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The U.S. lost 20,000 jobs in January, according government statistics released this morning (Feb. 5). Economists had expected a gain of 25,000 jobs. December's job loss was raised to 150,000 from 85,000 reported earlier, although November was revised upward. In its periodic "benchmark" revision, the government said 8.4 million jobs have been lost since December of 2007 -- almost a million more than previously estimated. But there was good news: temporary and manufacturing jobs rose in January, average hourly earnings went up a surprising 5 cents to $18.89, and the underemployment rate, which includes people who have given up seeking work and those working part-time but preferring full-time work, dropped to 16.5% from 17.3% in December.

Then, there was news that might be misinterpreted: the unemployment rate fell to 9.7% from 10% in December. Economists said it appeared to be a statistical quirk, but it might make consumers feel somewhat better.

One possible piece of good news: the birth-death adjustment model, which attempts to estimate jobs in newly-created businesses that aren't captured in the monthly statistics, reported a decline of 427,000 jobs. This might suggest that the reported job loss is actually too high.

The stock market has jumped up and down on the news and actually might be focusing more on European woes in Greece, along with Portugal, Ireland, Italy and Spain.

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Comments

a2zresource Feb. 5, 2010 @ 9:16 a.m.

"The stock market has jumped up and down on the news and actually might be focusing more on European woes in Greece, along with Portugal, Ireland, Italy and Spain."

There are comments in the media this morning that major European banks are adding credit default swaps in anticipation of possible financial collapse in one or more of those sovereign countries with a common currency. Naturally, I don't expect that if the comments are true, then those banks will be honestly transparent in their ownership of any new CDS paper assets.

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shizzyfinn Feb. 5, 2010 @ 9:32 a.m.

"The unemployment rate fell to 9.7% from 10% in December. Economists said it appeared to be a statistical quirk, but it might make consumers feel somewhat better."

What will make me feel better as a consumer is when people I know who have lost their jobs get new jobs somewhere else. Maybe we could call this the "re-employment rate."

Thus far in Depression II, a grand total of 2 people have found new jobs out of the 20 or so people I know who have lost theirs. Admittedly, this is anecdotal and therefore of limited value. But couple this re-employment rate of 10% with the reduced earnings of people who have managed to hang on to their jobs, and the consumer in me is not feeling better at all.

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Don Bauder Feb. 5, 2010 @ 10:35 a.m.

Response to post #1: The PIIGS (ailing Portugal, Ireland, Italy, Greece, Spain) are testing the whole concept of European economic unity. As you note, they have the same currency: the euro. The massive indebtedness and possible collapse of one or more of these countries could strain the euro zone tremendously. When the Europeans went to a single currency, some economists said such strains would be inevitable. As the euro goes down on international markets, the dollar goes up. Last year, the U.S. stock market (and other markets, too) rose as the dollar fell. Now the dollar's rise is hurting the U.S. market. Best, Don Bauder

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Don Bauder Feb. 5, 2010 @ 10:37 a.m.

Response to post #2: Excellent points. There is something else to consider: if companies actually start hiring again, then more people will join the labor force -- that is, they will start looking for jobs. This will make it all the harder for the unemployment rate to go down. Best, Don Bauder

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SurfPuppy619 Feb. 5, 2010 @ 11:51 a.m.

But looking on the bright side-the DOW is lower today (under 10K) than it was last week, last month, and last year...Oh wait-that isn't the bright side-sorry.

Saw John McCain interviewed yesterday on CNN, he said 48% of all the homes in AZ with mortgages owed MORE than the current value of the property (underwater). I was pretty shocked at that %.

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shizzyfinn Feb. 5, 2010 @ 12:21 p.m.

SurpPup, I recently read in NYTimes that the number of mortgages that are at least 25% underwater, nationwide, is 5 million. 5 million! I gotta think a good chunk of those folks will realize that they're wasting money, and will walk away, putting even more homes on the market.

