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2011: An Important Year for The United States of America

By Jim Gillespie | January 11, 2011

This may be the most important year for our country than any other year that I’ve lived through during my lifetime. This I believe will be the year that our country stares difficulty right down in the face and asks itself, "What do we have to do as a nation in order to pull through this?"

While there’s cautious optimism within many people regarding the economy right now, there are many things going on behind the scenes also, indicating that the economy is in worse condition than many people believe. So much has been done to protect the Wall Street insiders, and in the process this has all been making an economy that’s already in bad condition, look better to us.

So in the following paragraphs here, when you see the blue hyperlinks, these are links to articles and resources on the subjects I’ll be discussing, that will give you more insight and more details on them.

In starting out, several months ago I published an article discussing the dangerous condition that the stock market is in, and since that time it’s now been disclosed that insiders have been selling their own companies’ stocks at the rate of 3,177:1, meaning that these executives believe it’s time to get the heck out of their own companies’ stocks, and get out NOW.

3,177:1…that’s a massively huge ratio of sellers to buyers!

And in looking back at all of the bailouts that have been given to the different companies that have received them…remember when Congress was debating whether or not we should bailout all of these companies to the total amount of around $700 billion? Well as it turns out, the money that was loaned to these companies wasn’t really $700 billion, but $9 trillion instead! Which makes me wonder what the entire debate was about around loaning out just $700 billion.

So in comparing the amount of $9 trillion to $700 billion, you can see that our economy and our financial system has been in much worse condition than many people had believed.

But in relating all of this to commercial real estate, these insiders are being taken care of within our own arena also. The fact that so many of these upside down and distressed properties aren’t being taken back and sold as they normally would have been, has created a logjam within our industry that’s hurting your income as a commercial real estate broker. And when you combine with this the fact that the lenders are being allowed to keep these upside down loans on their books at their full original amounts, without taking any write downs in the value of them, we have one of the greatest cases of window dressing in the entire history of our nation. If any of us were to publish financial statements showing our own asset values at these inflated levels that were a reality years ago, they would call it fraud. But it seems to be business as usual today within our financial industry.

And for the the real icing on the cake, in terms of how special these financial insiders are being treated, read this story that happened in Colorado. A man was riding his bicycle and was hit by another man driving a Mercedes. The driver didn’t stop, stopping only eventually to take care of the damage that was done to his car from the collision. But the rider of the bicycle, however, suffered spinal cord injuries requiring multiple surgeries, and he may never fully recover.

Well the driver of the car was eventually apprehended, and when the case went to court, the prosecutor refused to prosecute him for a felony, and offered him a plea bargain deal for only a misdemeanor charge. The driver of the car manages more than $1 billion in assets for a major Wall Street firm, and the prosecutor felt that having a felony on this man’s record could be detrimental to his career with his company, as the Securities and Exchange Commission would have to be notified about the felony.

So as you can see, between both the financial bailouts and getting this kind of special treatment, the rest of us are all living in a completely different world.

In addition to all of this, there are some political developments on the horizon that I want to mention to you. If you didn’t see the recent episode of 60 Minutes, showing the great difficulty that many of our state and local governments are up against right now financially, I recommend that you take a look at it. During this 14-minute segment it’s mentioned that 50-100 local U.S. governments could be filing for bankruptcy within the coming months, and during this segment you’ll get a better idea of the great financial difficulties now facing our state and local governments, and the difficult choices that are going to have to be made by them.

In Europe, financial difficulties have been accelerating even faster than they have been here, and governments have been moving to seize the retirement savings of their people in order to get access to more money. And right here in the U.S., legislation is being discussed right now that would allow our individual states to file for bankruptcy, which would relieve them of huge obligations, including their state pension obligations. Along these lines, right here in my home state of California, it’s been estimated that over the next two years the state’s annual obligations to its top three government pensions, will be five times the total amount of the annual tax revenue generated by the state! So you can see that bankruptcy is an option that some states could utilize to deal with their current financial problems.

And if you think that our government would never come after our own retirement savings, here’s an article from Forbes mentioning that discussions are now underway for the government to implement an annuity program around people’s retirement savings.

The good news is that many people believe that business overall is improving. But you may have also noticed that the price of energy is rising, too. This is what happens, as I’ve previously written about, when our energy resources keep getting scarcer, and our demand for energy from businesses begins increasing again. As the price of energy rises, businesses find it more difficult to remain profitable with the higher costs, and some experts are now predicting $4.00 a gallon gasoline by the time summer gets here.

With all of this going on, I believe we’ll be seeing more distressed assets coming onto the market. And if this begins happening, more transactions will be closing, and brokers will begin making more money. There has been an increase in the number of distress sale transactions within recent months, and at some point the lenders will have to accelerate getting rid of these problem assets, as the number of distressed properties they’re having to deal with today is increasing.

So this is going to be a year that will be economically challenging for our nation. I believe there will come a time when our country will have to look itself right in the mirror, dig down deep, and do all that it can to find a way to rise above these economic circumstances that are right now in front of us.

But remember…from crisis comes opportunity. So continually stay focused on what opportunities are now emerging for you to capitalize on, as we continue moving forward within this economy.

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