Thursday, January 26, 2012

Federal Reserve Abandons Core Consumer Price Index - My blog in US News, January 26, 2012

The link below is my blog on the change in Fed policy.

Wednesday, January 25, 2012

Obama's State of the Union Speech: The Good, the Bad and the Ugly - My Blog on US News 1-25-12

Tuesday, January 24, 2012

Letter to the Wall Street Journal, January 24, 2012

You are dead right in calling President Obama, in his rejection of the Keystone XL pipeline "The Anti-Jobs President" (Review & Outlook, Jan. 19). However, you don't go far enough because he is also the antinational-security president. With Iran threatening to close the oil lanes in the Strait of Hormuz, the president is signaling that we are not really serious about energy security. President Obama would rather ship oil in by tanker from the Middle East than by pipeline from Canada. You can bet that the mullahs in Iran are smiling.

Full URL:

Wednesday, January 18, 2012

The Mullahs of Iran are Smiling

This afternoon the Obama Administration denied Transcanada Pipeline's long stalled permit to construct the Keystone XL pipeline that would transport oil from Alberta, Canada to the Gulf Coast. We have written before on President's job killing action in delaying the permit for this $8 billion infrastructure project. The ostensible reason for denying the permit was the potential impact of a pipeline leak in Nebraska's Ogallala Aquifier. However a deal has already been made with the Nebraska Legislature to reroute the pipeline around the aquififier. Then why is Obama halting the project?

The answer is simple. He is sacrificing our national security on the alter of the environmental lobby that he deems necessary for his reelection. At a time when Iran is talking of closing off the Gulf of Hormuz to oil shipments and with our navy playing cat and mouse with the Iranian navy, President Obama stalls an energy project that would supply 800,000 barrels of oil per day to our Gulf Coast. Along the way the pipeline would pick up oil from the highly productive Baaken Shale in North Dakota. With completion of the project our nation would be less dependent on oil tankers coming in from Venezuela, the middle-east and Nigeria.

As a result the President just tied one hand behind his back in our upcoming dealings with Iran. To the Mullahs in Iran we are not serious and I am sure they are smiling tonight.

Saturday, January 7, 2012

Will the Activist Consumer Come to Apartmentland?

Paul Polman, the CEO of the consumer products behemoth Unilever, was recently quoted in The Wall Street Journal as saying, "Where we had activist investors in the 2000s, we will see activist consumers this decade." Over the past few months activist consumers armed with a social networking infrastructure have over-turned what appeared to be arbitrary and capricious debit card fees at the Bank of America and billing fees at Verizon Wireless. What the B of A and Verizon have in common is high switching costs. This same factor holds true, even more so, for apartment tenants.

To be sure the apartment business is far more decentralized than wireless services and banking, but make no mistake it is certainly susceptible to the same type of consumer activism. Afterall what can seem more arbitrary than tenants paying different prices for essentially the same apartment unit; a phenomenon created by the use of airline-type yield management software now utilized by large landlords. Furthermore with hotter markets on both coasts exhibiting rental increases well in excess of wage growth, it doesn't take a genius to figure out that tech savvy consumers will soon link up to share information and start to raise a ruckus.

Because of decade low vacancy rates and rising rents, apartments have been the darling of real estate and REIT investors over the past few years. Although rent growth has slowed somewhat in recent months, most investors continue to project out-sized increases over the next few years, especially in Manhattan, Washington, D.C. and the greater San Francisco Bay area. I would doubt that not one in a hundred real estate investors are factoring in the liklihood that their industry will soon be the target of the new activist consumer. The bottom line is that it is highly likely that the apartment sector will soon face headline and in some cases real economic risk to the rosy rent projections now being forecast.