So IMHO, anyone who tells you housing is coming back is either nuts or trying to sell you something. I still marvel at how no one calls out the $8,000 homebuyers' credit as what it is, a handout to homesellers.

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Don Bauder Feb. 5, 2010 @ 1:39 p.m.

Response to post #5: Yes, 48% underwater sounds high, even for Arizona. Incidentally, stocks were down almost 2% during the day but closed the day slightly up. Basically, stocks would crater as the dollar rose and vice versa. Toward the end of the day, there was a rumor of some kind of a bailout for Greece, and shorts rushed to cover, sending the markets slightly into the black at the close. Best, Don Bauder

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Don Bauder Feb. 5, 2010 @ 1:41 p.m.

Response to post #6: Many economists expect another wave of foreclosures this year. Best, Don Bauder

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SurfPuppy619 Feb. 5, 2010 @ 2:53 p.m.

Since this is an Unemployment thread, I would like to submit this bone chilling profile-759 job applications-2 interviews-no job offers (and this is not uncommon at all as I have friends who have graduated law school and have sent out several hundred resumes with NO response at all);

"I've been looking for work since July 2007 but haven't applied to a single job in about 6 months. I graduated with my M.A. in marketing July 2007 in London and decided that I would look for a job there. I applied for about 400 jobs. I had three interviews but I knew that not having a visa, it would be difficult."

"I moved back to the U.S. in June 2008 and spent a few months coming to terms with moving back in with my parents, but started diligently applying for jobs a few months later. I kept track -- since then I've applied for 759 jobs, have heard back from 23, and interviewed with two."

http://money.cnn.com/galleries/2010/news/1002/gallery.discouraged_workers/index.html?cnn=yes&hpt=C2

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SurfPuppy619 Feb. 5, 2010 @ 2:55 p.m.

Yes, 48% underwater sounds high, even for Arizona.

I find it a bit hard to swallow also-even knowing AZ is one of the top 3 problem states for REO's.

But that is what McCain said on live TV.

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shizzyfinn Feb. 5, 2010 @ 6:52 p.m.

Maybe McCain was talking about 48% of the homes he owns? ;)

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SurfPuppy619 Feb. 5, 2010 @ 7:22 p.m.

LOL...you know McCain...no wait-it was the other Senator from AZ, Dennis Deconcini-he used to own an apartment complex in Mission Beach, right on Ocean Front Walk.

McCains wife had a vacation home in La Jolla, in the Village area, don't know if she still has it.

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Don Bauder Feb. 5, 2010 @ 9:43 p.m.

Response to poste #9: Sadly, there are thousands of stories like that. There is so much anecdotal evidence that people don't believe their leaders when told that th economy is turning around. It's not turning around for wage earners. Best, Don Bauder

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Don Bauder Feb. 5, 2010 @ 9:44 p.m.

Response to post #10: Methinks McCain erred. It won't have been the first time. When did you start believing what politicians say, anyway? Best, Don Bauder

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Don Bauder Feb. 5, 2010 @ 9:46 p.m.

Response to post #11: Touche. Best, Don Bauder

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Don Bauder Feb. 5, 2010 @ 9:49 p.m.

Response to post #12: She probably doesn't know if she owns it. Remember when McCain was asked how many homes he owned and he said he would have to get back with the answer? Best, Don Bauder

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SurfPuppy619 Feb. 6, 2010 @ 9:43 a.m.

I don't know if McCain is off his rocker or not-but he made the 48% underwater comment to the WSJ, and since then it has been re-stated in numerous interviews-reflected in this Google search. Who knows if it is accurate or he is just blowing smoke;

"Straight Talk with Sen. John McCain" [Hehehehe...love the title!!]

MCCAIN: I don't think it's necessary, but it's symptomatic of the spending practices of the federal government and the Congress in a way that is completely out of touch with what's going on out there in the real world. In the city of Phoenix and across my home state of Arizona, 48 percent of the home mortgages are underwater. In other words, they're worth less than the payments people are making -- 17 percent real unemployment.

http://www.foxnews.com/story/0,2933,584772,00.html

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Visduh Feb. 6, 2010 @ 10:02 a.m.

