For those of you too young or cultured to get that reference, don’t worry. It’s not germane to what we’re going to discuss here…Seattle real estate.

This holiday season I was talking about my view of where Seattle real estate prices were headed. Specifically, I was discussing West Seattle real estate, but my views can be used interchangeably for pretty much any moderately desirable Seattle neighborhood.

In a nutshell, even though the prices had come down a bit, I think Seattle real estate still needs to be HALVED to be considered a ‘good deal’ (by my standards).

To be perfectly clear, I actually meant that as of Christmas 2010, the prices needed to be chopped in half still.  And, to be perfectly honest, I just said, “HALF” cuz it was a nice round number, a little bit shocking, and easy to keep track of.  I might be interested at a 35 or 40 percent reduction as well…depending entirely on the property and the situation of course.

Rather than get into the ‘why’ (that will be several LONG posts) I just want to start looking at prices.

Before we get started, we can agree that prices PAID are the only prices that define the real market.  Unfortunately, with my tools, even paid prices are soiled, in that, prices paid by banks taking homes back through foreclosure sales are recorded as a sale and a price.

So, for now, I’m just going to start my investigation of prices by looking at the WISHING PRICES (asking prices) of different properties that haven’t moved yet….with the assumption that the market that clears these properties is either at or below these levels (for now — until we start seeing multiple bids over ask on properties again).

In West Seattle, there are 101 single family houses that have had their prices reduced in the last 30 days. Generally speaking, the further south (and east), the more aggressive the price cutting so far.  This follows the general pattern elsewhere that as the bubble has played out, prime areas go last.

Let’s look at a few:

West Seattle Property Price Reduction #1 (follow the link to see the complete Redfin listing)

Price History:

I’ll grant you this property looks anything but “PRIME” but lets do a little digging and cypherin’ here.  It sold in 89, for $45k, then again, 8 years later for more than 3x that price.  It’s unknown if it was updated or rebuilt between those two transactions, but for our purposes (it just so happens) that 1997 prices are about what I consider FAIR these days (in most cases).  With that in mind, let’s continue…

In the span of 9 years between my “fair” price of 166k, it goes to 386k when it is sold in June of 2006.

4.5 years later the bank forecloses on the property for 328,500 (presumably the unpaid portion of the 1st mortgage on the property).

The bank takes Christmas and another month to ensure that they’ve evicted any former home-loaners (and varmits hopefully) and put it on the market a month later for 324,900 — kind of them to whack a whopping 3,600 off their price.  Wow.  1.09% reduction.  Only 48.91% more to go to get me interested!

After 18 days of no takers, the bank wises up and reduces the price to $309,900

That’s a 15k reduction. $833.33 for each day you don’t buy and put up with the indignity of not being able to paint the walls in your rental.

20 days later, another $15k.

Another 18 days, another $10k.

At this point, the asking price is a full 43,600 below the price from Christmastime 2010.

That’s a 13.27% reduction, and what I would call, “A START”

I imagine that even with continued disinterest in this property the price reductions will slow since the quarterly reduction of 13.27% is a 43.5% reduction when annualized (1-13.27% to the fourth power).

As the real estate crash has hit other regions, it typically moves from the bad neighborhoods, and works its way into the better ones, so by way of comparison I decide to check out my old hometown, Longview, WA.

Before I get to the killer listing I found however, I need to share an enormous amount of background with those of you unfamiliar with Longview, WA — and those of you who’ve repressed the memories.

While it’s true that Longview has some nice older/established neighborhoods with tree lined streets and some McMansion developments in the hills that overlook this gritty industrial town, there are also some very modest blue collar dwellings built around the paper mills in the late 20’s (when the town was founded) and into the  30’s, 40’s and 50’s to house the growing population which was brought in to work in the timber and paper industry.

The planned community was built with a very distinct blue collar neighborhood, and a very distinct white collar neighborhood.  As the mills have fallen on hard times financially, the blue collar neighborhoods have turned into a section 8, welfare, meth-riddled, sketchy area of town (for the most part) with pockets of young families desperate for affordable housing attempting gentrification in certain pockets.

The town has two middle schools & two high schools, and two little leagues (baseball) for the kids roughly drawn between the old/sketchy part of town and the newer/shiny more expensive homes (with a few exceptions for some more rural kids).  My home and fate would find me on the border of those two worlds, but marginally in the ’sketchy’ middle school & high school, and more importantly (for this story) within the sketchy little league.

