Real estate markets have definitely been improving. Discouragedmoney looks away from high priced gateway wealth-island citadelswhere the best investments have become just too dear and begins toboost prospects for secondary markets and more commodityproperties, foraging for better—albeit riskier-- deals. Occupancies look better, rents inch up, and thankfully mostcommercial development stays mothballed, while multifamily buildershave room to run given renter demand. And now even housing lookslike it’s finally on the mend.
But an examination of the economic smoke signals does not offera confidence boost. The unemployment numbers do no better than edgedown at a painfully slow rate, statistically helped by discouragedjob seekers leaving the market. The Fed now extends its timelinefor keeping interest rates at rock-bottom rates until 2015. As wehave noted before, Bernanke and friends implement this printingmoney policy, because their examination of data suggests theeconomy remains in a weakened if not dire state. Pushing thelow rate regimen out for another two whole years suggests they seeno sign of rapid jobs and wage gains, or maybe just theopposite.
And why is that? Well we can start in Europe where for all thetap dancing by the various government players and bankers, the debthole is as big as ever and growing. Germany essentially demandsausterity, which only creates more hardship and larger governmentshortfalls for its dependent Eurozone neighbors. Nobody wants totake a hit. Independently, the UK austerity plan has put thecountry back in recession. The region’s bankers are essentiallybankrupt held up by governments drowning in their own red ink withrising unemployment and reduced tax revenues. It’s notexactly an expanding market where the U.S. or China can sell moregoods.
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