Orchestrated Downdraft

Money-Supply Growth Falls to 8-Month Low as Mortgage Rates Rise

Liberal Policies Boxing In Renters

According to Maria Cantwell,(D:WA), there are 3.9 million low-income households that lack access to affordable housing.

She does not blame the horrendous economic conditions of the current administration, with increased taxation and regulation; she blames the lack of governmental intervention introducing a plan for Congress to increase spending on the Low income Housing Tax Credit, a primary method for encouraging construction of affordable housing.

Builders should evaluate construction based on return of and on their investment and the government should exit participation in the housing industry.

With baby boomers retiring, the number of single family residences that need to be constructed will decrease over the next couple of decades to account for the dramatic demographic shift.

 It's Getting Harder to Pay the Rent in America

FEDeral Protection

Janet Yelln/ FED Chair

Trump fires a torpedo at the ruling class, suggesting the FED, who lost their independence some time ago, is keeping rates low to protect Obama. Trump is marginally accurate, for the ruling class would like nothing more than to dump the massive recession coming our way on a newly elected GOP president.

More aligned with the truth; however, is that rates need to rise to pull back the excessive money currently in the system, but there is heightened fear even a 0.25 basis point raise in rates will send our fragile economy spiraling downward. This would expose Obama's claims of a great recovery as false.

In addition, due to Obama's economic policies and lack of independence of the FED, few tools remain in the toolbox to counter shocks to the system, which are coming very soon.

It is important to note that in the aftermath of the housing crisis of 2008, virtually every economic decision from bailouts to excessive regulation was the wrong choice.

Free Markets, Not Affordable Housing, Cure to Housing Crisis

Numerous articles have recently appeared describing an alarming prospect for renters moving forward.

The Atlantic describes a "bleak future for renters" and Zero Hedge noted the "missing" inflation is located in rental rates, which have been on a historic rise. Bloomberg noted "the rent crisis is about to get much worse."

Many have used the fallout of the housing crisis to advance an agenda centralized on the transformation of wealth. An orchestrated series of events, from the FED's ZIRP (zero interest policy), quantitative easing (the printing of money) and the bailout of the nations banking system has led to an inflated stock market where counter party risks have escalated and an increasing disconnect between the worlds of equity and fixed income has emerged. Hypothecation is certain to be an upcoming buzzword.

The economic policies of the left have left those seeking to move up the ladder of prosperity shackled to the ground. Potential home buyers are unable to pull the trigger on purchases of new or existing homes, as median income is stagnant and full time employment growth is non-existent.

In fact, home ownership is at a 40 year low.

Chart via ZeroHedge.com

Left leaning policy wonks, who never let a crisis go to waste, think the government has opportunities to correct the situation, by stepping in to ensure affordable housing.  Stepping in to correct the "situation" they created?  One thing I know; it is not prudent to engage those who caused the problem to fix the problem.

“The economy alone is not going to solve this problem," said Andrew Jakabovics, senior director of research at Enterprise Community Partners, said in a conference call to discuss the findings. "It brings us back to the need to expand affordable housing.”

False.

Presently, consumers are boxed in with historic rises in rental rates (inflation), with little avenue of escape.

More government intervention in the market is the opposite of what is needed. As Ronald Reagan once said, The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'

For the problem to be solved, regulation and taxation must retract to allow increases in full time employment, median incomes and entrepreneurship. Further, QE, which devalues the currency, must cease and interest rates must rise.

As the brilliant Thomas Sowell appropriately notes upon the visit of Pope Francis to America, "Pope Francis’ own native Argentina was once among the leading economies of the world, before it was ruined by the kind of ideological notions he is now promoting around the world".

Without question, free market capitalism is the best path to prosperity, where most who achieve it significantly expand their participation in charity efforts. This is not only true in America, but across the globe.

Providing an environment for potential home buyers to escape from being trapped in rental homes is essential to solve the housing problem, and a integral part of that landscape would be free market capitalism unleashing the entrepreneurial spirit of the individual, placing the federal government back operation within its means and a reduction in punitive regulatory and taxation burdens.

As former Rep. Thaddeus McCotter, R:MI, noted, "Reagan trusted in Americans' entrepreneurial spirit, innovative talents, and industriousness, and he agreed with Adam Smith's insight that freedom and prosperity are inextricably entwined and mutually reinforcing. The flexibility of our markets is endangered by excessive regulation, onerous litigation, and government redistribution of wealth".

The blueprint to solve all the nations economic ills has already been written, if our elected leaders chose to engage it.  The current group will not, choosing to increase power over the citizenry through increasing tyranny utilizing divisive policies laced with socialism.

In November of 2016, we have A Time for Choosing.

Truth Lost in Conflicting Chaos

It is spinning out of control.

The NASDAQ was down 1.5% today, with the VIX (volatility index) spiking.

Overseas, Europe is under siege, with Nigel Farage detailing the damage unfiltered immigration will cause, with those seeking to take America down following Europe's lead.

Additionally, there are escalating issues with Russia in the middle, where things are quickly getting nasty, with our side lead by enemies within.

The housing market seemingly everyone is cheerleading is a mirage, as home builders and home sales are crashing.

Physical gold is elusive; however, big money is chasing it. Big money is also betting on increasing rents, which is a signal the economy is far from healed.  Potential home buyers are unable to pull the trigger on purchases of new or existing homes, as median income is stagnant and full time employment growth is non-existent.

Then, there is the stock market, where too many dollars are chasing too few performing assets, creating inflationary values based on nothing.  Retail sales, and manufacturing, have also collapsed.

With conflicting information everywhere, it is tough to decipher propaganda from reality.  Look no further than the lack of inflation in the market, or so we are told by our government and their media partners. In many ways, they seem blended in ironic mesh.

But make no mistake, real trouble is near. The market knows; soon, we all will.

 (chart via WallStreetWindow.com)

Folks Are Placed In A Stranglehold

An article turned up on CNBC today that seemed to catch many economists and pundits by surprise, although it has been painfully obvious to anyone not slanted with Obamavision for over half a decade.

Please see the following pull quotes from the piece, which notes a what can only be described as increasing economic issues that are not only delaying millennials from purchasing a home, but from fully achieving milestone of life.

"The typical first-timer now rents for six years before buying a home, up from 2.6 years in the early 1970s, according to a new analysis by the real estate data firm Zillow. The median first-time buyer is age 33—in the upper range of the millennial generation, which roughly spans ages 18 to 34. A generation ago, the median first-timer was about three years younger.

