Some peeves

Don't move files that aren't yours without asking!

When I email you a file 3 times in a month, don't send me an email
asking if I forgot to send it

if you need something prepared for a meeting, I prefer more than 30
minutes notice.

That is all (for now)

How did economists get it so wrong?

http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?_r=2

 

 

Another good map

Mean Population Center for the US - 1790 to 2000

http://strangemaps.wordpress.com/2009/06/08/389-americas-mean-streak/

 

Children of the Mountains - Link

http://abcnews.go.com/Video/playerIndex?id=6885766

Good special on life in coal country/appalachia

Holy Crap

Pretty darn good NY Times article.  Proof of the arrogance/ignorance that allows even people who write about economics and finance every day to take out loans they'll never be able to repay.

 

http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html

 

In the news....Are we running out of people to unemploy?

Weekly new unemployment drops again, looks as though 4 week rolling average of unemployment claims may have peaked, which often signals the end of the recession.

 

However, continued claims are still at a record high and the possibility of another "jobless recovery" is definitely out there.  We could definitely see a Japan-like scenario for the next five years where interest rates stay crazy low and housing doesn't appreciate at all. 

 

For those of us in the PNW the news is even a little worse. We were about 12-18 months behind the rest of the nation as most drank the "Can't happen here" kool-aid. Often in these cases an area does a bit of jogging to try to catch up, but never quite makes it. So I am going to put my amateur economic forecaster hat on here and make a few predictions.

 

1) 4 week unemployment average peaked 1-2 weeks ago. We will go ahead and say the nation is beginning it's recovery now. If we "jog to catch up" we likely are still 8-12 months behind the nation. which means

 

2) PNW recovery will begin early 2010 somewhere between December 2009 and March 2010.

 

Feel free to make your own prediction below, it will probably be every bit as accurate as half the economists' predictions out there.

 

 

Mapping the Seven Deadly Sins

Not looking so good for the West coast.

 

http://www.mcwetboy.net/maproom/2009/04/mapping_the_sev.php

Well, there's three ways to reduce housing inventory...

1 - Stop building or at least slow down home building

2 - Cut prices or even give away houses

3 - Bulldoze those bitches!

 

I guess they chose 3.

 

Book Review: Watchmen

As a new feature to the Chino and friends world, I decided that I would start reviewing books that I have read. This should serve at least 2 purposes, if not more. 

First, it will be a way for me to keep track of books that I have read and liked.  A lot of the time I trade/sell/give away books that I have read and when I think back to remember what books I've read over the past 6 months, it can be difficult to recall every book. 

Second, maybe I can somehow inform someone on whether or not to buy a certain book. But, take my reviews with a grain of salt, as I have somehow turned into an optimist at some point while drinking my way through my undergraduate education. I just avoid most books I know that I will hate, or else I never finish them. Maybe I will find a book to write a hateful review on though, just for the sake of balance.

Anyhow. On to the review. I read most of this graphic novel on a plane, which I think was kind of weird because certain illustrations are, well, a touch graphic (and not in a novel sense). I kept feeling guilty that a child behind me would be trying to read the "comic book" over my shoulder. This never actually happened though and mostly just proved that I am getting old.  

I can see how this gets a rep as being the best graphic novel of all time, it would be hard to give the same reading experience with a plain text novel, it just wouldn't match up. The characters are very well developed, though some never really flesh out until the very end. The heroes are very much fallible characters with personality flaws beyond that of the X-men. 

There isn't really a lot else I can say without given away some key plot points of the book, but suffice it to say that it's worth picking up for the right price. I found a copy at Costco for $11, but apparently retail on this sucker is $20. I have a hard time justifying anything for $20 so either hit up amazon or your local library once all the movie fervor dies down a bit. It's an easy read and one of the more unique reading experiences you will ever have. 

The only downside to this novel is that it just sort of ends and felt rather unfulfilled, like eating junk food I suppose. No real feelings one way or another, more just impressed at the novelty of the whole thing. 

Final Rating: 8/10

Emotional Mapping (not quite what you'd think)

http://www.sf.biomapping.net/

 

So this fellow made a device that measured your level of emotional "arousal" (not too sure on the specifics) but he then invited people to take walks with the device attached to their finger. The device collected locational and "emotional" data, which they then mapped. Participants annotated parts of their walks with notes, which are then overlaid on the maps as text. 

 

Interesting stuff, lots of reactions to views of the city and houses, which I think is interesting.

