Commercial Real Estate, 'Quantitative Easing'

Commercial Real Estate does not seem to be caught by mainstream radar yet, but it is gaining momentum and may move to the front of the line in terms of impact, moving home foreclosures to second place. All you have to do is look around your own town and see the vacancies.

There is a lot of discussion about Bernanke's 'quantitative easing,' especially in other parts of the world. The reason this will not work is that there is already money available to be loaned. There are no buyers for that money. Adding more to the pile is not going to get us anywhere. The author, Richard Koo, wrote about Japan's 'quantitative easing' in 2001 that did not work. One comment that stood out above the others was "... when there are no borrowers the banks are powerless." This means the Feds are powerless too. Here is how we as citizens actually can influence the banking industry. Consider contemplating on this. :)

Fannie Again, U.S. Debt

Here's an update regarding the property that needs a new septic system that we offered $179K versus Fannie's asking price of $150K. Yesterday, we saw this property with a price reduction to $134K. Here is an actual example of the inefficiency in this organization. There is no encouragement to perform, because whatever losses are incurred are covered by the federal treasury with no ceiling. I also read that FNM and FRE are estimated to cost $685B. The positive in this is the Republican who is expected to replace Barney Frank as chairman of the House Financial Services Committed said he will put these two organizations at the top of his priority list to address. I will be watching to see if it goes beyond words.

Another important subject that I emphasize repeatedly is our country's debt load. It is estimated to be 67% of Gross Domestic Product by 2013 if this congress does not act in any way to contain it. We are now spending 63% more than the tax payments we receive.

Elections

As a Californian, I am amazed that none of the changes that swept across the country affected our state. We are over $130B in debt and chose to keep the same political group in power. I did think that one of the business women would have won.

Today the Federal Reserve said they are going to print money (my words) to buy $600B in bonds over the next 7 months to support the economy's recovery. This is a stimulus package that sidesteps congress. I do not think this organization should have this kind of power without congressional approval. There is no check and balance. Bernanke should have been removed and someone else assigned.