| Did anyone out there ever coined the phrase | | | | economy, in order to make workers earn income |
| ‘The New Era Of American Socialism' yet? Well | | | | sufficient enough so that they can go to the bank, get |
| alright, that is unfair. After all Real Estate was sliding | | | | a loan and go shopping for real estate. Thus, it is going |
| downwards even before the Democrats took over | | | | to take equally long for demand to jump and prices to |
| the House and Senate, and Nancy Pelosi became the | | | | increase as well. This is so because demand is in |
| Speaker to be. However, it can be safely stated that | | | | direct function of underlying personal income. An |
| the recent mid-term elections have not exactly shed a | | | | increase in personal income will encourage investment |
| ray of hope on the already faltering housing prices. So | | | | to a higher degree, which, in turn, will spur demand |
| now, in light of the entirely new and revolutionary | | | | causing a proximate levitation of prices and |
| political landscape in Capitol Hill, what are mundane | | | | subsequent economic expansion.A second but equally |
| folks like you and I supposed to do?Sure, the social | | | | important flip side is how foreign investors and |
| agenda of the Democratic Party in general, and the | | | | debt-holding nations are going to view this sudden shift |
| personal ‘socialist' agenda of Congresswoman | | | | to the left of the American behemoth, and whether |
| and Speaker of the House Nancy Pelosi (D-Cal.) in | | | | emerging economies such as India and China will |
| particular take somehow the breeze out of the | | | | continue to finance America's spending habits. |
| investment world, both as it relates to Real Estate and | | | | Confidence in the U.S. Treasury is out of the question, |
| the Stock Market. But when it comes to Real Estate, | | | | but how convenient is it going to be for foreigners to |
| however, there are some positive notes worth | | | | continue investing in an America tilted definitely to the |
| mentioning.Housing supply is produced using land, labour, | | | | left?Many economists have long been expecting |
| and various inputs such as electricity and building | | | | America's widening current account deficit to cause a |
| materials. The quantity of new supply is determined by | | | | financial meltdown in the Dollar, and the main reason as |
| the cost of these inputs, the price of the existing stock | | | | to why this has not happened yet is that emerging |
| of houses, and the technology of production. | | | | economies have been happy to finance the deficit. In |
| Essentially, the production of real estate output | | | | 2005 India, China, South Korea and Japan (not an |
| depends on the accumulation of capital, which requires | | | | emerging economy but a very important debt-holder |
| a constant supply of labour force that can conserve | | | | nonetheless) ran a combined current account surplus |
| and add value to inputs and capital assets, thus | | | | of about USD 2 trillions, a large chunk of which was |
| creating a higher value.The rationale behind this is that | | | | reinvested in American Treasury securities. It is all to |
| labour adds value by satisfying demand through | | | | be seen, however, whether the Asian Tigers will |
| production, since when people work and acquire | | | | continue to find the convenience in investing their |
| income they tend to invest it, and the more people that | | | | foreign cash reserves in American securities or if |
| work and acquire income the more people that tend to | | | | instead they are going to withdraw their support of the |
| invest it. Therefore, there is a correlation between | | | | American capitalistic system, especially if such system |
| capital and employment in real estate or, if you will, | | | | will be perceived increasingly as shifting much too |
| between income and labour. An increase in levels of | | | | much to the left.Buy purchasing Dollar assets the Asian |
| consumption sets forth an increase in prices caused | | | | economies and Japan are subsidizing American |
| by a corresponding increase in demand, in itself | | | | consumers, encouraging too little saving on our part |
| generated by a commensurate increase in the | | | | and too much spending. But should they decide not to |
| income-employment factor.It follows, therefore, that | | | | buy anymore and in fact to cash in, the American |
| growth is derived by the equilibrium of capital and | | | | economy is likely to suffer a real hard landing. This is |
| investment with labour and employment. And since, | | | | the reason why it is important to monitor and |
| furthermore, production is in direct function of | | | | understand how developments in the world economies |