The delay reflects a trend that cuts to the heart of the financial challenges facing millennials: Renters are struggling to save for down payments. Increasingly, too, they're facing delays in some key landmarks of adulthood, from marriage and children to a stable career, according to industry and government reports".

The greater majority of the issues plaguing the millennials, and the entire economy, are due interactions of the government.  Among the negative governmental influences have been the flooding of the market with money, which devalues assets and is inflationary, increasing taxation and regulation, attacks on small businesses and increasing infiltration in markets creating inefficiencies.

Due to these improper, and in many cases illegal decisions, the economy has been in an orchestrated decline. Our opinion for the reasons the administration would engage in such activity centers around the administrations effort with regard to the transformation of wealth, both an a micro domestic and macro global level.

At any rate, there have been scores of negative byproducts from these efforts, and for those seeking home ownership and unable to make that jump and boxed in the rental market, it should not come as a shock that rental rates are skyrocketing, hitting "crazy levels".  As such, escape from this viscous circle becomes increasingly more challenging, and folks are placed in a stranglehold.

As, professionally, we operate in this space, we so appreciate those that have chosen one of our properties to make their home over the years, but we note with sadness the increasing degree of difficulty faced by those who seek to climb the latter and purchase a home.

The economy is a wreck, and expenses and inflation are outpacing rises in income for those who do have meaningful full time employment, which decreases monthly with 94 million Americans underemployed or unemployed.

We know who is responsible for placing hard working Americans in this status, although many do not given the propaganda put forth by a complicit media and outright lies being told by Obama administration officials (unemployment rate is top example).

Elections have consequences, and we are paying a heavy price for 2012.

Misleading and Fraudulent Housing Data

In February of 2009, the Government Census Bureau was moved to the executive branch, most thought to deal with congressional redistricting. A byproduct was the reporting of misleading and fraudulent data.

Of note this week was the "discovery" of some real questionable activity with the reporting of the housing numbers, specifically new home sales.  Already, we have documented erroneous data with respect to how unemployment rates are calculated.  Why not extend the propaganda throughout government data?  NBC will be happy to report it.

While housing is performing in certain locations, rental rates are rising due to higher demand of folks who ordinarily would be potential home buyers, giving indication the equilibrium in these markets the incorrect measurements suggests is not real.

Most of America does not have time to sift through the bull crap to figure out what is real and what is a manipulated fabrication. Therefore, most everything goes unquestioned, and when caught and reported, the level of deception is to intricate for the average person to comprehend.

As such, we get the government we deserve, one which is diminishing liberty and freedom for all of us on a daily basis, and on a much larger scale than even those who "get it" can imagine.

"When you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed"  --Ayn Rand, “Atlas Shrugged”

Devastation of the Family Home

In the field of economics, one of the most difficult items to estimate is the ripple effect associated with major events that significantly affect the economic and social welfare of a community. The recent housing crash, for which our economy is still reeling from, is a classic example.

In my estimation, the entire response from our federal government was in error, as government intervention took the place of free market capitalism to create devastating economic consequences which continue to this very day.  While some may conclude the government was attempting to help in a time of "crisis", I am reminded of another of the timeless quotes from Ronald Reagan: "The most terrifying words in the English language are: I'm from the government and I'm here to help".

 

The housing crisis established a house of cards, pun intended, where lending institutions gave mortgages to anyone with a pulse, packaged the loans into mortgage backed securities and sold them as A rated to investors.  With the leverage unsustainable, bank failures emerged and the devastation began.

Rather than letting the market cleanse itself out, where those who invested in error or without proper due diligence, or both, paid the price, the government initiated bailouts of the major lending institutions. These government investments in the banking sector have come with a heavy price for the lending institutions, including appraisal regulation that has significantly impaired the industry.

The government now has an embedded regulatory mechanism within the banking sector, and Fannie Mae and Freddie Mac continue to run inefficiency, with these government sponsored enterprises possibly needing more bailouts.  The housing market, although now seemingly stabilized and improving slightly in some markets, remains a shell out itself.

Home ownership is at historically low levels, in large measure to stagnant wage growth, with the worker actually losing ground annually. Many former homeowners are joining the millennials, where a majority unable to purchase a home are forced to rent, pushing rent levels to historic highs.

Much of the government interaction in the aftermath of the potentially orchestrated housing crash has limited free market principles, prohibiting the market from returning to optimal health.  Perhaps it is part of the war the progressives have on suburbs, maybe a vehicle in the transformation of wealth or quite possibly it is Orwellian in that gave the government an a prime opportunity to seize control over a large portion of the economy, and the citizenry.

Most in the economic world who embraces free market principles knew the path of quantitative easing and government interaction and control in markets was most problematic. While we await the next crash, which we forecast to come right around the presidential election, the devastation the crash has left on families across the nation is troubling and sad.

Many feel the great American dream is no longer obtainable.  Without question, if you have yet to obtain wealth, the degree of difficulty in achieving it has risen sharply under President Obama due to the infiltration of government regulation and taxation.

It seems 99 Homes may focus on the trial and tribulation of a family whose life was turned upside down at the drop of a hat as the housing crisis placed a stranglehold on the US economy back in 2008.

My professional activities, involving residential real estate appraisal, rental property management and as collateral risk analyst have given me a front row seat throughout.  When 99 Homes hits theaters, I will be there to grab a front row seat.

Twisted Tales

I did not know whether to laugh or cry.

That was my reaction to the following headline of a post by Tyler Durden over at ZeroHedge.com:

"With 1 In 3 Homes Unaffordable, Freddie Mac Prepares To Enter The Trailer Home Loan Market"

After fighting through the propaganda presented daily by the Obama administration and their media partners, it is quite obvious that the issues surrounding this headline are illustrative of an anemic and fragile economy, with our country teetering on economic peril few can currently visualize.

With all the failed stimulus, which I was against, we literally have nothing to show for it.  The economy "grew" an a paltry 0.01 percent last quarter, and it culprit is not the much discussed weather.  The culprit remains increasing taxation and regulation, and Obamacare, the biggest job killer we have witnessed in many a moon.

With over 90 million potentially fully employed workers out of work and the lowest labor participation rate since the economically dismal Carter administration, job growth is practically extinct and the annual after tax income for the average worker has decreased approximately 10% since the financial crisis of 2009.

Therefore, although housing prices have significantly retreated, due to a bludgeoned job market, as reported by Zillow, a third of the homes for sale are unaffordable to the average household. In addition, due to Dodd Frank and increased lending requirements, there is increasing difficulty in obtaining financing. 

