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True Stories from the
Front Lines of Real Estate
Temple Emmet Williams

List to Last

Time-worn sayings reflect the truth. They survive the test of time. The first broker I ever worked for often said: “Whoever lists, lasts.” Sometimes he changed it to "List to last." He told sales agents to build their inventory if they wanted to succeed. “Don’t, you won’t.” He was a champion of three-word truisms. He was a good Broker.

Successful real estate agents manage big inventories. Some of them do it honestly. Some don’t.

I am at the club, in the bar, minding other people’s business and enjoying myself. I am sitting next to another Realtor®.

“Didn’t get the listing,” he says to me. Or maybe he’s talking to his scotch on the rocks. “I fell into an honesty trap,” he tells his ice cubes.

“What’s an honesty trap?” I ask.

He rattles his glass at the bartender. “Need another.” He looks at me sideways, with what might be a smile, and says: “It’s where you tell a customer the truth, instead of what they want to hear.”

“Poor salesmanship,” I say.

“You prefer deceit?” he asks, turning towards me. “You know why people don’t trust most real estate agents? It’s because they shouldn’t.” He tells me his latest story.

“Her mother died. Her Mom was a good friend of mine. She owned a home here in Boca just down the street from me. She lived with a great guy who took care of her the last three years of her life, when she couldn’t work. She was a Realtor® and her cancer made it impossible. She was a good Realtor. And her daughter’s a Realtor® up in the Midwest. She has a sister and they split the estate. So when Mom dies, the guy living there agrees to rent the home and cover the mortgage and upkeep. The Realtor® daughter buys the other one out. After three years the guy wants to move on. He’s met a great woman and they want to share their lives together, but not in that house. So now the daughter wants to sell it. She has a friend who’s a Realtor® up in Jupiter or someplace, and she figures she’ll give her the listing. Says she owes her the listing for all the help she gave the daughter right after her mom died.”

“Jupiter is a long way from Boca,” I say. “How’s that Realtor® going to handle showings?”

He shrugs. Rattles his ice cubes. Stays quiet for a while, thinking.

“So he gave her the listing,” I say.

“No!” he says. He lowers his voice. “I could respect that. No. Another Realtor® calls her up and says she has someone who wants to buy the house. Right away.” He shakes his head. “It’s bullshit, but this is how this Realtor® gets a lot of listings. Hell, she even goes into some homes and says she loves the place so much she’ll buy it herself. Then once she gets the listing, the buyer disappears or the bank won’t cough up a mortgage or whatever. Only she’s got the listing, for 6 months or a year or however long.”

“But you said the daughter was a Realtor®. How long has she been in real estate?

“Twenty years.”

“You’re kidding.”

“No joke.”

“Well, sellers get what they deserve, or less” I say. “But jeez, twenty years in the business and she doesn’t know she’s being jerked around?”

“This Boca Realtor® is very good at blowing smoke," he says." She shows up with friends she calls buyers. Then she tells the homeowner they loved the house. They’re going to make an offer. And she’s also working with an investment group. And her house is exactly what they’re looking for. And all of this happens before she takes the listing. Sometimes she even shows up with real buyers. But they don’t stay in the home for more than 60 seconds, two minutes tops. It’s overpriced and a mess. But she tells the homeowner they loved it. They’re going to make an offer. She shows how good she is and how hard she’s trying. It’s a great act. Total deceit, but a really great act. She fools a lot of people. She gets a lot of listings. She eventually sells a few of them, for a lot less than she originally suggested was a sure thing. She blames buyers by telling her seller that ‘Buyers are Liars’. Or the mortgage fell through. Or the appraisal didn’t support the original price she said was a slam dunk. The seller never knows what hit them until the listing contract starts to wrinkle with age.”

I think about where our conversation started. “I don’t understand the honesty trap you fell into?” I say. “Where was the honesty?”

“I told the daughter what her mom’s house was actually worth. Which was 30% less than what the other Realtor® said she absolutely, positively could get for it. I told her about how she had to price it right to get real buyers through the door. Overpricing it would keep the real buyers away. I told her it would take time to sell it. I told her the truth. She didn’t want to hear any of it.”

“Pie-in-the-sky trumps the truth,” I say.

“I think this home is going to be on the market a long time,” he says. “The daughter will get another Realtor® in six months or a year, whenever the listing contract expires, at a lower price. She will eventually sell the home. She will never use me, though.”

“Why not?”

“Because I fell into the truth trap. I told her what her home was worth. She sent me an email that said I was condescending. She pointed out that the other Realtor® had already brought her a cash offer well over the price she would have listed it for, which she said was $335,900. She says the other Realtor® procured a buyer in record time. She says her home was sold.”

“When’s the closing?”

“The Realtor® now has the listing,” he says. “It’s on the market at $338,000.”

“Is it Pending?” I ask. A Pending listing is one which is under contract and due to close, usually in 30 to 60 days.


”Is it Contingent?” I ask. A Contingent listing is one which has a contract, but with some contingencies which must be met (such as financing or an appraisal that supports the selling price).

“No,” he says.

He rattles ice cubes in his glass but does not ask the bartender for another. “It’s just a listing," he says." It will not age well, or gracefully. It will create another unhappy seller. I knew the daughter’s mom very well. She was a good and smart Realtor. Funny thing, she once told me she could work happily with any Realtor® in the neighborhood. With one exception.”


“Yeah,” he laughs. “She absolutely refused to work with the Realtor® who now has the listing.”

Two days later, the listing disappeared from the "Actives" category. It went to "Pending" with a contract that had no contingencies on it. The much-maligned Realtor® had, in fact, done a great job of selling the home. In record time.

As my first broker would have pointed out: "Whoever lists, lasts." To which he would have added another one of his favorite three-word truisms: "Whiners aren't winners."


Selling like hotcakes
(May 2013)

She parked her car on the curb, near the mailbox. She looked at the house she might list and tried to think of a new way to say: “They’re selling like hotcakes.” She disliked clichés. When she rang the doorbell, it opened immediately. Smile met smile.

The homeowner invited her in, saying: “Everyone says you’re the top Realtor® in the club.”

“They’re selling like hotcakes,” she replied. “If you’re a seller, the market is finally coming our way.” She included herself on the sellers’ side, even though she was a transaction broker and would not legally represent either side of the deal.

In the papers, in the office, on TV, on the internet -- the housing market bellowed recovery, with prices rising and talk of multiple bidders. It felt like the good old days, before the bubble burst in 2006. With one big difference. Prices remained low. Which meant that seller expectations pushed beyond the limits of reason. The talking heads on television, the analysts on the internet, real estate blogs -- they continually suggested the buyers’ market had morphed into a sellers’ bonanza. It would, they said, lead the American economy higher (nobody seemed to realize that, historically, housing recoveries were always a symptom of an improved economy, not a cause of it).

