October 2012 Issue
Romney will be good for real estate
by Patrick Anderson, Publisher
market. Here's why: the fundamental barrier to a real estate recovery is high unemployment (and underemployment) which
prevents first time homeowners from entering the marketplace. The same conditions cause existing homeowners to exit the
market place via foreclosure. High unemployment weakens demand and increases supply, a devastating combination for any
Romney knows that his first priority is to create jobs. He will do it by getting the federal government out of the way of
business through less regulation, and by letting job creators keep more of their profits. As job creators generate more profit,
optimism grows and they will re-invest these profits. Private investment (not government investment) is what creates an
expanding jobs market.
estate recovery. More jobs will also reduce the number of homeowners losing their homes to foreclosure. As the supply of
foreclosed property dries up, prices will once again begin to rise. New home starts will also begin to rise as home prices return
to a profitable level for building contractors. Once contractors start hiring again, our economic engine will be well on its way to
Romney is a laissez-faire capitalist who understands economics. He has a tendency to let the natural forces of supply and
demand take care of such things as pricing, interest rates and growth. He knows government regulations are a barrier to the
natural flow of commerce. Take them away and almost everything works much better.
This is in sharp contrast to the tinkering of the past few decades where government geniuses mix social engineering and
business in an attempt to create a desirable outcome. Take, for example, the Community Reinvestment Act originated during
the Carter Administration. The goal was to get more low income people into the housing market. The program was expanded
during the Clinton years by pressuring lenders to lower their lending standards. Most economists agree this lowering of
standards lit the fuse for the housing boom and bust we have all come to know and enjoy (not).
order to fix our economic crisis, and rebuild our middle class, we need to fix our health care system too." Before he was
nominated, Obama promised the late Senator Ted Kennedy (upon receiving his highly regarded endorsement) that his first
priority in office would be universal health care. Observe that in the midst of the biggest economic meltdown since the Great
Depression, Obama used most of his first year in office to push a social agenda rather than solve the job crisis! And in the
process, the government takes charge of 1/6 of the U.S. economy.
This is what we get for electing a liberal college professor and former community organizer as our chief executive. Four years
later we still have high unemployment, a boat load of foreclosures, a flat real estate market, a depressed construction market,
and unending government tinkering that has no effect other than to delay recovery.
He knows what to do because he's already done it in the private sector. He understands that when companies fail they must be
allowed to go bankrupt. And when people default on loans, the lender must be allowed to foreclose. Anything else just adds to
the problem. He knows how important it is for the federal government to simply get out of the way and let it flow.
Romney is a fixer, not a tinkerer. And he has no particular social agenda other than to lift everyone up together with a vibrant
American economy, one that rewards participation and discourages dependency. I hope he gets elected on November 6.
Contact the author: Patrick@StSimonsLetter.com
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