Housing purchases have been happening over the past year, which have potentially inflated values.
However, it has not been the young family moving up from apartments or starter homes accounting for the sales; it has been Wall Street Hedge Funds and public and private real estate asset management firms, who have been making purchases to rent back to the increasing number of potential buyers unable to make purchases.

It is noted that in recent months these firms have significantly backed off their number of purchases.

Mark Hanson is a top notch real estate analyst, and he recently presented the following chart indicating cash purchases, which were a stunning 63% of residential properties sold in Florida in December:

Mark Hanson/MHanson.com

As the FED seemingly prepares to end qualitative easing, interest rates, which have been been held down and are not a true reflection of the market where economic equilibrium would be measured, without continued FED intervention, are sure to increase.  With the employment landscape stagnant as best, the purchasing of home will become increasingly unaffordable.

Seemingly in anticipation of the negative environment for housing created by the government and their partners, GSE Freddie Mac is now set to begin financing manufactured-housing communities.

Make no mistake, increased financing opportunities are always welcome, although the government should not be involved, as the private sector should be the marketplace for mortgage lending.

But, with this action, is there a story behind the story?

Manufactured housing is typically utilized by lower income families and acreage owners in rural communities.  Are stick built homes to become increasing unaffordable, forcing middle class owners to back step and unitize manufactured housing?

Keep in mind as well, that potentially increasing regulatory actions by the EPA, under the Agenda 21 guidelines, may make transactions on older existing homes much more costly for all involved through having the subject improvement meet EPA guidelines with respect to energy efficiency of appliances, windows, roof cover,etc. before qualifying for financing from GSE's or money center banks the government has interests in.

As a real estate investor, I have not included manufactured housing in my portfolio, primarily due to limited economic life of the improvement in comparison to stick built improvements.  Be advised I am not the only investor aware of this. 

Thanks to the Obama administration and their anti-capitalist policies, the economic conditions in the country are horrendous.  Reminiscent of the climate in the Great Depression, if you are fortunate to have good, stable employment, it has been your neighbor who has been laid off who cannot find adequate employment who is really feeling the brunt of the poor economy.

With employment stagnant at best, and the true future effects of Obamacare unable to be adequately forecasted, the job market remains facing unnecessary head winds with are keeping our economy from reaching high efficiency.

Perhaps Freddie Mac knows something most of you don't, and is looking for another investment opportunity?   The weather is unpredictable; don't get the tales twisted.

A Measure of Success

While literally in midst of another domestic terrorist attack in Washington, DC at the Naval ship yard, in what can only be described as a classless and appalling action, President Obama took to the podium in front of a staged crowd marking the five year anniversary of the financial crisis to take credit for saving America from a a depression.

The top priority since his tenure in the oval office began, Obama reiterated his intention of focusing like a laser beam in his effort in building our economy so it works for everyone and laying out a new foundation for economic growth and prosperity. Take a listen:



With an adoring mainstream media failing to once again to question the assessment of the president, the extreme lies and misrepresentations of this speech cannot go unchallenged.

Obama, through the passage of Dodd-Frank, has left most banks paralyzed, as he blames the money center banks for creating the housing crisis through unsavory lending and underwriting practices.  Never mind that much of the blame falls on the goings on surrounding the Community Reinvestment Act, which sought to provide loans to lower income individuals and families who under normal established guidelines would fail to qualify.  ACORN, a community activist organization Obama supported and worked with, threatened legal action and public ridicule through protest for those considered racist banks who refused to dismiss best underwriting practices and engage in lending to unqualified applicants.

Dodd-Frank also provides consumer protection for those engaging in commerce with banks, given the deemed incompetence of the consumer derived by the government.  Forget buyer beware, Obama and big brother are here to help, guiding (and restricting) what banking actions of commerce the consumer will be allowed to engage in. Dodd-Frank does nothing but restrict banking opportunities all while increasing costs of the consumers.  It is about nothing but government control, and limits the individual liberty and economic freedom of the citizenry.

In addition, while we are at it, the assault on property rights also adds costs and restricts freedom of property owners through EPA implemented regulatory action, restricted permitting and zoning regulations implemented under Agenda 21.  Has anyone replaced an HVAC system lately?

President Obama spoke of how his efforts jump started the flow of credit.  Through government entitlements, such as HARP, scores of homeowners have refinanced their mortgages at lower interest rates as banks beholden to the government have been directed to provide this opportunity.  The lost money is absorbed by the taxpayers.

Most property owners, due to underwater property values, facing restricted credit and unstable employment, are unable to qualify for loans without government assistance.  Credit for small businesses, and mortgage loans free from governmental intrusion, remain quite difficult to obtain.

Some thirteen trillions dollars have been spent, actually borrowed, to "stabilize the economy" and create jobs, and although Obama has no idea, this has been a colossal failure in large measure to his horrendous economic policies. Remove the FED buying bonds, begin some tapering, and see how stable the economy is.

While the administration trumpets a lowering unemployment rate, it should be noted that figure has been grossly manipulated.  Millions of Americans, unable to find work, have quit looking, and thus have fallen from being counted in the data sample, thus allowing the rate to fall.  The real story can be found by looking at the Labor Force Participation Rate, which tells us that the amount of our citizenry fully employed, not withstanding steady population growth, is at levels not seen since 1978.

 

The real statistics regarding the economy are staggering, and if the workforce was equal to when Obama was sworn in, the unemployment rate would be closer to 14%.  Among the jobs Obama has claimed to create, a mind boggling number have been part time, in large measure due to companies limiting the hours of their employees in preparation of the implementation of Obamacare.  Obama championed the flagship legislation he spearheaded in Obamacare, the current top ranked job killer in America. 

 

In a related statistic, ZeroHedge.com illustrates economic realities even the low information crowd can comprehend; reporting a record number of restaurant workers while restaurant companies report decreasing sales.  Something is wrong with this picture.

 

Obama noted an erosion of the middle class, unaware his policies are the culprit.  Families are working harder than ever for less as median family income is lower than when he took office, coupled with rising costs in health care, food and of course gas, which has been over $3 a gallon, in contrast to a cost of $1.83 upon him taking office, for over 1000 days.

 

In fact, Obama highlighted his efforts to insist on new technologies to end our addiction to foreign oil.  Given that commentary, it is puzzling that this included reducing domestic drilling where possible, with a byproduct of a reduction in jobs, and increasing purchases from foreign countries.  Obama proclaimed we sought to become Brazil's biggest customer for oil.  Cheers!

 

Higher education has been an item Obama has focused on, even having Sallie Mae taken over by the federal government,  Sadly, the cost of higher education has never been higher and issues abound.

 

Much of the stimulus money went to unions organization and green job initiatives, many of whom are now bankrupt. Bridges and roads earmarked for repair remain in need as the money went elsewhere.

