Archive for the 'Investment' Category
“Americans will downsize and live multigenerationally, in order to offset the fraud they know exists in real estate. Until there is wage growth, and that could be years or decades away, people will not trust any upward movement in real estate values.”
A searing indictment of The Bernanking System in Business Insider:
Once people start to come out of negative equity, even more of them will sell and try to get out from under the cloud they are under. So, the housing bubble orchestrated by the Fed and by the hedge funds and by the wealthy could free up massive inventory. The average person fears negative equity. The Fed will not erase that memory.19 comments
The only way people will risk negative equity is if their house prices are cheaper than rent. But the artificial inflation of housing prices will do nothing but push the average Joe away from housing.
Keep in mind that about 4.4 million houses were sold in 2011 and only 2.4 million mortgages were taken out for purchase. That is a mortgage depression and the rise in house prices has not changed that mortgage depression.
People are learning that the uptick in prices is a scam, both by banks withholding massive inventory, and by the Fed making more easy money available to the rich. Once they own most of the inventory, they will be forced to initiate a housing bubble or they will be stuck with the properties.
Pre-2007, I am not sure this topic would have even been controversial; people not only regularly utilized their home as their “primary investment”, but often, treated it as their personal piggy bank. In hindsight we can all judge others as we secretly lick our own wounds from a vicious downturn no saw coming, but that experience left a visceral taste in many mouths.
Most experts would suggest that your primary residence is not an investment. Why, you ask? First, you purchase a home based on need. Your buy and sell decisions rarely spring from analytical thinking around market timing. Instead, most times, they are rooted in your changing life needs. Second, investment strategy wages a secret war with your personal desires. For example, I want a tricked out man cave equipped with a full wet bar, bathroom and other appropriate amenities. Am I thinking about the return on my investment, or the endless joy my friends and I will have watching football on Sunday, Monday and Thursday? Sure, I will likely increase the value of my home with these upgrades, but the anemic return on investment, if any, would never be worth the money. Said differently, would you make the same upgrades to your rental property; probably not.
If it was that easy, I wouldn’t write the article.
I will start with a question. Is it easier to invest in stock or buy a house? Right now, Berkshire Hathaway Inc. (NYSE: BRK.A) trades at $128,175 per share. Its five year performance has been strikingly similar to the performance of many real estate markets. If you have a job making $50k and $7k in the bank, do you think you will ever in your lifetime own a share of Berkshire Hathaway A outside of a very lucky lotto ticket? The answer is unequivocally no. You don’t qualify for the right to buy on margin and even if you did, where would you get the 50% required to do a margin buy? And how would you live on the prison food when the margin call comes? All important questions to consider…
Now, let’s take that same fellow and put him / her into a working class neighborhood. He sees a for-sale sign and the asking price is $130k. He walks into his local bank branch gets a pre-approval letter and in 30 days, he is the proud owner of a similar $128k asset. Interesting… Are these two assets really that different? Sure, the risk profile is different, but not as different as people would have thought 4 years ago.
The real difference is access. Leaving aside the risk of foreclosure and the costs associated with credit repair, moving, etc., this person has $7,000 at risk and unlimited upside. Additionally, there is no other investment available to them with a lower risk profile or higher upside. This person probably could not even qualify for a real estate investment loan, but interestingly, they can get one chance to basically play with house money.
I would humbly submit that your primary residence is what you make of it. You can treat it like an investment, moving to an up and coming neighborhood every 4 – 7 years, investing in only the Spartan renovations that meet a certain return threshold, or you can treat it like your home, “investing” in renovations that make you smile a little bit every time you walk in the door. The choice is yours, but importantly, it is a choice. If you treat yourself as you would a tenant and you make sound investment decisions, you very well could do well with your primary investment. Given the easy access to financing, it may just be the biggest, safest investment in your portfolio. Or not, its really up to you.14 comments
If you are like me, you have a random sampling of news websites to keep you abreast of the happenings of the world every hour or so. It’s the age we live in; every data point, story, press release, blog post triggers a monsoon of pundits and analytical analysis that either sends you running for the hills or tripling down on your latest investment. If you don’t believe me, scroll through this reputable blog and tell me how I should be the most confident in years on Tuesday then be disappointed in home sales twice only a week later. With everything out there, how do you find the truth?
