While many investors and developers are pushing forward on the assumption that the worst is over and all will be on the upswing from here on, there is a huge underlying tidal wave coming at us under the surface which could put is all at risk again. We have a several pronged set of black swans each of which could create havoc if not properly handled. First is the fiscal mess we all know about and the apparent refusal of Obama to recognize the giant liability of entitlements and the deficit. Entitlements are now 50% of the federal budget and going quickly to 66%. They are eating the future. We are moving form 4.5 young people supporting each retiree to 2.8 which is not sustainable. We have wealthy people like me getting social security and all of my medical bills covered with no co-pay. That is stupid. In my father-in –law's last couple of days the doctors insisted on running tests. They knew he was going to die at any moment but they ran more and more tests. For What? If they just eliminated the end of life costs of Medicare running tests and extraordinary measures to keep someone alive in pain and extra week, and just let people die without pain and suffering or more tests, we would save Medicare. A huge expenditure takes place in the last three months of life to no benefit to the person dying. That is just one example. Raise eligibility over several years to just 67 for social security and Medicare.

The other big black swan is the Fed QE programs. Despite what Bernanke says, there is no way the fed can just work its way out of the $4 trillion of bonds they will hold without a market disruption. Right now the entire credit market and real estate market is manipulated and there is no free market for bonds or interest rates. That means there is no real cap rate. When the fed is essentially manipulating the debt markets, as they are, then nobody knows what free market rates really are. The best guess is rates should be about 65 basis points higher, but nobody really knows. With rates at unrealistically low levels, cap rates are lower than they should be and leverage is unrealistically bearable. At some point QE3 ends and when it does then the free market takes over. Guess what happens. Rates shoot up suddenly, cap rates shoot up suddenly, debt cover or debt yield goes the wrong way suddenly, values decline quickly, good investments may become suddenly marginal. The minute QE3 gets close to over, the big investors dump stocks and bonds and the markets get volatile. The stock market drops. And all of that is before the Fed tries to sell off $4 trillion of bonds at what will be a huge loss as rates rise. The Fed is currently buying 80% of all Treasury issues, so what do you think happens when that stops? Because the fed is controlling the debt markets, there is no longer any market signals telling us what may be happening at any given moment. Rates will go up and blow away almost any budget deal with high rates.

The younger generation is being abused into supporting older people and is being robbed of their future by higher taxes and a government debt burden which is using money that should go to growing the economy and using it to fund all of the non- productive entitlement programs for the non-productive people. Obama loves to talk about fairness and higher taxes, but the real unfairness is the huge burden he is piling on the younger generation with the massive debt burden that will have to be serviced and paid in the future. His refusal to reform entitlements meaningfully, and to reign in the deficit, is stealing the future opportunity of America from the young and from the minorities who he loves to claim he is helping. The kids need to figure out they are getting screwed.