The comments about the political leaders being out-of-touch with reality are so true. Some of this reminds me of "Poppy" Bush in 1992 telling the electorate that the economy was just fine, even as it was in recession. He kept quoting his advisors until he just could no longer ignore what the public knew, namely that the economy was contracting, jobs were being lost, and (isn't this ironic?) home prices were declining. Actually, in hindsight, we know that the recession ended before the general election, but it was too late to save him. He took a record-high approval rating into the year before the election and lost the election! How inept can one man be?

The distrust of politicians pronouncements is growing all the time. If a politician has a reason to put spin on any issue, it now seems that he/she will do it in a heartbeat. The more the elected officials proclaim "transparency" the less of it we actually have. But if you like this political chicanery ruling your life, just keep asking the federal government to provide more services, such as health care. The issues are true at all levels of government--just look at California--right down to the level of fire district. The preponderance of elected office holders cannot level with the voters. If they do, they never get the chance to serve.

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Don Bauder Feb. 6, 2010 @ 10:17 a.m.

Response to post #17: Who knows? He might be right. But I question that 48% and so do others who have commented. Best, Don Bauder

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Don Bauder Feb. 6, 2010 @ 10:27 a.m.

Response to post #18: An intelligent politician -- yes, there are some -- knows that the public doesn't think in terms of gross domestic product, as economists do. The public watches jobs primarily, but also such things as inflation, the family's own personal income, and to a lesser extent, stock and housing values. By the economists' reckoning, the economy grew by more than 5.7 percent in the fourth quarter. But it was basically inventory adjustment. Does the public believe that 5.7? No. Similarly, I believe that the White House is getting into deep trouble when it keeps taking credit for keeping the world's financial system from collapsing, but it won't name the financial institutions that would have gone under in a failure -- say, AIG's. No credibility there. Yes, Bush Sr. blew it by continuing to quote his economists. Best, Don Bauder

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SurfPuppy619 Feb. 7, 2010 @ 7:07 a.m.

http://s.wsj.net/public/resources/documents/info-NEGATIVE_EQUITY_0911.html

Thanks. That was an eye opening list.

CA at 35% was not far behind AZ's 48%.

And did anyone see Nevada??? 65% of the home mortgages are underwater. If I was Harry Reid I would forget about healthcare and do everything I could to fix that states problems.

Florida at 45% and Michigan at 35% were the two other states with a serious problem.

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Don Bauder Feb. 7, 2010 @ 8:48 a.m.

Response to post #21: I remember the controversy during the campaign, but don't remember how many homes we were talking about. What the press missed about McCain's wife was the sleazy background of her family and its businesses. Best, Don Bauder

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Don Bauder Feb. 7, 2010 @ 8:50 a.m.

Response to post #22: It looks like some of us, myself included, will have to eat humble pie. This is startling information from a reliable source. Best, Don Bauder

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Don Bauder Feb. 7, 2010 @ 8:58 a.m.

Response to post #23: What can one U.S. senator, even a powerful one, do about this housing problem? Nevada, particularly Vegas, got wildly overbuilt -- and the collapse has come, at long last. I would surmise this problem is one major reason why Reid appears to be in trouble in his upcoming reelection campaign. Best, Don Bauder

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Psycholizard Feb. 8, 2010 @ 8:17 p.m.

to 26 and WSJ

We should remember these figures were cooked up in the same kitchen that reported the wild upward swing. They ignore properties not mortgaged, they extrapolate prices from a few sales onto the whole loan portfolio.

I'm not sure the sunbelt is overbuilt, someone holding a snow shovel now will move into these homes, and the home price means nothing to the homeowner who likes where he lives, he's concerned about the loan payments, and his job.

These figures tell more about the bad position of the lenders, if their whole portfolio is underwater on average, as in Nevada, the mortgages moving towards foreclosure must be even worse. Foreclosure sales could further depress prices.

