Look the hell out Oregon, Richard M. Daley is coming for your businesses

Come to Chicago

SEATTLE, Washington - As we all know here in the Northwest, Chicago plucked Boeing's corporate headquarters away from Seattle in 2001. A coup to be sure, but not nearly enough to satisfy the appetites of Chicago mayor Richard M. Daley, who is responding to Oregon's recent, ill-advised tax increases by criticizing their bash-the-"rich" premise and promising greener pastures in Illinois:

“What happened in Oregon is not good news for Oregon. They believe that anybody who makes $125,000 or more [annually] or businesses or anyone who makes $250,000 — they’re gonna start taxing them. They call them ‘rich people,’ ” the mayor said.

“I’ve always thought America stands for [rewarding success]. You finish high school. You work hard, go to college and you hope to succeed in life. I never knew it’s a class war—that those who succeed in life are the ones that have to bear all the burden. I never realized that. It will be a whole change in America that those who succeed and work hard [that] we’re gonna tax ‘em more than anyone else.”

He's acting like this whole tax the successful thing is new, it's not, but I appreciate the sentiment.

Daley said Oregon’s tax blunder spells opportunity for Chicago.

“It will help our economic development immediately. You’d better believe it. We’ll be out in Oregon enticing corporations to relocate to Chicago. I’ll be very frank. I make no bones about that. If those states want to do that, so be it,” he said.

You hear that, Oregon? He's not just blowing hot air from 1,800 miles away - he's sending operatives to Oregon to seduce the businesses there.

Now this may all be smoke, mirrors and propaganda - the commenters on the Sun Times story linked above are killing Daley for hypocrisy, for his bloated and corrupt government, etc., and a hottie in Chicago I'd like to seduce an operative of mine in Chicago noted to me that the sales tax is 10.5% in Chicago and the property taxes are no picnic either.

Still, if you treat the productive class as an ATM machine they may just decide to move on; this is true both for individuals and businesses.

How much stuff survives 13 address changes?

SEATTLE, Washington - While working on a sink in my house I found a bowling ball towel (pictured below) that I knew dated from way way back, back before I even moved out on my own in October 1992, seventeen years ago this month.

Which got me wondering, how much of my stuff, my physical possessions, dates all the way back to my first apartment? We accumulate so much stuff, most of it seems somewhat important when we acquire it, but how much has made it with me for 17 years, which includes 13 address changes in six states?

There is the towel and other items from my job at that time:



I still have the license plate from my truck:



My father's M5 Bayonet from his time in the USMC:



I over-did it a bit with gear in my first apartment, a bad move considering my income at the time; of all the furniture and kitchen gear the only survivor is this humble blender:



When I moved out, I figured a responsible fellow keeps track of his paperwork, so I got an accordion-style folder. It has assorted stuff like 15-year-old credit card statements, receipts, the kind of stuff I routinely throw away today. It also contains a small newspaper clipping, folded up, that my mother gave me when I moved out (she seemed convinced I hated her and the world was ending, what son moves out of the house before marriage?) and that I was instructed not to read until she dies. It is still in there, unread, awaiting her death.



Only a tiny crumb of the 450 or so books in my house have been with me 17 years. A few old college books, and a tiny selection of other stuff. I was not a reader then.



How has this survived the ages, this is a recording of a Dungeons & Dragons session I ran. It must date from 1984 or 1985. I don't have any technology to play it on, thank goodness.



And, my old Dungeons & Dragons dice have never left me. (My old favorites, the yellow d8 and the clear d20!)



I think that's it.

All you need to know about the "housing crisis" in one press release from nine years ago

SEATTLE, Washington - Via Cafe Hayek, a press release from Wells Fargo in August 2000 (text not bolded in original):

A new home financing program, designed to spur homeownership among California’s educators, may receive an “A” from teachers throughout the state. The program, announced today by Wells Fargo Home Mortgage, Inc., the California Housing Loan Insurance Fund (CaHLIF) and Freddie Mac, allows teachers working within the state to purchase a home with a downpayment of just $500.
The program also offers teachers relaxed credit guidelines – making it easier to qualify for the program – and higher qualifying ratios, which allows homebuyers to qualify for more home. Wells Fargo Home Mortgage will be the exclusive provider of these loans; CaHLIF will provide downpayment assistance and mortgage insurance; and, Freddie Mac will purchase the loans.
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A starting salary for a California public school teacher is $29,000 a year, according to the California Teachers Association, while the average teacher’s salary is $44,000. Meanwhile, the median home price in California is $217,520.
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While California educators will only need $500 for a downpayment, the remaining downpayment will be funded by CaHLIF in the form of a 3 percent simple interest loan with payment deferred until the end of the loan term, or when the home is sold or refinanced.