Any smart Realtor® knew you had to suggest prices 20-30% above reality to take a listing. After thirty days with no offers, the homeowner started to listen to “the market.” After six months, they became realistic sellers. All the “hotcake” sales were coming from homes on the market for many months, often years, with prices dropped three or four times from the date of the initial listing. Most journalists said that foreclosures were keeping prices low. The cause did not matter. Prices remained low.

First you had to listen to a homeowner’s expectations. You had to agree to stupid prices, support them, perhaps inflate them to get a listing. Her broker actually said to her: “Just get the listing, and make sure the contract is for a full year.” That gave them time to beat down the price, using “the market is speaking” as an excuse.

“I heard that a home just up the street sold for $245,000,” the homeowner chirped once they were settled in the living room.

The Realtor® knew the home she was talking about. It originally listed at $245,000. It sold for $190,000. The seller cut it to $225,000 after it was on the market for a year, then reduced it to $210,000 several months later. A contract finally appeared at $170,000. The buyer refused any nudging higher, the deal vanished, and the home remained on the market. Another buyer offered $180,000 a few months later. That buyer moved up to $190,000 through a series of counteroffers. It was the highest price-per-square-foot for a home in the subdivision. It was on the market for 439 days before it finally “sold like a hotcake.” When the seller packed up to leave, he told all his neighbors that he had gotten his price. “I listed it for $245,000 and I got my price,” he said. It became a $245,000 sale in neighborhood gossip.

The Realtor® knew better. She smiled at the prospect sitting across the coffee table and said: “That home got the highest price per square foot of any sale in this subdivision.” She paused, and then added: “I think I can do the same for you and your home.”

After touring the house, listening to the seller, and explaining the listing contract, the Realtor® and the homeowner agreed on an initial price of $285,000. It was the third overpriced listing the Realtor® had taken in two days. It gave her the listings of over a quarter of the homes for sale at the club. Three listings in two days. “A hat-trick,” she told herself as she drove back to her office. After nine months, one of them might even sell, if the owners came to their senses.

The economy of America is banking on a sustained recovery in housing. Using southeast Florida as a proxy, it will not work. The sales of existing homes in April will fall below last year’s number. They have been trending lower since last October. After five years of steadily increasing sales, the annual trend suggests a reversal which will put pressure on America’s gross domestic product at a time it needs help, not hurdles.

New home sales might take up the slack as existing home sales slip on the banana peel of homeowners’ overpriced expectations. But new home sales represent less than 8% of total home sales, down 50% from the bubbling boom times of 1999-2005. They may not be able to take up the slack fast enough, if at all. Construction spending dropped 1.7 percent in March. Market expectations were for a 0.6 percent gain.

The old saying of “List to Last” remains true, but it may morph from a smart business approach into a financial swan song if Realtors® continue to overprice listings in order to build inventory.


Honest and Truthful,
so help me Realtor®
(March 2013)

The National Association of Realtors® (NAR) demands that every member complete a Code of Ethics course. If you don’t comply, the NAR takes away your association rights, privileges and services.

The Code of Ethics is a fairly long document, containing 7,841 words in 17 divisions (called Articles), each with numerous subdivisions (called Standards of Practice).

The word “Realtor®” appears in the code 196 times.

The word “honest” appears once.

The word “truthful” appears once.

This represents the NAR’s slightly unbalanced approach to ethics.

“What difference does it make,” a local Broker explains to me. “Nobody trusts Realtors® anyway.”

Nor should they. Because the NAR supports and even encourages an extraordinary lack of honesty towards the “public” which their Code of Ethics swears to protect. In Palm Beach County, for example, the local Board of Realtors® has made it almost impossible for a buyer to determine how long a home has been on the market, or its original listing price. Both represent critical data which a properly-informed buyer might use to make an intelligent offer.

“Any decent agent can get the right CDOM and price,” the Broker I am talking to points out, using Realtor®-speak for Cumulative Days On the Market.

“Are you a decent agent?” I ask.    

He knows I am a Real Estate Broker myself, so he smells a rat. After a brain-scratching pause, he swallows the challenge with “Yes, I am.”   

“Actually, I think you’re one of the best,” I reply. He does not smile. His eyes narrow slightly. I hand him the printout of a listing.     

“Tell me the original price and how long it’s been on the market,” I say as he glances at it.         

“Says here it’s been on the market for 3 days, with a CDOM of 55 days, and the original listing price was $335,000, which is what it remains listed at.” He hands me back the sheet of paper. He flashes nice white teeth. “Make an offer? Got lots of granite and stainless steel. Fabulous location. Great security.” He can’t help himself.

I stare at him. A smile twitches my silence.

“What?” he barks. We are friends, so he treats this as a game.

“It was originally listed at $385,000,” I say. Pause. “744 days ago.”

He snatches the sheet of paper back from me, waves it at one of his administrators and asks for a complete printout, including its listing history. It takes less than two minutes. He studies the new document, looks up, shrugs. “3 days on the market, with a CDOM of 55 days, and a listing price of $335,000.”  

“Originally $385,000 and 744 days old … stale … and musty,” I answer.

“I don’t know where you get your numbers.”

“Realist Tax rolls,” I say. He considers this.

“Two important points,” he finally replies. “First, a house sells for what the public is willing to pay for it, no more and no less, and second ….”

“If the public operates from bad information,” I interrupt, “it might get angry and lawyer up.”

“And second,” he continues, “I am a Realtor® just like you. We are both Brokers as well.” His forefinger emphasizes this with a gentle jab at my chest. “If my Board of Realtors says 55 days and $335,000, then that is the truth, the whole truth, and nothing but the truth.

“I know.”

He smiles and points to the bottom of the page, adding: “Subject to the disclaimers on the printout, of course.”

“I know.”

The disclaimer whispers, in tiny type:

“Copyright 2013 Information herein may not be accurate. Persons relying upon the above information are advised to personally verify said information before relying upon same.”

“So stop being a troublemaker.”

“Can’t I be a whistle blower?”

He slouches his shoulders, leans on his left leg, puts his thumb on his nose, and says in a really bad Brooklyn accent: “Only if youse wanna walk pasta the graveyard.”

We both laugh and the conversation ends.

Some day, smart attorneys representing troubled homeowners might use misleading information as a weapon to attack the sellers, the real estate agents, the brokers they work for, and the real estate boards to which they belong. It’s a wide-ranging and powerful conspiracy. As part of their arsenal, the smart lawyers might point to Article 12 of the NAR’s Code of Ethics. That’s where “honest” and “truthful” make their solitary struggle to be heard.

