Kenmore Undressed

Mr. Freeze, The Financial Curmedgeon - Pointing His Big Fat Finger at the Wolves

Mr. Freeze and his minions have never believed that letting wolves tend the hen house was a good idea. Unfortunately, our financial system has been controlled by individuals who are only concerned with profit. There are a lot of  capitalists who have been preaching the virtues of the “unfettered” free market for decades. Here is the constant refrain: “If we would just get out of the way and let the free market operate without the intervention of regulation, then business will prosper and everyone benefits.” This is an expression of the Ronald Reagan “trickle down” baloney that so many Americans believe in. Mr. Freeze knows that in America if something is said over and over again, often enough, then it becomes true. Well, today Mr. Freeze takes great pleasure in pointing his big fat figure at all of the libertarian/conservative think tanks, investment “experts,” day traders, financial publications and CEO’s who have manufactured this get rich easy propaganda. It is a sort of money-idolatry of biblical proportions. The tragic thing is that this MYTH is now causing domestic and international markets to self-destruct. As a public service, Mr. Freeze has provided you, dear reader, with two important media clips: a video from 60 Minutes broadcast last night, and one audio article from National Public Radio. I hope you have a few moments to reflect on what these pieces reveal. Click on the picture below to watch the 60 Minutes piece:

Please click on the NPR piece below to hear one of the most articulate observers of the current market break-down, John C. Bogle, Founder of the Vanguard Mutual Funds.

The pieces above confirm one of Mr. Freeze’s economic formulas: capitalism + greed - governmental regulation = disaster. There must be a well-considered balance between government and business. One cannot exist successfully without the other. Mr. Freeze is tired of hearing about the virtues of the free market system. Mr. Freeze lives in the REAL WORLD where people go bankrupt, where families fall apart, where jobs and careers are outsourced,  and where ruinous things happen to people because a wealthy, elite financial class has been allowed to “make a profit” no matter the cost.  Mr. Freeze hopes you’re all doing OK. Really.

Some Fun Real Estate “ART”

Sometimes art captures perfectly the times we live in. I thought it would be fun to post these wonderful bronze characters given the fact that money and housing have been in the news 24 hours a day. They are called: The Marriage of Money and Real Estate, installed just off Roosevelt Island (NYC) on December 1, 2005,  sculptural installations by Tom Otterness.

As a Realtor working in a fairly tough market, it’s nice to know that someone has a sense of humor about real estate.

Pictures by Wally Gobetz

A $700,000,000,000 Bailout, Golden Parachutes and The Invisible Hand

It’s hard to wrap my mind around $700 BILLION dollars. Look at all those zeros! What’s even more difficult is to ponder all the unintended consequences of using almost $1 Trillion tax-payer dollars to help Wall Street out of it’s troubles. One interesting byproduct of the bailout is the “shocking” revelation regarding executive golden parachutes. Since the 1980’s, executive compensation has been increasing at ridiculous rates. I think most Americans were convinced by the “investment class” that they actually deserved the exorbitant severance packages they received for running large corporations. My, oh my, Americans should have been paying closer attention. Allow me to illustrate my point with the following story:

I had a conversation with a good friend last week. He’s been a Realtor for close to twenty (20) years. He told me that he had to file for bankruptcy recently. He said his home had gone into foreclosure and that his “back was against the wall.” As is the case with so many real estate agents today, business has withered to almost nothing. The affects of the mortgage crisis have come down hard on our industry. And you know, my friend isn’t one of those speculator-type agents who purchased a number of homes as “investments” in the hope of becoming rich quick. He’s a hard-working professional with lots of experience and expertise. Right now he’s having a hard time finding a new job. His story is emblematic of the current state of our economy and it would seem almost cliche were it not for the news that came out a couple of days later: Washington Mutual Bank was seized by Federal Regulators. It was the largest bank failure in American History.

