Monday, May 23, 2011

Seattle's New $10 Million Bike Ramp

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The city of Seattle currently has a $67 million budget shortfall.  Like many cities and states around the country, Seattle is having to make many hard choices.

For example, Seattle is cutting between $25-40 million just from its police and fire departments alone.  All departments in the city's government are receiving a 3-8% across the board cut.

Not only is Seattle's mayor Mike McGinn slashing the current budget, he's threatening further budget cuts since the city's financial situation is deteriorating.

So today in typical Seattle fashion we learn this same bicycle addicted mayor so grim about budget cuts is spending $10 million to build a bike ramp.

$10 million.  How many police detectives and fire fighters does that buy?

Want to see what a $10 million bike ramp looks like?  Here are the architect's plans.

Mr. Mayor, aren't you aware that life in Seattle is DETERIORATING RAPIDLY and we need police officers a whole lot more than a bike ramp?

This past Saturday a woman was STABBED IN THE NECK WITH A STEAK KNIFE.

At 3:57 PM, in the middle of the afternoon.

At the intersection of 3rd and Pike, the heart of Seattle's business, hotel, and tourist district.  (By the way, that is the real intersection above, just three blocks from Seattle's famous Pike Place Market.)

This attempted murder took place in full view of hundreds of people, none of whom came downtown to witness a murder.  (By the way, killings at the intersection of 3rd and Pike are nothing new.  A man was shot in the head in the middle of the rush hour there last October.)

Seattle does not need a bike ramp that will be used more as a shelter by crackheads getting high and prostitutes turning tricks than actual bicyclists.

What Seattle needs is a mayor who can measure priorities and act accordingly.  We don't have one so a recall petition is in order.

Friday, May 20, 2011

Home Prices Fall 57 Months in a Row

Home prices have fallen 57 months in a row, losing another 3% in the first quarter of 2011.

Um, where are all the real estate gurus who sold rental properties as a path to financial independence now?

These fools were wrong when they said 2001-2006 was the "best time in a generation" to buy real estate.

Turns out, it was the worst.

These salesmen (not investors) were wrong again when they claimed all those motivated sellers and foreclosures hitting the market in 2007 through 2010 were "bargain opportunities"---or again the best time in a generation to buy real estate.

Sorry, prices are still falling.  Remember when investing "The Trend is Your Friend"?

Well, guess what?  These same dimwits are STILL pitching the same rancid message in some cheesy hotel ballroom to yet another crowd of newbies just waiting to be fleeced.

Real estate prices are falling, and will continue to fall for at least 2-3 more years.  Read this post I wrote on June 10, 2009 predicting the same.  Or this one from September 25, 2010.  Same message.

How do home prices go higher when VIRTUALLY EVERY CATALYST that could lift them higher is headed in the wrong direction?

Interest rates?  Headed higher.

Mortgage underwriting standards?  Tight, and getting tighter.

Supply?  Lots, and a huge shadow inventory measured in years.

New buyer demand?  No, fewer people want to own homes these days.  Young people want apartments, not condos or houses, and have too much student loan debt to afford much of a house anyway.

Rising sales?  No, in 2010 a full quarter of all "real estate sales" were foreclosures.

Abundant supplies of mortgage capital?  No, Freddie and Fannie are heading towards oblivion and a private underwriter means higher interest rates.

The gurus will never go away.  But that does not mean you have to buy their products and seminar tickets.

Monday, May 16, 2011

Seattle Cop Injured in The Jungle

Just one day after I wrote this blog post describing Seattle's notorious area called The Jungle, a Seattle cop was assaulted by a fleeing suspect there.

Here is a news story from KIRO-TV in Seattle about the incident which happened Saturday night.

Car prowling, for those who don't know the term, is when one or more car thieves break into a whole street or neighborhood of cars at the same time, going from truck to car to minivan breaking windows and stealing whatever is inside.  Here is the official Seattle Police description of the practice.

Seattle is coping with an epidemic of car prowling.  In one shocking statistic I could find, in just the last two weeks of November 2009 there were 370 REPORTED vehicle break-ins in just Seattle alone.  And that is just the reported ones.  Few people do anymore.

Read here how suburban Redmond (yes, where Microsoft is headquartered) is coping with its epidemic of car prowling.

