So the statistics are finally starting to emerge, and nobody but the spokespersons for our real estate brokerage industry, our debonair denizens of denial and flagrant fanners of fantasy can gainsay the obvious: the housing market is softening, and it is doing so quickly and rather dramatically. Prices are softening, unsold inventory is rising quickly, and new construction is clearly on the decline. The New York Times pointed all this out in its May 9 Business Section and, as we all know, once the ?Old Grey Lady? spots a trend, it's well underway or, perhaps, very nearly over.
Real estate investors, over the last couple of years, are the equivalent of the late 1990's high-tech moguls, persuaded beyond any reason that profits were limitless and that the market would, indeed, go up forever. Yes, folks, it's the tulips again! For those who may not recall 17th Century Holland (all evidence to the contrary notwithstanding, even I can't remember back that far), irrational and maniacal speculation in tulip bulbs in that era drove the prices up exponentially, until, predictably, the market crashed. I say, ?predictably,? even though every time speculative frenzy overtakes society, whether it be a dotcom investment environment ?unburdened by earnings? or a frothy real estate market which must go up forever because ?they ain't making any more,? we seem to have to learn the same lesson over and over again.
Is it a lack of intergenerational memory? We certainly don't have much sense of history, yet most of us know at least something about the Great Depression and Stock Market crashes of the past. Is it mere self-deception, i.e., the determination to think ourselves so clever that we've all become real estate moguls? In the late 1990's, I remember clearly being surrounded at my tennis club by 20-somethings, knee-deep in internet-land, sipping well-aged single-malt scotch, and puffing on expensive cigars, secure and, indeed, smug, in their status as ?captains of industry.?
I wonder what happened to those guys?
In truth, it is hard to say why we seem to have to keep learning the same lessons over and over again. This is, perhaps, a question better put to sociologists, and not to lawyers and financial people. But the consequences are, as ever, predictable, to those who see the writing on the wall.
In a previous article, I pointed out that the decline in housing values, coupled with other developments in banking, consumer lending and revisions to the Bankruptcy Code all portended very poorly for the American Middle Class. Depending on what happens in this area in the near future, a similar prognosis may, I am afraid, await the Upper Middle Class who also have a great deal of their wealth tied up in their homes.
Until only a few months ago, clients and colleagues were begging me to find them deals in ?distressed? properties. There was, at the time, virtually no such thing, because no sooner had someone gotten wind of a property owner with a financial problem, that the bidding war began, raising ?distressed? properties fully to market value (there may well have been no such thing as ?market value? either). Now I have the very clear sense that those properties may soon be plentiful. Those who have had the sense to ?keep their powder dry? and who have the foresight over the next year or two to begin nibbling at opportunities and the patience to hold the properties they acquire, will, in this writer's opinion, be well-rewarded. Much as the good leavings of the dotcom meal were feasted upon by so-called ?vulture funds,? the sharks may soon be smelling the blood in real estate, and might be slowly, oh, so slowly, beginning to circle.
Warren R. Graham Copyright 2006
Qana, as the British MP, George Galloway reminded his listeners (the show doesn't seem to be archived but he was accused of being an Israeli Mossad agent on Sunday), is said by some to be where Jesus turned water into wine. And as the roads of this village run with the blood of so many children, it is to water rather than to Chateau Musar that analysts are turning their attention.
Many have asked how it can be that one of the world's most powerful U.S.-taxpayer-subsidised armies on earth has not been able to defeat a guerilla army that has seemingly spent most of its money on social services in Southern Lebanon rather than rockets. And why is Israel willing to cope with such international opprobrium in order to free two soldiers Hezbollah captured to catalyse a prisoner swap in a type of deal done many times before? Israel has even alienated some friends on Capitol Hill. It has managed to get bad publicity for its cause on U.S. networks, which normally are uniform in their bias.
Israel, it seems, wants a complete evacuation of Southern Lebanon so that international forces can guard the area around the Litani river and ensure that the water flows to Israel. Whilst Israel has been successful in stealing some of the 580 million cubic metres of water a year, the Lebanese have a dam at Qarun.
"The entire basin of the Litani River is located within the borders of Lebanon. The river rises in the central part of the northern Biqa'a Valley, a short distance west of Baalbek and flows between the Lebanon mountain to the west and the mountains to the east, running south and southwestardly at its own pace. The river enters a gorge at Qarun, flows through it about 30 kilometers and, near Nabatiya and the Beaufort Castle, abruptly turns right (to the west), to break through the mountain range to the right, and continues to flow through the hilly terrain of the al-Amal region. North of Tyre, it empties into the Mediterranean." (from Inventory of Conflict and Environment).
Israel obtains over one third of its water supply from the occupied West Bank and Gaza Strip. But it needs more.
When Israel finally lost its twenty year war against Hezbollah in Lebanon, Israel asked the U.S. for increased contributions from American taxpayers to pay for bigger desalinisation plants. It seems that some of the money was refused by the Bush administration.
According to a United Nations Economic and Social Commission for Western Asia, Israel was using water from the Lebanese Litani River, by means of an 11 mile tunnel it had drilled, as well as from Lebanons Wazzani springs (source: UPI). Note that no journalists can get to the area to confirm information about the siphoning of water and, indeed, such claims are contested (Aaron Wolf, in a U.N. publication, says there's no way Israel would dream of stealing from the Litani).
But even whilst President Clinton and the Israeli government refused to negotiate over the right of return for Palestinian refugees, Israel imported over 100,000 Jews into the occupied West Bank. Those 100,000 use around the same amount of water that one million Palestinians do (something to do with swimming pools, say partisan analysts). As the Israeli Ministry of Foreign Affairs says:
"Israel's water economy is on the brink of a crisis."
So what's a country supposed to do? Whilst this White House is willing to send more than $10 bn worth of arms, it isn't going to send money to take the salt out of the Med? A neat buffer zone would at least guarantee illegal supplies from the Latani.
But will China and Russia and France go along with all this? And why is the U.N. Secretary-General not raising the hidden agenda? And why are hundreds of Lebanese Muslim, Druze and Christian civilians paying the price for this U.S.-Israeli plan? Secretary Rice's performance has been viewed as absurd by the international community. Henry Kissinger's "shuttle diplomacy" was just that. He "shuttled" between Syria, Egypt, Moscow, Jordan and Israel, running circles around hapless Egyptian and Soviet politicians. Rice seems to think she is reinventing the strategy of that scion of the U.S. right...by "shuttling" between her laptop and Ehud Olmert's drawing room. No wonder that the Lebanese PM told her to go home.
Both Warren Graham & Edward Victor are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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