Archive for July, 2008
“Some People Have No Confidence in This Country”
July 13th, 2008 Categories: Mortgages & Loans, The Road Less Taken
Summer TV really sucks. It’s a great time to catch up on some really good TV with the On-Demand feature on my cable. Mad Men may be one of the best shows on TV– it’s a retrospect of corporate life in the 1960s– placed in the world of Madison Avenue Advertising.
In one of the episodes the big boss of this ad agency tells a story of the history of one the oldest and wealthiest families in 1960s Manhattan. The current monarchs grandfather once owned everything in Manhattan south of 76th Street, he explained, until he sold it all in the 1934 panic.
“Some people have no confidence in this country,” was his conclusion.
I couldn’t help but apply this to today’s current housing mess. Friday, the federal government seized IndyMac Bankcorp after a run on the bank led to the third largest bank failure in US history. This sparked a lack of confidence in Freddie Mac & Fannie Mae causing their stock to loose even more value on speculation that these companies would be next.
What is causing all this upheaval? It depends on who you talk to. The optimists say not true. While the pessimists say that Freddie and Fannie can’t support what’s coming.
Almost everyday, it seems, I have a conversation with my broker about the current real estate market. If I ever think that this world has gone mad, I just have to talk to my broker who reminds me that it’s all about perception. Even if, in this case, perception is reality.
Because, you see, if you believe in something long enough it becomes true. I’m not saying that this housing recession is a figment of your imagination– don’t get me wrong. But– we did see the housing market detriorate as the media focused on the bad thing that was happening. People who invest in the secondary mortages market ran for the hills. When the secondary mortgage market dries up, there is no new money for new loans, lenders are forced to tighten their belts. (I know its more complicated than that- but these are the basics)
What I see when I talk to people who worry about the market is that they are afraid. They are afraid that the market may go down further, they are afraid they may lose their job and they are afraid they are going to make a wrong decision.
But I also meet people who aren’t afraid. They see this market as an opportunity to buy in a neighborhood they couldn’t a few year ago. They don’t worry about their jobs, they know it will only get better. They follow the basic theory of buy-low, sell-high.
I think that this housing market is a true test of whether you see the glass as half empty or half full. Because you see, back in 1934, things were bad. Really bad. People jumped from windows for gosh sakes. No one knew if things were ever going to get better, yet the people who had confidence in this country brought it back. Many others were poor– unemployment was high. I won’t say they were pessimist– but it was hard for them to put food on the table, let alone buy a home. (I know this, my mother reminded me throughout my life. She was a child of the depression.)
Eventually things began to change. The federal government created jobs– people got back to work. They passed legislation to help Americans afford homes again. And one day at a time, America came out of its depression to went back to work to support a World War. (that’s another story!)
It’s only when we look back through history do we know the answers. We can’t see the end game in the middle of it. But it’s only by going through it do we get out of it.
So the question to ask yourself… How much confidence do you have in the future of America?
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Happy 4th of July!
July 3rd, 2008 Categories: Life in the District, The Road Less Taken
There’s always something fun about this holiday. If you are planning to go down to the Mall to see the fireworks– they don’t start until 9:15pm. But there is tons of things to do while you’re waiting. Click here to find some great viewing spots. And don’t forget– there is no parking allowed this year on the shoulder of the George Washington Parkway!
If you’re like me and don’t like the crowds– look through this list for a local fireworks display in your neighborhood. From Arlington to Leesburg– just about every local area will have an event. You folks in Vienna will have to be happy with a laser display after last year’s accident.
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