New clothes, new car, new me.

Greenie is now mine. Linda bought her car, another Toyota, and since it will be the car that we take on trips, it won't be long before it has more miles than Greenie. My car is a 1999, and yet only has 23,000 miles on it. Like the last decade didn't even happen -- you know, like the stock market.

I feel guilty about abandoning the Black Dragon to the heartless car dealership; but I keep telling myself I'm being silly. It's a car, stupid.

Last night, we went to Fred Meyer and pretty much bought an entire wardrobe for me.
I was down to my last pair of jeans, which had holes in the knees, and down to my last pair Dockers, which because I've expanded an inch in the waist had shrunk an inch in length. My Rockports shoes(5 years old?) had sprung leaks. My underwear and socks were very saintly (you know, very holy.) My nice leather coat I got for Christmas 4 years ago had a broken zipper, both of my belts were broken, and so and so on.

I shop so seldom, I tend to buy absolutely everything at the same time.

I'm going to go through my closet and be ruthless and throw away or donate just about everything I have in there.

The cars I'm justifying because they have airbags, and in the case of Linda's car, side-airbags as well. All we had were seatbelts in the old cars. I suppose a new car every 20 years of so isn't going overboard.

I'm even -- gasp, thinking of buying a big-screen T.V. I'm going to get the biggest and best out there -- that isn't custom -- and that will be it.

I'm turning into an actual consumer. I won't be able to be holier than thou, anymore. It turns out, I'm weak in the face of temptation....

Extrapolations.

Extrapolations. I was going to title this, "Simple Math", but I like the word extrapolations...

So the housing inventory "plummets" in Bend? (Bulletin, 11/12/09)

Pardon me if I doubt it.

It seems to me a little simple math could have been applied to this assertion. How many houses were coming on the market for sale before this sudden decline, and how many after?

Is it likely with the high unemployment in Bend that fewer people are needing to put their house for sale?

So what do we get? Several quotes from real estate agents, which I consider all but useless as news.

And this from a California economist, Bill Watkins -- "That's absolutely good news. A decline in housing inventory is a precondition for a recovery."

Indeed.

So have we really had a decline in housing inventory? Or is there shadow inventory waiting to come onto the market?

How many houses were taken off the market without selling?

Later on in the story, Mr. Watkins has part of the answer: "He believes banks have generally been slow to list foreclosure properties, and that may account for some of Bend's decline in inventory."

"There's some evidence banks are slowing down their foreclosure process to keep the market more orderly..."

Nice phrasing: "More orderly..."


If you don't mind, I'll apply this reasoning to my own store.

My customers often look at my selection and say, "Wow! That title must have sold really well since you only have one left!"

Or "Wow! That title must have sold really poorly since you have a dozen left!"

Not really. In the former case, the title is such a dog I only ordered 2, and I have 1 left. In the latter case, the title is such a good seller I ordered 75, and I have 12 left.

What I've learned to do is leave between 1 and 5 copies out for sale, no more. If I have more, I keep them behind the counter and refill as needed.

Because you can't beat human psychology.

For me, shopping is newsworthy.

Linda and I took a little walkabout yesterday. We didn't get very far; we checked out Minnesota Street. You'd think, having a store on the block, I would've been well acquainted with all the stores, but I'm working, working, working.

I've started giving myself all of Tuesday and half of Thursday off.

We thought we'd go buy some me some jeans and then go to a movie.

Instead, we spent most of the day negotiating for a car. Linda wanted to show me a car she wanted to buy. As we pulled in, I realized that it was dealer who I had had a dispute with years ago.

I've only purchased one used car in my life from a dealer.

When we took it in for it's first tune-up, the car died the next day. Opening the hood, I saw that someone had done a real number on the battery -- using a screwdriver on the top of the battery when it required a special tool, leaving bits of plastic everywhere and pretty much man-handling it.

We went in the next morning, and their response was "How do you know that it was us?"

