Is this politics, or is it strategy or stupidity?

As the whole world knows, America’s government is in danger of defaulting after August 2nd unless Congress raises the federal debt ceiling so that it can keep borrowing enough to pay its bills. For a while the markets assumed that because a default would be so scary, Republicans and Democrats would have in the end to agree on the spending cuts the Republican-controlled House demanded as its price for raising the ceiling. The Theory of Inevitable Compromise was that each party would have to give a bit because voters will punish whichever proves too stubborn. But here are eight reasons to wonder whether the theory is true.

First, for the theory to work, both parties need to believe that failing to raise the ceiling will trigger a default and the “huge financial calamity” Ben Bernanke, the chairman of the Fed, gave warning of this week. Not all Republicans do believe that. John Boehner, the House speaker, is a believer, but the freshmen who bobbed into Congress last November on a tidal wave of tea are not. Some say that the government could keep paying foreign creditors by slashing domestic spending, and that this would be just fine—even though Mr Obama refuses to guarantee even that Social Security (pension) cheques would go out without a deal.

Second, the Republicans are divided among themselves. The party’s leader in the Senate, Mitch McConnell, has aired a convoluted last-ditch plan that would avert a default by letting Mr Obama increase the ceiling even without a spending agreement between the parties, provided he makes cuts of the same size. Senior Democrats have welcomed the idea, but Eric Cantor, the Republican majority leader in the House, has not. Mr Cantor had already rejected Mr Boehner’s secretive attempt to negotiate what could have been an historic bargain with Mr Obama embracing a higher tax take (anathema to Republicans) as well as vast reductions in entitlement spending (music to their ears).

Noises off are the third problem. Outside Congress, the Republicans’ presidential wannabes are taking up their starting positions for 2012. Craving power but not yet possessing it, these hopefuls are not constrained by responsibility. Indeed, further economic trouble on Mr Obama’s watch might suit them nicely. Whether for this reason or from conviction, most profess themselves unfazed by the prospect of a failure to raise the debt ceiling. Newt Gingrich called Mr McConnell’s last resort “an irresponsible surrender to big government”. Michele Bachmann says she is proud never to have voted for raising the debt ceiling in the past.

Fourth, the Theory of Inevitable Compromise holds that fear of the voters will push the parties together. But which voters? Candidates in the general election of November 2012 would not want to be thought reckless. That election, however, is an age away. Republican candidates and the new House members are now fixated not on voters in general, who want the parties to co-operate, but on the more ideological ones who will vote in the primaries. Many of these do not want the debt ceiling to rise.

Why not? In part because, fifth, the theory assumes that voters understand what the debt ceiling is. This assumption is almost certainly false. Many are under the misapprehension that it is a vote to authorise new spending, not permission to pay the bills that this and earlier Congresses have already run up. According to Gallup, 60% of Republicans, 46% of independents and 21% of Democrats oppose increasing the debt ceiling at all.

Couldn’t politicians explain things better? Dream on. The sixth argument against the Theory of Inevitable Compromise is the virtual impossibility in today’s polarised America of shaping a consensus. In the 1930s Franklin Roosevelt delivered soothing chats explaining the theory of banking. But the president’s bully pulpit is not what it was before the rise of partisan cable television and the cacophony of the blogosphere empowered the obfuscators. For every commentator wringing his hands over the danger of default, another accuses the “liberals” of crying wolf.

Seventh, the listless state of the economy makes it hard for politicians of both parties to do the hard things that are needed to reduce the deficit. The Republicans say rightly that increasing the tax burden would damage jobs and growth. Democrats are right to retort that so would the spending cuts the Republicans want.


Last, but not least and most important, both sides have made a stand on principles that will be hard to abandon without losing face. The Republicans’ is that there can be no increase in tax revenues, because that is how public spending ratchets ever higher. The Democrats’ is that a deal that reduces the deficit by spending cuts alone would fall too heavily on the most vulnerable Americans.

Some Canadian cities Real Estate prices to drop next year!

Winnipeggers are about to witness something one local housing official says they haven't seen in more than two decades -- a drop in housing prices.
In a special report issued Wednesday, one chartered bank says Canada's resale-homes market is poised for a moderate correction in 2012 and 2013, and Winnipeg won't be spared.
It predicts Winnipeg's average selling price will peak in the third quarter of this year at $245,000, drop by 7.8 per cent over the course of 2012 and the first half of 2013 to bottom out at $231,000, then level off.
Although that might shock homeowners used to seeing double-digit price increases for much of the last decade, prices will basically return to 2010 levels.

Cities like Vancouver (-14.8 per cent), Toronto (-11.7 per cent), Saskatoon (-11.1 per cent) and Ottawa (-8.3 per cent) will see even bigger price drops over the next two years. Winnipeg's declines will be well below the national average decrease of 10.2 per cent in sales and 15.2 per cent in prices.

The coming USA housing boom!

Housing starts in the USA have been at an unprecedentedly low level for a strikingly long period of time. And during that period, America's population has continued to grow. Eventually, whatever the economy is doing, Americans require new houses, new houses mean new construction, and new construction means new employment. Rising rents were one of the factors pushing core inflation higher last month, and increasing rents will soon translate into construction.

America doesn't simply face a situation in which housing has failed to keep pace with the growth in population. Since the onset of recession, household growth has fallen short of population growth as families doubled- and tripled-up on housing to economise. There are now nearly 2m fewer households than one would expect given growth in population. As economic conditions improve, many individuals and families now living with others in order to save money will seek their own homes. That should spark a period of catch-up household growth, which should in turn spark a large rise in rents and new construction. A recovering construction industry would help soak up unemployed workers, continuing a virtuous cycle of recovery. After five long years, housing may finally start pulling its economic weight again, or so many Americans must hope.