Broken car glass on the streets of Seattle is common these days no matter where you go.  And as this incident with the police officer on Saturday night proves, it isn't the IT professionals that work for or the biotech researchers at the University of Washington Medical school who are breaking into the vehicles of hard working decent people at night.

It's the vagrants, runaways, drug addicts, alcoholics, prostitutes, criminals on the run, and assorted mental patients of their meds who use squalid places like The Jungle as sanctuaries from civilization, people so desperate for drug and food money they ransack cars at night hoping to steal whatever they can.

The continued deterioration of the quality of life in the city of Seattle like the epidemic of car prowls is having a profound effect on home prices.

Property values in Seattle continue to decline, in fact, they are now exactly at 2004 levels.

Seven years of appreciation and equity buildup........ POOF!  GONE!

There is a reason for that beyond normal economic conditions, especially since Seattle's local economy held up fairly well in the recession.

Do people want to pay $500,000 for a one bedroom condo if they are greeted with broken glass on the way to work in the morning?

Friday, May 13, 2011

More on the Jungle

Just three days after I wrote about Seattle's notorious Jungle, a man was stabbed with a fork and threatened with a gun over a can of beer there.

I have received a flood of emails and phone calls over The Jungle since writing this blog post on Monday.  Some local Seattle residents had their own stories about the place, including residents of the besieged neighborhood of Beacon Hill that runs east of The Jungle.  Other readers from outside the Seattle area were incredulous that such a place could exist inside a major city.

Trust me, everything I have said about The Jungle is true----and more.

First, where is Seattle's Jungle?  It is a stretch of land that supports the network of access roads that make servicing the elevated portion of Interstate 5 through Seattle possible.  The video above from YouTube and the brave person who shot it perfectly captured the creepiness of the place.  It really is very scary, even in the middle of the day.

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This map shows the location of The Jungle relative to some universally known landmarks like Boeing Field which is directly west of Airport Way (as you might have guessed).  The location of the recent fork stabbing mentioned above, near the intersection of Airport Way S and S Bayview can be seen at the left of the map and is marked with a pin.  That big section of land east of I-5 where there are no roads until 13 Avenue South is the location of The Jungle.

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By the way, here is what the intersection of the "Fork Stabbing" incident of last night looks like.  If it looks that grim during the day, imagine what it looks like at night when the residents of The Jungle are awake and out searching for food, shelter, and often, victims. You can see I-5 in the distance and the entrance to The Jungle.

Most estimates put The Jungle at about 100 acres in size.  Using I-5 mile markers as a reliable measure, I think this estimate is on the low side and put the actual size at about 220 acres.  But given the fact there are no standard definitions of what The Jungle really is, I'll use the 100 acre figure.

This may sound small to some, but compare the 100 acre size of The Jungle to Seattle Center, the home of the 1962 World's Fair and the site of the Space Needle.  This park is only 72 acres in size with just only 17 acres of open space.

The Jungle is actually made up of two parts, The Caverns and The Jungle.  The Caverns are technically the spaces under the I-5 overpasses while The Jungle is the extremely dense growth that abuts these concrete spaces.  Most residents just use the one term to describe both.  Here is a great interview with one local Beacon Hill resident who did his own clearing of Jungle brush to chase out a local prostitute who was turning tricks in the weeds.  This YouTube video shows you how dense the growth actually can be, especially the ivy which is everywhere these days.

The effect on the residents of the neighborhood of Beacon Hill is obvious.  They feel like they are under perpetual attack from unseen forces that blend into the undergrowth.  The anger many feel is white hot.  Here is a typical comment found from a Beacon Hill resident on YouTube:

I wish I never moved to this neighborhood. At the top of the hill, anything you don't lock up will get stolen, whether a gas can or a motorcycle cover. It makes me want to put poison on my stuff, and leave it out in the open for them.
One Beacon Hill resident that did not want to "put poison on my stuff and leave it out in the open for them" was David Koenigs.  A former director of the St. Vincent de Paul Society in Seattle, Koenigs and his wife purchased a Beacon Hill fixer-upper and decided to invest their time and money back into their community instead of just talking about the homeless problem like so many others did without offering any solutions.

Koenig hired two homeless men from The Jungle to work on his rehab and live with him while they finished the construction.  You can guess what happened next.

In December 2005, Koenig was stabbed, strangled, and beaten to death by the men he tried to help.  These men promptly stole whatever they could from the home, including his car, before they were arrested in Oregon and sentenced to long prison terms.