Bad lending again, we need to reform banking.

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Don Bauder Feb. 8, 2010 @ 10:09 p.m.

Response to post #27: I was just reading today that nationally, 25% of homes are underwater. However, the data are a couple of months old. I agree that the data tell much about the banks. They haven't even written off failures they should have gotten off the books some time ago. Many people are living in homes and not paying on their mortgage -- have been doing so for months. Best, Don Bauder

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Psycholizard Feb. 9, 2010 @ 6:26 p.m.

to 28

These figures have already bankrupted some huge banks, if the slide continues more will follow.

The good news is that the average prices are not Japanese crazy, and the average mortgage amount is affordable at reasonable interest rates. The foreclosure problem might be due to unreasonable interest rates charged to marginal borrowers.

Does anyone have a link to a home loan interest rate survey with figures on foreclosures?

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Don Bauder Feb. 10, 2010 @ 2:03 p.m.

Response to post #29: Those banks haven't reported the bad news yet, rather like Japanese banks in the post-1989 period. Best, Don Bauder

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Psycholizard Feb. 11, 2010 @ 1:37 p.m.

to 30

I found this dry but informative Report to Congress:

http://www.huduser.org/portal/Publications/PDF/Foreclosure_09.pdf

It contains this assessment of blame;

"In terms of the nature of fraud, the FBI distinguishes between two types of fraud: (1) “for profit,” mostly perpetrated by brokers and others to generate profits, and (2) “for housing,” perpetrated by homebuyers with the goal of purchasing or retaining a home. The FBI estimates that roughly 80 percent of fraud is “for profit” and conducted by brokers and other professional parties to the transaction.”

Anyone interested in the foreclosure problem should give this study a look.

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Don Bauder Feb. 11, 2010 @ 6:28 p.m.

Response to post #31: The FBI is probably right: 80% of the fraud is perpetrated by mortgage brokers and real estate salespeople out for a quick buck. Best, Don Bauder

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Psycholizard Feb. 12, 2010 @ 2:11 a.m.

to 32

I have to eat a little crow. The report says that the pumping of liquidity from loans based on rising assessed valuations caused the bubble, which popped when the prices failed to rise, falling prices now pump liquidity out of the market, depressing prices. The practice of basing loans on assessed values caused the crises, not the wild antics of lender and borrower, these were constant through the upswing.

In the rising market distressed borrowers could sell, averting bankruptcy, now they can"t, that's why there's a foreclosure wave.

So to WAMU and the mortgage brokers, I apologize, you're still sleazy but you didn't cause this mess, you just followed the new law of the jungle.

As for the Federal Reserve, never have so few blown the cash of so many, with so much arrogant incompetence.

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Don Bauder Feb. 12, 2010 @ 10:04 a.m.

Response to post #33: The belief that housing prices would always rise, and people would always pay their mortgages, fed the securitization bubble. Then it popped. But crooked lenders played a role. So did greedy borrowers. Best, Don Bauder

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Psycholizard Feb. 13, 2010 @ 2:22 a.m.

to 34

Plenty of blame to go around, after the loans were bundled and sold round the world. High leverage loans based on price perhaps didn't cause the hysteria, as the report suggests, but they certainly enabled it, by providing cash.

The Federal Reserve, chartered to stop panics, has once again made one worse.

Tucson is not tulips, luckily there is real value in three bedroom ranch style tract houses. This slide may hit bottom soon.

The stock prices alarm me more now, I don't know how much leverage has been applied, but lending on share value was central to the 1929 disaster.

Tulips aren't stocks, there is real value in a beautiful tulip, unlike some of these shares.

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Don Bauder Feb. 13, 2010 @ 8:26 a.m.