Article 12 pledges that “Realtors® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations.”

It’s a nice promise.

In reality, however, it probably has a better chance as a class action lawsuit.


Tough customers
don't always win.
(February 2013)

The real estate agent stood outside the home for a few minutes prior to her listing appointment. She made a serious show of studying it. Three bedrooms, two and a half baths, small lot, identical to other houses in the subdivision. The agent knew that some sellers would peek out the window and start forming an opinion of her before she ever punched the doorbell.

It took a long time for the front door to open. The agent had to back away as another agent escaped through the entry. The seller was shopping Realtors®. The other agent made no eye contact, no smile. The listing price jumped up a notch in the new agent’s mind. The Realtors® golden rule: “You have to list, to last.”

The homeowner stared at the new agent and said: “Before you look at the house, tell me why I should list it with you, and why I shouldn’t just sell it myself.”

This would not be an easy listing presentation, the agent thought. “Same answer to both questions,” she answered. The homeowner showed no reaction. The agent continued: “It’s a numbers game.”

“Selling my home is not a game,” he said. “What do you mean by ‘numbers’.”

Do NOT apologize, the agent thought. “How many homes have you sold?” she asked. She still had not made it across the threshold.

“Five,” he answered, a little too quickly. “And I always got my price.”

“But probably not the best price,” the agent said. “You need traffic to get the best price. Marketing. People. Buyers work through real estate agents. Serious buyers. Not tire kickers or casual lookers. We work with real buyers. Hundreds of them, not a handful.”

The homeowner made a face, although the agent could not tell what it meant.

“Take a look at the house,” the homeowner said. That cleared the first hurdle.

The home was nothing special, somewhat dated. The agent knew how much the homeowner paid for it five years earlier, close to the top of the housing bubble. She knew the size of the mortgage, the taxes, and she could tell him, within $15,000, how much it would eventually sell for. The owner was not upside down yet. He did not owe more than it was worth. But there was not a lot of fat on the equity, and the costs of keeping the home -- taxes, insurance, mortgage, homeowners dues, upkeep -- would bring it to the borderline within a year.

The house would have to be staged. Clutter would need to disappear. Light bulbs needed to be brighter, 150-watts instead of 60-watts. That would lighten things up. The garage, which had become a storage shed, needed to reclaim its intended purpose.

She joined the owner in the living room. “Why are you selling?” she asked. Whatever he answered, it would probably not be true. But she might get a hint.

“So I hear the real estate market is roaring back,” he answered, inviting her to sit in what looked like the least comfortable chair in the room. She took out a comparative market analysis and tossed it on the coffee table between them.

“That’s the same material all the Realtors® will give you,” she said. “You probably went through something similar with the agent who just left.”

No response. It was going to be a difficult listing to take, and probably even harder to sell.

“And, yes, the market appears to have bottomed out,” she continued. “There are about 1,000 homes in 13 subdivisions here at your club. There’s a shortage of homes for sale. Of the 38 homes currently listed, 5 have contingent contracts in place. Most of the contingencies involve inspection, appraisal value and financing. Maybe a half a dozen of them will make it to a closing. The rest will come back on the market. Another 10 homes are currently pending. They should eventually close. They are not part of the 38 homes listed right now.”

“How long does it take to sell a home?” the owner asked.

She knew all the numbers. She followed them daily. She also knew some truths that most real estate agents either avoided or paid no attention to. “The average home here is on the market 91 days according to the real estate board,” she said. “The cumulative days on the market are four times as long.” She watched his eyes glaze over. She explained.

“When a listing expires and it’s re-listed with a new agent, the multiple listing service treats it like a brand new listing, on the market for one day and counting. That’s the DOM number, the Days On Market number. But it may have been listed with the previous agent for a year without going to contract. That’s the CDOM number, the Cumulative Days On Market. The CDOM number is reality. The DOM number is a sales tool.”

They kept talking, working their way towards a listing price. The homeowner wanted to know why appraisals were a problem.

“Because appraisers do their analysis against short sales, foreclosures and bank-owned homes. That crowbars the price of the home.” She loved the crowbar phrase. Tough talk.

The homeowner said: “But all the buyers nowadays are cash buyers. They don’t need an appraisal. They don’t need a mortgage.” Good answer. Smart homeowner.

“That’s true,” the agent replied. “And that’s why cash buyers discount the listing prices by around 20 percent.”

“What will my selling costs amount to?” the homeowner finally asked. Now they were getting close to a listing price.

“Figure about 10 to 12 percent of the selling price,” the agent said. “Legal fees, title insurance . . . .”

“Will you reduce your commission?” asked the homeowner.

“Why would you cut my salary before I go to work for you?” she asked. This was a poker game. She had been dealt these cards before. She would not cut her commission at the start. If it came to a contract, and it was a deal maker, she would reconsider.

“So a cash buyer will net me 70 percent of my asking price,” the homeowner finally said.

“Your best price will come from someone who is NOT a cash buyer,” the agent answered. “Which is why you need a lot of serious buyers viewing your home.”

“I just need one buyer,” the homeowner replied.

“Actually, you need about twenty,” the agent said. “That’s what it takes to get one pending contract. Twenty willing buyers.”

This was followed by a silence which stretched into discomfort.

The doorbell rang. The agent almost said: “Saved by the bell.” She smiled, but remained silent.

She stood up when the homeowner did. He said: “I need to get $310,000 out of this home.” That was about $30,000 less than he originally paid for it.

“I think that’s possible,” the agent said. She was surprised at his realistic price.

“So you have to list it for $405,000,” the homeowner smiled. “I need 70 percent of that asking price.”

“That sort of pricing will limit the number of serious buyers who look at your home,” the agent said. “Someone willing to pay $310,000 for a home does not even look at houses listed for more than $360,000. Their agent will not waste time showing homes priced higher than that. You would shoot yourself in the foot at $405,000.”

The doorbell rang again.

“You won’t list it for $405,000?” the homeowner asked, moving towards the front door.

The agent gave the homeowner her best smile and said: “I need to crunch some more numbers.” Another agent was waiting at the front door. She knew him. He would list it for $405,000 in a minute, and then turn around and use it to sell a similar listing for much less, creating a bargain out of his own listings. It was against the ethics of his profession, but still common practice.

“I’ll call you tomorrow,” she said to the homeowner. “Thanks for your time.” She smiled at the new agent, next in line, and walked out to her car.

The following day, she phoned. The homeowner was excited. In his best, I-told-you-so voice, he informed the agent that he had listed the home for $429,000. “And the agent thinks he can come very close to that price,” he added.

“That’s wonderful,” she said. “I was actually thinking of listing it for $450,000.”

