See:
Are Monetary and Banking Crises
Inevitable in the Near Future? by Dr.
Edwin Vieira, Jr.
See:
The Fed Sees Bubbles -- and keeps them secret by
Bill Fleckenstein Ole Bear, Editor, Commentary Walking on the Wild Side or Beware the Ides of March Last Tuesday, commonly known as the Ides of March, my bride tosses the business section from the local tabloid at me and poses the question: "OK, Ole Bear MAI -- what do you think about this?" Of course my bride was referring to Kevin Coleman's little piece in the Local Daily Tabloid linked above -- Rental Construction Accelerates. The article is about all the new investment capital from inside and outside the Columbia Real Estate Gambling Casino going into fancy multi-million dollar apartment projects. And of course I don't have an answer to explain how greed and fear rule markets, including micro real estate markets. If one person can build and sell a mousetrap, every brother and their dog wants to do the same thing. That's called competition in the marketplace. The fear is that everyone who can borrow Federal Reserve Notes out the Wazoo will miss out on making a dollar in real estate. That's called ruinous competition, and it sometimes causes values to hiss at pin pricks in hot air balloons. Ever been in a hot air balloon with no golden parachute? = Carry Me Back to Ole Virginny! I got in the car wash business on Green Meadows Road with three other fraternity brothers in the early 1980s from scratch. Bought the lot and built the six bay wonder to make us all rich. Ughhh... the self-service carwash business is a lot of dang work! By the time two of us had bought everyone else out and were looking at getting rich, when we needed to go from a buck a cycle to a buck fifty, one partner got cold feet, and we sold the rascal. The problem was the increased competition from all the other newer washes that got built in a 13 year period, since everyone was going to get rich washing Folks' Audis, Mercedes, and BMWs... the partner's thought was we couldn't go to a buck fifty per cycle, 'cause we would lose all our business. Six months after we sold the sucker, every carwash in town was a buck fifty a cycle. That was in 1995. The increase in revenues would barely offset the increasing costs of operation over the next several year period, especially with all the new washes still coming on line. To make money in 2005, every wash in town ought to be 2 bucks a cycle with what Mr. Greenspan has done to our money system, but everyone is still at a buck fifty ten years later. Go figure! Duplex and apartment rents in the Columbia Real Estate Gambling Casino are fairly soft and have been for the past several years. However, values have increased as prices paid for these rentals have gone up continuously. We even have some evidence where folks have taken money out of Wall Street to play in real estate. Yep, we think this is somewhat walking on the wild side, but if everyone is doing it, it must be AOK. This reminds me of high school morals mixed with economics. Hey, everybody's doing it, so it must be AOK! I am reminded of Poor Richard and his Almanac -- neither a lender nor a borrower be. In Billy's play, Julius Caesar, there were several ill omens and warnings afforded the noble Roman. One of these was -- "Beware the Ides of March!" Given the Saturday Night Fever surrounding me in development of residential, duplex, apartment, office, and new retail construction, all over Columbia, Missouri, I can only think that it has all been made possible by the Greenspan Federal Reserve. For right now, the laws of economics just don't apply to real estate anymore.
Hey, walk on the wild side. Everybody's doing it, so it must be AOK! Yours Truly, Ole Bear, Editor Columbia, Missouri © 2005 Realty Reality |
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