It’s bad enough that WAMU failed. It’s downright absurd that Alan H. Fishman was the new chief executive officer of the company for a total of 17 days when he bailed-out with a golden parachute worth close to $20 million dollars. Looked at another way, Mr. Fishman was paid $50,000 per hour (assuming he worked 24 hours a day whilst on the job). He didn’t even have to get results. It seems he just had to show up. Let’s be honest, we all have a picture in our heads about this type of person:

This morning Congress announced a Draft Proposal on the Financial Rescue Legislation which contains language regarding the limitation of CEO compensation:

• Limits on excessive compensation for CEOs and executives

– New restrictions on CEO and executive compensation for participating companies:

– No multi-million dollar golden parachutes

– Limits CEO compensation that encourages unnecessary risk-taking

– Recovers bonuses paid based on promised gains that later turn out to be false or inaccurate

One can only hope that this portion of the legislation survives the legislative process. Already I can hear the corporate apologists whining and complaining that running a company is a tough job. Pardon me for being so blunt, but I’m sick and tired of hearing how tough it is on the wealthy and privileged . I’m particularly tired of the notion that it takes some sort of Ubermensch to run a corporation.

My friend, who has worked hard for many years, is not part of any bailout. He represents millions of other Americans who have worked hard and played by the rules only to discover that Adam Smith’s “invisible hand” (the wonders of an unfettered market place)  is propaganda. It’s a philosophy that has been repeated over often enough that we actually believed it. I can only hope that this bailout will actually help the current market situation. Perhaps we will be better off in several years, but for now let’s all make a promise to ourselves: let’s be more vigilant with those in Wall Street who would have us believe they really care about us.

Pictures: capitalist  pig, http://flickr.com/photos/urbanblitz/, Washington Mutual Tower,  http://flickr.com/photos/cloganese/, Bailout http://flickr.com/photos/emdot/2880848408/

Autumn - My Favorite Season

Autumn has always been my favorite season and the Seattle area is one of the most beautiful places in America when the leaves begin to turn. We are a few weeks away from the deep, brilliant colors……but I simply can’t wait…….enjoy these stunning pictures from around the area:

Hi, Meet Crybaby (American) Capitalism

Have you ever lost your job and had a hard time paying your credit card bills, or got behind on your mortgage, or had medical bills or your spouse left you with a mountain of debt? Have you ever listened to people talk about “those folks” who should take personal responsibility for paying their debts! If so, then you need to meet Crybaby Capitalism. He has a solution to your financial problems. See if this works for you next time you need help:

Hi, I’m Crybaby Capitalism. You’ve been hearing a lot about me over the last several months. Things have been going really well for me the last 30 years. I’ve been able to make a LOT of money by wrapping up debt in security instruments (that no one, not even the smartest analysts can figure out) and selling them to greedy investors. After all, everyone knows that GREED IS GOOD. Wasn’t that the famous line in the film “Wall Street?” It didn’t matter that the paper we were pushing wasn’t worth as much as we said it was. It didn’t matter that what we were doing was borderline fraud. After all, no one was really looking that carefully, especially Uncle Sam, who has been demasculated by years of deregulatory legislation by both political parties.

Now that a lot of my friends: Banks, Security Companies and large corporations have gone bankrupt, they aren’t happy!!! They don’t think it’s FAIR that they lost money. After all, they were all practicing FREE MARKET ECONOMICS. Milton Friedman said that no regulation is a good thing. Keep the bureaucrats out of business. It’s all about supply and demand. It’s all about efficiency. It’s all about a rising tide lifting all boats. It’s all about creating wealth that will TRICKLE DOWN from the wealthy to the rest of you poor dumb losers.

But look, how can you ignore my friends:

This is AIG.

This is Lehman Brothers.

This is my other friend WALL STREET.

BUT WAIT, we found a solution to losing so much money. We just cried loudly enough that THE GOVERNMENT is bailing us out. It was so nice for President Bush to announce today that the taxpayers will be contributing billions and billions of dollars to help us out. We promise to pay you back!!! Really! 

No More Cheese! It’s Time for the Real Estate Industry to Grow Up

Spencer Johnson’s wonderful little book entitled “Who Moved My Cheese” should be required reading for EVERYONE in the Real Estate Business. This includes, but is not limited to: real estate agents, the brokers, the sellers, the buyers, the lenders, the title companies, the appraisers…………………..well, you get the picture. Johnson’s fable is a cautionary tale of what happens when we become complacent; when we quit paying attention to what’s going on around us. Most importantly, it warns us against self deception. Our industry has been plagued with a lack of candor and honesty for some time now. I my town, Kenmore, WA there has been a huge inventory of homes for sale and it’s only now, after many months, that sellers have begun to lower asking prices. This should have happened sooner.