Response to post #35: In the 1920s, the bubble was created greatly by trading on margin. Today, stocks are overvalued, but I am not sure they are in a bubble. The price-earnings multiples and other measures are high, but not ridiculous as they were in the late 1990s. However, the stock market today is based on something similar to the margin of the 1920s. The banks are getting loans for zero interest rates, or almost zero rates. Their trading desks are gobbling up stocks, bonds, commodities without risk. Hedge funds are also getting money for low rates. I would say 85 to 90% of trading is done by the big institutions -- banks, hedge funds, mutual funds. The public is not in this market. It is smart enough to know what 10% unemployment means. I am only about 22% stocks, and those in the portfolio are almost entirely ones paying good yields such as utilities and some pharmaceuticals. Muni bonds are my biggest concentration, but I worry about those, too. So with cash paying such a minuscule return, I buy some utilities for income. It scares me that individuals have 60% of their portfolios in stocks. Best, Don Bauder

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Psycholizard Feb. 14, 2010 @ 2:36 a.m.

Modern banking amazes me, unlike the old timer who loaned on margin to speculators, the modern bank speculates directly with the depositors money. That's efficiency! It took the old timers over two years to collapse after the 29 crash, the modern banker will cut that to a matter of days, so he can get with his wife and family sooner. Warms your heart.

I don't know if the stocks will bring down the banks, or the banks will bring down the stocks. but in a bear hug they will fall together, if the banks play too much in stocks.

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Don Bauder Feb. 14, 2010 @ 6:27 a.m.

Response to post #37: Right now, it's the institutional investors -- banks, hedge funds, for example -- holding up the stock market. The small investor didn't participate in the 2009 rally and still isn't in. The banks' trading desks can essentially get money for nothing (or almost nothing) from the Fed and gamble. It's not a healthy situation. Best, Don Bauder

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bluenwhitegokart Feb. 14, 2010 @ 7:39 a.m.

Response to post #10 (and others): A blurb from http://abcnews.go.com/Business/Economy/story?id=6031518&page=1 (though I don't generally trust the alphabet agencies) - Nearly one in six homes -- roughly 12 million households -- are underwater or "upside down," and it is a growing problem.

"All indications are that prices are still falling, and if they fall anywhere close to what the consensus believes they will, we'll have 15, 16 million homeowners underwater by this time next year," said Zandi.

Also, this site: http://www.phoenixrealestateguy.com/half-of-arizona-homeowners-with-mortgages-are-underwater-23-nationwide/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JaysArizonaRealEstateBlog+%28Phoenix+Real+Estate+Guy%29 sources the Wall Street Journal by saying "Not surprising, but sobering numbers… The Wall Street Journal reports that the number of people underwater on their mortgages (those who owe more than the property is currently worth), has increased to 23% nationally.

Arizona is second only to Nevada with 47.9% of all home owners with a mortgage having negative equity in the third quarter of 2009. Another 4.5% are classified as “near negative” – within 5% of being in a negative equity position. (Nevada is at 65% / 3.7%)

Yep, drive through a neighborhood in Arizona and statistically speaking, every other house you drive by is worth less than what is owed on it. Drive through a development built in the last five years and the odds are outstanding that every homeowner is underwater."

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bluenwhitegokart Feb. 14, 2010 @ 7:43 a.m.

Re: post #39. I meant to mention: check the dates on the 2 website articles I linked. The first is from October of 2008, and the second is from, if I recall correctly, November of 2009.

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Don Bauder Feb. 14, 2010 @ 9:02 a.m.

Response to post #23: I will go with 23% nationally, 48% in Phoenix, above 60% in Vegas. Phoenix and Vegas both grew entirely too rapidly. Now they are paying the price. Best, Don Bauder

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Don Bauder Feb. 14, 2010 @ 9:13 a.m.

Response to post #40: If you look at posts #22 and #23 above, you see the date as late November, 2009. Those figures look good. Best, Don bauder

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Psycholizard Feb. 14, 2010 @ 3:12 p.m.