Southwest Florida Real Estate Trends

Although property on Southwest Florida’s world famous barrier islands are always in high demand, great values are available in the Naples/Bonita Springs/Ft. Myers market, noted for both spectacular beaches and exclusive gated, world-class golf and country club communities.
All waterfront properties are in great demand. In particular, homes on saltwater canals with direct boating access. All properties with large water views and cottages, near but not directly Gulf front, are in high demand. Condos and Old Florida style cottages in tropical settings are also popular.

Global Housing Trends, Focus on South Asia

Regional Overview; In terms of economic growth, the South Asia region continues to be the second fastest growing region in the world after East Asia. The region, encompassing Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka has recorded an average annual growth rate of over 5% in 2003. Despite the fact that most of these countries have a strong agrarian economy, the thrust in GDP growth in the recent period has emanated from the services sector, accounting for 40% to as high as 60% of GDP. Ironically, the South Asia region continues to remain one of the poorest regions in the world. Forty-five per cent of the region’s population lives below the international poverty line of USD 1 a day. This region, most notable for its large population is also home to about 40% of the world's poor.
Urban Demographics; South Asia is in a period of transition as it strives to implement effective economic, political, social and legal structures to support sustained growth. The challenges are particularly great because of the speed at which their populations are growing. During the last fifty years, India's total population more than doubled, while the urban population grew by more than five times. In 1996, the urban population in Bangladesh was 23 million. By 2020, it will increase to 58 million. The urban population in Nepal, during the same period, will grow from 2.6 million to 7.7 million, and in Sri Lanka it will double to more than 8 million.

Structure of the Mortgage Market From a regional perspective, the mortgage markets in South Asia are small and fragmented with the unorganised sector continuing to play a dominant role, especially at the lower income strata. Further, key data that reflects the performance of housing markets such as housing starts, sales volumes, movement of house prices, size of the mortgage market and defaults on mortgage loans are insufficient, incomplete and not updated regularly. As regards the organised segment, there are distinct commonalities that characterise some of the mortgage markets of South Asia – a heavily subsidised monolith-like state run institution, a fledgling private sector catering to the middle and upper income segments and players from the banking sector who provide housing finance as a part of their retail portfolio. The mortgage markets in Sri Lanka, Bangladesh and Pakistan are such archetypes. A brief overview of the structure of these mortgage markets are given below. The Indian mortgage market, the largest and most developed in South Asia has seen turnaround that merits separate treatment as a case in point.

Vacation Home Prices, not a Deal, a Steal!

Been dreaming of a vacation home? Somewhere warm to get away? Or maybe a cabin in the woods? Prices are right if you can afford it. The median price of a vacation home was $150,000 in 2010, down 11.2% from a year earlier, the National Association of Realtors reported Wednesday. In contrast, the national median for primary residences fell only 4.5% in 2010, according to National Association of Realtors.
"The fall in prices has opened opportunities for more families to enter the second-home market," said Les Sohar of soharworldhomes.com. Still, vacation homes accounted for just 10% of all sales last year, and investment properties made up another 17%. Those percentages were little changed for 2010 as home sales declined across the board. There were 543,000 vacation homes sold, down from 553,000 in 2009; investment purchases fell to 867,000 from 940,000. One factor depressing sales was the difficulty in getting mortgages due to tight credit markets. Buyers often did an end-around this problem by paying cash.

Nearly 40% of vacation home sales were cash deals, while nearly 60% of investment deals were handled that way. Those buyers who did get mortgages brought big down payments to the closing tables, according to Les Sohar with Re/Max.
For vacation homes, the average was 30%, far more than the standard 20% down. Investment buyers with financing paid an average of 32% down. Many of the second homebuyers targeted distressed properties. About 17% of investment purchases were foreclosures, while vacation homebuyers chose distressed prosperities 10% of the time, NAR said. Only 10% of families buying primary residences last year went with foreclosures.

Naples Real Estate, the truth!

Naples, Florida real estate include dream homes, mansions, and condos sale properties that can statisfy investor, homes sale, and condos sale buyers as well as active retirement focused people. The recent turmoil brought by the sub-prime and credit crisis inevitably caused damage and lingering after-effects in the real estate properties market. Finding a Naples Realtor to get more accurate home and condo information for Naples real estate is paramount in a MLS search for property. That's where I come in. Check out my bio, then tell me I can't match you up with the perfect realtor. I will shed light so that as an International Realtor Specialist, with two designations you will understand all the terminology that gets thrown your way.
Naples is considered “The Palm Beach of Florida’s West Coast” and it has evolved dramatically over the last five to ten years, from a quiet little village for beach lovers and fishing, into a more modern and cosmopolitan community. The good thing about a MLS search for a golf homes or luxury beach homes or condos sale property here is that real estate in Naples still holds value well as a special coastal enclave in southwest Florida.
Those who wish to invest their money in real estate properties particularly in Naples and our sister community of Bonita Springs are in safe hands confirms the Naples Realtor community. Naples is divided into four main areas. In the south is Old Naples and Port Royal, central shore is Park Shore and the Moorings, Pelican Bay, Pelican Marsh and Vanderbilt Beach to the north shore and more inland luxury communities. Also north is Bonita Springs golf homes, beach home and condo properties as well, not to mention Estero.