Tweet

The Best of Times...The Worst of Times? Part 2

Guest post by: Gary Silverman

Article Overview: Do you get the impression that everyone is missing the point to our current economic climate (I prefer “climate” to “crisis”). All common sense solutions first identify the “root cause” of the problem. There are plenty of examples in our daily lives. Want to avoid a hangover?...DON’T drink, care to avoid lung cancer?...DON’T smoke, indigestion?...avoid spicy foods. When you go to the doctor seeking help with your cholesterol or blood pressure the doctor will prescribe medicine and a regimen of diet and exercise that will work towards solving the root cause of the problem. Why haven’t we taken the same approach to solving the root cause of our current “climate”?

The Best of Times...The Worst of Times? Part 2

HOUSING - This has been identified as the Boogey Man that caused the slow down in our economy, ground zero as it were. Actually it was easy credit and speculators who were attracted to the “liquidity” of housing, an investment that is rarely liquid. This created a spike in demand that accelerated housing appreciation. In their infinite wisdom, the financial markets packaged good paper with poor paper, sold it as an investment vehicle and packaged and repackaged these loans like a regifter at Christmas. Then they all got on T.V and proclaimed a bubble. This prediction struck fear in the hearts of anyone considering the purchase of a home and everyone ran like their hair was on fire. Demand dried up and builders who were responding to the market were left finishing construction of unsold houses which flooded the market. The intended buyers were unable to take delivery of their new home as their old home sat unsold and we were off and running. In a normal market houses are sold within 60 to 90 days which would absorb any potential foreclosures before they became a toxic asset. Our economy is based on supply and demand, when you dry up the demand through dire predictions it doesn’t matter what the supply is, one is too many. We shot ourselves in the foot.

HOUSING IS THE ROOT CAUSE - If you stimulate the sale of housing at the grass roots level rather than propping up banks to encourage them to lend, then money would flow to the banks through the consumer rather than Bernanke. A housing tax rebate similar to the $15,000 credit that died prior to the recent approval of the latest stimulus package would have been the ticket. Instead we are giving first time home buyers an $8,000 tax incentive. Aren’t these the buyers that are most challenged getting loans during the current credit tightening? Let’s propose giving iPods to the deaf or free cars to the blind. It may no longer be the first time home buyer that stimulates a chain reaction of everyone moving up in house. I believe this time the rebound in housing will be fueled by people downsizing and the first time buyer will remain in rental housing. By creating a demand for rental housing you are in fact stimulating construction. Rent is like the old Zero down loans of recent memory. Who cares what we build, just build something. People with no down payment do not need to be buying a house. By increasing rental demand perhaps the unsold inventory of condominiums and townhouses will be converted to rentals, problem solved. By giving everyone a tax credit the oversupply of homes will be eaten up during the spring and summer buying season that is upon us.

THE AUTO INDUSTRY - Very simple, eventually everyone’s car will wear out...next!

Related Articles
  Best and Worst
  The bad table
  Lessons from Worst Bosses
  Is The Economy Good Or Bad?
  Careful Consideration and Analysis

Article Tags: boogey man, chain reaction, financial markets, first time home, first time home buyer, first time home buyers, free cars, grass roots level, ground zero, infinite wisdom, investment vehicle, liquidity, market houses, root cause, speculators, stimulus package, tax incentive, tax rebate, time home buyer, time home buyers



Related Forum Posts
Re: What is your worst / best month? - Best: October, November, April Worst: January, February, July
Re: What is your worst / best month? - Best = January, February and March. Worst = April (tac season) July and August (vacations).
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
Does a New Company need a "Big" PR firm? - I've started work with a brand new company that is going to do loss mitigation. My boss intends to hire a "big" PR firm - ie one that costs a lot of money - because he wants press releases sent out to the New York Times, the LA Times - all the major papers around the country - and he think they'll be more likely to print them if they come from a "big" firm as opposed to a one-person PR firm. I think it doesn't matter where the press release comes from as long as its well written. What are the opinions here?
Re: Does a New Company need a "Big" PR firm? - [quote="OmnivoreInk":dmj1i0sv]I've started work with a brand new company that is going to do loss mitigation. My boss intends to hire a "big" PR firm - ie one that costs a lot of money - because he wants press releases sent out to the New York Times, the LA Times - all the major papers around the country - and he think they'll be more likely to print them if they come from a "big" firm as opposed to a one-person PR firm. I think it doesn't matter where the press release comes from as long as its well written. What are the opinions here?[/quote:dmj1i0sv] I think the most important factor is whether your press release will reach the most number of your target audience or not. It won't matter if the press release is well written if no one has the opportunity to read it. I also believe that credibility comes with having your press release in an established source like The New York Times, LA Times, etc... For instance, if you enjoyed playing tennis, who would you trust more? The advice from a recreational tennis player who has his own column in [i:dmj1i0sv]Tennis Magazine[/i:dmj1i0sv] [u:dmj1i0sv]or[/u:dmj1i0sv] the recreational tennis player who has his own blog? I don't know about you, but I'd listen to the guy on [i:dmj1i0sv]Tennis Magazine[/i:dmj1i0sv] over the blog owner at least 9 out of 10 times.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

SEO Gurus, Software and Ebooks

Angel Investors Where Are You?

The True Cost of Employee Turnover

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.