Financial Chaos

I don't write much about my day job here, but I can't let these days pass without at least a comment on what will turn out to be a remarkable time in the financial and political history of the US. If you don't pay attention to the financial markets, do yourself a favor and start now. You don't want to miss this.

As much fun as web apps have been to hack away on, commercial real estate investment is how I earn my real living. After watching the ups and downs of leveraged real estate, I've learned to respect to the wonder of leverage and the horrors it conjures when mistreated.

Here's the short version of what has come to pass:

• Everyone thought home ownership was good, no matter what.
• People borrowed lots of money to have those good homes, no matter what.
• Loan originators took those loans, packed 'em up and sold them as securities to ensure that they would profit, no matter what.
• Wall Street ate those securities up and leveraged them heavily. Surely the government could not let them fail, no matter what.
• 'What' happened and it mattered.
  

What happened is that the sheer size of the wad of shaky financial instruments is so massive that nobody can make it go away, not even Unlce Sam. Someone has to take some big losses. The way it's shaking out, those losses will be shared by pretty much everyone. That's life in the big city, I suppose.

I'll leave you with two dubious but often repeated quotations (if anyone can confirm these, it'd be much appreciated). I think that the entrepreneurs out there will appreciate the sentiment, and the timing seems appropriate.

"Bear markets return stocks to their rightful owners." - J.P. Morgan

"The way to make money is to buy when blood is running in the streets." - John D. Rockefeller

PS: We are looking to acquire retail properties in Austin. If you know of a good one for sale, let me know.