have hit bottom, it can't go any lower!", and such. We've heard both ad nauseum from RE "experts" (Bratton, DuBois, et al) quoted in the Bully going on 2 years.

It CAN go lower, and it WILL go lower.

Look at the price reductions in the cracker-ass middle of the desert in Cali: DOWN 90%+!

I don't think we'll see that, but 75-80% DOWN from the top is VERY POSSIBLE.

I mean, Holy Shit, we had $396,000 MEDIANS for the love of Christ! We're in the middle of ASS NOWHERE!

We'll hit $125K medians. If you DO CARE about capital preservation, and can tolerate renting, DO SO. Do it for 5-10 years. You will be able to make good money in 5-10 years from now.

Work, pile up your money, and shoot your wad in a few years. You'll have to pay cash, or nearly all cash, but there will be good money to be made.

NOT in cap-app. NO. RE isn't going to "go up" in any appreciable manner for 2 decades. BUT you can get a cash-flow positive shit-shack, that pays you a few hundred every month, and that will KILL what you could get elsewhere.

Finally...Any hbm sightings recently? Is he actually gone? Was the coincidental exodus of he & Brucey part of a Mormon love triangle?

hbm, come back! With you gone, there is no one to twist our nipples!

Look! In the sky! It's a bird! It's a plane! It's hbm!

hbm, please come back! My leather bras have shrunk to just B-cup! I need you!