Rumblings...

Earlier this year we described the 2008 financial crisis as the equivalent of a financial earthquake.  Using that metaphor, we then related that we were in the recovery stage... the buildings had stopped shaking and everyone was looking for the survivors in the rubble.

In the course of a typical month we have lots of conversations with clients, customers, potential clients, potential buyers of land, and just friends who are in business.  During the month of July we began to hear some more "Rumblings."

From those conversations there are several facts that appear to be a developing consensus:

     1.  The Democrats in control of both houses of Congress are absolutely clueless as to what is going on in the         business community of these United States as demonstrated by their persistent efforts to raise taxes -

          a.  To pay for national health insurance (when has the government ever been good at controlling costs?)

          b.  As a part of Cap & Trade (why do we want to replicate failure?)

          c.  And costs via unionization with the proposed Card Check legislation (the UAW was so beneficial to the success of GM and Chrysler);

     2.  Obama is an intelligent, well-educated and amazingly articulate man - but he has no real-world, practical business experience and neither he nor anyone in his administration understand what business owners are facing nationwide;

     3.  The typical small business owner is holding on by their fingernails.

Last December and again in June, we had the privilege of being invited to meet as one of 20 representatives of the commercial real estate market in the United States.  It was fascinating to hear the perspectives of the different specialized areas of commercial real estate from people who are geographically disbursed around the country.

The consensus in that group in June was that this economic cycle will be like a W rather than a V.  That matches with about 50% of the conversations we hear from other individuals.  No one knows when the second downturn will come, but many are convinced it will happen.

Because of headwinds appearing against national health insurance, cap and trade, and card check, we believe that the probability of a second down leg has reduced from perhaps 50% this past spring to 25% today.  We believe that the financial markets are assuming a robust recovery while we expect it to be tepid.

That difference between reality and expectation will probably cause some sort of adjustment in the financial markets by the end of this year.  We expect that adjustment to result in lower interest rates which will then build a solid base for economic recovery.

From our perspective, a tepid recovery is simply one facet of the "New Normal".  To understand the "New Normal" requires looking beyond the broad numbers so popular with the talking heads in the media.  .... Stay tuned.

In the meantime, call us if we can help you maximize the benefits from your land portfolio.