I went and bought a battery from somewhere else, but the more I thought about it, the more wrong it seemed, so I went to see the owner of the lot, the man who's name is on all the signs.

"I sorry that you didn't take it to me," he said. "But now that you've bought a battery, there is nothing I can do."

Anyway, I swore I'd never go back, and here we are standing in the lot.

Linda wanted a trade-in appraisal on my 1990 Toyota. The guy was pressuring us to take a ride in the "new" car, but I put him off. "It isn't how I planned to spend my day," I said. "Besides...I'm hungry."

So we went off, had lunch at Quizno's, and then I wanted to show Linda the new Haven Home store downtown. We went in and chatted with them, looked at a nice couch, and then decided we needed to greet Joyce of the Curiosity Shop, which we did, dropped by Karen Bandy's and then visited the Home Hardware and Diane's Kitchen Complements, and Lari's Clutch, and that took up the rest of the afternoon.

We went back for the Toyota, and I consented for a test drive of the new car.

Out of curiosity, I had them check our credit scores -- and was amazed to find out how high they were; mine was 25% higher than just a few years ago, and actually about as high as it could be. Linda's was also high.

Since we had a good downpayment, I felt the car dealership would be willing to deal.

Unfortunately, I think Linda had let them know how much she wanted the car.

Anyway, to make a long story short, I felt they were jerking us around, weren't really willing to come down on price.

We ended up walking away over a 500.00 difference in price. I was a little surprised they let us walk away....

....but they probably knew Linda would be in the next morning wanting the car.

I feel a little better about the deal, because I checked up online, and decided what they offered wasn't TOO bad.

Still, if it was me, I would've walked away. Plenty of cars on the lot, you know?

Personal vs. Local vs. National

When I first started this blog, I really didn't expect anyone would read it. Me and maybe an occasional accidental hit and maybe Linda when she felt like it. Perhaps a few of my customers, who would quickly lose interest because I really don't talk about books and comics and games all that much.

But the Bulletin kind of gave me a boost early on, by doing a couple of stories. And I found I really like writing this blog, so my ambitions became a little bigger.

When I finally checked how many hits I was getting, I was slightly disappointed. And at the same time, it really way beyond what I expected at the start. I also noticed that I would tailor my posts based on popularity.

So I stopped checking. I haven't looked at my hits for a long time now.

When Linda started blogging, she immediately connected with some national type bloggers, and they reciprocated. I realized there was readership to be had by making the effort to interact with other bloggers. I realized there was readership to be had by making more amusing and entertaining graphics. There was readership to be had by being A.) More controversial. or B.) The opposite, just kind of gently amusing or gently informative.

I'm neither.

The most popular blog in Bend is HackBend, who tells us who has the best chili in town. Well, that's O.K. But not where I'm headed. Another popular blog, based on comments, is BB2, which is amusingly outrageous. Again, not where I'm headed.

What I realized after awhile was that I wasn't interested in national readership. That would be too much of a burden, too much of a distraction. I would be too self-conscious. Besides, some of the national type blogs can be rather savage. My writing and my thinking would have to be considerably more rigorous.

For instance, above I say "Me" would be the only one reading my blog. I think it would be more correct to say "I", but that sounds too awkward, and I really don't want to get hung up on it. I'm too lazy for that -- but not only that, I think casual is the tone I'm shooting for, and casual doesn't work except for those who go along with it and then it's O.K., you know, sloppy run-on sentences and all?

This blog seems to have settled into more of a local readership, or people who are interested in Central Oregon. That makes sense, since that is the subject of most of my posts.

Or since I haven't checked my hits in a long time, maybe everyone has given up reading this blog.

Doesn't matter. I was comfortable with personal blogging, and I appreciated the local blogging and I don't care about the national blogging.

I don't have any rules about it, it just seems to have settled into that range.

I kind of like it.

Don't Mean A Thing. It Means Everything.

You know all those statements that the recession is over?

Don't mean a thing.

Kindle and Nook?

Don't mean a thing.

Mass market dinosaurs arriving or leaving town?