As I write this, the real estate industry is being transformed. You can hear the cries and complaints of the agents and lenders leaving the business; you can see long-held beliefs regarding commissions and agency relationships disintegrating. The pieces are being examined carefully. Owners no longer have the luxury of spending unearned equity to sell their homes like chips at the card table. On the other hand, buyers are being forced to prove their financial worthiness to purchase a home. Aubrey Cohen’ssobering article in the Seattle-PI illustrates the current state of affairs. Ironically, the changes are forcing us to be more honest with our clients and ourselves. Time for us to grow up.

Mr. Freeze, The Financial Curmedgeon - Why Did I Come Back to the United States?

I, Mr. Freeze was on vacation in August.  Mr. Freeze was visiting a very famous Eurpoean country (whose name shall remain anonymous to protect the innocent) where the people spend a lot of time eating really good food and drinking coffee; where the cities have places for people to hang out without being run down by cars; where they have Art. He didn’t even need a car to get around because, good golly, they actually have trains, light rail, trams, subways and buses (transportation that the public uses!).   

Mr. Freeze needed a break from real estate. My wife (Mrs. Freeze is one tough gal) put me on a “MEDIA FAST.” She knows Mr. Freeze is a media junky. Mr. Freeze is usually very grumpy about things because he spends a lot of time thinking about all the problems in the U.S. “You will not listen to the news……..especially news in English!” THE RESULT: Mr. Freeze was in a happy place for five weeks.

But then…………………………………………………………….MR. FREEZE CAME BACK HOME and Mr. Freeze was shocked: Hurricane Ike was having his way with Texas; our financial institutions continue to go bankrupt; Fannie Mae and Freddie Mac have a hang-over; the local and national real estate markets have fallen flat on their (collective) face; the national election continues to drag on and on; and the most difficult thing for Mr. Freeze to deal with is the fact that one cannot escape from the media in this country. It’s part of the fabric of American Life and it sucks. Blah, blah, blah……..The final straw was news of Lehman Brothers declaring bankruptcy. Is it any wonder that Americans don’t trust their institutions?

Mr. Freeze is taking a deep breath right now and is heading home to cook a nice dinner for Mrs. Freeze. He learned a thing or two about cooking pasta in that Eurpoean country! Yummy!

There’s More to Italy than Tuscany: Varese in Lombardy

As we drove through the lush, green roads north of Milan our hosts, Fabio Zerini and his wife Laura, pointed out that “this definitely isn’t Toscana!” In fact, our last two days in Italy were spent in a region north of Milan better know as the Province of Varese in Lombardy. We were fortunate to meet Fabio, Laura and a number of other “Lombards” in Sardegna. They are good friends of my cousins in Lucca. When they found out that we were spending our last two days close to their home in a town called Vergiate, they insisted on giving us a tour of the area. I’ve got to say: no, this region is definitely not Tuscany. It’s more modern and spread out. It lacks the cypress trees, vineyards and old rustico homes; nevertheless, we were charmed by the warmth of our hosts and impressed by this unique part of Italy. As always there were some wonderful surprises along the way:

Varese is truly beautiful. Modern and stylish, it is a unique blend of the old and the new. We were there on a Saturday evening and I was amazed at the number of younger people who filled the streets and plazas.

This building dating back to the 1500’s is now home to a number of small shops. This was a stunning example of how Italy blends the old and the new.

The city is full of deliciously stylish clothing stores, cafes and beautiful architecture. We were amazed at how beautiful Varese is. It is also close to a number of beautiful lakes (Lake Cuomo among them). Although we didn’t have time to explore more of the lakes, I did manage to take a couple of pictures of Lake Comabbio:

I did want to say a few words about Vergiate, where we spent our last two days in Italy. First, there’s not much to say. It’s a very small town with some small shops and restaurants. If you drove through it, you’d hardly notice it exists……………..but here’s why Italy is so compelling and wonderful: there’s always a surprise lurking out there to charm and warm your heart. On Sunday we got up rather late after spending the evening with Fabio, Laura and friends. We were hoping to catch a train over to Lake Maggiore and do more sightseeing. Unfortunately, we missed our train and had to stay in Vergiate. At first this did not seem promising but we decided to go for a walk and investigate the town. As usual we were pleasantly surprised. The town has a beautiful little church:

But, the best adventure was in a local restaurant. We had seen this restaurant when we first arrived and thought it looked good. Inside the restaurant was small. There was one waitress and a couple of locals having lunch. We were  hungry so we ordered risotto with mushrooms, grilled vegetables and some wine. Nothing special………………….until the owner brought out the risotto. Check this out:

She served the risotto from the middle of this huge round of cheese! By the way, the risotto was delicious. It just goes to show you that no matter how ordinary things seem to be in Italy, there’s always something special around the next bend.

