March 10, 2008
Perspective on Real Estate
The recession comes roaring to life as various experts say, “It’s over, it’s reached bottom, it never happened.” I have never witnessed an era like this one, where one party says, “We don’t need help (the free market will come to the rescue—by overpaying failed executives, I guess”) and the other features two attractive candidates fighting to the death to assist the other party to unlikely victory!
Risk is being redefined as so many greedy deeds get caught up in the inevitable punishment of failure. The stock market is proving that extreme volatility must result in severe ups and downs, with the downs seeking lowest records since records were kept. The foreclosure rates jumped to an unimaginable 7.9% in the 4th Quarter. It will reach 8% very soon and maybe some conclusions will finally become fact rather than conjecture depending on which party is drawing them.
Congress held hearings on the colossal pay and retirement settlements of executives. Republicans apologized for the hearings, which made me ill with their interpretation of the free enterprise system, that idolizes “free” issues, except for oil and pharmaceuticals. They feel that the federal government has no right to try to reign in greed as they feel that absolutely free, unregulated markets will cure anything and everything! It does the opposite as inflation becomes a real threat.
The nation lost 63,000 jobs in February, and March will have proved worse! Surging prices for food and fuel, combined with falling home values and now stock prices, insures that an official Recession will soon be acknowledged!
Household net worth has declined about $2 ½ trillion dollars in the 4th Q of last year and the first Q of this year! This lessens borrowing power and makes credit cards the very expensive substitute!
Stocks are in for a heavier upheaval, according to the bond market. More equities will be wiped out as “adjustments” turn into shockwaves!
In The Economist cover story (3/8/08), the point is made of a bloated Indian civil service (legacy from Great Britain’s training) and how red tape rules the rate of progress, no matter how well educated the people are. This is the type of conditioning the Republican’s have for government involvement in solving problems. They feel that the free market is the best way and while it does hold benefits, the problem is carrying it too far, while making government the enemy. That kind of conditioning is foolish and wrong-headed. India has far too many civil service workers and that is the big problem.
srg
