There are unusual benefits in the short and long term from some of the changes that have occurred. We have seen much lower prices in furniture, clothing, computers etc. We have seen higher building costs in all facets of construction which eventually will lead to higher prices in all areas of real estate. Replacement costs are starting to eclipse prices and a major adjustment is coming. As the dollar gets
weaker against foreign currencies the price of our assets comes down and entices foreigners to buy. Real Estate can be the biggest benefactor, especially in the Western United States, of the revaluation of
the Chinese currency as they will be able to buy our real estate at a discount.
The Federal Reserve has a very tough job especially in the next few months. Look at what they have to work with. Their money rate is 5.25% for overnight money to the banks or between the banks, while
the 10 year treasury is flirting with going through the 4.5% yield to the downside. Wall Street is showing good profits while incomes are stagnant on Main Street. As much as consumers drive the economy spending around 70% of the gross national product is contributed to said spending, it must continue. The belief that monies were pulled out of residential properties to keep the economy rolling and that now with the slow down in real estate it is harder to do, how is the economy going to keep rolling without the consumer? If the Federal Reserve cuts will it lead to an inflationary economy or if they don't will we end up in recession? Maybe a job as a Fed Governor or better yet the Chairman isn't looking so interesting anymore!
I believe the risk in the mortgage market is to the upside, not the downside until the Federal Reserve starts cutting their interest rate. It is hard to paint a picture of the 10 year treasury note being more
than 75 basis points under the Fed's short term rate and therefore I see no further movement downward until some word comes from the Fed that they will start lowering their rate.
My advice to the youth of America is to find a skill that our Country will need in the future and leave the family tradition for the history books. It doesn't have to be complex, technologically challenging or
even one learned in college but simply one that solves a need.
Think about the future when all of the baby boomers start retiring and consider a service that a vast majority of these people will need. Look at your residence and see how you live and then think about how a senior citizen could live that way. Probably can't and that could be the germination of an idea that can create a whole new day for you and the seniors as well. We are on the verge of major changes in our lives that make the walk on the moon seem insignificant. We all can be part of this or we
all can complain about it: your choice.
If you don't think it is happening wait until you start buying new cars that will be equipped with a new radio, not XM or Sirius, but HD. You mean you haven't heard of High Definition radio?
The future is coming and it can be as exciting as you want it to be, or as displeasing as you want. I for one am excited by the prospect and am thinking about all the new avenues that will be available. Writing always makes me think and now that I am on my second hundred columns, the thoughts are becoming more delightful. What does your future look like?