Wednesday, 6.22.11 “Real Estate for Real People”

  

So what does trust have to do with anything I normally write about such as the economy or the real estate market? Well, first of all let’s define the meaning of the word trust (as I am using it here). Trust is the assured reliance on the character, ability, strength, or truth of someone or something. I think the most powerful word in that definition is the word “assured,” which simply means GUARANTEED. I am convinced that nearly all of the problems that we, as a society, now face are a result of a breach of trust. Just look at the daily headlines, whether it is the banking crises, financial mismanagement of companies like GM and Chrysler, the foreclosure crises, mortgage meltdown, Municipal & sovereign-debt defaults, or even the spike in food or gasoline prices (and other commodities) caused by a Fed that is beholden to Big Banks instead of the average American, they all can be traced back to a breach in trust. As one dissects the cause of the before mentioned issues (and many others), it becomes apparent that there has been an almost total abandonment of professional judgment and ethics in both Washington and on Wall Street. Of course, there is a frightening amount of incompetency too, but the complete and total breach of trust by those in charge in D.C. and on Wall St. has created the current and ongoing financial nightmare. Adding to the issue is the total lack of urgency that these problems are receiving. Yes, there is some lip service being given to them, but no one has the backbone to tell the truth, except maybe Ron Paul who is being passed off as a cranky old man. I am not endorsing him nor do I know if he has the answers, but I can tell you that any politician that implies that this is some distant problem for our children, clearly has no clue as to what he/she is saying. Of course, our children will still feel the pain many years from now, but this problem is blowing up now. Roll your eyes, if you want, but as a citizen of this great country and as a father of two young children, I'm deeply concerned. That's why I believe the time has come for more of us to wake up to what is really going on right under our noses. It is time to send a wakeup call to Washington and Wall Street.

Look I am far from being perfect and maybe I am a bit naïve, but I believe that our elected leaders as well as those who are running the corporate institutions (especially the ones the taxpayers are bailing out) should be setting a better example. I don’t know about you, but I do hold those that we elect to run this country and for those that our tax dollars help pay their bonus, to a higher standard. When I see yet another politician exposed for an extramarital affair (the Terminator) or for texting his private parts (Weiner) to some blackjack dealer in Vegas or a multi-millionaire using federal campaign funds to conceal his own love child (Edwards) or when I hear how Wall Street (Goldman Sachs) deliberately set up their own clients to fail so the traders could make millions, I get sick to my stomach. At a time, when the economy is in the toilet, and millions of Americans are losing jobs and their homes, I strongly feel that our political leaders and those running the companies deemed ‘Too Big Too Fail’ need to be doing everything cleaner and more ethically than ever before for one simple reason - their ability to lead us out of the nightmare they created depends on the most important of all characteristics. And what am I referring too? Well, the same thing that we’re discussing that makes the connection between a parent and a child, trust. Unfortunately, the current state of our nation shows that it's very clear that trust doesn't rank very high on the list of priorities for many that are in charge of getting us out of this mess. As a result, I believe that each of us have to take matters into our own hands.

 

Maybe it is time to follow the advice of Howard Beale in the 1976 movie “Network.”

“I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's worth; banks are going bust; shopkeepers keep a gun under the counter; punks are running wild in the street, and there's nobody anywhere who seems to know what to do, and there's no end to it.” We know the air is unfit to breathe and our food is unfit to eat. And we sit watching our TV’s while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that's the way it's supposed to be! We all know things are bad -- worse than bad -- they're crazy. It's like everything everywhere is going crazy, so we don't go out any more. We sit in the house, and slowly the world we're living in is getting smaller, and all we say is, "Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials, and I won't say anything. Just leave us alone. Well, I'm not going to leave you alone. I want you to get mad! I don't want you to protest. I don't want you to riot. I don't want you to write to your Congressman, because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first, you've got to get mad. You've gotta say, "I'm a human being, goddammit! My life has value!" So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window, open it, and stick your head out and yell, "I'm as mad as hell, and I'm not going to take this anymore!!"

 

Maybe if enough of us get loud enough and let those in charge know that we are sick of their antics, sick of their lip service, sick of their cowardly behavior, and most of all sick of their violation of trust, then maybe we will see some real change. Robert Holt, CDPE/SFR of The [HOLT] Group, RE/MAX Sonoran Hills. For more info & past articles, please visit www.TheHoltGroupAZ.com or call 623.748.9583 & tell us your thoughts.