Don't mean a thing.


Look, I'm into long term planning more than most. I'm always trying to see down the road, trying to diversify my stock. But once you get more than a year or two down the road, it -- Don't Mean A Thing.

Because, as a small business, you can't really go a year or two waiting for something to happen. You have to pay this months rent and next and the next. You have to sell something today, and tomorrow, and the next day.

Commercial real estate falling?

Don't mean a thing.

Oh, sure. There are occasional immediate intersections -- if you are negotiating a lease at this moment, the CRE thing is important in this moment. But the vast majority of businesses are already locked into a lease, and so falling rents --

Don't mean a thing.

By the time it does mean a thing, a couple of years from now, everything will have changed, and you'll be trying to guess what will happen a couple further years down the road, and it --

Don't mean a thing.

Small business can't hold it's breath waiting to see if Kindle takes off, if the economy recovers. Trying to guess what the customer is going to want in a few years?

Don't mean a thing.

I've been waiting for the Oxford Hotel to open, wondering if it will help my neighborhood. But while I've been waiting --

It Don't Mean A Thing.

What means a thing is budgeting over the next couple of months, ordering over the next couple of months, managing my cash flow over the next couple of months. Designing the store the way I like it, trying to guess what will sell, looking for ways to display it all.

Holiday sale predictions?

Don't mean a thing.

Oh, I still try to guess. I still try to plan. But, more than a year down the road? You're just flipping a coin.

So you have to design your business to survive with either a head or a tails result.

You don't try to build a house by guessing the weather. You build a house to withstand heat or cold, wet or dry, wind or fog. You live in it day to day.

I create scenarios and imagine what I will do if certain conditions prevail -- but that's all it is. Most of the time, it won't happen. Sometimes, fortuitously, it does.

As a store you bring in so many options, that you can turn on a dime and pursue what is working, you can experiment with new products, let other products go, and constantly shift with the prevailing winds.

Because trying to guess the long term future?

It don't mean a thing.


IT ALL MEANS A THING.

Nice little essay. You know, the recurring theme. The "Who Knows What Evil Lurks in the Heart of Men" theme. Wuwhoooohhaaaaahhaha......

I believe every bit of it.

And yet, I believe the opposite. Every bit of information means something, every article I read, every expert's prediction. I'm wallowing in it on a day to day basis. Locally, nationally, and within my own industry.

I'm making choices based on that information.

If I'm right, I'll survive and thrive.

If I'm wrong, I'm a goner.

It's amazing to me how many businesses DON'T think about these things, how many of them don't plan for the longrun. They are of the mind that they can't predict, so why try?

On a day to day basis, that's prudent. Why agonize?

What's happened to me is that I've come to hold both themes in mind at the same time, flipping them and turning them and giving them less or more importance.

Ultimately, both are right. I take that information, and I try to intuit the future, and try at the same time to run my business on a day to day basis without disrupting it with my guesses.

This is a really sloppy essay, but it feels right to me. Because running a business is messy, you know?

CRE creeping.

I've been trying to understand the mechanisms of Commercial Real Estate for a couple of years now, because I've been concerned that Bend is completely overbuilt. The Nov. 6th entry of Financial Armageddon is a primer for the mechanics of CRE, gathering together 6 different articles on CRE. It's worth a read....

Here are my thoughts after reading them:

If it's true that downtown Bend real estate increased in value from 1997 to 2007 by 1600%, it's almost inevitable that developers over-invested in old buildings, new buildings, and renovated buildings. Especially the latter two.

Picture one of the new downtown buildings, which as little as a couple of years ago were asking 2.00 to 3.00 a foot for retail rent. Assuming that they got their loan with those figures in mind, how much of that loan was predicated on full occupancy?

The problem is this. They might be able to get 2.50 a foot for 50% occupancy, or 1.50 a foot for 90% occupancy, but in today's market what are the odds they can 2.50 a foot for 90% occupancy?

I recently checked on a prime piece of downtown retail that was asking 1.25 a foot.