As a commenter at CH noted, a $200K loan under these circumstances would be about $1,300/mo for someone making $44K a year. I make more than triple that and I consider my mortgage of under $1,600 to be approaching the upper range of what I consider acceptable relative to my income.

The "crisis" has repeatedly been spun in the media as crazy, gambling, out of control banks making bad decisions, but in this case all the bank (Wells Fargo) is doing is writing an ill-advised loan, scraping off a bit of vigorish, and dumping the turkey loan off on the only kind of entity that would want such a thing, a government mutant like Freddie Mac.

This particular example is doubly odious, doubly indicative of the danger of having a government entity tinkering in the housing market, because not only was Freddie gobbling up absurd loans, but in this case it was a special for teachers!. Why are teachers making $44K more deserving of cushy loans than anyone else making $44k? At least it was available to both public and private school teachers... cold comfort.

More reasons not to declare a national crisis when someone misses a mortgage payment

SEATTLE, Washington - We the public continue to receive news every month about the percentage of homeowners who are behind on their mortgage payments or in foreclosure. The impression usually given is that every one of these parties just needs a helping hand - that they're scouring through the couch cushions and hitting up relatives for a few bucks, just so they can scrape a payment together. Can't we as a society help these people? Who could possibly want to miss a mortgage payment?

Turns out, a lot of people. I already discussed people intentionally getting foreclosed and making a few bucks in the process last month. Now there's more: a long Time piece on Las Vegas real estate presents another variation of such a strategy. This variation involves short selling (which is the lender agreeing to let a house be sold for less than the value of the loan and letting this amount fully satisfy the borrower's obligation) and is being promoted by Vegas agent Brooke Boemio:

Boemio specializes in short selling, in a particularly Vegas way. Basically, she finds clients who owe more on their house than the house is worth (and that's about 60% of homeowners in Las Vegas) and sells them a new house similar to the one they've been living in at half the price they paid for their old house. Then she tells them to stop paying the mortgage on their old place until the bank becomes so fed up that it's willing to let the owner sell the house at a huge loss rather than dragging everyone through foreclosure. Since that takes about nine months, many of the owners even rent out their old house in the interim, pocketing a profit.

There you go. Creative, perhaps even profitable - but is it ethical?

It's an entire city of John Dillingers, feeling guiltless for stealing from the banks. Boemio is well aware that short selling isn't ethical [emphasis mine - jmr] and is exacerbating Vegas' economic problems. People, she believes, should make their payments, accept their paper losses and ride out the crash. "Guess what, a______s of Las Vegas. That's what gambling is about. That's what investing is about," she says. "It's greedy. But we're all doing it. Because why not?" It's very hard, she says, to suffer as the one honest person in a town of successful con artists.

I'm not a real estate guru but I've been researching and googling this and I'm not really seeing what's inherently unethical about short selling. First of all, the lender has to agree to it - it's their choice to just go ahead with a foreclosure if they so choose. From the seller's perspective, it's their choice to pursue a short sale and there is damage to their credit (albeit not as bad as a foreclosure) but as the article notes, under the Boemio strategy, "they just bought a new house, so they don't care."

There do seem to be some "ethical" concerns around short selling, in such areas as how and when to disclose to the buyer that the property is a short sale, when to list the short offer as "pending" in the MLS, and the fact that some lenders will drag their feet on approval of a short offer, hoping for a slightly better offer to materialize. I don't think any of this renders the whole concept inherently unethical.

Notice what's missing from this picture? No government "rescue" of borrowers, no posturing politicians, no snouts in the trough - just a resolution of the bloat in real estate using existing processes. The banks may take some losses and try to stick their noses in the trough, and unfortunately they'll probably succeed. Still, let's not think of every borrower behind on their payments as a helpless victim.

Found @ The Conspiracy to Keep You Poor and Stupid

Sometimes foreclosure is a strategy, not a disaster

SEATTLE, Washington - Media treatments of foreclosures often have an air of treating the foreclosee as a noble victim, someone who's trying to do the right thing but has fallen victim to extraordinary circumstances. An example of this is a Seattle Times story from May on government help for these unfortunate victims:

Aurora Loan Services is set to foreclose on her home overlooking Seattle's Puget Sound on Friday. Despite numerous calls, e-mails and letters, she says she's only been able to have one phone conversation with a company representative.

"It's like this huge, concrete thick wall that you cannot get through," said Inman, 58, who is working as a human resources consultant, but making much less than she was before she was laid off by the City of Seattle.

Let's ignore for a second that we have a city employee who can afford a Puget Sound view property - the tone of the entire article is (1) foreclosees are victims and (2) President Obama is riding to their rescue.