First, understand the underlying data. As it relates to real estate, one needs to be especially cautious. Data may or may not be adjusted for seasonality, it may or may not be a selection of particularly poor or particularly good markets, it may be new homes vs. existing homes, etc. With the need for new headlines every hour, data can and will be manipulated to tell whatever story is the flavor of the moment. Personally, I always start at one of the sources.
Second, understand the basics of real estate. Unlike the stock market, real estate is slow moving, plodding, and a hyper-local asset class. Despite what the headlines might say, you have not missed the bottom in many locations. If you are looking to buy a single family home, tomorrow will be just as good a day as yesterday, as will six months from now. Interest rates tend to move on a quarterly basis and rarely increase more than 0.25% in that time span. Sure, your neighbor might have a 3.75% interest rate, but your 4.25% will put your payments close enough and will still be historically, the lowest in our history.
Investors will likely need to act with more urgency. In most of the hardest hit markets, institutional investors (i.e., private / public corporations with lots of money to spend) have quietly been buying up homes at a breakneck pace. Trying to find a bargain in Florida or Nevada is no longer a slam dunk. Additionally, finding lenders that will do anything beyond the bread and butter multifamily investment will also be a challenge. Small investors had a great window 12 months ago, but now that window is closing rapidly. Rapid in real estate could mean six months from now, but it could also mean yesterday.
Last, but most importantly, understand your market. National real estate statistics rarely add value to a local buyer. Real estate is cyclical everywhere; however, the size and length of the peaks and valleys can vary dramatically. If GM moves a plant in your neighborhood to another state, you can bet prices will move aggressively downward no matter what the national real estate market is doing. Understanding this differentiates great realtors from the rest of the pack.
Amazing realtors don’t parrot pseudo-facts from newspapers or websites; they utilize stats to enhance their local market knowledge. Acting as the knowledgeable voice of reason to clients inundated with misinformation will only serve to build trust and respect for your craft.11 comments
It’s been quite a while since I last wrote on Bloodhoundblog. It certainly doesn’t mean that I have been absent; frankly, it just means I have been too busy to take 30 minutes and compose an interesting thought provoking piece of writing up to the standard we have all come to know and love on this site.
But I digress, as a real estate investor I have only worked with two great brokers in my entire investing career. I find most run-of-the-mill brokers to be under-educated, uninspired, and more interested in cashing a check by any means necessary than actually meeting my needs. The first broker was a dynamic “buyers” broker, who understood my investment goals and my available capital. Rather than over promising and under delivering, she relentlessly showed me house after house for 4 weekends straight until we found the right quaint little fixer-upper in my price range. Her reward, a $2,000 commission on a $40k home sale and my testimony.
What was my testimony worth? I did two more deals with her, both taking much less time and for a much higher dollar value in the next year (+$10k to her bottom line). I did another deal with her the following year for another $10k to her and I referred her like crazy to all of my investing friends. Even if none of them bought a single thing from her, she turned a $2k commission into $20k, at no additional cost to her and very little time thanks to her investment in me and her in-depth market knowledge.
Realtor number two is basically the same story, but add a few more zeros given some career advancement and price appreciation (Detroit vs. New York City).
From a buyer’s perspective, I am looking for the following qualities:
- Market Knowledge – I don’t need you to print off a list of 80 comps (not reviewed 90% of the time) and ask me what I think. I need you to send me a targeted list of homes you have been inside and already know will meet 90% of my needs. I need you to know why this block is superior to the next and I need you to know something about the seller if at all possible.
- Industry Knowledge – As an investor, I run my own spreadsheets, but I do need you to have a general sense of what properties make sense for investors vs. homeowners. We are different. A home does not qualify as an investment just because it can produce enough rent to cover the mortgage. I need to understand what kind of appreciation this market can expect. Are there good schools in the area? Is it a transitional neighborhood where I should be looking to hold for 3 – 5 years, or is it a heavy flip area where I could probably sell it to another investor? Any new commercial / retail coming to the area? Have a general idea about capitalization rates?