The murder, violence, and drug dealing in The Jungle is not new.  Here is the story of man being murdered there in 2008.  Here is another news story describing life in The Jungle from 2003.

Nothing has changed there.  It's only gotten worse.  Plus we now have mini-Jungles sprouting all over Seattle as every patch of undergrowth is now used as a haven for crime or a campsite for drug addicts and psychopaths.  Two examples include Seward Park in South Seattle and 14-acre Kinnear Park in Queen Anne which has become the headquarters of a Honduran gang which uses the location to sell drugs and also hunt squirrels which they seem to enjoy eating.  (I'm not making this up.)

Seattle has no plan to conquer The Jungle and rescue the residents of Beacon Hill and Seattle from the madness of having a lawless criminal encampment within its borders.  Today I read Seattle's bicycle addicted mayor has hired one of his bicycle hack cronies at $95,000 a year to help design bike lanes for the city's streets, a move most people consider sheer madness.

Instead, City Hall should spend the money to bulldoze The Jungle once and for all and develop the site for the lawful residents of Beacon Hill, instead of allowing this filthy unsafe place to fester for yet another generation of murder victims to find.

Monday, May 9, 2011

The Jungle in Seattle

There is an infamous part of Seattle known to residents as "The Jungle", a tract of about 100 acres that mostly borders and runs parallel to the access roads that service Interstate 5 where the highway is elevated through the city.

The area got its nickname because it is a lawless place where literally all the residents are "homeless" men and women.  There are no buildings or homes in the Jungle.  The only shelter there is the highway overpasses and their concrete corners and the dense brush that can conceal almost anything.

The Jungle is beyond dangerous.  Murder, rapes, and assaults there are common.  Dead bodies are found there all the time.  Drug dealing, prostitution, and other criminal activity is part of the daily ritual.  The Jungle is filthy and smells it, filled with used condoms, bags of urine, jars of feces, and rotting filth of every kind imaginable.  One time when they actually cleaned The Jungle in 1994 they netted 120 TONS of debris.

The video above from YouTube captures some of the menace of The Jungle.  The person who shot this film risked their life even taking a camera and a car into this place.

What I haven't told you so far is that The Jungle borders the growing and vibrant Seattle neighborhood of Beacon Hill and residents of this legitimate community are sick of the consequences of living near a place as intimidating and violent as any fantasy you would see in an Eli Roth movie.

The city of Seattle openly tolerates a homeless encampment within its borders, one self-defined by residents as one that only attracts the criminal class.  Think I'm making this up?  Read the transcript of a KBCS-FM radio report on The Jungle which I have reprinted below.

And the even better news is that we now have mini-Jungles sprouting up all along the I-5 corridor through Seattle and its suburbs.  The criminal classes who use these disgusting vacant stretches of land have learned from their time in The Jungle that you can do what you want there no matter how violent and grotesque and virtually no one in the end will care except the honest people who wind up dead, raped, or the victims of robbery there.

Seattle says they are going to clean up The Jungle.  Yeah, right.

Here is another article saying that Seattle is FINALLY going to clean up The Jungle.  This one is dated June 27, 1994.

Here is another article from July 1998 claiming the end of The Jungle.  It has been "bulldozed."

Understand my current skepticism?


Seattle’s Homeless Jungle

In terms of homelessness, there is at least one thing most everyone agrees on. For the more than eight thousand homeless in King County there are not nearly enough shelter beds. Bill Hobson is Executive Director of the Downtown Emergency Service Center, an organization that provides services, including shelter for homeless adults. He’s on the front lines of the fight to provide shelter for the homeless.

Actuality 1: (12 secs)
Bill Hobson:The amount of shelter bed availability is still not nearly enough for 2,000 people – men, women, and children who are forced to sleep outside because they can’t access shelter.”

However, very few agree on where the more than two thousand without shelter should go. While the issue is argued, every cold winter night hundreds of homeless are turned away from shelters that have reached capacity. And hundreds of others have already resigned themselves to sleep outside. Instead of wasting their energy searching for an empty cot, they scour alleys, bridges, bushes and greenbelts to find the best protection.

Ambience 1: (40 secs) Begin AMBI #1 & 2 during the middle of previous sentence. Sounds of walking around
in the Jungle over muddy trails and through a loose chain-link fence. Cars can be heard in the distance.