“Really?” the homeowner asked.

“Look, if I have a buyer, I’ll certainly show your home. Good luck.” She hung up before the homeowner could say anything else. She was upset with herself over her $450,000 comment. The arrogance of the homeowner stuck in her throat.

The home would not sell. It would not even be shown very much. It would slowly slide towards being a short sale, or a foreclosure. Several days later it appeared on the Realtors® multiple listing service as the most expensive home listed in the entire club. It was clearly the worst deal available, and it would be recognized as such my every real estate agent who kicked it up on a computer screen. Even in a market squeezed by a listing shortage, it would be years before prices rose to the asking level of this home.

She went back to studying the early market statistics for the coming month. It looked like sales might reverse lower again after half a year of increases. The agent looked at the small needlepoint prayer framed next to her desk. It referred to the time it takes to properly marinate a seller’s reality. The needlepoint read: “Lord, please make me the second listing agent, not the first.”

She started to study the expired listings from the previous week.

Moving Day
(January 2013)

“The kids want me to sell the house and move into assisted-living,” he says to the bagel in front of him. He does not look up at his buddies circled around the clubhouse breakfast table.

“Don’t do it, George. They just want your money.”

“Yeah, well, nothing wrong with that,”’ George says, spreading strawberry jam on top of the creamed cheese already smothering his bagel. “Should have done the jam first,” he says.

“What the hell is he talking about?” someone at the far end of the table asks. He sticks a finger in his ear, pushing on a hearing aid.

“George is going to move into an old persons’ home,” someone shouts at him.

“Tell him to get a dog.”

“Yeah, like I’m gonna follow around some piece of fluff with an old bag picking up his crap,” George says.

“What! You’d rather move into a home for the aged and just follow around the old bags?” someone quips.

The table laughs. Except for one of the old bags. She’s working on a plan for her husband who’s laughing so hard tears are rolling down his sagging cheeks. Old goat.

“Yeah, but it’s a big house,” says George. “I get lonely rattling around in the place since Agnes passed.”

The ”get a dog” guy starts to open his mouth but remains silent, thinking better of it. The table goes silent as well.

“Some of those assisted-living places are really nice,” somebody finally says. But the tone of the table has died a little. They are going to lose George and they like him. He’ll visit for a while after he moves, but then he’ll just be gone. Another life. A different life.

This conversation repeats itself thousands of times a week in Florida and other retirement states throughout America. It has enormous economic implications on the housing market, which is struggling through its own retirement.

Real estate agents with frayed cuffs and tattered bank accounts have spread the word that now is the time to buy, before prices spiral higher. Desperate sellers believe the hype. They have been dying to sell, often literally.

Then the kids are in on the act, and they do not have a clue what that retirement home in Florida might be worth. Get as much as you can.

So sellers overprice their listing (and the agents agree to it, because if you have loads of listings, something might actually go to contract). The vicious circle of stupidity hears the firing gun. The race resumes.

But the starting block is a stumbling block. Over-priced homes do not sell. Not even in good times. They just increase the number of people who say No Thanks and wander off to kick another real estate tire. Lookers. Not buyers.

In southeast Florida (Miami/Dade, Broward and Palm Beach Counties), inventory of existing homes continues to jump, along with listing prices. The media-driven frenzy of an imaginary housing rebound does not, however, sell a home.

The housing numbers (new as well as existing) will disappoint the market in February. An advance glance at the weekly numbers (available to brokers 4 weeks before they are released) suggest a market reversal lower. SOS. Same Old Shenanigans (or any other last word of your choice that begins with an ‘S’).

This may not stop the move higher in equity prices on the stock exchanges, where money washes up on the beaches of bourses worldwide, every day. It will, however, eventually put the brakes on a true housing rebound.

Two years from now might not look so good.

Making a Million in Real Estate
(January 2013)

He sat down in a hospital-green classroom filled with hopeful, unemployed faces. Most were women. The first day of another herd of agents studying to earn their Florida state real estate license. A housewife next to him whispered: “How much money do you think you’ll make in the first year?” Her voice cracked in the middle of the question. It was a nervous subject. He thought she had the bitterness of a foreclosure in her throat.

“I’m going for triple digits,” he answered, dropping his voice deeper than necessary. Total confidence. “$150,000 would be a good start.”

“Wow,” she smiled. She thought about her soon-to-be ex-husband, who had given up looking for work six months earlier. She needed to start a new life.

The classroom went quiet as a real estate instructor walked to the front, threw his arms against the black, slate chalkboard covering most of the wall, and fluttered in a series of spastic moves that opened mouths in every corner of the room. A few students moved to the edge of their seats, admiring the red EXIT signs.

The instructor turned to the class, smiled, suddenly calm.

“That’s the moth of greed being consumed by the financial expectations of new real estate agents,” he said. He had taught this class for over a decade and he always started it the same way. “Reality has a price tag.”

Pencils scribbled this phrase into notebooks.

Stop writing,” the instructor said. “Start listening.”

Fingers froze.

“Most real estate agents earn between $24,000 and $35,000 a year in commissions,” he continued. The housewife glanced at Mr. Triple Digit, whose face lost some of its Florida tan. “They sell between four and six homes a year. After splits with their brokers, after taxes, overheads and expenses, they might gross around $18,000.” He paused. “It’s usually a lot less in the first year.”

The classroom was quiet. The instructor smiled and raised his eyebrows. “But, hey, you get to be your own boss.”

Becoming a top producer in real estate takes years of referrals and hard work. Like most professions, ten percent of the workers make ninety percent of the money. A top producer nets between $100,000 and $150,000 a year. It takes decades to get there.

Most real estate agents struggle, drop out, find new professions.

An endless river of dreamers feed this technology-challenged industry.

Sellers resent paying commissions to agents. Buyers use them as free cab drivers to figure out what choices they have in a marketplace that measures loyalty in minutes rather than years.

More and more deals get done without agents. The internet lets buyers and sellers meet without middle men.

In an industry getting shrink-wrapped by technology, value does exist if homeowners and buyers work with the best producer. They call it “The last buggy whip” syndrome (when cars replaced horses in the early 20th Century, the last buggy whip manufacturer was the best one in the world – the last man standing).

Although real estate agents represent an endangered species, their political clout and super-PAC status will and does slow down their drift towards extinction. But a dinosaur is still a dinosaur. Not too many people miss Tyrannosaurus Rex. It was an oversized appetite that ate weaker animals. Similar to some real estate agents I know. Cynical. But true.

I have also worked with some of the best real estate agents in Florida, top producers who added true value to the bottom lines of their customers. In every case these agents based their success on quickly judging and understanding the needs of their buyers and sellers. They did not deal with tire kickers. If a buyer said: “I’ll know what I want when I see it” … these agents suggested they use someone else. They often sent them to their fiercest competitors, whose time they were more than willing to waste.