- Passion – Realtors that don’t love real estate should not be employed in real estate. If you don’t spend at least one hour a day looking at interesting real estate articles in your area just for the fun of it, you are not the person I want to hire. It’s great to love putting people in homes, but to be an amazing realtor you need to love homes, neighborhoods, and almost everything else there is to love about real estate. This is one of those characteristics you know when you see it immediately.
Are there other qualities that make a Realtor great, sure, competitive spirit, entrepreneurial drive, basic customer service skills, etc, but the three qualities above are my base criteria.
I am going to make a committed effort to start writing once a week again. Thank you to Don for knocking the cobwebs off of my keyboard.7 comments
CNBC: “In the name of supporting home prices, the Obama administration will likely put in place a system under which investors make private profits while the taxpayers subsidize the risk.”
Is housing the next Solyndra? Looks like it. The Obama administration is getting ready to transfer billions of dollars worth of foreclosed homes to campaign donors. If you think still more Rotarian Socialism sucks, wait until the house up the block from yours goes Section 8. Looters never tire of loot, so rent money they don’t have to earn will turn out to be the perfect garnish for real property they won’t have to pay for.
We are living in Part Three of Atlas Shrugged…8 comments
Revestor.com is live now. Revestor.com searches current listings by cash flow and capitalization rate.
I received an email, from BHB Anaheim presenter Bill Lyons, that Revestor.com is live now and will be announced to the public tomorrow. Bill knows that the Bloodhound way is to fly under the radar, sneak in the back door, and quietly win so I appreciate the chance to break the news.
Revestor.com is a new property search site. It’s unique proposition is that it allows users to search by either capitalization rate or cash flow. Revestor believes it will become a useful tool for both investors and primary residence home buyers. Bill Lyons suggested that its unique ranking display, offers data to a home buyer, which is currently unavailable. Incorporating the income potential of a property offers another valuation model for home buyers to consider.
I ran a search for an area with which I’m familiar; Oceanside, CA zip code 92056. I searched for properties listed from $150,000 to $250,000, by cash flow, and ten current listings were displayed. The top two listings appealed to me:
3906 Marvin – a 3BR 2BA, 1064 s.f. SFD with $902 of free cash flow, with an 80% LTV loan, listed at $169, 767
3132 Glenn – a 4BR 2BA, 1302 s.f. SFD with $533 of free cash flow, with an 80% LTV loan, listed at 249,900
Revestor offers a “launch” blog post and I’ll insert Bill’s comments from there (italicized), as I offer my ideas here.
Here is what I like about the site: I like the map display of the listings and I love the fact that it ranks the listings by investment potential. The financial data offered, on individual listings, is pretty comprehensive. It drills down on expense data and allows the user to customize it. The mortgage data is cool because it allows you to slide the down payment tool and see real-time figures. The exit strategy information is unique but I’m unclear as to how they determine the potential resale value.
Bill offered: While San Diego is just a starting point we are still very much a “work in progress“. The site is not perfect (especially for a perfectionist that is striving for simplicity). We launched with about 75% of the functionality/capability that we wanted to, but hey, we were anxious to bring about change.
Here is what I think needs improvement: It’s only available for San Diego County right now. That works fine for me but, as I’m sure the management of Revestor,com knows, that ain’t gonna fly if they intend to be a player. I’m unclear as to the accuracy of the rental rates. I thought the data look pretty high but I haven’t seen a property lease, in that zip code, for over a year now. The individual property listing display page seems kind of boring with incomplete MLS listing data but the financial data exceeds my expectations. Finally, the mortgage information is not “live” yet and a tad too ambitious. That should improve as they secure live mortgage feeds.
