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February 2012
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Perspective Pieces
Perspective Pieces are created by industry professionals for industry professionals. Find archived perspective pieces on PPO here.
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For Better...Or Worse
It’s nice for a change to be able to talk about an American economy that is, for the moment, getting stronger. After growing at a truly pathetic real (inflation adjusted) annual rate of less than 0.9% during 2011’s first six months, the economy grew at a revised 2.0% real annual rate during the third quarter. . . . more
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Steven Jobs – RIP
Isn’t it ironic that his last name is Jobs? He created millions of jobs over the years for his company, Apple. He was also responsible for millions of other jobs created in businesses that sold or used his innovations. It’s amazing that one man can be responsible for the creation of millions of jobs and all the politicians in Washington DC can’t create but a handful of private sector jobs. Steven Jobs had a vision, he had passion and he had energy. That’s what entrepreneurship is all about. Capitalism flourishes in a garage or a basement somewhere, not in the halls of Congress. There have been many others like Steve Jobs in the past and there will be more in the future. America was built on the backs of these people. Not only were jobs created, but the standard of living has increased around the globe due to their innovations. These entrepreneurs did this with their own money or help from private investors. No taxpayer dollars were at risk. Those who are currently protesting on Wall Street and other places in America should take a break from their iPods and iPads and reflect on how these conveniences came about. Wall Street and banks are an easy target when things go wrong in the economy and Congress is going for the jugular to get reelected next year. It’s unfortunate because politics divides people just when we should all be pulling together. John Kennedy’s inaugural address comes to mind when he said, “Ask not what your country can do for you, ask what you can do for your country.” Well, Steve Jobs did plenty for his country. He shall be missed. . . . more
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The Economy - It's All About Jobs
The key economic factor that impacts the value of real estate is jobs and job growth – considering that it is the tenant who leases space and pays the rent, which, in turn, creates value. If job growth is limited or weak, the outlook in the real estate market is less than optimal. The lack of job growth in the U.S. dominates the national economic and political conversation today, both on Wall Street and on Main Street. The following is a brief outline of the key issues surrounding the job market. . . . more
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More ‘Stimulus’ from President Obama
By most accounts, President Obama’s $800 billion “stimulus” bill that was passed in February 2009 with the promise of keeping unemployment below 8 percent was an absolute failure. However, last night in a speech to a joint session of Congress, the President demanded that it spend another $450 billion on more of the same “stimulus” that has left America with zero job growth and continued economic stagnation. But don’t worry. His top economic adviser Gene Sperling told NBC that this one would likely get us down to 8 percent. . . . more
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It's Not 2008
The past two weeks have seen a sea change in investor perception as the markets are down almost 18% since July 21. We have been proven wrong in our thought that the market would remain in a trading range for the summer. The primary culprits here are 1) a new fear of recession, 2) a US debt downgrade by S&P, and; 3) concern about the stability of the European Union and its financial system. All of these have combined to take stocks down to near bear market territory. The question is, are we entering another 2008 type episode, and we do not think that is the case. . . . more
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Clueless
Have you read about the debt crisis in Europe? In Greece and Italy national debt now exceeds GDP. Spain and Ireland are not far behind. It is causing turmoil in equity markets across the globe. Meanwhile, here in America Congress pats themselves on the back for finally agreeing to their own debt solution. They must not have been reading the papers as our debt just surpassed our GDP and Standard & Poor’s dropped our credit rating from AAA to AA+. Our debt is now like the Titanic waiting for an iceberg. So what did Congress accomplish? It’s not clear (is anything ever clear out of Washington?) exactly what transpired. The best we can tell is Congress agreed to cuts of $900 billion over ten years. So instead of increasing spending over the next ten years by $8 trillion, we will only spend $7 trillion. This would put our total debt over $20 trillion by 2020. It is unlikely that GDP will grow enough to close this funding gap. As for the ratings agencies (S&P, Moody’s, and Fitch) they are as clueless as Congress. They have never been pro-active, but always reactive. Moody’s said they would cut our credit rating by 2013 if the economy doesn’t pick up. What a bold statement. In the meantime the rest of the world continues to buy our debt. . . . more
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Commitment to Excess
The current debt/deficit debates taking place in Washington would be amusing if they weren’t tragic. What is the sense of having a debt ceiling, if we just keep raising it? There have been 75 increases in the debt ceiling in the last half century. Why have a debt ceiling at all? We could then avoid the charades that take place every time we bump up against it. So who is buying the new debt issued by the Treasury to pay our bills? It’s not Japan. They have their own fiscal problems right now. China? They are reducing their exposure to dollars. It’s certainly not Europe. They are having enough trouble finding anyone to buy their own debt. That leaves the Federal Reserve. In effect, we are issuing more debt to buy from ourselves. . . . more
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Bad News Bulls
It’s been said that the stock market climbs a wall of worry. The bear market touched a bottom in March 2009 and proceeded to rise about 85% to a high in April. We are now in the midst of a correction from that high, but the overall trend remains positive for equities. Not so much so for the economy. Well, the economy is still growing, albeit slowly. At this stage in a recovery the economy should be recovering more rapidly. . . . more
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LifeStages: Monthly Economic Update
There wasn’t a lot for Wall Street to get excited about in May. As the buzz of the 1Q earnings season faded, the latest indicators hinted that the economy was losing momentum. As a result, May turned out to be – well, another May. The Dow lost 1.88% for the month, retreating to 12,569.79. Commodities had a poor month as well, and dreams of a real estate recovery starting in 2011 faded. On Capitol Hill, lawmakers seemed more interested in discussing the debt ceiling than raising it. In Europe, the possibility of Greece defaulting prompted yet another bailout effort . . . more
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Perspective Pieces
