I know it’s that season when transactions should be occurring and yes, there has been a little bit more activity but we are far from the end of the crisis.
The stock market showed glimmers of hope this morning in anticipation of some positive signs in the real estate market but that reversed when the numbers were released.
Read here for the numbers.
Let’s keep at it…after all life is almost always about “showing up.”
It’s been a long and very cold winter.
Has spring brought a thaw? I am not so sure. Banks are still very clingy with their cash (not that this is a bad thing), some sellers are still in denial, and people are still nervous.
I read a great article that might shed some light for the future. The arguments seem to make sense. My gut – housing is still softening, will eventually bottom and base there for a fairly long time.
Read this: http://www.bloomberg.com/apps/news?pid=email_en&sid=aiiT.sNeq2YQ
There is hope.
I just heard from an old friend. He’s developed a technique to turn sewage sludge into usable energy that is cleaner, cheaper and environmentally friendly versus the current methods of incineration, trucking to land fill, or worse spread onto farm land (YUCK!).
He needs $1 million of seed capital. Now here’s capitalism at work. An engineer invents a system that solves a major problem. He now need to take his idea out to potential investors, convince them of his value proposition and build these new systems.
My point is – isn’t it wonderful that even in this economic environment, we have great people thinking up solutions for problems that can become tomorrows big industry. This call made me happy and hopeful. Even in bad times you can’t crush the spirit of an entrepreneur with a viable idea.
I love this and if I had a million, I’d invest in solving an environmental hazard!! And by the way, the name of the company is called Clean Recovery, Inc. Unfortunately there is no website, yet!!
If anyone wants info, I’ll send you the powerpoint!!
Viva la entrepreneur!!
The following article blog in the NYT does a nice job on the topic: http://economix.blogs.nytimes.com/2009/02/17/if-you-got-money-its-time-to-spend-some/?_php=true&_type=blogs&_r=0
I can’t believe that I am now reading a phrase in the newspaper that I learned 25 years ago and by the way viewed as a mere theory. But the concept is now relevant. And how ironic. We all need to save more and saving is what will get us out of debtor hell. However there is a resounding BUT….and that BUT is we need to spend to help the economy from tailspinning into a deeper recession. So, now do you get the paradox!!
But there is a near-term solution – it’s government spending. For anybody complaining about government spending – Here’s the equation you need to know:
GDP= C(Consumption) + I(Investment by businesses) +G(Government Spending) + X(exports) – M(imports). If C goes down because savings is going up, then there is one clear place where the spending needs to come from – it’s government.
The reality is far more complex but you get the gist!! So keep saving wisely but don’t forget to live while you’re living!!
Last night friends and family strapped on snow shoes and head lamps and took off into Beartown Mountain State Forest. It was a balmy 42 degrees and the moon broke through the clouds to provide a glow and shadows along the trails. It was truly magical – the combination of bringing a group of diverse ages and backgrounds together to walk in the snowy woods and then capping the evening off with food, drinks and a roaring fire in the fireplace is priceless.
And priceless it was in more ways than one – the walk in the woods — FREE.
But let’s think about it further. We live in the Berkshires. We have access to nature. During these tough economic times, combining sport, connecting with friends and family and a simple dinner is old fashioned fun. No fancy bells and whistles.
An investment in snow shoes can be anywhere from $50 – $300; I also suggest getting some adjustable poles. You wear your hiking boots and voila – you are ready!! I also use my snow shoes when showing land during the winter.
So, instead of fretting about money – call some friends, get out in the woods, cherish nature and appreciate why we live in the Berkshires – I did – and I feel fantastic!!
What’s clear to me is that things have really changed. The party as we’ve known it for the last 25 years is over. But I am OK with that – I never really understood how things could keep going. And of course I doubted myself for thinking that the buying and building frenzy were fueled by easy credit, not earned income.
So now that the proverbial chickens have come home to roost, how do even the sane among us cope with the sea changes ahead!! The secret is simple – don’t spend beyond your means, save your pennies, conserve everything (gas, energy, time, money) whenever possible. I hear my grandmother and now her words are being channeled through me.
As for the real estate market – it really goes back to the old rules too – buy a house you can afford and plan to live in – it’s not a buy and flip asset.
It’s a struggle to adjust to the “old” realities but it’s a relief as well. To a simpler, less cluttered life where the emphasis is on relationships, family, home and community.
I promise to write more this year – it’s been difficult during these challenging times to get inspired. I’m back!!
I was reflecting the other day on some very interesting thoughts. For argument’s sake, stock are down about 50% since last year – that’s pretty disastrous, I’d say. And real estate is down on average, 22-25%. So why is everyone focusing on the decline in housing as the major drag on the economy? Stock are twice as bad as housing assets.
In fact, I would argue that real estate is the better performing asset, except, of course for cash. And we all know that cash will be a terrible investment a year or two from now because all the economic stimulus needed to boost the economy will begin to create massive inflation.
And, if I go back to my finance text books, I was taught that the best assets to own as hedges against inflation are real estate, stocks and gold. (Did you know that the Saudi’s are now requiring to get 10% of their payment in gold – what does that tell you??)
I’d be buying all three if I had cash. I think that real estate will begin to bottom and people will stick their heads up out of the bunker and begin to plan for the coming inflation. Start looking for those values, be opportunistic and of course when it comes to real estate – locattion, location, location!!
I can’t help but think that these are the times in our lifetime that tests all of our mettle. This is a time when we should all take stock of the importance of family, friends and community. We’ve all been buying stuff for years that ends up in the landfill after we found more stuff with which to replace it. I love to shop and love stuff BUT not more than I love taking care of people that I love who are in trouble.
So this blog posting is nothing more than my humble words urging all to help your neighbors, your friends, be kind and pay it forward. Good Karma pays off and in this economy it may be our best currency!!