nouriel roubini

Real Estate News & Commentary by Chris McLaughlin, March 24, 2009
http://www.shortsalesriches.com/welcome.html

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Up and…down.

The Dow Jones industrial average jumped 498 points yesterday, or 6.8 percent, and the S&P S&P 500 rallied 7.1%, on news that Treasury Secretary Timothy Geithner would buy a trillion dollars worth of toxic assets, and an unexpected 5.1% rise in existing home sales. The jump was the biggest since October 28 of last year. Not surprisingly, the markets opened lower today on profit taking. “There’s a feeling that we’re getting to the end of the worse of the news,” said Ken Wattret, economist with BNP Paribas in London, but noted that there’s still plenty to be pessimistic about, including skepticism over whether the toxic assets at the center of the government’s plan will ever rise in value.

AIG – the saga continues

15 of the top 20 bonus recipients at AIG have agreed to return their bonuses, for a total of $50 million of the $165 million originally paid out. Whether it has more to do with altruism, or angry mobs with torches, is open to speculation. Just about everyone in the United States is outraged over the payouts, including congress, the president, and New York Attorney General Andrew Cuomo. Today Chairman Ben Bernanke got into the act by claiming in testimony to congress that he too wanted to sue AIG, but declined because if he had lost it would have added punitive damages to the bonuses.

Real estate rebounding? Sort of.

In housing markets around the country, there are signs that the bottom may have been reached, and sales are beginning to come back up. First-time buyers are coming back into the market thanks in part to federal incentives, which include a $8000 tax credit for first-time, residential buyers. Real estate search firm Trulia found that the greatest rise in internet searches occurred in Florida, where investors and retirees are snapping up bargains. Sales for Lee County, Florida, which includes Fort Myers and Cape Coral, were up nearly 80 percent from 2007 to 2008, says Mark Washburn, a realtor at Island Coast Realty in Ft. Myers. “That’s pretty impressive. The caveat is the prices are half.” That’s a caveat indeed.

Detroit troubles.

Car dealerships are going broke across the US. Nationally, the United States lost about 900 car dealerships last year, according the National Automobile Dealers Association. About 66% percent of the dealers that closed last year were single-brand dealers. The losses are greatest among dealers selling Detroit brands, said Jim Appleton, president of New Jersey Coalition of Automotive Retailers. Big dealerships with deep pockets are snapping up some of the smaller dealerships at fire sale prices, but many small dealerships are just closing up shop, unable to service the financing on the automobiles sitting idle on their lot.

Now on to our real estate investing education section…

It Can’t Happen Here – or Can it?

In the famous satirical novel written in the midst of the last great economic Depression by Sinclair Lewis, the election of a new president spurs the fanatical rise of “true believers” to propel the newly elected leader to the height of government. After gaining control of Congress and the Supreme Court the nation is radically altered as the dictator attempts to save the nation from financial cheats, crime and other societal woes through a series of ever more severe restrictions on the lives of citizens.

While the story might center around a fascist regime, the similarities are otherwise well worth noting; a charismatic presidential candidate that runs on a platform of “reform” and claims to be a champion to the causes of the average citizen while still maintaining close ties with big business. A media darling who is elected during a time of financial crisis, greed and the growing distress of the masses, he soon has the support of the populace in exchange for their freedom. Notice any similarities yet? Whether you love him or hate him, one thing is certain…going on late night television to proclaim up to 90 percent taxation plus retroactive implementation of taxation is one way to get the attention of every hard working American in the nation. Even the host admitted the prospect was of more than passing concern.

So, what does this have to do with Short Sales? Take a look at the state of the nation; from Wall Street to Main Street people are searching for someone to bail them out and fix things. The repeated refrain is “This is America”…things are supposed to turn out just fine and recovery is just around the next corner. But what if it isn’t? What if the economy continues to falter in a Japanese style lull that lasts for years as economist Nouriel Roubini predicts? Worse, what is the USA goes the way of the former USSR as predicted by Dmitri Orlov? What if income taxes are suddenly increased with little to no warning? What if your prior earnings are retroactively taxed at rates as high as 90 percent?

Consider this, while domestic automobile manufacturing companies beg for bail-out funds even while slashing payroll and cutting back on benefits, car sales continue to decline and obtaining financing to purchase a depreciating asset like a new vehicle becomes even harder…meanwhile, it’s now possible to purchase a home – complete with lot and land – in Detroit for less than the cost of even a modest compact car. In fact, most people could pay in cash simply by charging it on a credit card. Now, we aren’t suggesting this is the right road to wealth but it does point out some of the underlying assumptions and mixed-up priorities currently being perpetuated by the mainstream media. As little as two years ago real estate was considered the road to wealth by everyone – so why the sudden change of heart?

