Search
 

The Good And The Bad Of QE3

There is both good and bad news for real estate in QE3

By Joel Ross | Updated on September 15, 2012

The Fed’s new bond buying program is unlikely to do much, if anything, to help the job market. The issue is not liquidity in the system. US corporations have $3.6 trillion sitting relatively idle. Private equity funds and private investors have plenty of cash to invest. Individual balance sheets, while still a long way from properly balanced, are far better than they were in 2008. The issue is unprecedented uncertainty, fear, Obamacare burdens, and the regulatory threat that once you own an employee you may have a very hard time getting rid of him, and the whole issue of tax reform and increases and the fiscal cliff. Nothing the Fed does can alter that fear. It is a set of policy issues on the fiscal and executive side, and floods of even more cash is only setting us up for the possibility of inflation and crowding out of private capital raising in a few years when the Fed has to sell this portfolio.

While the Fed says it will hold rates at near zero until 2015, that seems a pretty risky projection. Nobody really knows what the next three years will bring. Much depends on who is president and who controls Congress. If Romney is elected with control of Congress, then a lot of things will change. Federal spending will be cut and hopefully there will be a complete reform of the tax code. There is likely to be a view by investors and business that things will be much better and it is likely that the markets will rally and business might start to hire by late 2013 if they see policies implemented that deal with the issues of entitlements and taxes. None of that is certain.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.