 

Obama was thrilled to save Detroit, except he did not.  The city of Detroit has gone bankrupt, and General Motors has been unable to repay Uncle Sam for the bailout.  The famed Pontiac Motor Division fails now to exist, and green energy vehicles Obama forced GM to produce have not produced a profit.  In a brazen derailment from contract law, bond holders had their money stolen while auto unions were padded.  Dealerships that were closed were over 80% owned by GOP donors, a political hit.  Ford, meanwhile, turned down the bailout and is outperforming GM. 

When Obama adds it up, he sees a tremendous success. Given his ambition to fundamentally transform the United States of America, his presiding over our decline may be measured as such.  For those who appreciate free markets, individual liberty and economic freedom, his tenure has been catastrophic.

But the lies and misrepresentation did not end there.  Yet to come was the all too common bitterly partisan and divisive attack on those meddling kids, otherwise known as Republicans.



It is worth noting, again, that for the fist 18 months of the Obama administration, until the election in Massachusetts of Scott Brown, democrats held a super majority. Better stated, the republicans may as well have played golf everyday because they alone could stop no legislative action. Zero.

At this point, the GOP has the house, but the democrats still control the presidency and the senate. Furthermore, against rhetoric to the contrary, a long list of progressive GOP members refrain from contesting Obama on anything, even some having supported much of his plans, inclusive of Obamacare.

The economic chaos Obama speaks of has been caused by his wreckless spending, exploding entitlements and attacks on small business and free markets.  Keep in mind it is Obama and his party are and have been in control presiding in the decline of America.

With respect to those who are offering opposition to Obama and his collective ambitions, I joined millions of others in electing representatives charged with defeating his initiatives.  It is Obama who has tanked the economy, not a handful of GOP members who oppose his socialistic goals.

Obama is emphatic that he will not negotiate with the GOP on the budget issues, which is odd coming from a man who claimed he would negotiate with any terrorist on the planet.  The GOP always get hammered for not compromising, but it is Obama who will not negotiate.

Yes, when you add it up, freedom and prosperity has been lost under Obama's presidency.  Five years after he implemented his strategy, with limited elected opposition, the country is far from economically stable and cannot pay its bills.  Seemingly under control of the administration, the FED is monetizing our bloated debt, crushing savers and decreasing asset wealth in what has to be considered the reaching of Obama's goal of the transformation of wealth.

The media can cheer Obama on, but those of us in the middle class out here working know what the scorecard says.  The economic conditions as a result of the actions taken by Obama have significantly reduced freedom and prosperity, the opportunity to achieve it, and have decreased the standard of living for the greater majority of our citizens.

How is success measured in this case.  For Obama, presiding over the transformation of the United States is considered a rousing success.  I consider those actions unconstitutional, and therefore seek his impeachment.

No War On Women At Daytona

During the last election campaign, we were led to believe by the Obama campaign and the mainstream media that Republicans were waging a war on women.  Obviously, as usual with this group who seek to demonize, ridicule and discredit their opponents, nothing could be further from the truth.

That does not mean they were not successful in creating the false narrative.  In threatening a potential domestic policy described as limiting to women with respect to health care issues, women became terrified of a retracement of women's rights eclipsing reality.  The left, with a complicit media assisting, were relentless in their attack on the issue, which was personalized for many women.

Although the right is certainly against abortion, the base of these attacks were outside of that argument, utilizing an orchestrated attack on contraception, starting from a seemingly out of left field question to GOP primary contender Mitt Romney.  It is recognized that there is a divide with respect to abortion between many women who hold their right to chose dear and those who think the rights of choice end when a human life is conceived. A Mitt Romney victory could not immediately impact the abortion debate, although it was presented it could.

Knowing the falsity of the attacks, the right was somewhat bewildered on why the left would keep running with this seemingly non existent issue.  We had the misfortune of being introduced to Sandra Fluke, and got a very strange campaign ad from a television star few had heard of.

As we examined the aftermath of the re-election of Barack Obama, we found that this false issue actually resonated with women voters.  Polling shows that women were much more concerned about getting contraception, with several options reasonably priced at retail outlets such as Wal-Mart (WMT:NYSE), than losing gainful employment, watching their housing values plummet, rising gas prices and a declining standard of living.

Welcome to the low information voter, or ones who cannot decipher the truth amongst the waves of propaganda.

There is no war on women from the right, and we champion women with great respect.  They are our grandmothers, our mothers, wives, daughters, girlfriends, friends, bosses and co-workers, neighbors, customers and teammates.  They are leaders, champions, and competitors who provide a necessary guidance in all of our lives.  In one of my employment capacities, the director of the department is a woman. We could not and would not want to live without women.

Women play vital roles in the fabric of society. It was women who led the way in the formation of the Tea Party, as noted in a recent column. Women also excel in inventions and innovation, noted in recent years by Sara Blakely, a fellow graduate of The Florida State University, who invented a "body shaping" innovative product in undergarments called Spanx, now a billion dollar operation.

All Americans should champion the success of women, as their success is our success. 

Today, another opportunity exists to celebrate women as Danica Patrick won the pole position for the 55th running of The Great American Race; the Daytona 500.  Patrick recorded the fastest time in her Stewart Haas #10 Go Daddy Chevrolet and became the first female to win a pole for a NASCAR race.

Congratulations Danica!  Good luck running the high banks when they put the field under green on Sunday. No war on women. We will be at Daytona International Speedway, a place with scarce liberal infiltration, Thursday and Sunday, cheering you on!



Danica Patrick wins Daytona 500 pole positon.

Tacking Tangible

The market indexes have been on quite some run.

If I could get a handle on all the lines of action going on on Wall Street, not only would I be a ventriloquist, I would be beyond wealthy. I am not.

The FED has increased the money supply by engaging in monetizing the debt, otherwise considered printing money, and that has resulted in excess money chasing too few assets, pushing the asset prices higher.

Due to the abysmal housing market, which cannot gain ground due to a horrendous job market and extensive regulation through Dodd-Frank, real estate investing has not been the avenue of choice for investors.  Gold and the stock market has.

A review of the NASDAQ after the close today shows the index increasing five year highs, and this has been a great run if you have been along for the ride. Take a look, but note the market level variance from the relative strength:



Weekly NASDAQ chart/Investors.com

While markets are forward looking and do not always reflect the current status of the economic realities on the ground, given our economy, it is reasonable to conclude the stock market should not be lurching into a parabolic assault on historical highs.  With an employment participation rate having retracted to levels not seen since the Reagan administration, a manipulated unemployment rate parked at levels not witnessed since The Great Depression, governmental assaults on small business, class warfare on the wealthy and putrid growth in the Gross Domestic Product, one has to wonder why the dichotomy between the capital markets and the reality on the ground.