During tough economic times it is more important than ever for investors to think for themselves rather than follow the masses. Real estate is a tangible asset that allows you to secure additional sources of cash flow when and how you want. Have a high income year? Take time to fix up the place to secure some additional write-offs. Need a little extra cash this year? Sell a property while you are in a lower tax bracket. Searching for a regular supplement to a fixed income? Rent or lease a property. Want to sell but retain a long term steady income? Hold a note. Whatever your situation, real estate has the flexibility to provide the financial returns you need to ride out the economic storm. While most American’s agree that it can’t happen here – some already think it did. Either way, learn how to profit while others panic by coming to our webinar this evening at 8:30 PM ET, 5:30 PM PST:

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See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html

P.S.

Don’t miss out webinar tonight at 8:30 PM ET, 5:30 PM PST:

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About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month

   * Long-time authority on real estate investing
      and rapid flipping of distressed homes. Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

     * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building

* On twitter: http://twitter.com/mclaughlinchris
* On facebook: http://www.facebook.com/addfriend.php?id=709199143

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Mid-Day Market News & Commentary by Chris McLaughlin, December 15, 2008
http://www.shortsalesriches.com/welcome.html

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Tired of being sick and tired of this economy and all the negative news that goes along with it? We have an amazing recession proof investing strategy that we’ll reveal to you on our webinar that we’re hosting tomorrow night at 9 PM EST.

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All eyes were on the Federal Reserve today as the members of the Federal Open Market Committee sat down to debate whether to reduce rates even further. The decision is due out tomorrow, and most analysts believe that Fed will cut an additional half percent, bringing rates to a historic low of .5%, with prime then becoming just 3.5%.

And no decision yet from the Treasury Department or White House on how to bail out the Big 3 Automakers after Congressional talks failed last week. Bush is considering using the $700 billion bailout package for the automakers, but opposition from others in the government has slowed any announcement of a deal. In particular, Federal Reserve Chairman Ben Bernanke sent a letter to lawmakers last week indicating that he was “extremely reluctant” to lend to the car manufacturers.

Now, on to our real estate investing commentary …

Do You Hear What I Hear?

During this most festive of holiday season, the sound of “cha-ching” normally rings just as loudly as that of the carolers and party-goers but this year is different. In fact, instead of singing and the sound of cash registers ringing the average short sale investor is more likely to hear wailing and gnashing of teeth from investors both near and far as the Federal Reserve reports that Americans have lost $2.8 Trillion in Net Worth…since last quarter!

Meanwhile, charge-off and delinquency rates for residential real estate loans have reached 1.45 for all banks and a whopping 1.66 for the 100 largest banks. Delinquency rates for residential real estate have now surpassed 5.08 for Q3 of 2008; the highest rate for residential real estate in over 25 years. With the economic news at home sounding so lackluster, it might lead some to seek returns in the foreign exchange markets. So, should potential short sale investors sink funds into global money market accounts or continue to pursue opportunities here at home in the current “buyers market” for real estate?

If the news domestically is hard to hear then consider the global perspective; entire nations are going bankrupt. Iceland, Hungary, the Ukraine, Pakistan and others are either facing bankruptcy or in the midst of a massive bail-out by the International Monetary Fund (IMF). Lest you think “it can’t happen here” consider this; Argentina went bankrupt as recently as 2001 as did Russia in 1998. Once an economic powerhouse, Germany has gone bankrupt twice in the recent past including 1923 and 1945. With interest rates in excess of 20 percent, Argentina is attempting to inspire investors to take a chance on investing in their nation; to date, there has been an apathetic response at best.

According to Stephen Jen, a currency specialist with Morgan Stanely, a 1 percent drop in growth could reduce the flow of capital to “threshold countries (those in a financially precarious situation) by more than half! Should this transpire, the IMF would not have enough reserves to “bail-out” each individual nation resulting in Argentina style cycle of events including frozen bank accounts, withdrawal caps, hyperinflation and social unrest. Dare to guess which nation “guarantees” the IMF slush fund should it run dry? Yep-the good ole USA. So much for “Plan B”. As these threshold nations face economic disaster, the trading partners and surrounding nations would be exposed to further strain…setting the stage for a global economic meltdown.

Experts such as Nouriel Roubini are already calling for the most severe global crisis since the Great Depression while others like Ron Paul are openly questioning the Federal Reserve about contingency plans in the event of global economic collapse. Plain and simple; fiat currency around the world is risky business even with the prospect of double digit returns. On the other hand, real estate has historically fared well even during dollar devaluation.

Don’t let me get you down … my point in writing this is only to show you that real estate is the SAFE investment right now, and if we have a method that shows you how to buy low and sell fast, wouldn’t that be of great help to you?

See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com/blog

P.S.:

Are you ready to crack the law of the lid? Are you ready to get serious about your business and wealth heading into 2009? If so, you have to go now and watch Nathan’s youtube video! Leave some comments on it …this is AMAZING to watch, and all TRUE:

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