I see that President Obama has admitted that his efforts to improve the housing picture have not been successful.
(What gave you the first clue, Dick Tracy?) The administration is seeking some method to stop the decline in home values, but as someone in the business I can tell you that the solution is jobs, and that is not being addressed.
The job numbers released this morning were “disappointing” to use the president’s words, and the president said in a statement that the sooner we give businesses some certainty by solving the debt problem, the sooner they will hire.
That may be his hope (he is strong on hope), but I track Apple computer closely because they are a bell-weather company. The upper management is liberal – but they are also realistic. They have more than 60 BILLION in the bank, and they are not hiring – except in Taiwan, China and South Korea. Their numbers are staggering, they have for the iPHONE and iPAD, more than 425,000 approved apps, and users have downloaded more than 15 BILLION apps! Here is the rub – Android phones outsell them, but Apple still drives the market.
If Apple is doing so well financially and not hiring US, what incentive is there for others to do so. Business has discovered that the workers they let loose can be replaced more easily today with available, off-the-shelf technology.
Disintermediation is accelerating. Real Estate agents are in the crosshairs, just as travel agents, and bank tellers before us. It’s not that we will be fully replaced, but there will be less need for the numbers of us. There will be less need for MANY people – unemployment is going to be a natural thing – or rather many of us will sell our skills as independent contractors.
The administration is insisting that lenders extend consideration to jobless homeowners from four months to a year, but that is not going to solve the problem. jobs, and jobs alone will eventually stop the homes from going into foreclosure, and it is that foreclosure inventory that can be bought below market that makes a new market at the lower rate, and the slide continues.
It was the government permitting, nay, encouraging people to own homes who rationally should never be homeowners. The lenders are now overly cautious but that is natural as they see the results of being too lenient.
There is a natural tendency for governments under both major parties to extend home ownership under the theory that home ownership contributes to societal stability. However there is a natural ratio of homeowner to renter, and government can do nothing to change that natural ratio – it can only distort it unnaturally. Distortions eventually reach a tipping point.
We are in a long term transition. I have explained before the constant cry of every lacrosse, soccer and basketball coach – “You are being killed in the transition game” – because transitions take place in sports and in life with great rapidity, and those who do not respond quickly are left behind.
Government, by its nature, does not respond quickly. People can respond quicker – but not when they are paid by government, not to work.
Filed under: Culture, Economics, Politics, Taxes | 1 Comment »