Business Weeks quotes:

"...billionaire investor Wilbur Ross: "Commercial real estate has gone from being highly liquid at sky-high prices to being extremely illiquid at distressed prices."

Anyway, I kept hearing the term "coming due" on CRE, and didn't understand how that worked. Obviously, it isn't like a fixed residential loan. I was guessing that there was some form of low payments while the building was being built and rented, and then a balloon payment as the rents started rolling in. (Or the condo sales...)

Looks like that was a pretty good assumption. From the Atlantic Business Channel, quoted in the Financial Armageddon site:

"It should be a really, really worrying statistic that 9% of all CRE loans are delinquent -- because it isn't that hard for most of these loans to make monthly payments. Commercial mortgages are generally structured differently from fixed-rate residential mortgages. Many require relatively low monthly payments for the term of the loan, with a larger balloon payment due upon the loans' maturity. So if a large portion of commercial borrowers can't even make those relatively easier monthly payments, then we'll see some far more serious problems once those balloons come due."

You have to figure that many of these commercial loans are going to come due in the next couple of years in Bend. That's why we should be worried about local banking institutions, as well, because they are most heavily invested commercial real estate:


"...this year, smaller lenders and community banks are going bust at an alarming rate because of their exposure to souring commercial real estate loans." New Jersey Business News, 11/9/09

If local banks and resorts are ALREADY having trouble, it's probably only going to get worse.

Yes, downtown Bend is filling up. But with lower rents. Which will probably make it that much harder for the New buildings to pay off.

From the San Francisco Chronicle:

"No quick recovery is in store," the report said. "2010 looks like an unavoidable bloodbath for a multitude of 'zombie' borrowers, investors and lenders," it said. "The shake-out period may extend several years as even some conservative owners with well-underwritten loans from the early 2000s see their equity destroyed."


The local banks CRE exposure is so bad, the Fed's have relaxed some of the rules, allowing for a Pretend and Extend strategy. But from what I'm reading, this will only delay the inevitable.

My earlier researches into CRE mostly talked about how most of the bigger lending institutions were effectively frozen a couple of years ago, putting an end to most new commercial developments.

Only now are the consequences of the earlier over-building becoming as equally clear to me.

Mansion on the Hill.

"Hey, Don! I noticed you aren't living on the Mansion on the Hill anymore."

"Too much upkeep, Poindexter. I didn't want to be tethered to it any more. Besides, it kept getting hit by golf balls, and I kept having to see people in plaid shirts and white shoes walking by. It was hard on the eyes."

"But I thought you owned the golf course."

"I never wanted to actually OWN a golf course. Tell you a secret. They don't make money....you build them so you can sell houses."

"So you're selling houses?"

"Well, not really. But I got rid of the golf course..."

"You built the thing that doesn't make money first?"

"Of course! How else am I to make money?"

"Ummmmm.....where are you living now?"

"Glad you asked, Poindexter. At first, I was going to build on one of the lots. But then my partners wanted them, so I gave them up. Just as well. I mean it really hurt at first, but then I started liking it. I wasn't happy, but then I was happy...."

"Maybe you can stay in the overnight lodgings, Don. Be the caretaker."

"Oh, we gave those up. We didn't really want to build them anyway, and then the county decided that since our guarantee wasn't worth anything, they would lower the guaranteed money."

"The money you deposited to cover the possibility of failure was lowered because you were failing?"

"Well, I wouldn't quite put it that way, Poindexter. Besides, I can get an extension every 5 years ago, and the deposit drops in half.

"Doesn't matter anyway, I sold that hotel thingy to my new partners. Lovely folk. They specialized in taking over things I don't want anymore."

"So where are you living?"

"I found a cave in the middle of the desert...er, I mean, my property. I mean...their property...but I quite like it. Some of the weeds around the mouth of the cave are quite pretty. No upkeep, the payments are reasonable, and except for the occasion golf balls falling on my head, it's nice and cosy."

"Well, I'm happy for you, Don. Keep up the good work."