As the excellent blog Zero Hedge accurately pointed out, many economic measures are breaking down, and while the Case Schiller Housing Index has shown signs of life depending on how you analyze the data, even though a shadow inventory remains, the housing market remains bottoming.

If housing is improving, with the state of the economy, one must conclude rising investor participation as first time home buyers are scarce.  If investors are becoming more interested in real estate, what market has fallen into disfavor and why? The stock market?

Indications are yes.

In fact, as BloombergBusinessweek reported, some $114 billion US Bank deposits have been withdrawn, at the fastest pace since the September 11, 2001 attacks. 

Apparently, few know why.

Paul Miller, a bank analyst with FBR Capital Markets, cautions against reading too much into the Fed’s weekly data. “It’s a noisy database,” he says.  No kidding.  With a media complicit in propaganda, and the FED intervening in market action in unprecedented levels, it is most difficult to accurately value equities.  It is the FED behind the curtain who is crowding banks out of the mortgage origination market and setting unreasonable credit requirements for lending practice, handicapping the housing market even with manipulated easy money.

But is there a correlation between rising housing investment and what looks to be a topping out of the DOW and NASDAQ?  Further, in anticipation of a market collapse, would tangible assets such as real estate become the favored investment?

Without government interaction, even though they have been replenishing their balance sheets borrowing free money from the Fed, banks could not withstand a major economic collapse.  Further, unwinding the hypothecation would be catastrophic.  If the clients of Jon Corzoine at MF Global are any indication, get your money while you can.  Maybe investors are.

No matter what market developments lay in store for us, a few things are certain in my view.  The housing market remains broken and cannot recover without a recovering job market. The market has been compromised and true evaluation is not possible. And, unfortunately and most notably, the rule of law and trust of the marketplace, integral for the survival of a free market capitalist system, has been violated.

As I have previously mentioned, until the rule of law is reestablished with the government becoming a bystander, allowing the FED to resume normal open market operations, the market place will remain compromised and a playground for the crony crowd.

Given the increasing turbulence, while I don't know what I am having for lunch tomorrow, I sense a major storm brewing both port and starboard. Caveat Emptor.

Failing to Dodge a Bullet

Back last June, President Obama informed America that his administration has created hundreds of thousands of jobs and that the private sector is doing fine.

A great storyteller (liar) of our time, while the administration has created thousands of jobs, more folks have quit looking as the number of employed citizens has spiraled downward under his watch.

Although, for the moment, our economy seems to have stabilized with the help (?) of over 5 trillion in stimulus, there is no doubt, with increasingly handcuffing regulation and suffocating taxation, the private sector is not doing fine.  With apologies to Ted Nugent, who was in town Sunday night, the Obama economic policies have us in a stranglehold.

For the most recent case in point, I direct you to the announcement yesterday in Detroit that Fiat owned Dodge will cease participation in NASCAR at season end, some 12 years after their triumphant return to the sport.

After absorbing all the seemingly legitimate reasoning behind he decision, one thing is clear: this is not good news for the auto industry, Dodge and certainly NASCAR, where even the most casual observer is noticing the large number of empty seats around the Sprint Cup Series circuit. While participation of the major auto manufacturers in NASCAR is a small part of the overall business, it is a significant association. 

The manufacturers gained from participating on many levels, including engine research and development, a testing ground for innovative products and of course, advertising. Win on Sunday, show on Monday was a catch phrase back in the day, but with NASCAR going to the car of tomorrow, the personalities of the makes lost presence. While that is changing in 2013 in a effort to recapture the similar stock look, it is too late for Dodge.

It was unfortunately George W. Bush that began the process to bailout the car companies, a move that coupled with Obama taking advantage of the engagement, has severe repercussions affecting all those associated with the auto makers, and us taxpayers, to this day.  The actions taken by the Obama administration upon taking office, created significant issues, some bordering on criminality, plaguing efforts at achieving profitability.

The GM bailout is particularly troubling, with bondholder positions being placed behind union interests, dealership owners being targeted due to political association, the jettisoning of the iconic Pontiac brand and the government utilizing its ownership position to advance green energy vehicle initiatives. With the government in control, the old GMAC financial arm, a top player in the mortgage meltdown, has emerged renamed and is back to the old tricks with subprime used car loans,  a highly risky roll of the dice, this time with taxpayer money.

While Obama claims he saved the car companies, GM requires a stock price in the low 50's to make itself whole.  GM closed today at 20.38 per share, and the true costs of the bailout is staggering, In addition, the criminality associated with this takeover is now beginning to unravel.  Ford did not accept money, but Chrysler also was partially bailed out and has since been sold to Fiat.

The car companies were not saved.  The preferred route for them would have been a structured bankruptcy.  Obama has wasted untold trillions of dollars, and after this huge expenditure, the automakers are still having major trouble.  Similar to the housing industry, the industry needs the job market to improve significantly for these sectors to return to health.

For a company like Dodge to exit the friendly confines of NASCAR, take it as the harbinger it is, one signaling an unhealthy economy which is major trouble.

Five Forgotten

When Glenn Beck left FOX News Channel after smashing rating numbers for the 5PM EST time slot, FOX rebounded nicely with the new show The Five, with five rotating panelists discussing the events of the day. This show is outstanding, with excellent co-hosts Eric Boling and Kimberly Guilfoyle. Anything that puts the lovely Guilfoyle in front of the camera will be a ratings success.

Even so, this week I was following five stories, or in the case of Rick Santorum's sweep, variations of, that The Five did not cover. As good as this show is, and as good as FOX is, many very important stories do not get proper coverage, if they get covered at all.

Below are five that I focused on this week, and I wonder is any of the readers knew about these stories. They are important, so have a look

NANEX

I was over at Zero Hedge and found an alarming story on high frequency trading. On the day Uncle Sam was downgraded back in August, a staggering increase in high frequency trading ensued and has continued since. Check out the story and the chart over on Zero Hedge HERE.

It seems to be that algorithmic trading between computers is taking place at a highly increased level, and while there is a place for such trading, this type of activity is dangerous. You got any ideas about what is happening?

RICK SANTORUM

Rick Santorum had a big night this week, winning Minnesota, Missouri and Colorado. They picked Rick! Although the pundits discussed the momentum perhaps gained by Santorum, and the problems perhaps exposed by his opponents, I focused on his outstanding victory speech.