As if you needed another reason to dislike California

This is from the LA Times  in 1886 (no joke, 1886)

 

"We Californians have learned something. And that is that home prices can't just go up forever—they have to be supported by something. Never again will Californians make this mistake."

 

If you are feeling particularly pessimistic...

Then I have a particularly good website for you to check out. No, it won't cheer you up, but it will join you in your pessimism.  After the Crash is a blog devoted to envisioning a future after "TSHTF" otherwise known as "The shit hits the fan". There you can find theoretical future fiction of a post apocalyptic McMansion wasteland as well as tales of people eating their neighbor's dogs.  Because different people post on the blog sometimes it is pretty disorganized so you have to devote a little attention to figuring out who is posting what and if/how it is all connected. Still, worth a read, especially if you like speculative future sci-fi.

 

Oh, and also 1 bank and 1 credit union have failed so far today. Boo-ya banking system!

 

 

 

 

McMansion developments - the next slums?

http://www.theatlantic.com/doc/200803/subprime

 

I'm over a year late in find this article but it is still worth reading.

 

Over email I was thinking about the future of the McMansion as I semi-seriously contemplating moving into one with other economically depressed folks. There are few left who can afford the notes on these monstrosities, and fewer still who would want to live in them. There will likely be a future in cutting these up into duplexes and triplexes just like was done in San Francisco and the east coast to the large houses of the early 20th century when their wealthy inhabitants left to the suburbs.

Moustache May

So - May is soon to be upon us, any top choices for moustache styles?  Include pictures if possible.

A roadmap to love?

Perhaps it can be found in the various maps showing disparities between the numbers of single men and women in major cities. Of course there isn't a built in correction for the sexual preference of those singles.

http://www.mcwetboy.net/maproom/2008/04/the_singles_map.php

 

Perhaps the most banal editorial I have ever read

http://seattletimes.nwsource.com/html/opinion/2009071716_opinc17will.html

Seriously, how much can a guy write about how he dislikes the upper middle class wearing denim.

Wheee! Unemployment maps

Two things are love are dire news and mapping.  Often, these two are combined, as is the case in these interactive unemployment maps!  Enjoy!

Picturing the Recession - From the NY Times

http://www.nytimes.com/interactive/2009/04/02/business/economy/economy-user-photos.html

 

Since I love posting on depressing news, here are some depressing pictures of the perhaps impending - depression?

 

LA Times on "Jim the Realtor"

Definitely work taking a look at. Guy is a little nuts, but probably one of the more honest realtors out there. Here's the link If nothing else you have to appreciate a guy who doesn't just parrot out "It's a great time to buy!"

Mr. B - the worst substitute ever?

"Well, it looks like Tarzan sure isn't getting off the vine this hour"

 

This is probably the best quote from perhaps the worst substitute teacher I ever had the pleasure of experiencing in my life. 

 

I say pleasure, because it was an experience in some ways, so surreal that I might not have ever had it anywhere else. But so unproductive academically that this fellow was never allowed back in the school district.

 

It's an easy task to measure the qualities of a good substitute teacher, they follow lesson plans, keep students on task and some might even be so helpful as to grade papers. But what makes a truly horrible sub?  This is the question we shall explore with Mr. B.

 

 Now, growing up an in area that was in constant shortage of substitute teachers, I have experienced some true gems. One who showed a tape of Saturday Night Live instead of doing the planned spanish lesson, another  kicked out a third of my biology class for insubordination, while also arguing with us about the races of the world (did you know that Mongloid is a race?  I didn't - not until a certain woman came into my life one fateful morning).

 

But Mr. B, he took the cake. It wasn't his inability to stick to a lesson plan, his haggard appearance, lack of social graces or even his riveting relation of his cancer treatments. No, what truly completed the puzzle was his periodic retelling of how his wife was murdered in a foreign country.  Apparently a distance runner, she had been walking alone in Italy as I recall when she was robbed and stabbed, bleeding to death in an alley.  Periodically he would recount her beauty or how she was always cold because of her low body fat.

 

As a youth, I had witnessed my fair share of tragedy, but I had never come face to face with a man who truly had nothing left to live for, until I met Mr. B. With most tragic cases you witness, the victim still has something he clings to, for some, it's their love of drink or other substance, others, family, religion, etc.

