Six lessons on the financial crisis that help explain why we’re still in one.

Six lessons on crisis that help explain why we’re still in one:

  1. When you don’t reinvent institutions at a time of systemic failure, the problems they’re creating don’t just magically disappear.
  2. When you prop up (read: bail out) the institutions causing the crisis, instead of reinventing them, the crisis will deepen.
  3. When dysfunctional institutions prop one another up, prosperity’s a house of cards. Crisis becomes stagnation.
  4. When propping up failed institutions has drained your resources, you’ve turned a crisis into a catastrophe.
  5. The longer it takes you to see a crisis for what it truly is, the disproportionately worse it’s likely to get.
  6. When people who are prisoners of the

a post capitalism look at how to run the business of life

Continue reading Six lessons on the financial crisis that help explain why we’re still in one.

Portland OR Q1 Apartment Building Investments Now Posted.

Here are some interesting transaction statistics for 1st Quarter apartment building investment transactions:

  • Average price per unit was up 11% from Q1 2011
  • 6.86% was the average cap rate, vs. 7.07% in 2011
  • 77% of properties sold had between 5-50 units

Click on the image to see the list of Q1 apartment building investment sales in Portland:

Portland Apartment Building Investment Sales Q1

For more on PDX apartment building investment see City Rents Rise As Buyers Wait Out Housing Bust from Joseph Bernard Investment Real Estate.

 

Why now is the right time for CRE and Apartment Building Investment. Video via Tom Barrack at Colony Capital

Tom is one of my mentors and I follow what he’s doing closely to learn from a pro in apartment building investing. Here’s a video 3fer with Tom on why now is the time, if you have any contrarian testosterone as he puts it (in other words you are a true value investor). See also my notes below with the exec sum in bold.

1st Video:

Tom Barrack on Commercial Real Estate and Apartment Building Investment

Tom Barrack on CNBC last week

Stock markets rise and fall, but investors with a long-term view will make money, real estate investor Tom Barrack of Colony Capital is a “slow money guy”.  Barrack has $27 billion invested in real estate and $45 billion in assets around the world.

Overall in the US

Where I think we are is actually a great Continue reading Why now is the right time for CRE and Apartment Building Investment. Video via Tom Barrack at Colony Capital

European debt-crisis issues are lessons for the US. We’re just a few years behind them and if we pay attention…

European debt-crisis issues are lessons for the US. They belong in the political debate. Both political parties are responsible for our growing debt issues. Bush ran up huge deficits. Obama continued them. Each party blames the other. See the whole post here: Back from Paris

Especially pay attention to item #4. that begins: Private holders of Greek debt had several years to get out…

Yet Another Government Debt Crisis

For extra credit from ‘The Only Thing New In History’ department: Yet another sovereign debt crisis If that link no longer works use this one to see the PDF.

The bullet points:

  • Having believed the myth that governments don’t default, many banks and investors will take huge losses in Europe’s sovereign debt crisis.
  • The historical regularity of government defaults—more than 250 have occurred since 1800*—gives the lie to the notion that holding sovereign debt is “risk-free.”
  • The sovereign debt crisis of post–World War I Europe provides highly relevant lessons for today.

*Referencing Rogoff & Reinhart’s work in “This Time Is Different”. See ‘Whodunit’ in the column to the right for this essential book.

Where is Your Multifamily Market In The Cycle? Nice interactive map. Via @UrbanLandInst

Is Apartment Building Investment in the up cycle in your market? Job growth is the most important leading indicator of the market cycle. Check out the cool interactive map through Q4 2011 from The Atlantic here: MetroMonitor Economic Performance Maps

Apartment Building Investment Cycle Map

A new (and simple to understand) economic model that actually works- Via Bridgewater Associates

Three related research pieces from the guy about whom former Fed Chairman Paul Volcker said had a degree of detail that is “mind-blowing” and admits to feeling sometimes that “he has a bigger staff, and produces more relevant statistics and analyses, than the Federal Reserve.”- The Economist

A Template for Understanding…

…How the Economic Machine Works and How it is Reflected Now

Ray Dalio  |  October 2008 (Updated March 2012): The economy is like a machine.  At the most fundamental level it is a relatively simple machine, yet it is not well understood.  I wrote this paper to describe how I believe it works.  My description is not the same as conventional economists’ descriptions so you should decide for yourself whether or not what I’m saying makes sense.  I will start with the simple things and build up, so please bear with me.  I believe that you will be able to understand and assess my description if we patiently go through it.

 

An In-Depth Look at Deleveragings

Ray Dalio  |  February, 2012: The purpose of this paper is to show the compositions of past deleveragings and, through this process, to convey in-depth, how the deleveraging process works.

 

Why Countries Succeed and Fail Economically

Ray Dalio  |  June, 2011: This study looks at how different countries’ shares of the world economy have changed and why these changes have occurred, with a particular emphasis on the period since 1820. As explained in this study, the rises and declines in countries’ shares of the world economy occur as a result of very long-term cycles that are not apparent to observers who look at economic conditions from a close-up perspective.

What is Money? There’s more to it than meets the eye. From GK Research via David Hay over at Evergreen Capital Mgt.

Great exploration of what money is and what it requires to remain viable. The piece covers such topics as:

Bad Economic Theory caused the financial collapse along with greed, corruption and leverage says new book

Last week in Economists Prove Einstein’s Theory About Repeating Behavior And Expecting Different Results I was talking about how mainstream economists have earned their dismal reputation because I’ve been searching for a better model of how the economy actually works. Now a new book explains just how the current mainstream economic theory of ‘Rational Expectations’ not only is wrong but in fact is one of the leading causes of the financial collapse. Better yet the author explains why the new economic model which is based on game theory is better  for understanding the financial world but additionally offers a way to avoid future collapses.

American Gridlock: Commonsense Solutions to the Economic Crises

I have read in numerous places recently about how the profession of economics has failed to deliver real benefits because the mainstream theory is built on the wrong assumptions. I and I’m sure you also have experienced the downside of this but these pieces until now have only been able to point out the problem not the solution which would be a new model of the economy and what it would teach us to do differently. Well now we have a better model and what needs to be done to move Continue reading Bad Economic Theory caused the financial collapse along with greed, corruption and leverage says new book