Many people lost their shirts building San Diego, none of them homeowners who held on for twenty years. These figures should be sobering for developers and bankers, but may represent opportunities for home buyers. A desirable new home selling for less than construction costs is a steal, stolen from investors by the developer and mortgage broker. Sun Belt migration is a solid 200+ year trend, and when the current oversupply is sold out, prices will rise till development is possible again. Solid fundamentals will support Sun Belt housing prices eventually.

Stocks are another matter, when banks make leveraged equity plays in highly leveraged corporations, there are obviously no grownups in the room, and the whole market may be childish fantasy.

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Don Bauder Feb. 15, 2010 @ 11:26 a.m.

Response to post #43:Sunbelt migration is solid for 200 years? Maybe, but with many peaks and valleys. Ask people in Phoenix, Vegas, Florida -- and San Diego and LA, too. Best, Don Bauder

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Psycholizard Feb. 15, 2010 @ 5:54 p.m.

Real estate is a lot by lot proposition, there are plenty of ghost towns in the Southwest to remind us of the risk. I should have said Western Sun Belt, since I know less about Dixie which has seen population outflows over the last 200 years.

As a child I played in a ghost town in the middle of Pacific Beach, for our parents the real estate play had risk, but growing up in an aquatic park was priceless.

Pay no attention to assessed valuations. The home buyer, like the car buyer, is final arbiter of price. Buy a car based on where you want to go, a home based on where you want to stay, make sure everything is bolted down properly, set the seat back and enjoy.

If you don't worry about your car blue book don't worry about the housing price, it's only important when you want to sell. I suspect that your home will perform better as an investment than your car.

Stocks are another matter, for the player, cool wheels always come first, Hugh G's fine ladies won't believe the story about being a big time stock player unless you pitch it from a nice limo.

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Don Bauder Feb. 15, 2010 @ 6:20 p.m.

Response to post #45: The house-flipping days have waned, except for properties foreclosed upon and sold on the courthouse steps, then rehabbed and resold. Increasingly, I would agree with you: buy your home for your own comfort and forget future buyers. Best, Don Bauder

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Psycholizard Feb. 16, 2010 @ 2:57 p.m.

Homes are a hybrid, part investment, part consumer product. Broadly, we invest in land, and consume the construction. While land prices have dropped, construction costs remain steady, In some areas home buying is mostly consumer choice.

The consumer should examine rents and vacancies, since that is the fallback when the market is not liquid. Many flippers are now landlords, and if they didn't over leverage may still come out OK, though they now may be working very hard for the bank. Renting may still be the best choice.

I worry about industrial real estate more, I see the factories that won WW2 turned into parking lots. I fear that the corporations that shuttered our factories and sent production overseas may have neglected to write down the property in the ghost towns they created, and may have borrowed more on assessed value. I wonder how many corporate real estate portfolios are underwater? In the projected future earnings all this property has no doubt been subdivided and sold to eager home buyers.

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Don Bauder Feb. 27, 2010 @ 1:49 p.m.

Response to post #47: You are so right with old manufacturing plants. It is my understanding that if you drive through the old industrial heartland -- Dayton, Akron, Elkhart, most of Michigan -- you can't help weeping. The same is true in upstate New York and parts of Pennsylvania. Best, Don Bauder

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Psycholizard March 6, 2010 @ 12:40 p.m.

I try not to get weepy driving past the General Dynamics plants that built the B24 and the Atlas missile, it's not safe. Sad to see the aerospace dreams of sixties school children done in by the usual culprits, leveraged buyouts to restrict competition, sponsored by a corrupt federal government. California didn't forget the jobs sent to Georgia, we haven't voted republican since.

If we built better planes and rockets than we did then, there might be some consolation, but the B2 has been awol in every war, the B52 did the job instead. And the Atlas missile is plainly superior to the Space Shuttle when figuring the cost in dollars and lives. The Space Shuttle, two roman candles strapped to tanks of liquid explosives, might be the monument to the glory and idiocy of our age. Great engineers enslaved by a stupid design cobbled together to meet political needs.

I won't weep for the Space Shuttle's end, it's not safe.

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