One of the best agents I ever worked with would pre-qualify a buyer with a painstaking questionnaire she called her Balk and Walk test. If the buyer grew impatient, she’d send them to a competitor. If they made it through the test, she would set up showings for the following day. She would only show five or six homes. If the buyer did not like any of them, she’d send them to a competitor. She sold a lot of houses, and she was extremely generous with her competitors’ time.

How do buyers and sellers spot an agent worth working with? How many homes do they sell? Not how many do they list. How many do they sell? If they only stamp one SOLD sign on every 20 homes they list, they anger 19 out of every 20 sellers. If they list 200 homes a year, they can make a good living. And a lot of enemies.

“I list more homes in this area than anyone else,” could be a warning signal if it doesn’t have an addendum which says: “And I sell more homes than anyone else.”

Let’s end this commentary by going back to the classroom, the housewife and Mr. Triple Digit. They are all a flashback from a decade ago, and I know how their stories ended. You might be surprised.

The housewife did not make it. Not as a real estate agent. She sold one home for a friend in her first year and gave up. She never renewed her license.

And Mr. Triple Digit? He needed to score a 70 on the state real estate exam to get his license. He was arguably the dumbest student in his class of 37 people, and also one of the most popular. Turned out he was a funny guy who made people laugh. He passed the state exam with a 70.

He was the first person in his graduating class to sell a home. He slashed his commission to do it. It was a $7 million dollar listing. He made a $10,000 net commission. His Broker expected $210,000 and expressed a long string of 4-letter reservations about the deal. It was nevertheless a written, binding contract, and you don’t mess with the Florida Real Estate Commission on stuff like that.

Then Mr. Triple Digit sold another. And another. And, yes, today he is a mega-producer running a group of agents who boost his annual net well past the $250,000 mark. Dumbest fox in the hen house.

In a dying industry, he might just be the last man standing.

Knocking down walls of worry
(December 2012)

They say that stocks like to climb a Wall of Worry. It underscores a contrarian point of view (or perhaps an oxymoron) that the worse things look, the greater the chance that the market will rise and shine. Much of 2012 has skipped merrily along this path. No shortage of problems. No shortage of rising prices.

It makes very little sense to the average investor.

It makes a lot of sense to a successful trader.

Fade the losers. Bet against average investors. Make money.

Of course, nothing is quite that simple. Stocks climbing the Wall of Worry can always smash head-on into it, blow their airbag and face an agonizing future of failed recoveries. Apple Computer threatens to become the latest example. By the middle of January, 2013, an Apple decision should be reached by the market. It could be a classic call. An Apple a day keeps investors away.

Housing remains an important brick in The Wall. Sell a house and you sell a kitchen, bedroom, mirrors, lights, carpeting, toilets, showers, sinks, washing machines, dryers, tools, towels, the works. Ancillary sales push the entire economy higher. Don’t sell a house. The opposite applies.

In Southeast Florida, home sales have been climbing since 2007. Numbers, not dollar value. It does not matter where a contract closes in price, all the stuff that fills the home still needs to be begged, borrowed or bought. Economic ripples spread out. They jack up the economy. Without the sale, the economy gets crow barred.

What seems troubling right now is the rate of the climb in sales between last year and this year. We will sell more homes. But just barely. The good news? For the first time in many years, prices in Southeast Florida have increased along with the number of sales.

Massive numbers of foreclosures remain in the wings. Banks will move them onto their balance sheet as REOs (Real Estate Owned) early next year. The write-offs will make banks look good. But the housing market may tank again in the process.

The sales projections already point lower for the first quarter of 2013. Sharply lower.

So the Wall of Worry grows taller. It also grows thicker. Fasten your seat belt. Check the airbag. Floor that sucker, close your eyes, smoke those tires. I say we go higher.

Great time to buy a home
(November 2012)

The real estate agent sat next to me and confided: “Great time to buy a home in Florida.” Bright smile. Good caps on his teeth.

His shirt cuff was frayed and the suit originally hung on a younger, fitter man. He’d lost weight. Not many free lunches on the “Broker Open House” circuit in an era of foreclosures and short sales.

“Three months ago, I would have laughed at you,” I smiled. “I’m a real estate broker.” 

“Oh.” His eyes flicked across the room, looking for other prey. He started to move.

“But now I agree with you,” I said. He stopped.

“You do?” His eyes sparked a you’re-an-idiot look.  “Yes, I do.” I told him why.

In the past three months, stumbling sales in southeast Florida have reversed. More homes will be sold in 2012 than in 2011. Cheaper. Discounts from listing prices remain double digit, although official Real Estate Association statistics deny it.

Just two months ago, on September 3rd, I wrote:

… the collapse in residential home sales has been validated by preliminary numbers for September (to be released on October 19th). Nobody is talking about this right now. Not Bernanke. Not the real estate boards. Not real estate agents (who always say “now” is the time to buy). Not the “experts” on financial channels. Nothing but talk about how the housing market continues to recover. It is not true.

Well, it was true. In just two months, 3000 more homes sold than I projected or expected. By the end of the year, the real estate reversal will turn into a leading indicator for better times.

One of the driving forces will be future inflation. It may not arrive until early 2015, but all those sweating printing presses churning out dollars and euros will kick price increases into higher gear. For everything, not just housing.

At the same time, a frightened middle class will try to take advantage of the inflation. Or at least survive it. Savings rates won’t cover the bill. They need stuff that inflates.

Equities inflate, but the stock market has proven untrustworthy for an entire generation. People with the guts to return to equities will reap rewards, but they may not sleep at night.

Bricks and mortar also inflate. You can put a roof over your own head or you can put one over somebody else’s and make money doing it.

The pent-up demand of a growing population guarantee a reversal of fortunes in real estate in the next five years. It may not prove as profitable as equities or commodities (which inflate quickly), but people will trust a busted housing market. They will tell themselves they are buying at or near the bottom years after the low point has passed.

“And the low point is here right about now,” I told the real estate agent. “So, yes, now is a great time to buy a home in Florida.”

He seemed neither spellbound nor interested. His voice carried the bored monotone of a front line soldier in the real estate wars of the past 6 years.

“I wish I had some money,” he said. The conversation ended. Bad timing sucks.

Nothing new under the sun
(October 2012)

Every great bull market results from a bubble. Every great bear market starts with a “POP!” This boom-and-bust cycle rhymes throughout market history.

Successful financial traders understand the full meaning of “Plus ça change, plus c'est la même chose.” It means more than “nothing new under the sun” because it guarantees constant change as well as identical results. That is how and why it escapes being another definition of insanity.

