A Lake Shastina Milestone, sort of

For the first time since we began real estate here I saw a home listed for under $100,000 (above, on Cottontail Dr.). As you might suspect it needs work and is dated. It is also I think, an REO or real estate owned. That is, the bank owns it because the owner gave it back to them under duress.

There are a rising number of these it seems. As many Siskiyou County natives say, it takes months for some things to reach us up here. Like the foreclosure waves rippling through the bay area for example. This week we met with a Redding broker looking for help with the REO's and foreclosures here. He has so many, and spread so far out, that he doesn't have time to drive up and show or take pictures.

Prices per square foot are below $100 more commonly, too. It used to be that $100 per foot was the builder's cost and in olden times homes were selling at $125 or even $145, where the builder could make a decent profit. Of course older homes should be less per foot than brand new ones; they have wear and tear, often need updating, and lack modern amenities.

The home above is $63 per square foot and owned by Countrywide, one of the first casualties of the ARM loan collapse. The bank is trying to get back what they loaned the owner and it's possible they may have to take a loss on that loan if they can't move the home for the actual balance.

I'm not trying to alarm anyone however. We have all seen home values falling and in extreme cases, owners walking away from their places. Buyers do seem scarce and wary; what if I buy and prices go even lower? Some who have been in the business through previous cycles feel that we are not yet at the turning point where demand has risen close enough to supply for prices to stabilize. Maybe that will happen this year and the certainty about it all is that it WILL happen. Cycles by definition repeat themselves and the supply-demand balance will return sooner than later we feel. Our phones are ringing more lately it seems and we are hopeful.

Whee, The People

I'm using the title to this article, "Whee The People" the same way Herb Caen did regularly in his column for the San Francisco Chronicle. Herb was fond of poking fun at people and lampooning our follies. He laughed the most at the antics and foibles of socialites and politicos in the Bay Area and became surprisingly famous and in great demand in their celebrity social circles.

My reason for using his phrase is much the same; I relate to his happy cynicism . . . the Big Three bailout for example. The automakers, their unions, their suppliers, and ultimately we consumers created this crisis ourselves, as a group. Why try to blame General Motors when we drivers were buying the Hummers and the Suburbans? Big was good in our consumer lingo. Remember the joke "you don't need to look for a parking space when you own a Humvee. You make your own" accompanied by the video clip of a Hummer driving over the top of adjacent cars? It appealed to those very same impulses that marketing companies use today namely, owning more and bigger things than your neighbor means you are a more important person.

And the newscasts of serious-faced Congress people looking down at the automakers in the hearings. Do you suspect that maybe some of them were driven to those meetings in 8 mpg limos? And then tell me that "we" (meaning the government but really us, the voters) are going to do a better job. A government car czar to decide which cars to build, how much to pay the workers, etc. etc.??? I always thought that was up to the entrepeur, the business owner......

So if there is need for regulation and discipline shouldn't we look to ourselves first instead of trying to blame somebody else? After all, we vote people into and out of our government, people whom we mean to represent our needs and interests. We have a representative democracy in this country (although some, like the Illinois governor treat it more like a business) and so is our market economy. Nobody is making us buy those Humvees. No one forces us to watch NASCAR races, and muscle cars have been hot sellers ever since cars were invented.

I guess "whee" gets the brass ring. We could waste a lot of time and money and engergy pointing fingers when really all that is needed is for us to just look in the mirror and take a little responsibility. Self-discipline makes a lot more sense than playing the blame game. Taking a longer-range view of our consumer-driven mentality would go a long way toward avoiding these bloated corporations and bloated bureaucracies.

My two cents.

Can The Big 3 Survive a Bailout?

(from CNN.com Dec. 3)
Jack R. Nerad is Executive Editorial Director for Kelley Blue Book and kbb.com, and co-host of "America on the Road," heard on more than 300 radio stations. In the 1980s he served as Editor of Motor Trend magazine. Nerad is the author of "The Complete Idiot's Guide to Buying or Leasing a Car," "Chevrolet Corvette: The Power & the Glory," and his latest book, "The Complete Idiot's Guide to Hybrid and Alternative Fuel Vehicles," published recently by Alpha Books.

IRVINE, California (CNN) -- The Big Three automakers yesterday presented impressive plans to Congress that justified their need for bridge loans to help them regain their competitiveness in light of a vehicle market that has crashed into a wall.