Santorum spoke truths about the Obama administration, that they seek to rule over the people rather than listen to them, that they wish to rule over them and run their lives with a lengthy list of central planning programs because they think they know better than you.

Obama really does look down on the people, with soaring rhetoric about helping the people while actively reducing the freedom of the people. Santorum has the right message, and it would do America well to hear him!

BORDER CALAMITY

On GBTV, Glenn Beck presented an incredibly alarming program on the activities taking place on the border. Although there are a handful of Americans who have some level of understanding about the high level of national security issues taking place along the border, most have no clue how serious this problem is. Unfortunately, the problem is worse than ever, and our government, on both sides, is for the most part sitting it out. Why, I do not know.

Although I could not get elected dog catcher in my community, if I were President, with a thorough understanding of the severity of the problem, I would have the US Military seize the day immediately, using any force necessary.

Hearing the facts presented is a depressing indictment of the failures of our government, but unfortunately, something you must become knowledgeable about. The video is not for the faint of heart, so viewer discretion is advised. However; knowledge is power, so have a look on Glenn Beck HERE and HERE.

HOUSING PLAN

Stupid is as stupid does. President Obama has yet another plan to punish banks and reward bad behavior in an effort to boost the housing market. Jimmy Petholoukis leaked that Obama was ready to release the plan, hitting banks with punitive punishment and forcing them to refinance some home owners. Should the banks fail to comply, a newly appointed Czar will seek them out for punishment. Of course, costs force upon the banks will be passed on to the consumers. This will raise the cost of capital, reduce the amount of mortgage activity and prolong the crisis.

Obvious to just about everyone not involved with wealth redistribution, this program will only hamper any recovery in the housing market. As we have repeatedly said, for the housing market to improve, a growing job market must be in place allowing free market principles, free from government interaction, to form an efficient market where buyers compete with sellers in arms length transactions. Under such a market, price will be established a normal market can resume.

Obama will not allow this to take place, as his principles center around wealth redistribution directed by a government who picks winners and losers. This creates an inefficient market, is not free market capitalism, and will restrict the pace of any recovery.

CME GROUP

On Wednesday, the S&P cut the CME Group Inc.'s credit rating in the aftermath of the debacle involving the collapse of MF Global. The has been under fire since MF files for bankruptcy. Under normal market conditions, this news would some kind of spook the markets.

Be advised there is much more here than meets the eye, and the fallout could be mind boggling. Customer funds were stolen, and with this type of activity taking place, the integrity of the market is zero. Ann Barnhardt, of Barnhardt Capital Management, has been leading the way in covering the real story going on here from a birds eye view.

Future Financial Mayhem

You may not recognize it, but you are being lied to.

For an example, which is a full assault on your wallet, look no further than the monetization of the debt, which Fed Chairman Ben Bernanke said would not happen. Well, Investors Business Daily reports that the FED is readying for more stimulus. Perplexing for sure, given the failed results of previous quantitative easing, QE1 and QE2. Printing money decreases asset value, which surely will not be of assistance the millions of homeowners underwater.

Media outlets report that the economy is growing and jobs are being created, as evidenced by the unemployment number presented by the federal government. If that is true, it would not be necessary for the FED to engage in QE3.

Speaking of the FED, something has gone terribly wrong over the last few years. The FED is the lender of last resort and is charged with conducting monetary policy. Historically, Presidents have had little power over the FED, with the FED operating outside of executive branch influence, the exception being appointments to the boards and appointing the Charmian, if necessary.

Although the FED is by far the most powerful governmental agency, there is little regulatory oversight over its activities. Somewhere recently, particularly under President Obama, The FED seems to be carrying water for the administration and assisting in the implementation of policy. This is very troubling, particularly when the leader of the executive branch is not a free market capitalist.

Recent actions by the FED, seeming to begin with TARP, have broken tendencies and are raising concerns on both sides of the aisle. The creation of the conditions that allowed MF Global to take place is a recent example of the now problematic status of the FED, and how you are being lied to.

For a brilliant explanation, please see First Principles Capital Management CEO Doug Dachille at the Yale School of Management last December:



The government, using the FED through regulatory influence and intervention, is now choosing winners and losers. Although Fannie and Freddie are still in operation, it is the FED behind the curtain who is crowding banks out of the mortgage origination market and setting unreasonable credit requirements. As Dachille points, out, life insurance companies are being squeezed, and Sallie Mae has been taken over and private lending has been crowded out.

With MF Global, customer accounts were not protected. They were stolen to pay major players. Again, as Dachille discusses, with the suffocating Dodd-Frank bill, you might think customer accounts might be protected. If the regulators are charged with one thing, it would be to protect the integrity of the system, the trust that customer accounts not participating in risk taking activity are not hypothecated and can be made whole in a timely fashion.

This did not happen at MF Global, and due to the lack of trust in the markets sure to emerge because of this, bad things are on the horizon. If this can happen at MF Global, it can happen at any firm housing investments. A customer obviously has no control over hypothecation by these firms and therefore cannot be guaranteed a return of the investment should the firm be severely compromised or fail.

Beginning with the shafting of the bondholders of the automakers, the rule of law and trust of the marketplace, integral for the survival of a free market capitalist system, has been violated. You are being lied when government officials and the media inform you that everything is fine.

Until the rule of law is reestablished, the government becomes a bystander and the FED resumes normal open market operations, the market place is compromised and for you to be participatory in it, Caveat Emptor.

Information Misrepresentation: Appraisals

Information presented to the Public by various outlets is being crafted to misrepresent reality in an effort to skew political thinking, gain economic advantage and nudge social justice further down the American psyche. This is the first in a series of blog posts detailing instances in this regard, as it is imperative the Public recognize the significant level of misrepresentation and how vast the manipulation is.

Information Misrepresentation: Appraisals

The National Association of Home Builders (NAHB) reported this week one out of every three of its builder members has lost a sale during the last six months because of home values reported by appraisers.

NAHB Chairman Bob Nielson said, "The inappropriate use of distressed and foreclosed sales as comparables in determining new home values is needlessly driving down home prices, killing home sales, causing more workers to lose their jobs and delaying a housing and economic recovery."

The NAHB did not stop there, further hammering appraisers with the following:

* According the Association, appraisers are using "faulty" practices by utilizing distressed homes as potential comparable sales against new homes. Mr Nielson said in a statement that "This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market."

* Mr Nielson notes that in many cases, new home appraisals are coming in below the cost of construction, because of flawed appraisals for utilizing existing and potentially distressed homes.