“It’s different this time” becomes an open invitation to profit at the expense of people who believe it.

The difficulty comes in figuring out the timing of it all. Only a fraction of those who claim to do it, actually do it. Counterfeits reign.

Prices always go higher than expected. They collapse two or three times as fast, often dropping lower than predicted.

Useful road signs do exist.

One road sign: “It’s different this time” almost always identifies the final stages of a bubble.

Another road sign: Frantic “expert” warnings of impending doom often earmark a bubble that has not yet expanded to its bursting point.

Where are we now? What’s the next bubble?

It will not be housing. Consecutive mass stupidities almost never occur.
Before housing – which popped on October 7th, 2007 -- there was the internet bubble: on March 19th, 2000, the so-called Dotcom Crash saw the Nasdaq Composite start to lose 78% of its value.

Black Monday, the largest 1-day percentage drop in history (22.6%), vaporized portfolios on October 19th, 1987. This Greed Bubble, celebrated in the film Wall Street, featured hostile takeovers, leveraged buyouts, naked puts, program trading, barbarians at the gate, and a new math that suggested that even the sky was not the limit.

Before those bubbles burst, there was the Great Depression, the Florida Real Estate Craze of 1920 which popped in 1925, the South Sea Bubble which burst in the 18th Century (1720), and the Tulip Craze which deflowered Holland’s investors in the 15th century. Dozens of other bubbles fizzed and popped along the way. Plus ça change, plus c'est la même chose.

I think the next bubble is the Inflation Bubble. It might not repeat the 13.5% inflation of the final year of the Carter Presidency (1980), but it will rhyme.

If this is right, it has just begun. The “pop” may be years off, although there will be sinkholes along the way. The pinprick could be a burst of uncontrolled and uncontrollable volatility in the money supply.

Since May of this year, I have been predicting a high in the S&P 500 average of 1550. I thought it would occur in September, followed by a sinkhole into the election.

Back to the drawing board.

The trends in the eight sectors which I analyze daily continue to be very positive. The sectors are (1) Basic Materials, (2) Conglomerates, (3) Consumer Goods, (4) Financial, (5) Health Care, (6) Industrial Goods, (7) Services and (8) Technology. Some analysts use 9 sectors. I use 8.

Trends remain my most powerful predictive weapons. In my analysis, they point higher in every sector in the short term, the medium term, and the long term. Two of the sectors have breakouts higher in their medium and long-term trends. The balloon has expanded quite a bit. Remember that the current averages look out between 9 and 12 months. Inflation – recognized inflation -- is not far off.

I have new targets for the S&P 500. I see them rising as high as 1800.00 by July of next year. We are currently at 1460.93, up from 1266.74 in May of this year and almost 90% higher than the May 9th, 2009, intra-day low of 666.79 (the bottoming out of the busted Housing Bubble).

I always use intra-day (or intra-night) numbers. “The Close” of trading is a man-made fallacy supported and sported by journalists and talking heads.

Since the start of this now-famous “bull market that everyone loves to hate” there have been three sinkholes: (1) a drop of 208.90 S&P 500 points (handles) between April and July of 2010, (2) a drop of 295.80 handles between April and October of 2011, and (3) a drop of 155.60 handles between April and June of this year.

At the moment I do not see another major sinkhole until July of next year although both Goldman Sachs and JP Morgan suggest a sinkhole is imminent between now and the election. I believe they are “talking their book” and will, once again, screw their customers. They remain experts at doing this. The house of Morgan and Goldman Sachs will make a bundle in the process.

I trust these two behemoths about as much as David trusted Goliath. Their history is on my side.

That’s where I stand right now and I’m stickin’ to it until I change my mind.

Saving America
(October 2012)

PS: what follows is a “de-personalized” summation of my commentary from October 1, 2012.

Almost 80 years ago, President Roosevelt did not like or trust bankers. It was hard to find one who acted with honor during the bank runs preceding the 1933 Bank Holiday. On March 6, 1933, FDR shut down the entire banking system.

The Emergency Banking Act of 1933, passed by Congress on March 9th, gave the Federal Reserve the power to insure bank deposits 100%. That removed “the buck stops here” from the pockets of bankers. It usurped their power to control money and placed it in Federal hands.

In his very first Fireside Chat, on March 12th of that year, Roosevelt explained to the public why the re-opened banks would be safe. The United States Government insured that it would be so.

The banks opened the next day. Depositors stood in line to return more than half of their hoarded cash to the vaults of America’s banking system. On March 15th, the first trading day on Wall Street after the Bank Holiday ended, investors pushed stock prices up by the largest-ever one-day percentage price increase.

FDR’s Bank Holiday succeeded because it replaced the power of the bankers with the will of the people. Make us safe. Make us whole again in troubled times. Make us trust the intentions of a government for the people and by the people.

FDR’s Bank Holiday proved, almost 80 years ago, what happens when you lead bankers to money, but they refuse to lend it.

Nowadays, with the Treasury turning financiers into a protected species, you can’t even make them look after it very carefully.

Not unless you have strong government controls that prevent the buck from stopping in the bankers' pockets.

I seriously doubt if there are any politicians on the ballot with the "cram it down their throat" guts of FDR. Bernanke is the closest we can come to it, and he has neither the strength of an elected official nor the power of a dictator.

* * * * *

We called him “Papa.” He was a stern, humorless man with pale blue eyes that never twinkled. I only heard him tell a joke once. It was not very funny, but most of the dozen or so guests at the luncheon table laughed loudly and told him he was a jovial fellow. He was a Governor of the Federal Reserve, appointed by President Franklin Delano Roosevelt in the troubled 1930s.

He tried to teach his grandchildren about money. He bought each of us a bunch of lambs in 1952, which we visited and loved on his Gentleman’s Farm (Leatherwood Lodge) outside Hot Springs, Virginia. They were wonderful little lambs. In the autumn of that year, he gave each of us a check, explaining the profitable difference between what we paid for them and what they were killed for. We wept over the Slaughter of the Lambs. He was not pleased at our reaction.

My older brothers and I got even by training our Blonde Labrador, Olive, to lie down next to the chair in the living room where “Papa” always sat on his Sunday visits. A double click of the fingers and off Olive lumbered to the ordained chair. Then we waited, assuring my Grandfather that our dog had a special affection for him. It would only take a few minutes before my Grandfather would wrinkle his nose and shake his head. Olive passed vicious gas if you fed him enough dog biscuits before Papa's arrival.

I only saw “Papa” without a necktie and jacket once. We were sitting alone in his leather-bound library, speaking in whispers. He used a few swear words I had never heard him utter before. He died the next day. He had no friends who came to his funeral. Not one.

