Erin J. Brennan is the founder of Transact-q a business broker business and development and firm. We operate in the Engineering consulting and construction field. We have a growing scale advantage specify in the power generation and power deliver industries. erin@TransAct.q.com Our Website www.TransAct-q.com Phone 1 (208) 515-0937
My economic perspective By: Erin J. Brennan
I am at the airport overhearing a conservative. He sounds just like me in the past. I think he is a good and moral man. I can't stop thinking, when I was more like him, I would have appreciated an honest intellectual presentation of a different perspective. Therefore my thoughts are below.
Some of the policies I see implemented by our government like an internationally competitive tax base and encouraging free flow of cash worldwide are likely positive. However my perspective includes deeper insight, as well.
When I worked at a commercial real estate investment company, I purchased and procured financing on 1/4 billion in property. All these market priced purchases were at absurdly high valuations and financed at rates that did not properly reflect the risk of lending. My nickname at that company became Chicken Little because I told my colleagues the market was going to blow up.
I remember the week that it did blow up. Interest rate spreads to the base rate LIBOR went from .5 points to 3.5 to no credit offered. This happened in two weeks and there was no warning except excess. Once privately I ask a lender "how can you lend at a ½ point spread." He noted combining assets for diversification. The premise was C credit assets somehow magically turn into A+ credit when combined. I thought “what a crock of shit”.
This type of thinking as well as unwarranted financial stimulus (which includes government debt) driven by our self-centered short-term thinking is the true cause of the last worldwide systemic economic collapse and will be the cause of the next. Of course we know AIG a provider of risk reducing insurance for pooled mortgage instruments failed first but the ultimate cause was a presumed deferred responsibility in this case because it was insured.
The current administration and our financial organizations are doing it again. I hoped we had learned. For a time it seemed we did. I should have known that nether democrat, republican, or businessmen, ever really learn for long. All three are notorious short-term thinkers. I don't know when but it will happen again. This pending market collapse, as always will devastate the poor but also middle-class up to > 250K earners. Many harmed will incorrectly blame whoever is in charge then and the cycle will begin again.
I am very concerned this time because rates can go much lower and history teaches us money supply stimulus at some point doesn’t work. Our president Donald Trump made a portion of his wealth selling condos to wealthy foreigners from mostly Russia. He is a real estate developer that is known for aggressive business practices. When these practices fail he just declares bankruptcy. This of course leaves others holding the bag, but is legal. In the presidency unfortunately this type of thinking doesn’t work. America or the world can’t declare bankruptcy. We all will have to accept the consequences if our economy fails like it did before.
The current aggressive unwarranted financial stimulus (debt included), the removal of good regulations designed to avoid a future crisis, and other so-called risk reducing financial instruments reminiscent of credit default swaps/derivatives, will be the catalyst for the next crisis. All these catalysts listed above as always are driven by our selfish short-term thinking and presumed deferred responsibility.
Respectfully, I will close quoting my conservative airport companion. "Trump is rude and obnoxious, but he's doing the right things economically." I clearly disagree with his economic assumption. From where I sit, Trump seems unconcerned about many outside his inner circle. You can determine for yourself if you agree and if you do who might be in his inner circle. I suspect it’s not a very large circle at all.
Erin Brennan 1 (208) 515-0937 TransAct-q is a business broker and business development social media firm. www.TransAct-q.com
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Our Website: www.TransAct-q.com Erin J. Brennan Email: Erin@TransAct-q.com Cell: 1 (208) 515-0937