February 25, 2008
Perspective on Real Estate
Have you ever driven in sudden fog? As you use your senses to try to see better, you realize you cannot. Our economy, led by the housing sector’s murk, is like peering into a fog bank, which time isn’t making it any clearer. The more columns I read, the deeper the fog and pretentiousness of too many experts.
This particular election seems to emphasize the fundamental conflict between former office holders, who have become lobbyists.
What McCain is going through shows the conflict-catch of trying to be clean, which is different from trying to remain ethical! And does the electorate give a damned as they go through their incredibly fickle love/hates with the candidates The young have had no experience but are gifted with innocence, which is no guarantee of any insight!
The escalation of criminal activities and kidnappings, in Mexico, will play havoc with the wealthy Mexicans. They are searching for places to put their money. It is similar, for different reasons, to the escape money Mexicans searched for when Communism threatened the “stability” of their country.
I am serving some south of the border, in looking for land that has been reduced in price, especially by publicly owned builders, whose investment bankers insist on getting rid of huge overstocks of entitled lots, which would take many years to build out, even during “normal” times.
Cover Stories: Business Week (March 3): "Consumer Vigilantes" (fighting for truth and justice—always a noble cause)
Politics is like bacteria, which are always hanging around something to pollute. History informs us that the pollution happens throughout time itself. Ethics are an accidental happening in politics; media-though seemingly hunting for wrong-doing, is undependable and unbalanced in uncovering seeming wrongdoing. I have never witnessed an election where media has been so unfair in its coverage, in its subjectivity about the candidates, especially in its coverage of Clinton versus its coverage of Obama, who has indeed had a free-ride that has morphed Hillary into second place after being far ahead.
There is nothing so unethical and unfair as insurance companies who collect tons of money, but cheat so many payers, when it is time for them to payoff, what the client has been paying for!
As Castro slips out of sight, it should change the amount and the velocity of investments in Cuban real estate. It will be the “super bowl” of real estate action! It will be interesting to note how much ex-Cubans living in Florida will invest.
Japan’s experience in the past two decades shows the flaws that can infect any economy. It was thought that Japan’s economy was recession proof—which is always more illusion than fact. When I was very active in Japan, the coming of a recession was clear to me. Why? I thought there was an attitude problem that made them believe that they were smarter than Americans about US real estate values. They weren’t!
”Rescues weighed as homeowners wallow in debt”. Mortgages exceed value of homes for 10.3% of nation’s owners!”
That ‘70s look: stagflation. The quick actions of the FED will heighten future inflation as we are caught on the dilemma of trying to clean up the housing crisis while rescuing the lenders who contributed so to it!
There was great conflict of interest in banks that were involved in owning and funding money for Japanese and US real estate. Once the head of a bank made a mistake, there was no one around to correct the boss’s error. There was no Japanese FED to patrol the marketplace looking for conflicts. The lesson is that arrogance is a dangerous infection of any marketplace. I made a lot of friends in Japan, based on trying to tell the truth about my findings, got a lot of favorable press in Japan when I made predictions about the future of their markets as well as what would happen to the Hong Kong market when the Chinese took over from the British.
I have warned my readers, for many years, about the risks of entering foreign markets because of the hidden cultural impediments. Americans suffer from over-certainty of their knowledge. This is not due to suffering doubts about drawing correct conclusions from the dearth of their experience. It is quite the opposite. Arrogance has no upper limit.
We could learn so much from reviewing how we were able to overcome the Great Depression. It wasn’t quick or easy and it needed a war to assist the overcoming. Well, we have a war with little nobility to it. The giving back of billions, that should have gone to pay for the enormity of these costs, was sacrificed to give the wealthy tax relief. Our ridiculous absence of intelligence and leadership have sucked any surplus of monies or manpower. The lasting damage, to make up for these monies and manpower, will take years to comprehend or alleviate, for the politics remains more powerful than any brainpower that could compensate for our foolishness and massive mistakes!
srg
