If you are reading this, then we
have all, once again, survived the year-end holiday season. As I write, the 112th Congress is
finding where the bathrooms are located and the rain has finally stopped
drowning California, after going on to set blizzard records back East and
inundating Manhattan in more snow than I (and most people) have ever seen
there. Everybody has now returned to
their office or workplace or place of business and all are waking up to the
bills piled up late last year, rolling up their sleeves, and plunging back into
the fray.
Later today, the job numbers come
out. Breaths are being held. Fall indicators seemed to say that retail did
better than in years prior and that even some jobs may finally be in the
process of re-materializing, though year end employment numbers are always a
bit suspicious due to holiday season temporary hiring, and other exotic
economic factors which would put you right to sleep if I began listing them
here.
So, is it finally over? Can we come out of our bunkers now and get
back to business as usual? Is the long, national nightmare of what they are now
calling the Great Recession (still not the dreaded D word, for obvious reasons)
finally now in the rear view mirror and can we finally get back to business for
this new, sci-fi sounding year of 2011?
If you grew up like me as a Boomer, you may remember the 50’s
predictions that, by the year 2000, we would all be commuting in those flying
Jetsons’ cars.
Well, so much for predictions . . .
What will the new year hold for our
aching economy? Like real estate is said
to be ‘location, location, location,’ our economy is about ‘jobs, jobs,
jobs.’ If people are not earning, they
are not spending – no spending withers and kills our, and everybody else’s,
economy. Also, those manufacturing
numbers are looking better – all look to see what inventories hold and whether
or not there is any uptick in ordering of equipment and the goods that make our
world work.
Friday’s employment numbers are the
key to kicking off the new year. The
problem, among many, is that we do not stay in a constant state. Some say we need to add some 250,000 jobs per
month just to stay even with population trends.
Thus, if we all celebrate on Friday, what does that say about all the
months we’ve missed since this abominable economy first gained traction in
later 2007 or early 2008, and how long it would take to make up the
losses. You don’t want to go there . . .
it’s depressing.
Where we do want to go is to see
the real estate inventory held by foreclosing lenders begin to shrink. That won’t happen, of course, until the
tsunami of foreclosures ends and that is not likely in the near future. Foreclosed real estate is incredibly
expensive for lenders holding those properties to maintain to avoid blighting
whole neighborhoods, as is now the case in places that grew so incredibly fast
over the last decades, like the Inland Empire.
Eventually, even in a very sick economy, that backlog of foreclosed
properties now owned by lenders who dearly need to unload them, must begin to
shrink. It would also be helpful if
there were more creative solutions to the problems presented. There must be ways to keep some worthy,
responsible homeowners in their homes, paying something as opposed to
nothing. As long as this tidal wave
continues, the real estate forecast remains dim.
Last, but far from least, is the
looming question of whether or not we raise the US’ debt ceiling, truly the
choice between the ‘Devil and the Deep Blue Sea.’ Our country has never defaulted on its debt
before . . . not in any modern sense, anyway.
If this were to actually happen, the results would make the Great
Recession look like going on Weight Watchers as your new year’s resolution
because you pigged out over the holidays (granted, more than a few of us should
consider the latter).
There is ‘playing with fire’ as a
tool of political deal-making and expediency, and then there is utter
madness. Placing our nation in the path
of really defaulting on its debt, the nearly sacrosanct treasury paper which is
still the best investment for other countries in this world, and is so desperately
needed for our own economy and society to continue to function (until, perhaps,
we get spending under better control), would be the latter. To put it in real world terms, if you want
to get your mortgage lender to talk to you about modifying the terms of your
home loan, do you: a) keep the payments current, to protect your good credit,
or b) stop paying, to get their attention?
If you guessed (b), and many supposed ‘foreclosure consultants’ actually
are giving this advice to distressed homeowners, then you have made an
irrational decision, and you have destroyed what remains of your credit rating
– a move which will only help you when your living alternatives include
residing in your camper/pickup truck at the local beach.
Let’s not drink this Kool-Aid; not
now, not ever.
Let’s resolve in this new year to
think and act rationally and always in the best interests of our country
first. Defaulting on our national
obligations is the road to unmitigated disaster and even threatening it in
today’s unstable and rapidly changing world, could scare off potential lenders
or make our costs of borrowing skyrocket. . . now, when we desperately have to
dig ourselves out of the deep hole that we took years to dig ourselves into.