I was perhaps the least gifted little league player in modern history and my career spanned one full season (at the age of 10), but I remember it well….that far north, early season games were often scheduled to allow parents to attend.  While kids, struggling to find the strikezone would ‘walk’ the bases full, and subsequent runs would be forced in by additional wildness, the little league coaches were not keen on using relievers — perhaps because none of the other kids could do better (?)

Six inning games would become marathon events as 3rd and 4th graders milled about in the field waiting hours for their once a game chance to boot the ball and extend an inning for another 8 batters.

This far north, early season games would stretch well into twilight and a bike ride home through the ‘highlands’ (ironically the lowest part in town and some feet below sea level in many parts) would creep a kid like me out.

As I whisked past dilapidated clapboard depression era rental home after rental home, I would get especially creeped out feeling when passing by stretches of the ‘hood where no one had bothered to mow the lawn in months and the grass was growing chest high…I would start out riding casually trying to feign indifference, and as my adrenaline took over, I would be riding faster faster, lungs burning, until I reached the fringes of what I considered a ’safe’ neighborhood.

Sketchy characters with shockingly low tooth to tattoo ratios would sit on old sofas and upholstered chairs left out in the pacific northwest rain all winter, on their front porches, drinking Lucky Lager, Malt Liquor, or the occasional Rainier (for the very discerning tastes).

The occasional industrious soul would work on one of the muscle cars or broken down ford/chevy pickups parked in their front yard in the prerequisite wife-beater.

I imagined marginalized intoxicated pedophile drifters sitting in their yard watching all the kids stream by after a late game, like a so many bears watching a salmon run in a mountain stream.

It’s with that background that I found this fabulous deal.  For the sad day that link goes dead, I decided to embed a few pics:

Nice Curb Appeal, Huh?

I love the curb appeal of this place. In some weird way it reminds me of these places in South America where they are taxed based on what the assessor can see from the street. Everyone puts up these very dated, unpainted fronts (facades) to their home, hiding the opulence, luxury, and ‘old world charm’ within.

To get an idea of what the highlands was like in the late 70’s, imagine the whole house looking like the front. I love the description on this listing touting the ‘covered porch’…brings up visions of southern mansions, rocking chairs and mint juleps.

So, where is this gem located? Here is the view off of that front porch:

beautiful view of the baseball fields

Your typical ‘park-view’ home in Longview, WA .

I hope you enjoyed this post, and the definition of the true meaning of ‘Fubarrio’.

Well, I’ve had quite the lapse in posting anything on this blog.

I was looking at it this afternoon, and was amazing by how disorganized and chaotic this thing is.

Hilarious.

I *may* make an attempt to clean it up and categorize some things better.

I already heard from two of the three people that have seen this blog, that they were having a hard time making heads or tails of things up here.

In the meantime, here is a link to a hilarious article for your amusement.

Unmanned Wikileaks Drone Destroys Afghan Village

I have a negative bias going into the next week of trading, but it remains to be seen whether or not that will play out as predicted.

The EU’s bailout plan seems like a lot of bluff and talk so far and not a lot of action. They have however opted to carry out their market operations (buying of bonds on the market) in secret. So that has to have a lot of the speculative shorts spooked. You never know when the big bad boogeyman will swoop in with bags of your tax money to bankrupt you by manipulating the market in an ‘irrational’ manner. The initial reaction in the markets was of course a rocket shot in the Euro and the indices that track the eurozone equity complexes — and some tightening of blow out bond spreads, but the luster seems to be wearing off of that polished turd already.

In other news, gold is trading at an all time high in electronic trading after hours after closing at 1220 in the pits. Of course this will probably get it a mention in even the mainstream news sources and it’s rapidly moving back to a page 2 or page 3 story.

I’ve been a big believer in deflation and something that is called the ‘priceless dollar theory’ — or at least a variation of it. That said, I’ve been telling people privately for at least 6 months that I thought the dollar AND gold could perform quite well at the same time given what is going on. That’s obviously played out — but there may actually still be more room to the upside for both. We’ll just have to see just how far the Fed is willing to go to defend the euro (and likewise debase the usd).

Back to Greece for a second: it’s been reported that there will be more riots, er, i mean demonstrations tomorrow. This HAS to be factored into the markets already, right? right? Well, we’ll see.

So, this is not financial advice, cuz I’m not qualified to do that sorta thing. But, I would suggest that all long term investor types (the buy and hold stocks, not traders) calmly get out of the water at this point. We just saw some people get sucked under, and I think I saw a fin circling the wading pool.

