Las Vegas High Rise Condos, Las Vegas PreConstruction Condos, Luxury Vegas Condos, & Las Vegas Hotel Condos

The Macroeconomics of Stagflation

Implications for Las Vegas High Rise Condos

What is stagflation? It is simply inflation with no growth. Now the pundits of Wall Street will tell you otherwise to keep the lie of no inflation a myth and keep the "investors in the barn from bolting". The Federal Reserve also keeps the lie going that inflation is not a problem. But the truth is that oil is up 70% in 2007, near $95 per barrel. The grain markets: soybeans, corn and wheat are up almost 80-100% during 2007 with each of these grain markets hitting 30 year highs. Gold is up 60% during 2007 touching $900/ounce last week. All other precious metals such as platinum, rhodium, silver, palladium are up huge percentages as well during 2007 with platinum closing at $1565 per ounce on Friday, January 12.

The scary part is that the Federal Reserve is printing money at a rate of over 15% per annum. Most other central banks are doing the same, with the Euro and Swiss Franc being notable exceptions.. There is a worldwide debasement in the value of currency, especially in relationship to commodities. This will continue into the future as we are beyond peak oil (that is, oil supplies are dwindling faster than new oil supplies coming on board). But the most notable debasement of one currency in particular is the U.S. dollar. The Federal Reserve, along with the nodding approval of the White House and both parties of Congress, are literally destroying the wealth of Americans by devaluation of the U.S. dollar. Can anyone remember when the Canadian dollar, which always used to be worth about 70 cents versus the U.S. dollar is now worth more than the U.S. dollar. I can't. THE DESTRUCTION OF WEALTH UPON ALL UNITED STATES CITIZENS IS UPON US NOW, ESPECIALLY UPON THE MIDDLE AND LOWER CLASSES. IT IS DELIBERTELY BEING ORCHESTRATED BY THE FEDERAL RESERVE AND THE U.S. GOVERNMENT TO KEEP THE BUBBLE GOING. From one bubble to the next. First it was the stock market bubble of the late 1990's, next it was the real estate bubble with artificial and ridiculous low interest rates to re-stimulate the economy. Along with that came lending to anyone with no documentation, all kinds of exotic lending programs, mortgage fraud, bad sub-prime mortgage paper created by Wall Street which immediately and grossly increased the money supply. Wall Street then sold that bad sub-prime paper to take that asset class off their balance sheets and spread the risk to other banking institutions worldwide to eventually create a worldwide credit crunch. The effects are now hitting Europe with the head of the Swiss National Bank stating today, January 13, 2008, that the "economy is deteriorating rapidly".

Senator Schumer of New York called for an immediate $70 billion economic stimulus package on Friday, January 12, to revive a sliding economy, especially after very weak Xmas sales were being reported by most retailers. How's that for printing more money and debasing the U.S. dollar further? Does anyone think that a mere $70 billion in stimulus is going to help the U.S. economy, which is heading downward in growth, and where many economic experts including the Bubble Master himself, Alan Greenspan, are calling for a recession in 2008. Whether the U.S. economy is technically heading for a recession or not doesn't matter. What we do know is that many industries in the U.S. are already in recession right now, namely the housing sector, the mortgage industry, the automobile industry, many retailers, the banking industry, and so forth.

It is now being circulated that the U.S government via the Federal Reserve is being asked to bail out Wall Street and its sub-prime mess which Wall Street created. This sub-prime debacle, which is spreading to Alt-A and prime mortgage paper, has destroyed the balance sheets of many venerable Wall Street brokerage houses as well as well-known large institutional banks. It is the reason why Citibank, etc. are selling off large chunks of their companies to Sovereign Wealth Funds (funds controlled by foreign governments not so friendly to the United States) to raise financing to shore up their balance sheets. It is rumored that Citibank and Merrill Lynch will write off an astronomical $15-20 billion each in the quarter ending December 31, 2007. It is a reason why the nation's largest mortgage lender, Countrywide, who was rumored to need $4 billion in the next 2 weeks to avoid bankruptcy, was purchased by Bank of America last week through the urging of the Federal government. The CEO of Countrywide took a $87 million parachute payment and left the company riding off into the sun. Stops and makes one think about the shenanigans regarding the entire mortgage market and the mess it has created for American home owners and the value of their real estate. Just like one big ponzi scheme. Countrywide's stock, which use to be priced at about $60 per share one year ago, closed on Friday at about $6.50 per share. By the way, the Wall Street investors did not overwhelmingly approve this deal with their pocketbooks. Talk about the demise of the mortgage market, and the worldwide affects of the credit crunch and you get a clearer picture of the why the U.S. real estate market is in such a funk.