 

This was not so with Mr. B. Unreligious (as my class and I learned together one afternoon in Junior level English), widowed, afflicted with cancer, but apparently sober. I gathered that he only substitute taught to keep a roof over his head. In small engines we fixed his 70's era toyota one day, just enough to keep it on the road so he could get to another school to enrich another day's worth of students.

 

A typical period with Mr. B would involve some retelling of how he barely got to school on time because he slept in past 8 thanks to his cancer treatment making him so tired. Then he would ask us what were supposed to be doing and then sit in the back making occasional comments or telling a story. We never actually did what were supposed to do and he never cared.

 

Eventually he was barred from teaching in our district because of an incident where he did nothing all day except sit at a desk and eat lollipops from a teacher's candy stash.  Apparently this teacher's candy stash was kind of a big deal and they complained loud enough to finally get him off the sub list. 

 

Mr. B, I have no idea if you are even still alive, but if you are, thanks for your insight into the depths of human despair and I hope you finally got all your shit together.

 

 

 

 

 

 

Everything you might want to know about unemployment calculations...

...but didn't care enough to research for yourself.

The BLS has a pretty good explanation of all the various rates (u-1 through u-6), the PDF can be found here

If you want the very most recent data (Feb 09) you'll have to grab the table yourself on the BLS website. Nationwide U-6 was 16% in February.
http://www.bls.gov/news.release/empsit.t12.htm is where the table can be found

Washington U-6 Unemployment, graph still coming

Up to 14.8%. U-6 is the "old" measure of unemployment that includes
those unwillingly out of the labor market as well as discouraged job
seekers.

I am working on a lad's visual guide to first date restaurants. I
haven't forgotten about it, I promise. I'm just trying to get a
quality final product ready.

Economic Update: States with Unemployment > 10%

This is U3 by the way, not U6.

California
Michigan
South Carolina
Rhode Island

Special Bonus Category
Territory with > 10% unemployment
Puerto Rico

South Carolina is forecasting a peak of 15% and a forecast from the University of the Pacific is estimating a peak of around 12% for California.

A request for reader input

Alright, so in an attempt to provide a visual aid for a gentleman on a first date, I am attempting to compile an exhaustive list of eating establishments and their relative cost and class values. Cost I am estimating on a cost per date basis while class is on a scale of 1-20 where a taco van is a 1, McDonalds is a 2 and The Herbfarm/Canlis is a 20

 

For example

 

Taco Van

Cost  $10 for 2

Class 1

 

McDonalds

Cost $10 for 2

Class 2

 

Subway

Cost $14 for 2

Class 2.5

 

Olive Garden (in many ways our control subject for this experiment)

Cost $30-40 for 2 (more with drinks)

Class 5?

 

Once I have enough compiled you will have a graph for the ages, I promise you

 

Olive Garden

An infamous story to some who know me, this is one I love, especially because it doesn't require me to talk about myself. Plus, it does a pretty good job of describing some quirks of where I hail from.

A friend of mine, who I shall call Billy, had quit community college to work fulltime at Wal-Mart. I was home one break from college and we went out on the town to grab dinner and some drinks. On the way home he starts to tell me this story.  Keep in mind that the entire time he's telling this story Billy is also chewing copenhagen and spitting into a cup about every 5 seconds or so.  There is no way I could write this story with all the spit breaks included, but just keep that in the back of your mind. 

To get on with the story, Billy and I are in the car, and he tells me "Dude, I have to ask you a question" "Okay..." I respond, not sure where this is going.  "Well man" he says "I have kind of had this thing going on with this girl I work with you know, kinda flirtin' around and stuff"

"Right" I say.  "Well, I told her, hey, I want to take you out, can I take you out to dinner and a movie?" "Well, she says yes, and I go pick her up, not dressed too nice, but not bad either, you know, nothing unusual" 

"That sounds fine" I say, still having absolutely no idea where this is going. Though often these conversations with Billy go nowhere.

"Well, so yeah, so I pick her up and take her out to dinner, we go to the Olive Garden, you know, the one that just opened up, and we have a nice dinner you know and go to the movies, and nothing really happens, you know, I take her home, we kiss, that's about it"

"Alright, so that doesn't sound so bad, what was the question?"

"Man, so I go to call her the next day and she doesn't call me back, I call her again, and she doesn't call me back.  Finally, I catch her at work and ask her why she hasn't returned my calls, you know what she tells me?"

"What?"

"Well She tells me "I know what you want, you're only trying to get in my fuckin' pants, taking me to Olive Garden on the first date!"