Watch CBS News Videos Online

He’s an AUDITOR for a local UNIVERSITY….so first off, his employment solid, and second off he should have KNOWN better that he was taking a risk with buying his house.

One’s left to wonder what kind of self-importance these clowns would have if their prices had doubled. That said, walking away in a non-recourse state when you’re dramatically underwater is in almost every case the right thing to do

Seemed like every week was a ‘green candle’ (up week), and every month was a guaranteed winner for a while there. The investors/traders(?) who for whatever reason were buying each and every dip in the market were being rewarded in spades. It felt like a ‘one way’ market — UP.

That has all changed now.

The market has been straining and creaking lately with the most obvious signs the wild swings in volatility. At one point, today, during the most vicious part of the sell-off, at least a few of the more popular retail trading platforms upped the margin requirements for holding futures positions intra-day.

So what did that mean? It meant that the volatility was too great for the futures broker to feel comfortable letting traders hold ‘normal’ amounts of leverage in their positions.

In fact, the plunge today was recorded as the second largest on record — ever — and it came midday with a total collapse of the bid (anyone who was willing to buy), and after a brief, eye-watering plunge over 100 points down on the s&P and 1000 points down on the dow, snapped back up to just an ‘ordinary’ 3%+ down day.

So, that washed out the weak hands and we’re ready to move higher again, right?

I don’t think so.

As tempting as it might be for those who are bullish the US stock market to think that it’s safe to go back in the water, I would caution that extreme volatility like we’ve seen the last few days is really not the sign of a healthy bull market. It is the sign of what happens at the end of bull markets and at the end of bullish retracements within a larger bear market trend.

It was hard to watch the market action this afternoon and not think that there was a higher power at work providing liquidity to the markets through a favored son (cough cough JP Morgan).

Tinfoil aside, at this point the long held belief that the EU was in deeper doo-doo than even the US is starting to make its way into mainstream consciousness. Despite the attempts to play this decline today off as a glitch at a trading house, or an errant ‘fat fingered’ trade, even a cursory glance at the forex markets would tell you that that is utter b.s.

Huge unwinds were taking place where the Euro was down over 5% against the yen and over 2% against the USD! In one day!

That kind of violence puts anyone with any sort of leverage whatsoever completely out of a trade as even a 20:1 gearing would have your account blown up completely in one trading day (!) And forex is a domain where 50:1 and 100:1 are more the norm.

Anyways, good luck if you are crazy enough to attempt to trade anywhere in and around this kind of violence, and remember, when volatility is infinite, even 1% leverage will get your account zero’ed in a hearbeat.

If the S&P can’t bounce up to the 1150ish area by the close, all eyes will be on 1105.

Ok, that got a lot crazier than even I thought it would today. As you can see from a cursory view of the news or my post above, the S&P sliced though 1150, dissected 1105 and plunged to 1065 in a wink before finally rebounding up to 1127 to close.

The amount of violence and the % moves were enough to rip your head off if you were playing with any leverage, and the moves in the forex market were even more outrageous.

See my post up above for more…

The recent fubars in Greece and the EU’s predictable response is as good a catalyst as any to get back into the swing of things.

Today looks like it might get interesting.

More commentary at the close.

Luckily (for Switzerland) they kept the Swiss Franc (CHF) and won’t be asked to cover the PIIGs and they move towards default or bailout.

Click Here to Open a Swiss Bank Account!

While I was stumbling around I found these guys here who can help people get a Swiss bank account — a traditional port in a storm, so to speak.

Ironically, back in 2008 when everything was going haywire in the world’s financial system and I was working for a company doing offshore banking down in Uruguay, we saw applications for new accounts and interest in moving to a safe haven skyrocket — even in the face of liquidity evaporating everywhere.

Anyhow, if you have any interest in carving out a little safe haven for yourself, regardless of where you live, you should check out the link.

Click Here to Learn the Secrets of Swiss Banking

When we were selling accounts within accounts in South America we used to charge 250 bucks…The price may have gone up though, because frankly, we were one of the cheaper alternatives.

The guys who make a living from selling ‘account opening services’ (really just telling you where to go to open an account) can charge over 1000 USD.

These guys here have put together an ebook for just 47 USD. Insanely cheap.

Click here to move your money to the safety of Swiss Banking — before it’s too late!

The Sovereign Society, for the uninitiated here, has made a business out of promoting the political belief that every person should be their own ’sovereign’ individual. Sovereign society, with their email newsletters — including the A-letter — brought the idea of personal sovereignty to the forefront of many a liberty-loving libertarian’s inbox.

