Dawn In America- Part One

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Anyone who has read this satirical piece knows that my writing turned macabre this past year.  One weekend, one book,  one article, and one website dramatically changed the way I look at the world and it inhabitants.  It has been painful to watch my political party regress from Bob Taft to Teddy Roosevelt in less than 25 years.  It is crushing to watch REALTORs and mortgage originators cheer for professional slavery rather than to muster up the courage associated with the rugged individualism that made this country great.

It has been said that it’s always darkest before dawn so while it was pitch black this past summer, I remained confident that Morning in America was nigh.  Rick Santelli fired the outburst heard ’round the continent and glimmers of light came by way of tea parties and election upsets.  As the economy sputtered, the previous and current administration acted like looters amidst a blackout but people have caught on to their theft- and they don’t like it.

It’s gonna get a lot darker before the dawn and I’ve never been so optimistic in my life. Here’s why- collectivism is a failed philosophy.  For all its noble efforts,  the unintended consequences of collectivism stifle the indomitable American spirit of reward for creativity, ingenuity, and innovation.  We saw collectivism fail here, here, and most recently here.  Now, the average guy in the street knows it, too.

Remember the Stockdale Paradox and you’ll remain optimistic with a keen eye to the circumstances as they unfold.  Now, hold on to your hat because…

It’s gonna get uglier so be prepared. I think great opportunities will go to the prepared. The day that emerges from the dawn will be so bright you’ll swear that global warming isn’t a hoax.  Here’s how I see the next cuppla years playing out:

1. Real estate may decline, even more. While the lower end of the market has already declined to utilitarian value, the affordable housing organizations will (finally) attack that which artificially inflates markets; zoning regulations.  Rather than convert old military bases to detention FEMA camps, the impending currency crisis will force the Federal government to divest itself of real estate holdings to replenish the Treasury.  Developers will have an opportunity to build housing that people can afford to buy or rent.  The Reds Greens will try to attach deed restrictions for those developments, in order to advance a new way to redistribute wealth, but their original supporters will sacrifice the collectivist ideology for the immediate need to house people.  The free market will find new disciples in the most unlikely of places.
2. Sovereign debt is going to default en masse. Greece is just the beginning.  Ireland, Portugal, France, Italy, and Spain will set off a chain reaction that dismantles the European Union.  The masters of the Old World will tighten the screws while the people take to the streets.  Americans will be horrified when they see this.  I think Americans will demand drastic spending cuts from our government.   The American people will wonder why we borrow money from other nations to offer free military defense to those very same nations. America may selectively default against those nations in a bi-partisan demonstration of disgust:  the leftists will cite human rights and the neo-conservatives  will giggle in delight that they can “harm” the Chi-Coms and Islamo-Facsist States through the most unconventional of weapons- the debenture.
3. Americans will respond to this default of our sovereign debt with a HUGE demand for government to be reduced drastically.    The sovereign default and subsequent currency collapse will be the light that shines brightly, exposing all of the cockroaches in the room.  NO will become the new YES for politicians but it still won’t be enough.  Woe betide the politician that expands existing entitlements programs come election day.
4. The U.S. Dollar will be devalued but so many other currencies will have collapsed it won’t feel too painful (unless you buy stuff from or travel frequently to Switzerland).  Financial pandemonium will last for about two weeks until the most likely technology emerges with a solution backed by the most likely institutions.  Tin-foil hat theorists shouldn’t worry about the One World Currency because demand for competing currencies will rise and the most likely technology will find a way to partner with asset protection firms.
5. Domestic oil exploration and drilling will grow as the supply gets restricted as aresult of the mistrust propagated by the sovereign defaults.
6. Public property divestiture will offer big opportunities for the most entrepreneurial of real estate and finance professionals.  Private real estate finance will boom as demand for capital explodes and commensurate returns will reflect the risk associated with the local projects.  Think locally, invest locally will be the new normal in real estate finance.
7. Certain companies are going to thrive so the stock market won’t necessarily stay down.  While the world will wonder about the safety of dollar-denominated assets, they’ll be worried about the euro, the yen, and the yuan, too.  I suspect investors will get really smart, perform the due diligence required, and invest for longer terms.  I expect trading volume to drop.  You may see annual stockholder meetings held in Madison Square Garden rather than an office board room on Madison Avenue to satisfy that demand for activist capital.

I have a lot going on in my head about the future.  I’ve already written some 1800 words and I feel like I’m just getting started.  Let’s call this a series and I’ll break it up into a bunch of segments.  As always, your feedback is most appreciated.