Is Help On The Way For The Real Estate Development Industry?

Here's what we know:

• The overall economy has been slammed harder than at any time since the Great Depression of the 'thirties;
• Recovery seems to be imperceptibly slow to the point of stagnation;
• Real estate development appears to have suffered more than any of the other industries;
• The administration remains unchanged, but, thanks to a majority of the American electorate, the political and fiscal complexion of Congress appears to have moved somewhere to the right of where it has been for several years;
• Profligate spending by the administration, as ably assisted by its departing cohort in Congress, has weakened the purchasing power of our currency, thus worsening the situation;
• we depend on debt (through the sales of Treasury instruments) to operate our government
• The Chinese, Japanese, Saudis and others are the principal purchasers of these obligations, and they have been threatening to slow or stop buying them because of the low rates of interest and the depreciating dollar as a store of wealth.
• A proliferation of regulations on businesses and the looming threat of tax increases has created an environment of such uncertainty that the needed expansion of business, and the resulting creation of jobs, has not occurred;
• This has aggravated the reluctance of lenders to provide the needed debt capital;
• This uncertainty, high unemployment, and absence of debt capital dampen demand and make it difficult both to reduce the huge overhang of residential units and refinance much of the $1.4 billion in commercial real estate loans maturing over the next few years.
• And, this doesn't even touch on the potential economic disaster represented by apparent irregularities in the mortgage-backed securities industry.

Here's what we need:

• The Republican majority in the House to display some genuine grit for a change and dispel the uncertainty by:
• Rolling back the plethora of centralized power-grabbing regulatory schemes enacted in the past few years - simply unfunding them if all else fails;
• If lenders had clear regulations regarding reserve accounts and other matters jumbled by the Dodd-Frank bill and other legislation, they would be far less reluctant to lend.
• Initiating permanent tax cuts - temporary ones or ones that benefit only the lower bracket taxpayers who don't create jobs - do nothing to dispel the uncertainty concerning the economic future;
• permanently quash the death tax and the oft-proposed tax on carried interests;
• lower the capital gains tax and the corporate tax rate;
• create tax incentives that encourage investment and expansion.

These are but a few of the positive actions that could be taken to jump-start the economy. We'll discuss more in a future blog entry.

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