Over two thousand without shelter have to go somewhere, and for nearly 80 years many found that somewhere to be a controversial place called “the Jungle”.

The Jungle is in south Seattle and bordered by I-5 and Beacon Hill. It’s 100 acres of dense ivy, muddy slopes, and hundreds of broad leaf maples at the end of their life cycle. A quick walk through and one will also find that it’s a place filled with invasive freeway noise, rats, garbage, spent condoms, and human waste.

Fade out Ambience 1 during Simon’s intro.

Simon has been homeless for 13 years. He states that despite its deplorable living conditions, the Jungle offers one feature highly valued by the homeless.

Actuality 2: (20 secs)
Simon: “Up there they can do what they want without being interfered with by other people; people in mainstream society. Up there they can practice their freedom in the truest sense. A rugged individualism you’ll find up there.”

The lack of rules and oversight makes the Jungle appealing for the homeless, but this also makes it a target for frequent sweeps by the Beacon Hill community and local government.

Craig Thompson lives in Beacon Hill and just two short blocks from the Jungle. Since 2000 he has been active in finding a way in which the homeless and his community can live harmoniously. He is keenly aware of the tough position communities like Beacon Hill are in because of the county’s lack of appropriate shelter.

Actuality 4: (20 secs)
Craig Thompson: “It’s a dilemma that we’re in right now because on one hand we cannot allow, as a city, to have our woods to be overtaken by homeless encampments that then become criminalized. But on the other hand, we don’t have a place for these folks to go.”

Tent City, a self-governing mobile encampment, is an alternative. Communities tolerate Tent City because the roughly 100 residents must obey a strict Code of Conduct, with rules including no drugs or alcohol, no fighting, no panhandling and no visiting tents of the opposite sex. It has not proven to be a perfect solution however, because, like the Jungle, the reason it appeals one group is the reason why it repels another.

Charles and Matt collect cans during the day and sleep most nights in the Jungle. They tried out Tent City and have a very specific reason why they don’t stay there anymore.

Actuality 6: (9 secs)
Adam: “Why would someone choose to live in the Jungle as opposed to Tent City?
Charles: “What it is is privacy.
Matt: “We want to be left the hell alone!”

For Charles and Matt the lawlessness of the Jungle is a catch-22. While ensuring they won’t have anyone telling them what to do it inevitably attracts dangerous people and situations.

Actuality 7: (22 secs)
Matt: “There’s bozos down there. There’s enemy people down there.
Charles: “You see guns. You see knives down there. People get beat up. I’ve seen a girl out there naked, she was prostituting, and she was about to get beat up. She was screaming for help and I had to go over there and help her. She was running around…
Matt: “You clobbered that guy.”
Charles: “Yeah, geez.”

Given Charles’ and Matt’s depiction of enemies, weapons and violence, one might think it strange that anyone would choose to live in the Jungle. All the homeless people I talked to expressed that they would spend as little time as possible there. Most people without a home, a family or shelter just want to find a place where they can rest.

Actuality 8: (17 secs)
Charles: “You got people down there who just need a place to go and sleep. When I see them they ask all kinds of questions – where can I go, where can I sleep, and stuff like that. It’s not easy down there in the weeds trying to find a place to sleep.”

SOC OUT: (2 secs)
For One World Report, I’m Adam Vaughn.

Monday, May 2, 2011

David Einhorn on Inflation

David Einhorn of Greenlight Capital is one of the best investors out there these days.  I became familiar with him after reading his book Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story about his long and bitter struggle against Allied Capital.

It was a great book and I have followed his career with strong interest since.  His financial analysis is simply brilliant and even when he's wrong you can honestly see why.  This guy is super smart and also a lot of fun.  That's David in the picture to the left playing in the World Series of Poker where he raised $659,000 for charity.  He came in 18th place, by the way.

In a recent letter from Greenlight to its investors, Einhorn gave his opinion on inflation.

He's right and I've been saying the same thing here in this blog for YEARS.  Read this blog post of mine from April 10, 2010.  Not April 2011.  April 2010, nearly thirteen months ago.  Even better, use the search bar at the top of this page and enter "inflation" and see what turns up.

Smart investors listen to even starter investors like Einhorn.  Ignore his words at your risk.