Such loans won't simply help support a vital portion of American industry, they will help prevent a much greater potential economic disaster. The commercial and strategic importance of the auto sector simply cannot be overestimated.

That being said, we are reminded of the old phrase, "Watch what you wish for; you might get it." Because as we watched the chief executives of the Detroit automakers make their second trek to Washington to seek loans from the federal government that could stave off disaster, we have to ask the unexpected question, can the Big Three survive a federal bailout?

An undiscussed but critical part of whether government intervention will succeed is determining whether the inevitable strings attached to the federal funds will bind the Big Three into untenable positions like Gulliver in Lilliput.

Loan assistance from the federal government that tries to control the companies too tightly, that forces them to bring to market vehicles that the public may not want, might simply assure that they fail somewhat later rather than sooner. And in that scenario the American taxpayer and consumer is the biggest loser.

That question must be asked because the historical dynamic between the federal government and the domestic auto industry is a relationship that has been, at best, rocky and often openly antagonistic.

Jump back to 1975 and the institution of the Corporate Average Fuel Economy requirements designed to limit our reliance on foreign oil in the wake of the Arab oil embargo.

Instead of simply limiting foreign imports or adding federal taxes to fuel costs to give consumers an incentive to buy more fuel-efficient vehicles, the government instituted byzantine regulations that required American manufacturers to build (or at least market) fuel-efficient cars just so they could continue selling the cars and trucks they were already known for.

Since the United States had always been a country of "cheap gas," (a tradition that continues, by the way) American car companies were not geared up to build small, fuel-efficient cars, but foreign manufacturers were. The result was that Americans were almost forcibly exposed to import vehicles, and many American consumers liked what they found.

The CAFÉ regulations accompanied by inexpensive gasoline were analogous to plopping consumers into the middle of a giant candy store and then forcing the candy manufacturers to somehow persuade a percentage of consumers to buy broccoli instead.

When all was said and done, the CAFÉ rules ended up giving a strong leg up to the Big Three's import competitors, putting their market share on an upward curve that hasn't ceased climbing.

Of course, having helped push American consumers into import cars, albeit inadvertently, the federal government then tried to reverse the trend through new intervention.

At the urging of the U.S. government, the Japanese manufacturers adopted "voluntary" restraints on their exports of vehicles to the U.S. beginning in 1981. The goal was to give U.S. companies "breathing room" so they could catch up to the Japanese in producing small, fuel-efficient vehicles. (Sound familiar?)

Again, this might have seemed a worthy plan at the time, but it had several unintended consequences that ended up doing much more harm to the domestic manufacturers than good. In the short term it limited supply of popular Japanese-built vehicles, which resulted in windfall profits for the dealers of the top imports, helping those brands establish very strong dealer networks.

It influenced the import manufacturers to move up-market both by building more expensive vehicles and by establishing luxury brands like Acura, Lexus and Infiniti. And it gave strong impetus for the import manufacturers to build plants here in the United States.

Today a large percentage of the "import brand" share of the U.S. market -- more than 50 percent of the total light-vehicles sold here -- are vehicles built by Americans in foreign-managed factories on U.S. soil. Ironically, to counteract this, the Big Three automakers have increasingly moved production from the U.S. to lower-labor-cost countries like Mexico.

So what are the implications of this history lesson? The first takeaway is that a portion of the woes the domestic Big Three are suffering today are the result of current and past federal government policies, so it seems fair that they be accorded government assistance now in time of dire need.

But equally important, while the Big Three automakers might well be accused of not correctly gauging the needs and desires of the American buying public, one group that is demonstrably much worse in that endeavor is Congress. If the U.S. government were a car company, it would not only be deep in the red, but also have miserable customer satisfaction scores.

So a second takeaway is that doing the wrong thing -- and by the wrong thing we mean attaching assistance to a web of politically motivated strings to federal loans -- will only lead to a bigger catastrophe down the road.

If Congress acts to aid the ailing Big Three car manufacturers -- and I strongly suggest it should -- then it is equally important that the domestic carmakers be allowed the latitude to conduct their business based on the dictates of the American consumer, not the politicians.

The opinions expressed in this commentary are solely those of Jack Nerad.

