Eric Von Berg - Newmark Realty Capital - 595 Market Street, Suite 2550, San Francisco, CA 94105 - for loan quote: 415 956 9922

January 1, 2013

It’s the Deficit, Stupid...

My alarm clock went off the other day and the radio came on to an interview by Rachel Martin with Thomas J. Wilson, CEO of Allstate, who was speaking on behalf of the organization, Campaign to Fix the Debt.

This was an interview I wanted to hear.

Allstate is an important correspondent lender for my company, Newmark Realty Capital. They are a no-nonsense Midwest firm, well respected: When their leaders speak, people listen. I find Allstate’s management more prudent in their remarks than most insurance companies, who as a rule, are generally quiet and considered in their public profiles.

With the “Fiscal Cliff” looming, I was hoping to hear a grand plan - a solution that would break the stalemate and lead to long term deficit reduction. But, what I heard was a simple plea for the public to make it clear to our politicians that deficit reduction needs to be a high priority. Tom Wilson also stressed that a solution would not be hard if our leaders can take a balanced approach, cutting spending and raising revue. Our politicians simply need to do their jobs, i.e. compromise for the sake of our nation.
Politicians all learned years ago "it's the economy, stupid...". Candidates who ignore the plight of the unemployed do so at their own political peril, so during the last campaign to talk about belt-tightening to fix the deficit was a political no-no. We are now in a time of unprecedented fiscal and monetary stimulus, designed to butter the bread of voters in the here-and-now. Little attention is being paid to the tab that will be paid by our children for today’s deficit spending. And as I blogged in June 2012 and August 2011, too little attention is being paid to the distorting effects on our economy from unprecedented and untested credit-market manipulation by the Fed for short-term political gain.

We have a window of time to make a difference.

The candidates of last year are no longer candidates - they are elected leaders. The members of the House and Senate need to turn their heads around and start leading. They need to stop pandering and start making tough compromises for the sake of the nation. Not the nation of the next election cycle, but the nation our children will inherit.  Putting off any meaningful spending cuts for two months, accomplishes nothing.

If our elected officials cannot do their jobs, then our country will need the, now postponed, arbitrary spending cuts of the Fiscal Cliff. Our Federal Budget has become morbidly obese and will need gastric banding, a drastic measure not recommended for those who can lose weight through measured diet and exercise. A drastic measure for a Congress that cannot push itself away from the table.

And our media does not help. Pundits of both political persuasions hype the conflicts that lead to inertia, and focus the public’s attention on the hunger that will follow any belt tightening. Listening to the news the other night, I heard this remark from a reporter, “Europe has proven austerity does not work. Their economies are stalling and unemployment is rising. We cannot go down that road.” With other words, if you diet, you get hungry. Well, duh. But, if you do not control yourself, you will eventually be put on a forced diet, like Greece. We cannot go down that road.

Our corporate CEO’s are saying it, and our real estate industry leaders should should shout it out too... “It’s the Deficit, Stupid!”