Giant make believe.
The free market seeking an equilibrium price is no longer economic policy. In short, the working of the free market is suspended. She went on to say it was administration policy that they will create new employment and by doing so they will boost the economy, and so then real estate values will return to old levels. There were 50 of the most senior and smartest real estate people in the room. They ripped her to pieces. It looked like one of the town hall meetings of August, except everyone there was a very senior, polished professional. At one point everyone was calling out or moaning at her. It was clear to all she had been given a few talking points and she was told to stick to them no matter how foolish she looked.
The group told her in no uncertain terms this is terrible public policy. They said for jobs to be created you need to lower rents so the cost of occupancy was at a level to encourage more hiring. If the loan is kept at old levels and building values not reduced, then landlords can't reduce rents to where they need to be to make taking space by tenants economically viable. Retailers costs remain higher than they should be making it harder to lower prices to induce sales. So there is a massive make believe going on. When I pressed the issue of political interference she said -what do you want us to do, bankrupt all the banks?
When I pressed the issue of political interference she said -what do you want us to do, bankrupt all the banks?”””
The first step in destroying all the banks was when Jimmah Carter started the CRA.
IMO, it all started there.
Last week I was at a brand new shopping center and most of the storefronts had been empty since the center was built.
All those empty spaces -— we started talking about the kinds of things people could do with them if only the rent were low enough to make a tiny business viable.
For example, I know someone who would love a small shop in which to give music lessons. Her home, both in size and situation, is limiting the number of students she can have, and she needs storage space for stuff related to her lessons, and she’d like a small area when 10-12 people could be seated for recitals and so on. With enough space, she could also take on another music teacher as a partner, and they could double the number of students.
This would be a very small business, requiring no changes to the space at all, but it would bring some life, foot traffic and possibly even a little spending at nearby restaurants to the center. Which right now is earning exactly ZERO on that space.
But then we realized the owner probably has very little room to adjust the price of rents, either because of the terms of his loan or simple government regulations.
We also said this is why in the Great Depression an unemployed business manager and his wife could make candy in the kitchen and sell it on street corners, or sell pencils or apples. Not today! The government regulations involved in pursuing the tiniest commercial enterprise are almost completely prohibitive.