February 11, 2008
Perspective on Real Estate
Business Week cover: “Credit on the Edge. the hangover will be a whopper”. You can bet on it. The worse is coming and it will be bad just as I advised my clients many months ago. There is no one as blind as he who refuses to open his eyes!
There is a wonderful column in The New Yorker (Feb 4), The Talk of the Town about “The Minsky Moment”. This is about a maverick, Hyman P. Minsky, among whose words came these: "Bankers, traders and other financers (from time to time) play the role of arsonists, setting the entire economy ablaze”.
There are five phases in Minskey’s model of the credit cycle: displacement, boom, euphoria, profit taking and panic. A boom leads to euphoria as banks extend credit to dubious borrowers. Then at the top of the markets, some smart traders begin to cash in their profits as American households are growing poorer at the rate of two trillion dollars a year, as consumers begin to stop consuming!
Job growth is backward, like everything else in this administration! Bush is the first President since WWII to preside over an economy where government employment grew faster than the private sector!
The lame-duck budget that proves what Bush’s imperatives are and that they are not taking care of the people who need it the most. Defense (a lot of it wasted) doesn’t include funding for the wars at hand. This man hides so much truth from his countryman, you wonder about the values he may truly have. He orders men into war over and over again, takes poor care of those who come home (finally) with grave wounds or in caskets. He has misplaced priorities and has the nerve to announce in his last major speech, “Yet the state of our union has never been stronger”!!!! The Constitution reveals its fundamental weakness when it makes this man Commander-in-Chief, with no experience and bad judgment to boot. Most of the Bush touted savings would come from programs intended to protect the country’s elderly, poor, and the disabled!
Credit card companies begin to feel the pain of delinquent customers…couldn’t happen to a better gang of cutthroats!
Bush, as he becomes even more divisive and enjoys how spoiled his backers allow him to be, presses for GOP unity, as his mantra continues to be the spreading of fear if the other party wins any election. As I look at this smirk and his face and listen to his words, I realize again and again, that he means so little of what he claims. The press emphasizes the Democrats’ competition with each other, as it also criticizes McCain for being “temperamental” (but so devoted to Bush’s failed programs).
Studies call Biofuels a Greenhouse threat. What to believe? First they tell us that cutting back on sugars creates dangers for Diabetics, and now that almost all biofuels used today cause more greenhouse gas emissions when the costs of producing these green fuels are taken into account!
THE CREDIT MARKETS ARE VERY TIGHT AND GROWING TIGHTER!
srg
