Sales of previously owned homes reached a peak in late summer, creating a momentum finale for 2015. Existing home sales accelerated as the year-end neared, indicating a pace of more than 5.5 million, according to the National Association of Realtors, making last year the strongest since 2007, just prior to the Great Recession.
Despite a late summer lapse — ascribed to a stock market selloff, interest rate uncertainty and general global domestic pessimism — pent-up demand sprang forth in the final months, with overseas investors and a slightly weaker dollar making American pre-owned homes an increasing focus of foreign money. Also playing a role was the tendency of top-tier homeowners to refurbish their residences with solar power, standby power generators and recreational supplements, such as whirlpool baths and swimming pools, plus standard enlargements.
While the 2014 sales pace indicated an impressive recovery, it was still a far cry from the six million record set in 2007. Worrying professionals about sustaining 2015 activity is the slowdown in overall employment by upper-middle-class employees, due to the reversal in energy development, and the upward creep of average home price sales at the $250,000 to $500,000 level.
Such a combination of rising prices and affordability is beginning to generate concern, as more prospective sales of late had to be consummated by reduction of initial price demands.
At the same time, reduced new home construction, which had previously slowed, has capitulated to the increased demand for existing homes.
Barring a new surge of economic growth in 2016, real estate prognosticators don’t expect much improvement in 2016, under present circumstances.
Gold vs. paper money
It has been axiomatic that the buying interest of gold in its various forms (bullion, gold equities, coins, etc.) has been the option recommended by many analysts as the singular alternative to paper money, which continues to lose value as national debt rises.
Although gold has been the traditional measure of wealth since the days of antiquity, this legendary acceptance has continued to be the standard of wealth survival throughout the civilized evolution of mankind, despite the accelerating evolution that has bypassed almost all other value standards in these rapidly changing times.
Through a combination of media advertising drumbeat and instinctive fear of runaway inflationary periods, still fresh in most observers’ memory banks, gold is the one value entity that is universally regarded as rock-solid in times of economic or even geopolitical crises.
Although this confidence may generally be well-deserved, especially since nothing has equaled the historic gold standard national basis, the investment negatives should also be open to question:
- The price of gold, although generally higher at times of inflation, has ranged between $200 an ounce in the mid-1980s, when inflation was brought down, to close to $2,000 as the world was recovering from the recession. This displays the volatile nature of this valuable commodity at times of changing currency valuation periods.
- Since gold generates no interest or dividend income, it must be considered a defensive segment of any portfolio that ties up investment funds in case of unexpected crisis. Like valuables such as jewels, diamonds and other portable holdings, gold derivatives were the mandatory holdings of wealthy European minorities that were at risk from the whims of hostile governments, forcing them to depart on short notice. Obviously, real estate or other fixed investments would have to be left behind.
- Since the United States is the most stable, secure and highly valued of all the world’s nations, the transitional movement of gold is not a major plus for U.S. citizens.
Even the fear of currency collapse, or major deterioration, is less of a factor in the United States than anywhere else in the world. Since America combines the world’s leading proportional consumer sector, a smaller but versatile manufacturing base, a strong export/import balance and a geographic scope allowing for considerable population growth, no other world nations come close to matching its economic totality.
In putting all these points into perspective, the intensive pitches for gold on television are obviously slanted toward worries over dollar depreciation and fears of economic collapse.
It seems that Democrat presidential aspirant Hillary Rodham Clinton is taking on Wall Street’s big banks turned into super financial institutions, such as JPMorgan Chase, Citigroup, Bank of America and Goldman-Sachs, which reversed the process by getting into the banking business from monolithic investment bases.
But instead of unraveling the limitation placed on these megabanks before the Glass-Steagall Act became history, the Democrat presidential nomination favorite is advocating a major risk fee for all banks with assets in excess of $50 billion. The fee also would hit financial firms that regulators deem risky, such as American International Group. This projected punitive action against the multibillion financial giants would be constituted to penalize firms that have incurred ultimate high debt levels, or high-risk short-term funding.
Although her projected attempt to rein in these unprecedented global financial giants was a come-down from an initial plan to revert back to Glass-Steagall, it may have more to do with the circumstances leading to the unfortunate turn of events in the latter days of President William Jefferson Clinton’s second term.
In the late 1990s, Sen. Phil Gramm (R-TX) pushed through Glass-Steagall’s liquidation with the Gramm-Leach-Bliley Act to give the nation’s leading banks more leverage in expanding America’s broadened economic base, through more aggressive banking approaches.
As a reminder, Glass-Steagall became the law of the land 60 years previously to do just the opposite; to keep U.S. banks — whether large, medium or small, — tethered to the needs of their independent business and individual loan clients. It was enacted after the stock market crash of 1929 to separate investment and commercial banking activities.
A more stringent plan originally considered by Rodham Clinton would have looked suspiciously like a rejection of the heavily lobbied and endorsed negation of Glass-Steagall by President Clinton, who had left no stone unturned in successfully pushing through this legislation in 1999 before he left office.
His subsequent involvement in global investments since then may give further insight into his full support for breaking down the barriers between the dedicated “pure” banking system protected by Glass-Steagall and the overwhelming “one-stop shop” financial giants that now dominate the current financial world.