Our father, an only child, started his professional life as a banker. He worked for our Grandfather as a vice-president of National City Bank (now PNC). After a few years he escaped from “Papa’s” autocratic, overbearing shadow. He blossomed into a humorous, fun-loving bond salesman. He was honest. He had integrity. He was amusing. Children frightened him. But in my middle age, we bonded as men. We became friends. I liked and admired him. He had a lot of other people who did the same.

None of “Papa’s” grandchildren became bankers. The Slaughter of the Lambs backfired badly. I do, however, think we understand bankers. We lived with them for a long time. Our opinion may be somewhat unenthusiastic, perhaps a bit cynical, and certainly pessimistic – then again, history has been on our side.

Almost 80 years ago, President Roosevelt did not like or trust bankers. It was hard to find one who acted with honor during the bank runs preceding the Bank Holiday. On March 6, 1933, when fear cast a dark shadow over America, FDR shut down the entire banking system.

The Emergency Banking Act of 1933, passed by Congress on March 9th, gave the Federal Reserve the power to insure bank deposits 100%. That removed “the buck stops here” from the pockets of bankers. It usurped their power to control money and placed it in Federal hands.

In his very first Fireside Chat, on March 12th of that year, Roosevelt explained to the public why the re-opened banks would be safe. The United States Government insured that it would be so.

The banks opened the next day. Depositors stood in line to return more than half of their hoarded cash to the vaults of America’s banking system. On March 15th, the first trading day on Wall Street after the Bank Holiday ended, investors pushed stock prices up by the largest-ever one-day percentage price increase.

Roosevelt looked around for a few good bankers with untarnished reputations who could run the newly-strengthened Fed. "Papa", our Grandfather Lewis Blair Williams, who at the time was the President of the National City Bank (now part of PNC), became a Fed Governor.
FDR’s Bank Holiday succeeded because it replaced the power of the bankers with the will of the people. Make us safe. Make us whole again in troubled times. Make us trust the intentions of a government for the people and by the people.

Bankers today pay a lot of lip service to helping out poor, deadbeat homeowners
who can’t hold their breath under water much longer. Bankers have recently spent time publicizing their attempts to streamline what we now call the “short sale” process, which allows a home to be sold for less than the value of the mortgage.

Bankers are not do-gooders. They do not publicize the fact that streamlining the process cuts their costs while keeping the tax breaks created for them by the “Mortgage Forgiveness Debt Relief Act and Debt Cancellation” passed by Congress in 2007.

Short Sales surpassed sales of foreclosed properties in June of this year. That does not mean that bankers like them. In fact, without the Mortgage Forgiveness Act of 2007, they would hate them.

A short sale is debt forgiveness. Debt forgiveness is taxable. The Mortgage Forgiveness Act of 2007 codifies the write-offs banks need to do the deals, and homeowners are not taxed on whatever debt gets forgiven. Remove the Act and you have a lose-lose situation. That would drive yet another stake in the heart of the barely-recovering housing industry. It might actually happen. Why?

Because short sales and mortgage principal reduction are the foundation of the $25 billion mortgage servicing settlement signed early this year by America’s biggest banks and the state attorneys generals. In other words, short sales were put on the menu by government bureaucrats and they are being crammed down the throats of our financial institutions. For the people. By the people. With some benefits accruing to the banks, of course.

The Debt Relief Act is intertwined with the Bush Tax cuts which disappear at midnight on December 31st. If mortgage debt relief and forgiveness becomes a casualty of a do-nothing Congress, the Bankers’ Lobby may be the only dry eyes in the house as America slips over the Fiscal Cliff.

Eliminating short sales could send the $25 billion mortgage servicing settlement back to the legal drawing board. That might let the bankers off the hook.

As FDR’s Bank Holiday proved almost 80 years ago, you can lead bankers to money, but you can’t make them lend it. Nowadays, with the Treasury turning them into a protected species, you can’t even make them look after it very carefully. Not unless you have strong government controls that prevent the buck from stopping in the bankers' pockets.

Cattle Rustling
(September 2012)

It’s tough to figure out the catalyst for a sharp selloff. I thought it might be disappointing numbers from the Real Estate industry on the 19th, but that has done little more than dampen the rise in equities from 1473.06 on the S&P 500 to a low of 1449.08. A loss of less than 2 dozen handles is not a selloff. It’s a set-up for higher prices.

Perhaps my target of 1550.00 on the S&Ps will soon be met.

Today I heard a rumor, supposedly out of the mouth of JP Morgan (via MSNBC’s talking heads) that struck me as very odd. Just a rumor.

A big-time trader at JPM, the financial industry leader, supposedly suggested that share prices would “melt up” between now and the November election.

I interpret this as a sign that the House of Morgan may have  gone into the cattle rustling business in a big way. Their computerized cowpokes could be selling like crazy whenever the 1-day, 65-handle jump in S&P prices appears. Remember, that’s the ‘tell’ I am waiting for.

A lot of short sellers are betting on a collapse, but the market keeps busting their chops (and trading accounts). Today (Thursday) is a perfect example. The market began sharply lower. Short sellers rejoiced. They probably added to their positions. Yet the market chewed its way back to neutral before 3 pm. It finished a fraction higher.

Yet again -- another bear-buster of a day -- a setup for the melt-up. Which might come sooner than expected.

I can hear the JP Morgan traders rustling in the wings, rounding up the herd, promising them green pastures-- and stampeding them into the slaughterhouse. Just a rumor.

That’s cattle-rustling in 2012.

We used to hang ‘em.

Now they’re a protected species.

Unelected Rulers
(September 2012)

Nobody has ever done what Fed Chairman Bernanke did today. He has added a fourth ruling branch to our government.

America’s constitutional rulers include the Executive branch (President), Congress (Senate and House of Representatives) and the Supreme Court. The Federal Reserve has now reshaped that triumvirate into a four-legged stool.

This requires a boring preamble.

The Executive Branch appoints the entire Board of Governors of the Fed (seven of them), subject to the approval of the Senate. They serve for 14 years. Once appointed, they may not be removed from office for their policy decisions. The Banking Act of 1935 guarantees it.

The President chooses the Chairman and Vice Chairman from the seven appointed Fed governors. This also must be approved by the Senate.

Ben Bernanke was appointed by George W. Bush and sworn into office in 2006. He was reappointed by Barack Obama in 2009 and confirmed by the Senate in 2010. His second term ends in around 16 months, on January 31, 2014.

Whoever wins the Presidential election this November cannot fire him from his job. They cannot remove him from the Fed Board of Governors until 2020.