| consumer-spending which increases as unemployment | | | | affect the balance between domestic demand and |
| falls, it follows that capital accumulation increases as | | | | supply. Exchange rate movements tell something |
| employment rises and capital accumulation decreases | | | | about economic developments that may be having a |
| as employment falls.Therefore, seen from this | | | | direct impact on aggregate demand.By monitoring the |
| perspective, the Democratic agenda of both increasing | | | | fluctuations of the Dollar in the forthcoming months it |
| minimum wages and put people at work through more | | | | will be possible, therefore, to anticipate whether the |
| direct governmental intervention than the Republicans | | | | Central Bank will ease or tighten monetary policy by |
| otherwise would like to see, finds in fact its long-term | | | | stimulating the economy through lower interest rates or |
| benefits in Real Estate. It is a statement of fact that, in | | | | by reducing the stimulus through higher interest rates. |
| retrospective, many workers in North America have | | | | And, therefore, it will be possible to predict the impact |
| missed out and are missing out on the rewards of | | | | that anticipated shifts in interest rates will have on |
| globalization, so trumpeted about by both the present | | | | demand for domestic real capital assets. Clearly, in the |
| Chairman of the Federal Reserve System, Prof. | | | | eventuality that demand for U.S. Treasury bonds will |
| Bernanke, as well as the former Chairman, | | | | abate, the Federal Reserve will have no other choice |
| ‘Maestro' Alan Greenspan.Rich countries have | | | | under the present circumstances but to raise interest |
| democratic governments, so continued support for the | | | | rates, so as to continue to attract foreign capitals and |
| globalization process will depend in large part on how | | | | thus contributing to a further slowdown in the domestic |
| prosperous the average worker feels. Yet in the | | | | housing markets.Should a forced rate increase actually |
| United States real wages have been flat or even | | | | take place in 2007 to maintain the momentum with |
| falling these past few years while, at the same time, | | | | foreign debt-holders, that would really fly in the face of |
| capitalists and large corporations have never had it so | | | | all those analysts and commentators who have |
| good. In America specifically, profits as a share of | | | | assumed that a vote for the Democrats would |
| GDP are at an all-time high of about 15.5 percent, and | | | | contribute to a rate settling.Certainly we are entering |
| Corporate America has increased its share of national | | | | into a period of financial uncertainty, all the more |
| income from seven percent in 2001 to thirteen percent | | | | remarked by what promises to be an economic - if |
| this year.In fact the primary culprit and cause of the | | | | not political - stalemate between a conservative White |
| slowdown in Real Estate is the ratio between wages | | | | House and a liberal Congress. And should this |
| and real estate market values. This ratio is entirely | | | | stalemate translate into higher interest rates, the soft |
| skewed to values. Whereas market values in | | | | landing that Chairman Bernanke was mentioning only |
| metropolitan areas have appreciated an average of | | | | this past July may very well become in 2007 a distant, |
| fifteen percent per year through 2005 inclusive - or a | | | | wishful dream.Luigi FrascatiLuigi Frascati is a Real |
| total of seventy-five percent since 2000 - salaries | | | | Estate Agent based in Vancouver, British Columbia. He |
| have increased an average four percent per annum - | | | | holds a Bachelor Degree in Economics and maintains a |
| or twenty percent total. There is, therefore, a fifty-five | | | | weblog entitled the Real Estate Chronicle where you |
| percent gap, which accounts for the problem buyers | | | | can find the full collection of his articles on Real Estate |
| are facing today when it comes to go to the bank and | | | | Economics and Finance. Luigi is associated with the |
| qualifying for a loan. In this sense, therefore, a | | | | Sutton Group, the largest real estate organization in |
| redistribution of income from capital to labour is now | | | | Canada, and is based with Sutton-Centre Realty in |
| due.The flip side of the Democratic agenda, however, | | | | Burnaby, BC.Luigi is very proud to be an EzineArticles |
| is that it is going to take a long time for government | | | | Platinum Expert Author. Your rating at the footer of |
| economic intervention to get a foothold in the | | | | this Article is very much appreciated. Thank you. |