All that I can do is laugh for a minute until he says "So that's my question man, do you think Olive Garden means you want to fuck on the first date?"

"Dude, I have never thought that in my life"

Affordability Part 2 - Some Numbers

Part 2 How to define affordability? Historically, there have been several definitions of affordabilty used by different groups. I'll include a Seattle area numbers example with each one. There is a lot of debate right now about whether someone with the median income should be able to afford a median priced house or not. This is argued a lot because it isn't realistic for the bottom 20% or so to own a dwelling. Some have shifted up the median income to the 60th or 70th percentile to compensate. I'm a populist at heart and bearish on housing so I won't be doing that. In this post I'll cover two methods of affordability calculation 1. 2.5x household income, somewhere along the line people shifted this to 3x household income, I'm not sure if that has to do with lower interest rates or expecting to pay more for a house. Pros: Simple, easy to remember Cons: Does not take interest rates into account - thus does not directly correspond with monthly payments, and we are, by and large a monthly payment society. Does not take into account property taxes or homeowners fees Example: Seattle median family income is $69,000 a year, approximately, using 3x rule they can afford a dwelling unit that costs $207,000 (If you are lucky you can grab a small condo for that price, though I'm not sure where the rest of your family will go). 2. 28% of gross household income devoted to monthly payment, not more than 35% debt to income ratio (DTI). The DTI number varies somewhat, but the 28% is generally pretty rock solid. This is a number that is generally used by reputable lenders to determine loan eligibility. The problem with this figure is when the 28% is calculated on the payment for the first 5 years of an ARM that will be reset to a much higher payment in 5 years time. We are seeing some of those effects now. Pros: Takes interest rates into account, works well for the monthly payment society. Usually the 28% includes property taxes and insurance, but not always Cons: Loan term often not taken into account, can allow pretty large debt load, as figure is calculated as % of gross, rather than net income. Example: The median Seattle family earns 69k a year or $5750 a month before taxes. That leaves them with $1610 to pay towards a dwelling unit and taxes. after taxes and insurance they would have around $1300 to $1400 to make their mortgage payment. Splitting the difference gives $1350, which at 5.25% apr means $245,500 of house for our average family. This will actually purchase a home in the suburban fringe or in a more 'exciting' neighborhood in a more central location.

House Values and Affordability: Intro (part 1)

Throughout the bubble economy of 04-08 (approximately) there was a lot of talk about wealth creation through home price appreciation. However, the question always was, where is this money coming from in the first place?  Barring an increase in the money supply itself, there is only a finite amount of currency in circulation at a given time. Increased expenditures on housing must mean decreased expenditures in another area for a given household.  In this case I am referring to increased expenditures in monthly housing payments, rather than total house price, though that is another component as well.

One might point out in argument to the above point that there were also jobs being created, which increased flow of money to individuals, this is true.  However, if one was to go back and analyze the type of jobs created in the last decade, the vast majority were in the service sector, as the US economy has shifted away from manufacturing and into service.  This is all well and good as long as there is someone to service (no innuendo intended). The problem with all of this is that much of the consumption that drove the creation of these service sector jobs was being financed by assets that didn't really exist, i.e. home price appreciation that was unrealized (on paper only). Many were capitalizing on the tax benefits of the mortgage interest deduction and using home equity loans to finance consumer spending. This, arguably, is now acting as a multiplier on the downside of the slope, as people walk away from their houses and leave banks on the hook for not just the purchase price of the house, but also an Escalade and a few jet skis as well.

To veer back on topic, we can all now agree in hindsight that the runup in house prices was unsustainable and will have a lasting effect on the US economy.  Most can also agree that in order to get things back on track we need a return to affordable housing.  In many ways, this return will be unavoidable, as we are now overbuilt in the US of A.  All of those who quoted Will Rogers' memorable "They aren't making any more land" line are now looking a bit foolish as well. Regardless, how do you judge what "affordable" means, in regard to housing?  This, in my opinion is one of the toughest tasks ahead in predicting where we will end up after the economic crisis. Things will obviously sort themselves out as they do, but for many industries and in fact, our own government, forecasting will be necessary to gauge demand for services and markets.

What makes matters even more complicated is that housing demand is not as inelastic as many tend to think.  During severe recesssions several things occur that reduce demand for housing.  Note that I say housing in general, rather than the purchase of a home.  I will get to this later.