* Per the NAHB, These appraisal practices are a major contributing factor to the current acquisition, development and construction (AD&C) lending crisis that has choked off credit for home builders and threatens to prolong the current housing downturn. Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, to demand additional equity and even to call performing loans.

* The NAHB has been having summits, with leaders throughout the housing industry in an effort to find solutions that will allow appraisers to develop realistic valuations based on sales that are truly comparable.

Mr Nielson and the NAHB concludes that, you guessed it, “Major reforms in appraisal practices and oversight are needed to ensure that appraisals accurately reflect true market values and don’t contribute to price volatility or harm aspiring home owners and move-up buyers.”

One thing I know from the real estate world: It is always the appraisers fault. NOT! What we do have from the NAHB is information misrepresentation.

This must have been some series of summits. A bunch of bureaucrats gathered together to central plan the housing recovery, culminating in the one thing we need less, not more, of; additional regulations.

If additional regulations were the answer, the sweeping regulatory action spearheaded by former HUD Secretary and Architect of Ruin Andrew Cuomo, The Home Valuation Code of Conduct (HVCC), would have done the trick. Instead, it has wrecked the appraisal industry, leaving unregulated Appraisal Management Companies to coordinate, and in many cases dictate, appraisal performance.

Since distressed properties make up approximately 65% of the market here in Florida, it would be highly inappropriate to fail to consider these as potential comparable sales, provided the gross living area, age, amenities, and, of course, condition, were reasonably similar.

By applying political pressure to "develop realistic valuations," made as instructed will become a reality and as a result, valuations will be lacking in adequate support and accurate value.

Appraisal practices, as governed by the Uniform Standards of Appraisal Practice (USPAP), provide a framework for appraisers nationwide to adhere to in an effort to provide consistent and accurate valuation through the three approaches to value. These voluminous guidelines are a contributing factor to providing the industry with appraisal reports arriving at well supported value indications , not further deteriorating the housing crisis as the NAHB says.

Conspicuously absent from the many factors cited by the NAHB for the continued downward pressure on the housing market are the actions of the Obama administration. It is well documented that the origins of the collapse centered around the governments efforts to provide housing to buyers the marketplace weeded out. These potential buyers were not weeded out due to race, as ACORN would have you believe, but due to the higher risk associated with their ability to repay the loan. Before political correctness ran amok, his used to be referred to as sound business practice.

Among those applying pressure to the banks in the form of threatening race related boycotts was a young attorney for ACORN, Barack Obama.

While George Bush made failed attempts at forcing Congress to rein in the Government Sponsored Entities known as Fannie Mae and Freddie Mac, under House Finance Chairman Barney Frank, the Congress looked the other way.

Meanwhile, instead of letting the market cleanse itself, the administration has invented program after program to reward bad behavior and prop up the values of housing, which has only prolonged the pain and the problem. Government, who cannot be trusted, should leave the housing marketplace and let the free market establish a base for prices. In fact, we now learn the housing numbers have astonishingly been inflated.

Housing is not the only place numbers are inflated. Government spending, regulation and taxation is what is crushing the job market, with unemployment actually around 12% rather than the reported 8.6%, and for buyers to feel comfortable making large purchases in the form of housing, the job market needs to be at worst steady. Under this administration, there is no job creation, debt is expanding exponentially and Americans are in fear for the future.

Until jobs can be created in large numbers and the government diminishes involvement in what should be private sector activity, continued negative pressure on the housing market and America will remain.

As Ronald Reagan accurately said, "Government is not the solution to the problem, government is the problem."

Crashing Dreams Nationwide

A few months back, 60 Minutes rolled through greater Orlando highlighting the housing crisis and the high level of homelessness and the devastating impact it is having on families throughout the area. Scott Pelley and the crew made a return visit, which is really a must see. Please take a listen:



If your eyes aren't welling up after watching this report, you may want to have some pre-Whoville cocktails with the Grinch.

Sadly, this story could be told gazillions of times all across the country. This report is from my own community, and as a residential appraiser, I see several views of the damage on a daily basis.

Certainly, everyone had to be impressed with the Metzger children, and we all felt for the family who saw the abyss before reaching a life line. Local news reports suggest things have turned up for both families. Reportedly, Stetson University has offered the Metzger children scholarships and the family is now residing in a newly furnished condo, which now with Dad gaining employment as a Seminole County sanitation worker, they have a chance to make rental payments moving forward. We all wish them the best.

60 Minutes did a wonderful job chronicling the staggering level of homelessness on both these reports, except for one glaring omission. Biased no doubt, 60 Minutes failed to associate the reason for widespread homelessness; Uncle Sam's anemic job creation under our President, who has led a balanced and sustained attack on free markets small business job creators.

The Obama administration has hurled every program they can think of to stem foreclosures and protect families from losing their homes. A black hole of financial costs continue to saddle taxpayers, tying a ball and chain to families across America. Yes, Obama inherited a significant housing problem, but instead of employing free market principles to correct the problem, he did not let a crisis go to waste and expanded government, public sector employment, entitlements and our national debt to unsustainable levels. The byproduct of this is the crashing of our system, leaving government as the solution, which crashes dreams nationwide.

What has not been attempted, and I want to emphasize, by choice, would dramatically improve each of these major issues in a matter of a pair of years. The creation of private sector jobs.

Instead of promoting socialism, and yes we are quickly running out of everyone else's money, and attacking wealthy job creators and venture capitalists, an environment needs to be nurtured by the government that deletes unnecessary regulation, limits burdensome taxation, rewards risk takers and unleashes the entrepreneurial spirit of our nation.

A fully employed citizenry, with efficient markets, will balance out supply and demand and generate a healthy, growing economy that offers those who aspire to succeed the world at their fingertips. In addition, an employed workforce will continue to reach for higher levels of housing options, which will cure the housing market as inventories decline.

Free market capitalism is the best path to prosperity, and we need politicians who subscribe to that in office. Barack Obama is the antithesis of a subscriber of free markets and capitalism, so if you wish for these problems to get corrected, you must vote him, and his supporters, out of office.

Market Trick

Halloween was not kind on the corner of Wall and Broad today, and with good reason.

While traders were receiving treats last week from the news of a Euro fix, it really is nothing short of a trick. We have been down this road before, and we will go down it again, and as we pass each exit for a real fix, the pain forthcoming gets deeper.

FOX Business' Judge Andrew Napolitano speaks with Nigel Farage, who has been on this story from the get go. Take a listen:



As traders woke up to learn of the impending blowup of MF Global, headed by former New Jersey Governor Jon Corzine, they found the futures in the negative. It should not have come as a surprise that Corzine, who blew an 8 billion dollar hole in New Jersey Chris Christie is now cleaning up, would fail miserably at MF Global. Fail at running the company yes, but apparently not in securing cash for himself, typical for Democrats in these positions. To think as recently as August Corzine was being considered by President Obama as a the new Treasury Secretary should indicate the level of complete incompetence leading this country.