I get an image in my head after reading stories like this, of a cruel bank sending four masked goons to haul the hapless residents from their properties, one goon on each limb, perhaps as a hungry child looks on with a tattered doll in her hands.

First of all - if you're a paycheck or three away from falling into a foreclosure that you don't want to fall into, you should have mortgage insurance. I get solicited for such insurance every month, and I've determined that I don't need it. The woman above (in a view property on a municipal salary where a pay cut has resulted in her not being able to make payments) has simply not been responsible. But I guess this is why the people have elected the politicians that they have elected - to dig them out of these holes.

But beyond that - getting foreclosed is often a strategy for a property owner, not a disaster to be averted at all costs. A friend of mine back east is doing it, and explained his plan to me in detail. He has an underwater condo with a paying renter. He's done the math on his income from the rent and his various costs (mortgage, taxes, condo fee, etc.) and has decided that the best move is to just stop paying everything, keep collecting the rent, and let the slow slow process of foreclosure grab the place when the time comes. He's 60+ years old and doesn't give a damn about his credit rating.

I've always sensed that situations like my friend's are more common than the media are letting on, and now I have some evidence to back me up: analysis of the causes of foreclosure show negative equity to be the leading cause of foreclosures in the second half of 2008, not the reasons more commonly cited in the media (e.g. evil banks offering "teaser" loan rates that roll into higher rates that the victimized borrower cannot afford). Negative equity does not in and of itself make you unable to afford payments, but it may make a thinking owner (like my friend) decide that walking away is the best option.

Of course, all the government "fixes" to the foreclosure "crisis" are either shooting at the wrong targets or aren't likely to lower foreclosure rates much even if they hit their targets (as the WSJ article above discusses in some detail).

codicil: When it comes to real estate, nobody has a more blinkered, myopic view than realtors. An Arizona realtor has dubbed people like my friend "sympathy foreclosees" (who is being sympathetic to whom, I'm still not sure) and declared that Something Must Be Done:

Everybody loses in a sympathy foreclosure, the lender loses money, the buyer damages their credit and usually they neighborhoods with many foreclosures are less attractive to buyers due to high crime in some of these abandoned homes. Something must be done....

Nevada seems to have a secret

SEATTLE, Washington - I have a laminated map where I've marked with a black marker everywhere I've been. Given my prodigious memory, I think it's close.

Nevada has a bit of a unique look on the map - it looks like it won't let intruders into its interior. I have six entry/exit points, from lonely Jackpot in the north (where the desolate two-lane road generously grows a turning lane to allow for easy access to Jackpot's modest casinos) to several entries near Las Vegas. It looks like I have entered and been steered right back out, like there is some great secret in Ely or Winnemucca that I'm simply not allowed to see.

Compare this with nearby, promiscuous California, which I have crisscrossed with impunity.

Ideology, fecundity, and mobility

SEATTLE, Washington - In case you didn't hear in the aftermath of the 2004 election, white fertility rates had an incredibly high correlation with voting patterns - Bush carried 25 of the top 26 white-fertility-rate states, while Kerry carried the bottom 16 states in this category.

This was pointed out today in a post by Bryan Caplan that was a response to Arnold Kling's grim assessment that demographic trends were going to result in stagnant, single-party Democratic rule in the coming years.

Caplan (who's very much into nature-vs-nurture stuff) countered Kling's grimness with the idea that the higher birthrates combined with an intergenerational correlation in ideological preferences spells trouble for Democrats in the long term.

I'm not buying it. Even if there is some small genetic component to ideology, it can't possibly be enough to counter the fact that a certain percentage of young people currently flee and will continue to flee their stagnant red-state origins.

Many years ago, I was on a feverish, catch-all conspiracy email list (remember those?) One member would often post stories about "infiltration" of homosexuals in the school system etc. and then note that "homosexuals can't reproduce, so they have to recruit to replenish their ranks". That's an asinine observation about homosexuality, but I think I can twist that quote around on this issue: "Heartland religious conservatives can't recruit, so they have to reproduce to replenish their ranks."

Problem is, a certain percentage of these "reproduced" folks leave the Heartland and move to coastal urban centers and turn into leftist Democratic voters. This migration strikes me as largely unidirectional. If you live in a big city, like Seattle, you probably have some friends who moved there from [insert dumpy red state here] as young adults, often leaving their religious upbringing behind. How many people go in the opposite direction? How many Boston Brahmins or young Seattle urchins leave home to become religious conservatives in Nebraska?

There's a reason the migration is unidirectional - people (especially young, curious folks) are going to head for the more dynamic, less restrictive lifestyle. Cultural homogeneity and an alleged 6,000 year old Earth are not great bases for recruitment - you have to "birth" people into that world-view and hope they stick around. Dynamic culture, sex, drugs, and a government that allegedly will tend to your more costly worldly needs? As Drucker said in Heat, "I don't have to sell this and you know it, 'cause this kind of shit here sells itself."