-Households become more willing to take on renters (i.e. renting out a room)
-Singles become more willing to find roommates
-Multiple generations will move in together (ex: Jon and his wife lose their jobs and move in with Jon's parents)
-Larger homes that are vacant (McMansions!) become chopped up as duplexes and multiplexes. If you don't believe me, look at many of the houses in older urban areas. They were once larger victorian style homes that were converted at some point. A local example would be in the U-District, San Francisco also has many of these.
-Couples move in together sooner
-Students are more likely to stay close to home for college, more choose to live at home, others boomerang back to their parents house when done

As I am not a professional numbers guesser, I will not attempt to construct an elaborate demand curve for any of these items, but everyone shoudl be aware of these factors when looking at figures from a "professional".

For part 2 I will look at some differing definitions of affordability, and why affordable housing is a good thing.  Stay tuned

Stay Tuned

Planning a good post on housing affordability and what iit really means, historically and today.  Plus, if I somehow get some time this weekend there might be a bonus story (since that was the original purpose of this blog and all).

Dawgs in the Pac-10 Tournament

First, I am a bit upset that I missed watching Brockman and crew's last home game, but weddings do take priority over sporting events (I mean, let's all keep perspective here, we are just talking about dudes putting a ball through a hoop).

 

However, the huskies got their win and cut down the nets, and I was kept informed via text message while in a state that doesn't acknowledge the existance of the west coast. (Though I did see a story about the Huskies in the New York Times at the airport, who would have thought?). 

 

Now they are onto the next leg of the journey to the national championship (dreaming big here), The conference tournament starts tomorrow and UW plays at 2:30 on Thursday, I'm still figuring out how to work my work schedule so I can watch the game, but if nothing else I'll bring my laptop so I can get updates from the gamecast online. I would just tape it and watch it later, but I think that people at work won't be able to keep quiet about it for long enough.

Back from the southland

So, I went from a nice 70+ degree at the beach to mixed snow/rain in my journey back from South Carolina yesterday.  Aside from the bugs, tropical disease and poverty, the south is a pretty darn nice place.  I sent this picture to a few people already, but might as well post it up here as well.  It doesn't really do the place justice, but keep in mind this is taken in March and on a camera phone to boot.  

Hope everyone had a nice weekend.

Countdown to the dirty south

37 hours and counting.  Plus, UW - Seattle U tonight.  Busy day and a half coming up.

Treasury stress test home price predictions

Looks like the "Stress Test" that's been much talked about has had some of it's basic criteria released.  You can find the criteria and table here.  One of the most interesting aspect of the "stress test" that is being administered to these banks is that the two scenarios both have rather large house price declines built in, which tells me that whoever designed these tests is realistic about how much further home prices are going to fall, especially since their index of choice if the Case-Schiller Composite 10, which is based on the 10 largest housing markets in the US.  This would include LA among others, which has fallen somewhere around 35 to 40% already.  They are using a further 14% decline as their baseline for 2009 with the extreme scenario having a 22% decline. 

 

I doubt the National Association of Realtors will appreciate this information, they keep telling everyone that now is a GREAT time to buy (if you say it enough you might start to believe it I guess).

 

The optimistic viewpoint of this data is that if interest rates rise (they can't go much lower for home loans) then house prices will have to go down, because everyone is shopping a monthly payment.  The best time to buy is when interest rates are as high as they can go, because real prices are low, then later when interest rates inevitably go down, you can refinance. 

 

I think there are a decent number of financially savvy individuals who are on the sidelines right now because interest rates have nowhere to go but up, which means that house prices will have nowhere to go but down. There is an inverse relationship between the two that isn't covered much in mainstream media.  However, if you already have a house, this is perhaps the best opportunity you will ever have to refinance.

 

 

Seattle home prices back to 2005 where will the wheel stop?

Seattle PI and many others report. Calculated Risk also has some informative graphs re: price to rent ratios and historical affordability indices, which can be bound here

 

 

Real unemployment vs reported unemployment

So, numbers officially out today, 598k jobs lost in January, unemployment up to 7.6%.  Gee, 7.6%, that sounds bad, but not THAT bad, right?  Wrong.  When you look at historical graphs of unemployment, it's not stated that how unemployment is measured has changed over time, you can mostly thank Ronald Reagan for this.  Regardless, if you want to see a more realistic measure of true unemployment, check out table a-12 "alternate measures of unemployment" currently listed at 13.9%

How I spent my winter break

Helping someone build this fence.