Real Estate Investing and The Global Economic Crisis

"listen to your father; without him you would not exist. When your mother is old, show her your appreciation. Truth, wisdom, learning, and good sense- these are worth paying for, but too valuable for you to sell."

I am really struck by this - I am becoming more and more convinced that I am putting limits on what I think is possible, that don't need to be there. "Make the situation work for you" - those words are so contrary to the way most people think. Usually the assumption is that you need to find ways to fit yourself into circumstances. I just came across your book "Why We Want You to Be Rich: Two Men, One Message" at http://www.audiobooks.net and I am really interested to know more about how I can change my thinking and habits, to change my lifestyle.

Some believe the roots of the crisis can be traced directly to subprime lending by Fannie Mae and Freddie Mac, which are government sponsored entities. The New York Times published an article that reported the Clinton Administration pushed for subprime lending: "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people" (NYT, 30 September 1999). A positively sloped yield curve allows Primary Dealers (such as large investment banks) in the Federal Reserve system to fund themselves with cheap short term money while lending out at higher long-term rates. This strategy is profitable so long as the yield curve remains positively sloped. However, it creates a liquidity risk if the yield curve were to become inverted and banks would have to refund themselves at expensive short term rates while losing money on longer term loans. For further references, check out: http://personalmoneystore.com/Cash-Advance/Payday-Cash-Advance-Loans/

You know Mr. Trump, this advice can be applied to all kinds of markets and industries. We all need to help the ones that are struggling to understand this concept. Look for the lesson in the experience. Look for the hidden opportunity. Use your creative mind to find solutions and stepping stones instead of road blocks. Our struggling auto makers, and our industries affected by medical discoveries and health laws such as the tobacco industry, need to stop identifying themselves with the products they have been producing and start recognizing the core skills they already have to identify new profitable, healthy endeavors. Most people resist change, and that can obliterate greater opportunities than they already had. Your success was built on your understanding of human nature, your vision, energy, passion, and right reasons. Your ability to work collaboratively with all the stakeholders goes a long way. You are in a prime position to influence those struggling industries, lawmakers, and the media to build momentum and rebuild our economy - how is that for thinking big?

Good question...Great Answer!

There are always great opportunity's in life regardless of a world crisis. It depends on the circumstances and how much structure, money and debt you could absorb and handle.. So, circumstances set the pace.

Life can be harsh...and there is always great opportunity around the corner. Do you know when and where? Key questions on circumstances on people that over-leverage and fall. Walk before you run....and maybe, network with people and help one another in difficult times Great value...Great opportunity!

Making situations work for you is definitely key. I have been know as "A Pertetual Optimist" over the years. Even though this economy struck me hard, I'm still trying to find a way to bounce back. Even though I lost one property in the area to "inherited hidden tenant issues", I'm still looking at the potential benefits of forming a corporation to purchase 1285 Boston Avenue in Bridgeport CT for mixed use or otherwise.
So even though I'm not in the "bright green", I'm still looking ahead!
Feel free to give me any advice or backing you'd like.

Getting money for projects being done today is a lot different than a smile and a handshake which often sealed a deal "in the good ol' days." There is way more paperwork involved and scrutiny by the lenders. The internet has made it nearly impossible to hide past investments that may have turned into a flop and never repaid when a corporation went bankrupt.
That's why keeping up with the changes is so important.

Much of what's happening in today's economy is a repeat of the 1970s. Politicians lose popularity in a recession, so they artificially inflate the currency. They jack up government spending. Also, in a HUGE story that got little coverage (ALL the biggest stories tend to be glossed over by the media), the Federal Reserve loaned out an additional TWO TRILLION dollars last fall! That's BIG inflation! That's the sort of thing that causes conditions like 1920s Germany! Or 1970s Argentina! The dollar will soon go to ZERO!

So how do you cope? Get out of dollars, and anything based on dollars. Invest in things that ACTUALLY EXIST! Real estate is good, but don't leverage yourself too much. Cash flow problems could cause you to default on your mortgage. Get out of any adjustable rate mortgages! Lock in a fixed rate! Interest rates are going to go up! HIGHER than the twenty percent range we saw thirty years ago!

Metals and commodities are also good. Both will go up a lot! Even if they do go down, they NEVER go to zero! Stocks are dangerous! Stocks CAN go to zero! Some stocks WILL go to zero! And some stocks will do very well. Any company involved in raw materials should do well - mining, petroleum, etc. Companies like Cargill and ConAgra should be safe, and could go up.

In every recession, there are always some people who do well. The trick is to figure out what changes WILL take place, and get into position to profit from the change! This recession has me worried. In a recession, the government usually does things that make conditions worse. Carter tried to avoid the pain of a recession, which only made the pain worse when it couldn't be held off any longer. Reagan understood that painful corrections have to be made, and by making them, laid the foundation for the decades of prosperity that followed!

This time, our country is much MORE vulnerable, and the government is making far WORSE decisions! Today, our balance of trade is far worse than thirty years ago, we are FAR more dependent on foreign oil, much of our industrial base has been exported, etc. Plus, the government is nationalizing industries faster than even Castro could dream of! I am very seriously worried that the Democrats are destroying FOREVER the basic fundamentals of America's free enterprise system!

Jeffrey K. Putman
Professional Engineer
Dayton Ohio
je_freedom@usa.net

For me preservation of capital is the order of the day, however I understand the fact that in times like this you can make a fortune by making the right financial decisions. I'm sure you can make lots of money buying real estate if you know where to look and how to find bargains.

John
http://www.canadabanks.net