In addition, as part of the Agora publishing group, they began selling conferences, get-togethers in far-flung, usually tropical, offshore locations, books on becoming a perpetual traveler, and expatriation, and services to help the budding sovereign man or woman take the plunge.

Recently, with the economic turmoil in the US, the polarizing political environment, the specter of rising taxes to pay for some of the obscene overspending of the last several decades, and a huge demographic bubble of baby boomers moving through the system like a pig in a python, many recent or near retirees are starting to move their money or themselves offshore.

Of course, one of the cruel jokes the US government plays on all those that are, ‘too clever by half’, is that they’ve already thought through the ramifications that a mass exodus would bring to the US. The results? Well, perhaps the most significant is that the US is one of the only countries in the world — I think the other is Libya, seriously — that taxes non-residents on worldwide income.

What does that mean?

That means, that if you are a US born citizen, no matter where you live, even in the extreme case of someone who leaves the US with no intention of ever returning, you owe the US government taxes and are expected to file a tax return annually. So much for the ‘land of the free’ huh?

What about the Foreign Earned Income Tax Credit?

Ok, truth be told, there is a break on the first 80,000 usd that you earn abroad. However, and this is the cruel part, it has to be earned from labor. You cannot apply capital gains or interest to this exemption. So, you see, the typical retiree, or even trader who did not arrange their affairs in a complicated mishmash of foreign offshore corporations, finds themselves paying taxes for a company whose services they are not receiving.

While it’s difficult for me to shed too many tears for the tax situation of too many baby boomers, this in particular is a raw deal, and it cuts across traditional generational or demographic boundaries.

So What About this 80k Tax Credit?

Truth be told, I believe it is a subsidy for the US (or foreign corporation) and used as a recruiting tool for getting expatriate workers to move themselves and/or their families overseas. In the countries with expatriates that I’ve lived in or visited, very few US expats have the freedom to own their own real estate and start their own businesses due to limitations placed on foreigners. With the advent of the Internet this is changing of course as more entrepreneurs and even employees move offshore, and coincidentally there were some rumblings about revoking this tax credit last year that had the expat community’s feathers ruffled.

Ok, So What Does this Have to Do with the Sovereign Society?

Well, like I was saying, they’ve moved into selling services to expat wanna-be’s. One of the things they began selling was a book called The Billionaire’s Loophole. From what I gather, the ‘loophole’ is basically that you can (and should if the financial situation makes sense) expatriate permanently, seek out a second passport or permanent residency somewhere, renounce your US citizenship, and then once renounced, apply for (and get) a certificate which formally renounces your citizenship, let’s you avoid US taxes, and apply for US Visas for whenever you want to visit the grandchildren.

A lot of people were intimidated by the process of doing this. So, the Sovereign Society went to great lengths to explain how simple, easy, and painless it was — including printing letters from readers and customers who explained in their own words how surprised they were at the ease with which they shed their US taxpayer chains. These were basically testimonials in the guise of long copy, but they were somewhat convincing nonetheless.

Unfortunately, the testimonials, along with the rebound in the stock market perhaps, has had the unwanted side effect of reducing the “urgency” of the matter, and removing the illusion of scarcity. So, what is a marketer to do? Well, of course, the answer is to introduce the element of scarcity.

The Sovereign Society’s newest email explains that the window is closing on those that want to expatriate. How do they know this? Well, they’re pointing out the fact that US State Department has started charging a 450 USD fee for expatriation.

While the US charging for fees for things that used to be free is no ‘revelation’, they further point out some subtle signals that may indicate that the consular offices of U.S. embassies that handle expatriations are increasingly overburdened.

While this too seems thin, there is further ‘evidence’ that suggests that some expats are experiencing delays in getting their “certificate of loss of nationality,” or CLN. The CLN, or course, allows you to get a Visa to enter the US after you’ve expatriated, and also allows you to avoid US taxation while residing outside of the US.

While the Sovereign Society likes to make hay out of these ’straws in the wind’, I’m more inclined to think that these are not really anything more than a demographic eventuality, and a bad economy, making it more affordable for expats of all colors to get out of Dodge.

However, the Sovereign Society and Agora publishing in general, never miss a good opportunity to fan the flames of paranoia among the libertarian sect. And, truth be told, if you ever sit around and have a few beers with the expat crowd, you’ll learn the embers are never really all that far from the surface.