Bill offered: We will be the first to admit our ‘estimated rent’ and our algorithm are not 100% accurate. Over time (as the algorithm recognizes patterns in our database and our users give feedback it WILL gain more intelligence and get very close!). At this point, Revestor is not an end all be all, but rather a pre-due diligence tool. You certainly aren’t going to call up your real estate agent and say “buy 1234 Main St – now!” without doing any additional research but it sure is going to give you a good place to start
All in all, Revestor,com is a great tool with a limited reach. Tomorrow, it works for San Diego County agents and home buyers, If Revestor,com wants to last past their cash burn rate, it is going to have to add new markets…quickly. I’ve know Bill for five years now and I’ve seen him build profitable businesses pretty quickly. If I had to bet on on a horse race, I’d bet on the Lyon. Give Bill your feedback and don’t be too kind. He’s a big boy who can handle constructive criticism.13 comments
The dictated debt limit deadline looms and a credit rating downgrade, to US Treasury securities and agency mortgage-backed securities, seems likely. Naturally, a spike in treasury yields is expected and a subsequent rise in mortgage rates should follow. That’s right out of the senior year textbook, in most American business schools.
I’m not so sure the fixed-income markets will follow the textbook. Mortgage rates might … do nothing in response the the credit rating downgrade. Here’s why:
The credit ratings agencies lack……well…credibility.
The independent credit ratings agencies ( Moodys, Standard & Poors, Fitch, etc) have a reputation for being late on the scene. They got hoodwinked with Enron, MCI/Worldcom, and Greece. They were asleep at the wheel during the mortgage meltdown, issuing AAA ratings to CDOs, up until late 2007. They are often considered to be too chummy with the issuers (the issuers pay their fee) and when the issuer is a government (with the power to regulate their business), they generally walk on eggshells.
The news may be baked into the market already.
The ratings agencies have been signaling a potential downgrade for months. Clearly, raising the US debt limit will allow the Treasury to remain “liquid” but the agencies have said a downgrade is likely unless a substantive plan is enacted to reduce spending. Cut, Cap & Balance, the “most extreme” of the proposals offered, still might not have been “extreme” enough to avoid a downgrade. Both political parties are demonstrating that they lack the political will to address the long-term structural deficits, needed to bolster the Federal budget, to avoid the ratings downgrade. Fixed income traders seem to be shrugging that off.
US Treasury securities are still considered to be the safest investment in the world.
Certainly there are better run countries than the US but their debt offerings lack SIZE; there ain’t enough of that debt for the real money. Germany has its EU obligations hanging around in the background and Japan seems to be in worse shape than we are. Chinese sovereign debt could be a consideration but the Chinese and Japanese still want their investments dollar-denominated. The US is, for all purposes is “too big to fail”. While a world-wide bailout, under the auspices of the IMF seems unlikely, a de facto bailout, by countries who have no other place to park their cash, will probably happen. As paradoxical as it might sound, the ratings downgrade might attract more money because it affirms that while the US is getting ugly, we’re still the prettiest girl at this dance.
Domestic institutional investors are married to the US Treasury.
Insurance companies, state pension funds, union pension funds, banks, and credit unions are bound by charter to invest a certain amount of assets in US Treasury securities or agency derivatives. Banks are amending their charters to read that they “must invest in AAA securities or government debt” this week, to facilitate the downgrade. If you can’t be, with the one you love, baby, love the one your with.
Rebalanced portfolios could attract more money to US Treasuries
A downgrade will most likely affect the credit markets through the overnight borrowing market (where short-term treasuries are used as collateral). This could hamper the availability of private sector lending a bit which could be detrimental for domestic equity markets and corporate fixed income issuers. Subsequently, portfolio managers might rebalance their portfolios by trimming back on stocks and corporate bonds, and seek a “safe haven” with the proceeds. That safe haven may be the very asset class which caused the mess. Go figure.
The Fed might just continue to be…The Fed.
I’ve given up on trying to figure this creature out. The Fed does crap I never knew it could do (well, because it never could do what it’s done these past few years). The Fed could announce QE17 and start bidding 102 for the new treasury auctions, with the sole intent of “fooling” other investors into thinking the issue is in high demand. Please don’t tell me I’m a conspiracy theorist; the Fed has transparently operated outside of its charter for AT LEAST 3-4 years now.
Another thought is that the spread between mortgage-backed securities and treasuries could narrow after a downgrade. The bad news buried in the back of the breadbox is tempered by the fact that the MBS market has a
sugar daddy rich Uncle Fred and Aunt Fannie, which continue to be wealth redistribution conduits. Traders might figure that the profitable loans stay in the MBS pools while losses are laid off on the Treasury. If this theory gets traction, mortgage rates could be flat or actually go down.
