When Bush was in office there was a lot of unhappiness about hisadministration and the mainstream media did its best to fan thatsentiment. However, there was a business friendly attitude in theWhite House and taxes were lowered. That encouraged investors totake risks and to hire new employees. Unfortunately it got taken toextremes and the bubble burst. However, it did demonstrate thatinvestors will react to government approaches to tax, regulation,and general attitude of government toward successful entrepreneurs.I could never understand how anyone could think a communityactivist who never held a real job, never ran anything, and whocontinuously bashed the business community, could possibly be goodfor business- especially with Nancy Pelosi running Congress. Ialways felt she was the most dangerous person in America and shehas proven that to be true.

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I spend a considerable amount of my time talking to investors,lenders, and owner/operators. The psychology now pervasive in thecountry is reminiscent of the days of Jimmy Carter –only muchworse. Carter was not anti business. He was just an incompetentpeanut farmer. Obama and Pelosi have created a regime which isfilled with people who are truly anti-business, pro labor, antiwealth creation. Elizabeth Warren is the ultimate example of theregulatory zeal which will ultimately harm the economy. The way heappointed her this week is further proof that Obama doesn’t carewhat is best, he only cares to advance his agenda. That is whathappened with Obamacare. This has now deeply impacted how investorsare reacting. I have never heard such levels of caution, fear,anger, and uncertainty. It is not that there is not capital, orthat there are not many people anxious to do deals. It is that thepsychology does not encourage risk taking. The constant attacks byObama on those of us who worked very hard to achieve the wealth wehave created for ourselves and the economy, is deeply offensive.Many of you have a similar story as mine. I started with less thannothing and through years of long hours, hard work, some smarts,and a willingness to take risks, I was able to achieve a very goodlife. Just as most of you, I earned it all myself. The governmentgave me nothing. I paid my taxes. I made sacrifices. Now that Ihave achieved success Obama and Pelosi think I should redistributemy hard earned money to all the people who don’t pay any taxes (47%of families), don’t work long hours, and don’t create jobs forothers as you and I have. They seem to not understand that capitalgains is the result of taking big risks of potential loss. It isnot the result of being a “fat cat”. If you tax away therewards of investing to redistribute them to the people who pay notaxes and take government entitlements, then in the end you killthe incentive to take risks.

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It is not as much the marginal dollars that many of us wouldhave to pay if they do raise taxes, as it is more the psychology ofwho am I working so hard for and why take the risk of investing.Why should I be vilified for creating jobs just because I may makea good return on my money and my efforts. There are numerousstudies that clearly show that raising taxes actually harmsgovernment revenue and economic growth.

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It is not at all clear that the Republicans have wonderfulideas, or that they will really reduce the deficit. It is more thatthe rush to regulate, to redistribute wealth, to tax success and totake over vast swaths of the economy from banking, healthcare,autos, and the like, can get stopped. It is possible that aRepublican sweep will dramatically change the psychology ofinvestors, and that will be good for the economy and investing, andgood for value resurgence.

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Joel Ross

Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.