 

Wednesday, 6.29.11 “Real Estate for Real People”                                                                                                    On the Road to Nowhere   This weekend I heard an old ‘80’s song by the Talking Heads called "Road to nowhere.” Not only did the song bring me back to my high school days, it got me thinking about the last years and how it seems like we have all been on a road to nowhere. Yes, despite nearly $4 trillion dollars thrown at the economy (down the drain), we are right back to square one. In fact, we might find that we are in an even worse position now than we were 3 years ago.   If you recall, it was in 2008 when we saw the U.S. economy coming to a grinding halt as the housing market began the biggest decent of all time. In fact, since 2008, we have witnessed the worst economy since the Great Depression resulting in the largest decline in home sales and the most foreclosures in our nation’s history.   It was also back in ‘08 that those in charge swore on a stack of Bibles that the debt crisis was limited to subprime mortgages. Yet, as we know now the crisis rapidly spread to all kinds of mortgages, which resulted in the demise of giant mortgage lenders like Countrywide, Indy Mac and of course, Fannie Mae, and Freddie Mac.   As the housing market and stock market crashed and consumer confidence fell into a black hole, our fearless leaders finally admitted that we had a problem, but they swore on even more Bibles that it was strictly contained to the housing and mortgage sector.   We all know how that movie ended, as it was just a few short months later that the crisis had taken over nearly all of Wall Street. And, by mid 2009, virtually every one of America's largest banks either failed or came very close to being taken over by the FDIC. Of course, because of crony capitalism, none of the ‘Too Big to Fail Banks’ were ever going down despite how insolvent they were (are).   Plus, by the end of 2009, the government had devised a plan that would save us all. They would throw a (TARP) (pun intended) over the problem by bailing out the same banks and mortgage lenders that caused the problem. Yes, our government would reward the incredibly bad behavior of Wall Street by taking $700 billion of taxpayer dollars and giving it to the Big Banks, with nothing more than a hope that they would lend it out to “We the people.”   It was also during this time that our over-indebted government had to take over Freddie Mac and Fannie Mae as they went bankrupt resulting in the U.S. government (or if you prefer, the taxpayer) becoming liable for trillions of dollars worth of mortgages and other bank obligations. As we walk down memory lane, keep in mind that during the last 3 years, our government has spent over $4 trillion dollars bailing out Wall Street. Sadly, this has not helped the average American, but instead it has created an even bigger potential disaster that is going to be paid for by Main Street. Meanwhile, Big Ben Bernanke has done everything in his power to destroy the U.S. dollar and your standard of living. Now, after printing Trillions of dollars Ole Ben looks like 13-year-old boy on his first date, clueless.    Now, fast forward to today and once again, the economy is slowing despite the largest injection of money in the history of the world, and the housing market (nationally) has double dipped (in Phoenix we saw that happen 9 months ago). Even with an uptick in buying, home prices are falling as banks continue to flood the market with foreclosures, which in turn will create more foreclosures. In the broader economy, consumers are closing their wallets as consumer confidence and retail sales are falling again. Despite massive amounts of money injected by the Fed, the stock market is fracturing. Falling 6 out of the last 7 weeks, the Dow is more susceptible to a crash than at any time since 2008.   And, if you don’t think that the problems in Europe will affect us, think again. Because the governments of the U.S., Europe and Asia have tied their collective financial markets together like a string of boats, when one goes down they all get dragged to the bottom. Believe me, our very fragile banking system, which is in even worse condition than 2008, is scared to death of the pending Greece defaults.   While much of the financial scene looks like 2008 all over again, there are some significant differences between today and ‘08. Namely the fact that the U. S. is dead broke. Thanks to massive bank bailouts (at least $700 billion), and Obama's colossal stimulus program (nearly $800 billion), and Ben’s money printing (about $2.6 trillion), we are now trillions of dollars closer to being bankrupt. And, despite all the tough talk out of D.C, I will bet you dollars to donuts that there is more money printing by Ole Ben and somehow Obama is going to try to spend more tax payer monies to stimulate the economy.   All told, this bailout-stimulus-money-printing experiment has cost the U.S. taxpayer over $4 trillion. And, all we have to show for it is MORE DEBT. If I am not mistaken there was a pretty smart guy, who went by the name Einstein, which once described insanity as doing the same thing over and over again, but expecting a different result.   Now as rating agencies like Moody’s and S&P warn D.C. about its massive deficits and as Big Ben floods the world with more dollars, investors around the world are growing tired of our politicians’ lack of leadership and more importantly their fiscal irresponsibility. What does that matter – you may ask. Well, when they get to the point that they refuse to buy, or worse, they actually start to sell U.S. bonds (this is happening now), then the U.S. can no longer borrower cheaply. This means that interest rates will move much higher as they have done in Greece, Portugal and Spain. Pair this reality with a falling dollar and you get a very ugly situation for us commoners. There is only one force strong enough to turn this problem around before it is too late. And, what is the power? It is you! It is up to the voting public to demand that our elected officials stop the games and get serious about the real issues. Every single member of Congress should clearly understand that the American people are going to “throw the bums out” if they do not stop throwing good money after bad in a desperate attempt to spend our way out of the crisis. Robert Holt, CDPE/SFR of The [HOLT] Group, RE/MAX Sonoran Hills. For more info, please visit www.TheHoltGroupAZ.com or call 623.748.9583 & tell us your thoughts.