Forte dei Marmi, Chianti, Santa Margherita and Torino

Our experiences in Italy, over the last two weeks, have been incredible. We are truly fortunate that my families are so generous and don’t mind that we butcher the Italian language. They also love to travel in Italy as much as we do! My cousins in Lucca wanted to spend a couple of days with us in Tuscany, so last weekend we visited two very different sides of the region: the ritzy beach town of Forte dei Marmi (north of Viareggio another beach town for the wealthy) and the towns of Montalcino and Montepulciano in Chianti (both of which are famous for their wines).

Lots of Italians who live inland find it easy to enjoy the beaches of Viareggio and Forte dei Marmi. It’s easy to hop on a train from Florence, Lucca or Pisa and hit the ocean.

Those who aren’t on the beach spend time enjoying my wife’s favorite pastime: shopping! Chianti is a different universe. Montalcino is know for its distinctive Brunello wine. Montepulciano was a pleasant surprise. We were fortunate to see a traditional Palio there. The pictures speak for themselves:

Alas, our time in Tuscany came to an end. It was really hard saying goodbye to my family with whom we had grown very close during this trip. We were able to explore the area around Lucca more deeply and we were able to get a real sense of life there. We also attempted to find the birthplace of my grandfather, Tranquillo Lupori, without success. It seems that his father moved around a lot and he is more elusive than we anticipated. As a result, we have a good excuse to return to Italy. Our next stop was in the beautiful town of Santa Magheritain Liguria. Just north of the famous Cinque Terra, this lovely seaside gem was romantic, tranquil and friendly:

Virginia and I were impressed with Santa Margherita. In just one day we managed to wander its lovely waterfront, eat in some good restaurants (the seafood was excellent) and visit the church of San Giacomo Corte. Its interior is lush and the grounds around it are spectacular. Right before we caught the train to Torino, we met a nice couple from Richland, WA (imagine that!) who were also impressed with Santa Margherita.

Now for something completely different: Torino 

 I’ve been waiting to write this section for a long time. Not long ago, I met an Italian gentleman in Seattle who is originally from Torino. When I mentioned that Torino was a beautiful city, he just looked a me as if I was impaired. Yes, Torino has a bad reputation as an industrial zone. But things have changed over the last decade and Torino has emerged as a wonderful city. Ironically, Torino must be one of the most un-visited places in Italy. No, it’s not Tuscany or Umbria or Sicily, yet, to me it’s a hidden treasure worth visiting. With a population of around one million people, it does have its challenges for visitors. Nevertheless, if one plans ahead and does a little research, Torino offers treasures galore:

Torino is a city of large, wide avenues and city squares (no cars thank you very much) that most Americans can’t fathom. It’s a city of palaces, churches and FIAT as well as chic clothing shops, elegant bars and wonderful pastry shops. It’s bigger than life and overflowing with life as well. I’m amazed at how well Torino handles its huge population and still manages to provide huge public spaces where Italians live together and share a vibrant heritage. It’s something I feel American cities lack due to our love affair with the automobile. Even though Torino lacks the laid-back, country feeling of Tuscany or Puglia, it is an important, elegant place. I love Torino!

Florence and Italian Bake-Offs:There’s Art and then there’s ART

Yesterday my wife and I did a day-trip to Florence which is about one hour by train from my cousin’s house. We visited Florence two years ago in November and, frankly, the only thing that impressed us at that time were the museums. We found the Florentines and the food a bit cold. Everything was different yesterday. We had a wonderful time exploring the city away from the larger museums and tourist areas. A highlight was the Basilica of San Miniato Al Monte which is an extremely old church. Also, we managed to get some very nice shots of Florence. The weather was perfect:

BUT, just when we thought things couldn’t be better, my family threw us in the car and we went to a genuine Italian bake-off. Now there’s art and then, there’s art. Check these delicious little things out:

The photo above shows various treats that children made. Yummy! By the end of yesterday we got to experience two of the greatest forms of art in the world: Florence and Cake. What could be better?