None of this makes any sense but, in the world of “too big to fail” it ain’t supposed to make sense…it’s just the “right thing to do”. Right?
Call me Alfred E Neumann but I’m not too worried.17 comments
Ahem: “Today’s young people would be foolish to imitate their parents and view ownership as the cornerstone of personal finance.”
From the Wall Street Journal:
At the risk of heaping more misery on the struggling residential property market, an analysis of home-price and ownership data for the last 30 years in California—the Golden State with notoriously golden property prices—indicates that the average single family house has never been a particularly stellar investment.
In a society increasingly concerned with providing for retirement security and housing affordability, this finding has large implications. It means that we have put excessive emphasis on owner-occupied housing for social objectives, mistakenly relied on homebuilding for economic stimulus, and fostered misconceptions about homeownership and financial independence. We’ve diverted capital from more productive investments and misallocated scarce public resources.
Between 1980 and 2010, the value of a median-price, single-family house in California rose by an average of 3.6% per year—to $296,820 from $99,550, according to data from the California Association of Realtors, Freddie Mac and the U.S. Census. Even if that house was sold at the most recent market peak in 2007, the average annual price growth was just 6.61%.
So a dollar used to purchase a median-price, single-family California home in 1980 would have grown to $5.63 in 2007, and to $2.98 in 2010. The same dollar invested in the Dow Jones Industrial Index would have been worth $14.41 in 2007, and $11.49 in 2010.
No need to pass these facts along to the National Association of Realtors. They already know.24 comments
Business Insider has the goods.
Yes, I know you can tell me stories about killings made. We’ve done it, too. How are your results lately?
Meanwhile, do you want to have a long talk with all those folks who bought their homes believing in the wealth-producing miracle of the mortgage-interest tax deduction?
Does anyone want to chip in for some wood polish for the NAR’s nose?11 comments
Debra and I had the good fortune to met Anthony Randazzo at a Reason Foundation dinner last week. Mr. Randazzo published an article today, about real estate as a “store of value” (which was consistent with what we’ve been talking about here on BloodhoundBlog).
Few people will dispute that more homeowners adds “social value” to communities. Greg Swann articulated that nicely here:
The essence of our freedom is the free ownership of the land, and yet everywhere we turn, private property is subjected to one law after another, and everything that is not forbidden is compulsory instead.
This is a grievous error. The men who become Brownshirts or Klansmen or Khmer Rouge — the men who make up murderous mobs — are men without land. It is the husbandry of the land — each man to his own parcel — that most makes husbands of us, that sweeps away our willingness to live as brigands or rapists or thugs.
By robbing the private ownership of the land of its meaning, the state is, by increments, robbing its citizens of their humanity. No one burns down his own home, nor his neighbor’s home. But when the time comes that we all seem to own our homes only by sufferance, none of us will have anything left to defend.
What Greg was arguing against was an activist government, abusing eminent domain laws. I was happy to read that locally, the brigands disguised as National City, CA Councilmen were defeated last week but the war in defense of private property rights will be a long campaign.
Mr Randazzo’s article however, demonstrates how that “social value” (op. cit.) can be distorted when the planners keep planning:
When looking at housing this way, the “ownership society” lauded by President Bush in the early 2000s, sounds like a good idea. Especially when considering the social values associated with homeownership, like being a good neighbor and having a stake in nuturing a community. However, while owning a home is rarely a bad thing, it might not be the great investment our parents told us it would be.
When you adjust these numbers for inflation, housing prices stayed nearly flat from the end of World War II until the mid-1990s. Only once the so-called 1992 Government-Sponsored Enterprise (GSE) Safety and Soundness Act opened up the floodgates of federal subsidies, later to be caffeinated by the Federal Reserve’s loose monetary policy in the early 2000s, did prices double nationally. Of course, that price jump was a bubble and prices have fallen nearly back to levels last seen in the 1990s.
Randazzo shows here, with charts, that activist economic planning, in pursuit of what would otherwise be thought of as a noble goal (a deed in every safety deposit box), distorted the market, detached housing from its traditional characteristic as a “store of value”, and turned it into a commodity ripe for speculation.