Today, Ben Bernanke made himself the Jobs Czar of America. The Executive Branch and the Congress of the United States have been unable to create a pathway to structural unemployment of less than 6.4%, which most governments would consider full employment.

The Fed Chairman and his Board of Governors decided to plow the way for America’s politicians. That is what happened today.

If it works, Ben Bernanke will go down in history as the greatest South Carolina macroeconomist ever. Forget South Carolina. Make that the whole world. The solar system. The universe.

Will it work?


We are now in the final stages of a good, old-fashioned short squeeze. Once it finishes (possibly within the next few trading sessions), equity prices will collapse.

I defined this short squeeze in my last commentary on September 3rd:

“ . . . As the stock market tries to grab the last few percentages of profit (between, say, 1424 and 1465 SPX on the S&P500 index), the shorts who bet on the collapse of prices finally give up. They liquidate their bearish, short positions. The market shoots higher as they throw in the towel, perhaps up 45-60 handles in a single session (a ‘handle’ is one SPX point). That is the ‘tell’ . . . that is when the stock market rolls over and dies, no matter what the Fed, the politicians, financial advisors, or the talking heads on financial channels pontificate and promise.”

As much as I want Bernanke’s move to be a meaningful epitaph to the legislative stupidity of Congress and the Executive Branch, I am afraid it will just be another tiny pebble in the road to ruin.

The day rapidly approaches when the most popular question on Main Street becomes: “What the HELL were they thinking?"

Pass the gasoline. Put out the fire.
(January 2012)

I have not published a commentary for almost 6 months. I couldn’t really figure out anything to write about that was not covered in my August 12th, 2011, comments.

I want to talk about the Fed and the Treasury further. I painted them dark last August. I wrote: “ -- in the land of the blind, the one-eyed Fed has led us to the brink of disaster. The Treasury has tricked the ‘public’ into thinking we could borrow our way out of debt.”

I have not changed my mind. Throwing gasoline-soaked dollars on raging economic fires still seems odd. On the other hand, it worked for Red Adair, who was my god back in the early 1960s.

Paul Neal "Red" Adair was an American oil well firefighter who died eight years ago after a lifetime of exploding burning oil and gas wells to death. He would lower high explosives into the raging fire of an out-of-control wellhead and blast it into a harmless spout of gas or oil that could be capped and tamed. He was a demolition expert in World War II. In the Marine Corps, I became a demolition expert. As I was graduating from Parris Island boot camp, Red Adair was performing his greatesat feat -- tackling the Devil's Cigarette Lighter in the Algerian Sahara. That was the nickname of a 450-foot pillar of flame that burned from midnight on November 13, 1961 to a few hours after daybreak on April 28, 1962. Red Adair put it out. Killed it. He was a god to young demolition experts. He fought fire with fire, and he won.

Ben Bernanke is not Red Adair.

The Chairman of the Fed is a very smart man doing an impossible job, given the mandate of the Fed. He faces an out-of-control inferno that could consume several economies before it burns itself out. He is taking Red Adair’s approach. But he is not a demolition expert. He is not a god. And the Fed does not have the equipment, or the ammunition, to tame the world’s wayward economies.

The only way the Fed can operate is through the financial, mostly banking system. It has no other avenue, or mandate. When the Fed dumps greenbacks into the raging wellhead of America’s economy, it has no choice but to pull the strings of the banking system. Ipso facto, the Fed must TRUST the bankers.

The money which the Fed pushes into the economy (quantitative easing) supposedly finds its way into the pockets of the captains and lieutenants of industry, and eventually filters down to the employee/consumer who spends it. The entire cycle creates the volatility of money. One dollar becomes many as it passes through various stages of give and take.

It does not happen if the money stays at the banks. They just loan it back to the Fed. They make a slight percentage doing so, but the law of large numbers turns it into a hefty sum. The banks’ balance sheets bulge. But the money never gets into the pipeline of commerce. It is replaced by large salaries and ridiculous bonuses to the wealthy.

Being a banker is a good gig.

The Fed knows all this. These are not stupid people. They will eventually figure out a way to unplug the pipeline and the money will flow. Nobody knows what the spark will be. It will, however, be a spark.

That spark will explode with a roar and the beast it comes from will be Inflation. The volatility of money will multiply all the dollars sitting on the sidelines. For a moment or two (a couple of months, perhaps a year) it will seem OK, perhaps even GREAT! Everyone will be making money, and the Fed will pay down the massive debt the Treasury printed with the devalued dollars of inflation. In the end, it will go horribly wrong. Because it will burn out of control. There is no such thing as a good inflation run.

The Fed has the arrogant notion that it can control money volatility when it reappears as raging inflation. They don’t think it will start until after 2014. After all, we are in a faltering economy, and continuing high unemployment guarantees lower prices. Consumers gravitate to bargains. Producers have a tough time jacking up margins. Inflation remains under control.

This is where we are today.

The only thing really holding back better times in America is the Housing Debacle and European politics. The Fed has no control over either one of these areas. Nor should it. The Treasury can play in economic muck, but it suffers from the same arrogant notion as the Fed. They think they can control and manipulate the economy. They can not. They are noise, not drivers.

The only people with control over the economy remain -- the people.

That’s right. You and I. Us. The crowd. The masses. We actually control what happens to this world and their economies.

Before we puff up with “Power to the People” and start singing “All Together Now” -- remember what Sigmund Freud said about crowds. I'll paraphrase: crowds tend to sink to their lowest common denominator of ethics, morality and values. Which explains a lot of wars, deception and general chicanery.

It also underscores the cancer of inflation. Once price increases infect the marketplace, they kill the economy.

Governments have always thought they could control economies. They take credit for good ones, and they blame bad ones on predecessors or the other guy. Or Greece.

I do not believe the Fed will be able to control the inflation which the Treasury’s printing presses have created. We have been led to the brink of disaster with a grand, unproven experiment. We have allowed it to happen. We were too busy trying to find jobs and save our homesteads to pause and reflect on what was actually happening. Our government promised us something that was too good to be true (borrow our way out of debt) and we bought it. Voices of reason (a tiny part of “the crowd”) were disregarded, politicized, dismissed.

When the spark of dollar volatility bursts into runaway inflation, that's when we get to pay for not listening more carefully. The result will not be any better than the brain surgeon who pronounces an operation “a fabulous success” -- only the patient dies.

There is no Red Adair to cap the flaming wellhead of inflation. The only explosive that can be lowered into the inferno is -- the passage of time. It will be a painful passage for most people. And, as always, it will disappear, slowly, into the repetition we call history.


Contact Information

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Direct Phone: 561-241-6323
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Office Address: Templeworks Properties LLC, 3755 Mykonos Ct., Boca Raton, FL 33487