HeroRATS

(adapted from an article in the October National Geographic)

Some people cringe when they see a rat but Bart Weetjens smiles. A Belgian product designer, Weetjens devised a way for these often reviled rodents to help solve a global problem: how to locate land mines, some 60 million of which are scattered in 69 countries.

Dogs are often deployed to sniff them out, "but I knew rats were easier to train," says Weetjens, who bred them as a boy. Rats are also light, so they don't detonate the minesthey find; they stay healthy in tropical areas too, where many of the explosives are buried; and they're cheap to breed and raise.

In the late 1990's Weetjens chose the African giant pouched rat, with its very sensitive nose, for Pavlovian training: if the rats scratched the ground when they sniffed TNT, they got a reward.

More than 30 trained sniffer rats, aka HeroRATS, have started sweeping minefields in Mozambique, where they've cleared almost a quarter square mile. Weetjens also trains rats to screen human saliva for tuberculosis and is mulling new missions, such as finding earthquake victims in rubble. Lives saved, health improved, mines defused__ nothing to cringe about here.

Too Good for Too Long ?

It's beginning to look like it's time to tighten our belts. Last night on the news I heard a Wall Street pundit use the "P" word for the first time __ panic. As we know when fear sets in emotions, not rational thought drives the market and everything else. And as the investment expert pointed out, it's much like a stampeding herd of cattle, it will only stop when it runs out of its fear.

So like many, we are cutting expenses and watching our budget. Although we are Realtors we just began managing rental properties here for example, not only because sales are few but because sellers are getting upset at not getting offers and are flipping their homes into rental to get some cash flow going. We are getting lots of inquiries and the extra income doesn't hurt, either.

Plus we bought one of those clothes lines that fold out into an umbrella shape. They are outdoor gadgets but our plan is to use the umbrella base from the patio set and put this guy in a guest bedroom. Since we have central heat, we'll leave the door open while the laundry dries, adding much needed humidity to the dry air that we all have in winter at the same time.

But my larger point here is wondering if our society has had too much of the good life lately, and I'm thinking beyond the now-infamous easy home loan snakepit. It has also been easy to buy a new car, too. And it seems like an awful lot of people dragging an awful lot of consumable goods from Costco and Target, too. Big screen TV's, easy chairs, and of course an endless stream of laptops, I-pods, and other electronic gadgets.

Things. Stuff. We fill up our garages and mini-storage units because we just can't seem to get enough. My college bag was sociology and I'm coming to think we've been very well trained. Indeed, some of the brightest minds are in the marketing industry, from political strategists to people trying to sell us soap.

I once went to a class on staging a home for example where we were going to learn how to "stage" or fluff up an otherwise dreary home to make it look more appealing to buyers. What an eye-opener in marketing. The lady was an ex-marketing division head from Colgate-Palmolive and she started out with this intriguing question:

"As product development people we are trained to target a certain type of consumer and design a product that group needs or wants. The chosen group was Realtors, so what product do you think our (basically) soap company developed that would attract this group?"

I was the only one who guessed right, and I strutted my way through the rest of the course because I thought it was Febreeze. Odor is one of the worst turn-offs to buyers and I figured a neutralizer like Febreeze would be of interest to people who staged homes for sale.

But the point is not my lucky guess it's that these people are that far out ahead of us in our thinking and desires. They virtually manipulate our buying and spending habits. It's sort of like our particular strain of capitalism has been SO successful that it is in danger of burning itself up.

Perhaps a little consumer restraint might help here. We are a one-car family right now and the only reason we'd buy another one (and it will be a used car this time) is when we each land second jobs to help get through this crunch. I bet we're not the only ones, either.

Doggie Parks

The pictures says it all . . . "When are we going for a walk???" . . . and walks are nice. Necessary even. But there is another element that many communities are turning to. Doggie parks.

These are fenced areas where people bring their dogs to socialize. This is important because left alone or on run-lines dogs get mean. I've seen my share of penned and chained dogs and so have you.

Dogs are social, just like we are, and keeping one on a chain all day makes them funny. Sometimes mean and defensive. Which may or may not have anything to do with why doggie parks came along.

They don't have to be large and the only "cost" is the fence. Typically volunteers police them and owners bring bags for the 'gifts' their canines leave behind.

Now here's the thing: Lake Shastina has a bunch of areas that are dedicated to "parks". They are at present undeveloped. Why not make a few of them doggie parks where people can socialize while their dogs do the same?

Any support for this?????