Eventually real housing prices picked up, doubling from 1996 to 2006 on the back of the housing bubble. But in trying to boost investment values, policymakers and poorly incentivized bankers drove prices unsustainably high, and the peak of growth was short lived as home values have steadily fallen back towards the pre-bubble trend line, as can be seen in the below graph.
Moreover, the government-encouraged speculation had an opposite effect when the final chair was pulled in the musical game:
This is not to say homeownership is a bad thing. And on an individual level, low- and middle-income families certainly were able to build equity during this period—which is a good mechanism for creating wealth. But a lesson from the evolving “foreclosure society” in the wake of the housing bubble is that what many thought was homeownership was simply a twisted form of renting. If the only means of getting a family in a home is to provide government subsidies that lower interest payments and down payments, then the homeownership is all a façade, and there is no equity growth.
To be sure, homeownership is a worthy and attainable goal, but not before a household has the means. A house is not a stock to be wielded as an investment, but rather it is a savings account that maintains its value with inflation.
Certainly, private ownership of real property is not only a virtue of American Exceptionalism but a demonstrable benefit to communities, Those of us who practice the craft of trading and financing property, would do well to defend our clients against an activist government which would steal their property, and protest loudly when it tries to bestow premature gifts of property to their neighbors.6 comments
Ever wonder about the relationship between gold and real estate?
Jim Klein got me to thinking about a “store of wealth”, when I postulated that there is no gold bubble:
I think people can get snookered into thinking it’s a great “investment.” It’s protection, it’s barter; it’s a store of wealth. To me, that’s not what “investment” means, which is usually about income. I believe that in actual inflation periods, gold tends to appreciate on the low side, particularly when compared with many other assets. It does much better /anticipating/ inflation, as now.
I remembered hearing that term before, over on Seeking Alpha:
Gold and Real Estate have historically been the two ways to store real value as they are as real assets as you get. So what happens when the value of one real asset is artificially manipulated? We all know by now what caused the bubble in real estate, but, at the height of the bubble it was unknown to the market that it was a bubble on the verge of bursting
Real estate does have income-producing value though, as Sean Purcell pointed out to us years ago. Also, the median-priced home is larger today than it was 40 years ago, because of change in retail demand. Still, for fun, let’s compare the median price of a single-family home, in August, 1971 ($25,300) to the price of a single-family home, in February, 2011 ($202,100), in ounces of gold:
On August 1, 1971, the price of gold was pegged at $35/oz so it would have taken 722 ounces of gold to purchase a median-priced, single-family home. Two weeks later, The United States terminated its participation in The Bretton Woods Agreement, creating a fiat currency.
At the end of February, 2011, you might have paid $1,400/oz for gold. You could purchase a median-priced, single family home then for 144 ounces of gold, about one-fifth the cost (in gold), from 1971.
What I’m missing here is the net operating income you would have derived from that single-family home, over the 40-year period. I’d have to know what the rents were for each year, the property taxes and costs for fire insurance, maintenance, etc.. I suppose we could assume 1% of the value of the home for monthly rents, adjust it each year to the median-price, and deduct 25% of that income for taxes, maintenance, and expenses.
One of the great reasons to purchase real estate is that you can leverage it. If we could assume that you purchased that home, in 1971, with just 20% down payment, financed the rest, and the rents covered the financing costs and expenses, and amortized the loan for you, we could say that you only paid 144 ounces of gold then, for 144 ounces of gold today but…
…you could live in that house today. Real estate then might be a real bargain today and, until they have a home brokerage counter in Wal-Mart, there is no bubble in real estate.
…then we can start talking about a possible bubble in gold.”–Gary North, on LewRockwell.com
Gold is an investment asset. It therefore will not become popular short of an economic collapse – hyperinflation followed by a depression. The average person owns no gold coins, nor will he anytime soon.
Where would he buy them? How could 100 million households buy a single gold coin per household? This would be impossible. There are only a few small coin stores in any community. They are mostly mom-and-pop outfits. The U.S. Mint could not meet the demand.
When Wal-Mart has a gold coin section in the jewelry department, then we can start talking about a possible bubble in gold. Not until then.