I had to use all sorts of labels and terms here I usually avoid - Red State, Heartland, blah blah... oh well. Only way to make my point.

Americans agree with me on where to move

SEATTLE, Washington - When I compiled my livability index of all 50 states, I automatically excluded the 41 states that had a state income tax. Turns out many other Americans have the same philosophy - an editorial in today's WSJ looks at the relationship between state income taxes and domestic migration. Their comments are based on this year's United Van Lines migration study, which has allegedly been fairly representative of overall migration patterns for decades.

The WSJ notes that the 7 of the 8 states without an income tax (in the contiguous 48) are ranked in the top 12 as far as inbound vs. outbound migrants. In case you were simplistically thinking/hoping that people are moving strictly to get to better weather, note that Florida was the one no-income-tax state not in the top 12, and that bad-weather states like Wyoming and New Hampshire are getting a significant influx.

North Dakota, with an income tax, is a big outflux state, while South Dakota, right next door and without an income tax, is a big influx state. I doubt that the weather explains that one.

I've been saying for a while now, your best chance of getting the government you want is not to vote for it, but to move to it. And, as the WSJ notes, the people most likely to move are the ones you probably would most like to keep around:

Our friends on the left say Americans are willing to pay more taxes to get better government services, but their migration patterns reveal the opposite. Governors would be wise to heed these interstate migration trends as they try to cope with what may be one of the worst years in recent memory for state finances. The people who tend to be the most mobile in American society are the educated and motivated -- in other words, the taxpaying class. Tax them too much, and you'll soon find they aren't there to tax at all.

Soundproof Suite livability index of all 50 states

NEW YORK, New York - Given that I now work remotely, and greedy, evil developers are casting a curious eye at my house in Seattle, it may be time to consider a move, either elsewhere in Washington or to one of the other 49 states.

Living in a state with no income tax saves me a pretty penny, as my state of employment for tax purposes is wherever I reside. So for now, let's eliminate the 41 states that have a state income tax. Some top-of-the-head pros and cons of the other 9 states:

Washington
Pros: I'm already there; there's a lot to like about Seattle; probably has my largest friend base; the weather is fairly acceptable, given some of the alternatives (I don't like air conditioning); good espresso.
Cons: It's a long flight to the East Coast, which I'm now doing about 10 times a year; becoming politically untenable, with mass-transit boondoggle lust and other issues; I'm a proven flop with Northwest women; the women are not so great here anyway; I want to golf more and the weather can be troublesome.

Nevada (let's just assume the Las Vegas area for now)
Pros: Sunny weather good for golfing; I could get back into poker and sports betting; much more house for the money than Seattle; the mayor is a former Mob attorney; lots of airline service.
Cons: Many report that, once you're there a while, the truth comes out - that it's a growing-too-fast, high-crime, cultureless shithole.

Alaska
Pros: Low tax burden; the adventure of saying you're in Alaska.
Cons: Flight times even worse to the East Coast; high cost of many goods; high male-to-female ratio; don't know anyone there.

Wyoming
Pros: Big fish, small pond; classic huge old porn shop in Evanston near the Utah border, long before the chain porn supermarket trend.
Cons: Cold; rather poor air travel; isolated; do they even have broadband internet?; don't know anyone there; no jobs.

South Dakota
Pros: see Wyoming, except for the porn shop thing.
Cons: See Wyoming.

Texas
Pros: Pretty good golfing; good air travel from major cities; probably good food; good music but I don't care; reasonable cost of living in many places; decent job market in Dallas if I lose current job.
Cons: Bad weather for my tastes; probably some cultural disconnect; others have moved there and left, citing crappiness.

Tennessee
Pros: Reasonable air service and distance to East Coast; pretty good golfing; pretty good cost of living.
Cons: contemplating an income tax; Southerners; probably bad summer weather; don't know anyone there; poor job market.

Florida
Pros: excellent air service; good golfing.
Cons: Bad weather; huge bugs; every knuckle-dragging nincompoop that doesn't like cold weather moves there; high crime in most cities; poor job market if I lose current job.

New Hampshire
Pros: No sales tax, either; Driving distance to Boston, New York, and Atlantic City; presumably an ideological climate more to my liking; probably a bit more house for the money than Seattle; low crime and freeloader ratio.
Cons: Winter can't be pleasant, and summer is probably no picnic either; golf will suffer; air travel probably not great; high property taxes may offset other cost savings; would probably have to trade in Black Heat for a 4-wheel-drive vehicle; don't know anyone there; are there single women there?


UPDATE: The Wall Street Journal chimed in on income taxes and domestic migration.