This evening, Clusterstock reports of "hundreds of millions of dollars missing", which cannot be good for the markets, propped up by false fundamentals and already spooked by a myriad of issues, including on the domestic side a continuous mortgage meltdown.

But further concerns over the supposed Euro fix is what really what spooked the markets. Good money is being put after bad, bailing out entitlement expenditures which cannot, and should not, be sustained. As Farage put it years ago, the fixes won't work and we can only hope the markets derail this before things get really bad, as if they have not already.

Restated; they will soon run out of everyone else's money. Invest accordingly.

Regulations Eroding Economic Lifeline: Credit

While many of our citizens remain unaware, a slow creep of regulatory instruments are eroding the lifeline of our economy; credit. If you are working hard to make ends meet and catch bits and pieces of newscasts from national and local news outlets in the mainstream media, you likely have no knowledge of how serious this issue is.

Rahm Emanuel, former Chief of Staff of President Obama said the administration should never let a crisis go to waste. They took advantage of the fear in the aftermath of the banking crisis to power grab much of your liberty when it comes to your finances, likely without your understanding of the "small print."

It has been three years since Lehman Brothers collapsed, and although many of the experts say Uncle Sams balance sheet is improved and the worst is behind us, I don't buy it. Neither does Home Depot founder Bernie Marcus, who joins Mary Thompson, David Faber and Joe Kernen for a frank discussion on CNBC's Sqauwk Box this morning. Take a listen:



The experts are almost always wrong. Discredited economist Paul Krugman and social economic pontificator Jared Bernstein coupled with comments such as "The housing crisis is contained" and "Pass the stimulus and unemployment will not exceed 8%" come to mind.

Bernie Marcus is not wrong, and listening to him will get you more saving, more doing.

With a new wave of foreclosures coming, property owners will be seeking opportunities for refinancing among banks, but the big banks are not able to extend the necessary credit due to strict regulations. These banks can borrow from the FED at zero and lend to the public at 5%, and a banker can have a fine career in banking doing that. But this lending is not taking place, and the alternative option of small banks is being crushed by Dodd-Frank, which quite simply is killing small banks. Regulations have wrecked the residential appraisal industry, spearheaded by The Architect of Ruin, Andrew Cuomo. These regualtions allow the government to pick winners and losers as well, which raises costs and handicaps the entrepreneur.

The markets have been up this week, and given all the horrendous economic news this week, such as an unexpected rise in jobless claims, inflation and sobering news on poverty, you may wonder why. Euro Tarp! You got it, the FED is essentially bailing out Europe, which can be equated to QE3, a new installment of quantitative easing on a global scale. A socialist European dream! Of Course, I am quite sure this will fix the problem with the PIGS? Well, it won't work!

The economy is in crisis, and we are far from out of the woods. Uncle Sam is a major event way from taking a substantial leg down, and the FED is short on tools to fight the problem due the poor crony capitalism decisions made under Obama and Bernanke. Could the crisis in Europe be such an event? If so, will global governance, all for our benefit no doubt, claim more of our liberty in creating a global banking system, which could lead to a dollar collapse?

The big banks continue to get bailed out while the small banks are being killed off by excessive regulation, crippling the credit line for consumers, who are on life support. Collusion between the administration and the FED is extremely alarming, contributing to the unnecessary extension of the economic crisis we are in.

All these goings on are the antithesis of what should be taking place, and strongly appear to be orchestrated. These are critically troubling times, and our country as we know it could hang in the balance. As I pray we make it to November 2012, we must hold our freedoms dear, protect our sovereignty and remember that free market capitalism is indeed the best path to prosperity.

Agent Speculator

This sign, reportedly located in north Central Florida, is most telling.

Please allow a moment of digression. Elements of the left wing, under the premise of assisting those in the lower levels of economic stature to purchase a home, applied pressure to banks to lend with potential charges of false racism to lend to this group of individuals. Certainly, you recall ACORN.

The easy money position taken by The Federal Reserve helped fuel and create an environment of easy lending to all levels of economic status. Coupled together, we all now know how catastrophic this series of moves was.

In response to the crash, the FED balance sheet has been expanded to allow for banks to reset. Initially, public thought was that the banks would lend this money out to the public to help restart the economy. Instead, banks have been hording the money.

Are the banks still trigger shy to lend to the small businesses and individuals that make up most of the economic growth in the community? Given the economic environment created by this administration, one which seemingly encourages people to escape their financial obligations, I would be.

Are banks not convinced of the stability of the underlying value of the collateral used to secure loans, such as real estate? I am.

Are banks saving up because they see what lies ahead in the future, which is the possibility of another crash. Could be, as a double dip recession is already underway and we can see bubbles in several areas, such as gold and silver.

If I had all the answers, I would be floating around on my Hatteras in the Bahamas.

Currently, the dollar is at near term low. One of the four pillars of Reaganomics was sound money, which includes a strong dollar, which puts our economy in prime position to function at high levels. With oil prices pegged to the dollar, a weak dollar is one of the main reasons gas prices are soaring. Another reason is the Obama administration, who set out to investigate what role speculators are having in causing prices to rise.

If I know demand is steady at a minimum and Obama is restricting oil production, adverse to increasing our domestic supply from drilling, is assisting in creating havoc in the oil rich middle east which disrupts distribution and is placing a heavy hand of regulation on the profitable energy sector, I recognize investment opportunities.

Investors are indeed speculating on higher oil costs. The way to derail the speculators is for the policies regarding oil to change, and that would heave to come from the very folks investigating potential speculation.

Recently, China has been decreasing bond purchases from the US and selling at a discounted rate, as the Chinese are not confident they will get paid what they are owed. This action devalues our economy, as does our government using quantitative easing (printing money) as stimulus.

High levels of inflation has already arrived in some areas (food), but will become an all encompassing issue in the coming years. The FED will work to quickly offset the inflationary pressure by restricting the money supply, which should include a rise in interest rates.

What will the playing field look like when this starts happening. Will the gold bubble burst. Will the much talked about municipal bond crash become a reality? Where will investors run to?

Perhaps the answer is Real Estate, a tangible investment which as adjusted has historically low prices. Due to high levels of vacant units nationwide and new home construction nil, a reset is not expected until about 2016.

If it does come full circle, I hear Exxon-Mobil is entering the home financing business. Just call me Agent Speculator!