Market Perspective

The Forces That Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 9

Posted by on Mar 6, 2019 in Ned Massie, Perspective | 0 comments

Garbage: Government bureaucrats prosper by building their empire. The more regulations they create, the more employees are needed, the more responsibility they have, the higher their income. We witness that empire building in the environmental regulation arena constantly. Well intentioned but self-serving, it is not a good combination. We Americans are almost drowning in our garbage. But instead of focusing on that “growing” severe problem, the regulatory bureaucrats prefer to issue regulations that diminish the use of land for the production of food, housing, etc. Does that sound like a long-term, healthy strategy to...

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The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 8

Posted by on Feb 27, 2019 in Ned Massie, Perspective | 0 comments

Shadow Banking: Shadow Banking almost always ends up badly. Think of GE Capital’s almost total destruction of the American industrial icon called GE. Square, a tech company, has become a “shadow bank” with a subsidiary called Square Capital which offers loans to small businesses. In the last 12 months, they have made approximately 200,000 small business loans, totaling $405M in credit. Using algorithms instead of bankers, successful borrowers have enjoyed this experience, as long as they can get money. Unsuccessful borrowers have lamented about not being able to actually talk to a banker to find out why their loan application failed. Square has “off-loaded” their risk to pension funds, and other investors. Does that sound familiar to you? This is another sign that our economic cycle has peaked. Worry about the ripple...

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The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 7

Posted by on Feb 19, 2019 in Ned Massie, Perspective | 0 comments

Brexit: This drama is scheduled to end around March 29th, 2019. Britain’s Prime Minister May actually voted against Brexit and has negotiated in a manner consistent with her vote. The European leaders are trying to drive a very hard bargain because of the other cracks that are appearing in their unsustainable union. If Great Britain actually leaves, Great Britain will thrive economically. However, the splintering of the Eurozone will accelerate. Even if Great Britain stayed, the Eurozone will fail. The ripple effects of the splintering of the Eurozone will have significant economic impacts around the...

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The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 6

Posted by on Feb 6, 2019 in Ned Massie, Perspective | 0 comments

The proper term for the country we call China is, “The World’s Danger Zone”: The so-called “China Miracle” is just growth funded by out of control government debt in their economy. Unsustainable actions continue until they do not. This chronic house of cards will fail and the economic impact will be felt globally, the only question is when. There are two terms you need to add to your vocabulary: LGFV (Local Government Financing Vehicles). These are part of China’s shadow banking system. Typical of Communist countries, LFGV investments were made because of central government instructions, not because they were good investments. FACE – Finally, a leader of the western world stood up to the Chinese and called them out for their illegal and constant theft of intellectual property, as well as many other unfair trade practices. Given the fact that the Chinese have to “Save Face”, Dictator for Life Xi, is in a really bad spot. If he makes a deal with the U.S.A., he will “Lose Face”. If he does not make a deal with the U.S.A., the Chinese economy will crater. To me, the highest probability is that Xi will be deposed and a new Chinese leader makes a deal with the U.S.A. The question then becomes, will the Chinese line up to our agreement? If so, it will be the first time. Because of the size of China’s economy, turmoil there ripples around the...

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The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 5

Posted by on Feb 6, 2019 in Ned Massie, Perspective | 0 comments

European Banks: On December 28, 2018, it was reported that the Euro Stock Bank Index was 34% lower than it had been at the beginning of 2018. The USA Bank Stock Index in 2018 had a decline of 23%. European banks today, as a whole, are selling for about 40% below their book value. Some European banks’ stocks are now trading at almost 60% lower than they were in January of 2018. This reflects the European bank’s lack of profitability because of holding too many bad loans, etc. As a result, a very small economic bump could create massive problems in the European banking system and therefore their economy. Japan has showed the world that if your banks are zombies, your economy is stagnant. Europe is in serious economic trouble with a welfare program bloated by illegal immigrants, weak banks, and an unstable regional governmental structure. Because the Euro zone is such a large economic block, economic turmoil there ripples around the...

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The Forces That Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 4

Posted by on Jan 30, 2019 in Ned Massie, Perspective | 0 comments

Pension Fund Crisis: There was a movie some years ago called “Wag The Dog”, that had to do with a politician obscuring what was actually going on by focusing everybody on something else of lesser importance. Here are the facts that no one is telling you about the Pension Fund Crisis: One half of the states in the U.S.A. have pension funds with balances that are less than 70% of the amount required to meet their obligations; While many of the states in the U.S.A. have recovered from the Great Recession, Virginia is rated among the very worst states in their financial structure; When the pension crisis hits, probably within five years from now, the effects on the economy will be both Direct and Indirect. Direct Effects: At some point the pension funds simply will not be able to meet their obligations which will mean that pensioners will receive less of a pension amount than they anticipated. Pensioners will have to cut back their spending. Indirect Effects: The loss of income by the pensioners will ripple through the economy, because of their reduced consumer spending and loan defaults. That means economic distress called a recession. The solution that will be proposed will be to radically increase taxes. The amount of the tax increase required to solve the pension fund crisis will have the same effect on all households – reducing their disposable income and thereby causing a recession. This will be ugly when it hits. You want to have your portfolio balanced and have some liquidity before it hits. Please re-read our first two points in this series of blogs as you plan your investment...

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