If you’re looking for the best primer for owning gold click the link above and read the whole article. Of course, if you’re confident that the Fed will find a way to unwind QE II, and that the money center banks are all safe, and that we’re finished with bail outs, and that the Federal budget deficit is under control, you have no need to own gold as an an inflation hedge. If you think ANY of those shoes could still drop, buy the yellow metal until you see it offered at Sam’s Club.18 comments
“I’m here in the interest of being more neighborly,” Obama said. “Maybe if we’d brought over a fruitcake when I first moved in, maybe we would have gotten off to a better start.”
The President just doesn’t get it, though. He still thinks the fascist model works:
Obama alternated between pledging help for business from the federal government and asking big business to do its part to help “win the future,” a theme he first introduced two weeks ago in the State of the Union address.
“Ultimately, winning the future is not just about what the government can do to help you to succeed,” said Obama. “It’s also about what you can do to help America succeed.”
Obama claims that he is open to suggestions:
If businesses lack confidence in the economy, Obama said they should let him know about it.
“If there is a reason you don’t share my confidence, if there is a reason you don’t believe that this is the time to get off the sidelines – to hire and invest – I want to know about it,” Obama said. “I want to fix it.”
Cool. Let’s tell him to roll back the federal register to 1990. Uh, oh ! Maybe not.
Obama has launched a review of regulations to eliminate burdensome rules, but he gave a nod to their importance in Monday’s speech.
“Even as we work to eliminate burdensome regulations, America’s businesses have a responsibility to recognize that there are some safeguards and standards that are necessary to protect the American people from harm or exploitation,” Obama said.
“Moreover, the perils of too much regulation are matched by the dangers of too little. We saw that in the financial crisis, where the absence of sound rules of the road was hardly good for business.”
Sean Purcell is right. Obama isn’t a pragmatist, looking for solutions. The President is a religious zealot, forced to mix among the heathen, seeking cooperation. His open-minded solicitation however is tempered by his abiding faith in the State. This is like the Pope saying he is open to any and all ideas about salvation as long as they recognize that Christ is the only path. I hate to be pessimistic but I don’t see an Obama transfiguration happening.
The President of the United States just doesn’t like free enterprise. Until we get past that, we’re in for more musical deck chairs on the Titanic.56 comments
Worried about a dollar collapse? Virginians may worry less because their legislature is proactively investigating solutions:
WHEREAS, various systems of alternative currency employing gold or silver, or both, in the form of coin or its equivalent in bullion have already proved themselves in the free market, and could either be employed by the Commonwealth directly or be used as models for a new system created by the Commonwealth to meet Virginia’s unique needs; and
WHEREAS, the adoption of an alternative currency consisting of gold or silver, or both, would not destabilize the present monetary and banking systems, the Commonwealth’s governmental finances, or Virginia’s private economy, because it would not compel or commit the Commonwealth or her citizens to employ such alternative currency to the exclusion of the Federal Reserve System’s currency immediately, but would merely make the alternative currency available, and enable it to be used in competition with and preference to the Federal Reserve System’s currency, to the degree that the need for such use became apparent; and
Governor McDonnell (R-VA) claims the resolution would be unconstitutional, that the powers to coin money rest with the federal branch of government. I don’t think that matters. The Virginia Resolution simply recognizes that a competing currency might be needed should the US currency collapses. That resolution could very well be the “shot heard ’round the world”.
Americans of all walks of life, from the CEO in the corner office to the cop walking the corner beat are following the price of gold and silver daily. Some are actually buying the precious metals, too. Wall Street, in its typical fashion, developed a derivative product to sell to its customers. The bankers and brokers claim GLD and SLV are a more simple approach to hedging portfolios with an exposure to precious metals. Guess what? It may be harder to find the actual metals, held by the Wall Street mutual funds, than the mortgages packaged in the collateralized debt obligations. GLD and SLV may be empty vaults; perhaps a scam.
I started moving money into silver about a year ago. It just seemed safer to buy the metal from dealers, and take delivery, rather than to rely on a statement or stock certificate.
What does the economy look like if the dollar collapses? How will it affect real estate? How will it affect the way you live your life?8 comments