How does the stagflation affect discussed above affect the Las Vegas real estate market? There are 2 segments of the Las Vegas real estate market that needs to be discussed here, namely the single family home market and the Las Vegas High Rise market. Las Vegas has led the nation for the last 11 months in a row with the highest foreclosure rate in single family homes. Fortunately, that has not happened to the Las Vegas High Rise market as we did not overbuild the high rise segment. But because of the current state of the U.S. economy with recession fears and because of the continuous worldwide credit crunch, the Las Vegas High Rise market is back to 2004-2005 prices.

Unfortunately, there are many Las Vegas high rise owners looking to sell their units at 2008 prices. THEY ARE IN DEEP DENIAL. These sellers have 3 choices right now: (1) hold on to their units and continue to service their debt and association fees and wait for a turnaround which may be years off, (2) rent their units and take a cash flow loss, since rental prices are soft for the Las Vegas high rise market, or (3) lower their prices to 2004-2005 levels which are the realistic prices they will receive for their units. Again, those owners/sellers who recently closed escrow on their Las Vegas high rise units closed at the peak of the current market cycle.

It has been noted that the Ben Bernake, the Chairman of the Federal Reserve, also know as "Helicopter Ben", last week stated that the Federal Reserve will do whatever it takes to keep the economy going and avoid a recessionary downturn, mainly being caused by the housing crisis. The Federal Reserve is expected to lower rates this month, maybe by as much as 50 basis points. Whatever happened to the Austrian Economic School of thought which believes in the natural economic cycle that recessions are necessary after multiple-year economic expansions? I'm sorry to say, in my humble opinion, the Federal Reserve aggressively easing rates won't help the real estate market during this economic cycle. We are in different times. We are in a stagflation environment. What this easing move will do will cause more inflation, devalue the dollar even further, erode the wealth of all Americans by making their dollar assets less valuable, and further demise the real estate market. Please do not assume that lowering interest rates is the panacea the real estate market needs. If one was to take history into account, let's look at Japan as an example. When the Japanese stock market bubble burst in the 1980's and Japan lowered interest rates to 0%, that is, the incredible and amazing fact that one could borrow money and pay no interest even as of today, the Japanese real estate prices never recovered back to their 1980 prices even to this day.

For potential buyers of Las Vegas High Rise units, there are tremendous opportunities. But be a Condo Predator ™. Buy only Bargains, Buy below what the sellers paid for their units. There are many bargains to be had in the Las Vegas High Rise market, where units are now selling for tens of thousands of dollars below what the seller paid for his unit. The Stark Team are Las Vegas' Leading Luxury High Rise Experts, who have won the most awards and have sold more high rise units in Las Vegas than anyone else. The Stark Team has a large inventory of bargains to be had by the savvy Condo Predator ™. Lastly, there are a number of high rise realtors/brokers out there claiming to be the know-it-alls of the Las Vegas High Rise Market. THEY ARE NOT. Ask them simply when they got their real estate license, in other words, how long have they been selling real estate in Las Vegas. I would venture to say that many of these so-called high rise realtors are licensed only a few years, even those who have broker licenses, and have never been through a wicked down cycle like we are seeing at the moment. Las Vegas is the wild, wild west when it comes to real estate. Many realtors/brokers claim and fabricate many things. Be very careful of who you do business with.

The Stark Team have been residents in Las Vegas for over 35 years, have over 30 years combined experience in selling real estate in Las Vegas. We were the original pioneers in the Las Vegas High Rise Market before anyone else, are listed in the Who's Who of Luxury Real Estate, have received many accolades from the local real estate community, the Las Vegas High Rise community, and from the Las Vegas High Rise developers themselves. We have been asked to consult on many Las Vegas High Rise projects from their inception. We are known for our integrity, honesty and for telling the truth. Just ask around. Ask the developers. Ask the sales managers of all the Las Vegas High Rise projects about us. The Stark Team wants you to ask around about us before you do business with us. Before you do business with any realtor/broker out there, do your research on that realtor/broker you will be doing business with. It is critical at this stage of the real estate cycle.

Sellers - please contact us regarding the sale of your unit. We will tell you the truth. The Stark Team is forthright about the current state of the market. Our integrity and reputation are non-negotiable. We want to help you sell your unit. But we will not be shy about the forces you face in getting your unit sold. Our clients and their needs always come first.

Please visit us at:

LasVegasCondoBargains.com

LasVegasCondoExperts.com.

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With so many condos and lofts from whcih to choose, it is important that you research your realtor representation just as you would your investment. Our experience, knowledge and track record speaks for itself:

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Lauren Stark- 10 year VIP Agent, Marketing Expert, Las Vegas Native, Professional Speaker To Real Estate Investment Groups

June Stark - 36 Year Las Vegas Resident, Former Officer of United Nations NYC Headquarters, Founder of 3 International Computer Based Businesses

Jeff Stark - Leading High Rise Market Analyst, Former Wall Street Accountant

Travis Scholl - Leadng High Rise Rental Specialist & Buyer's Agent