Just when the adults seems to be back in control with their Gang of 12 bipartisan proposal, here come Obama and the Dems seeing if they can out dumb the right wing by saying NO, we want more spending. We don't care if we say you can't change Obamacare it is the law, except when it comes to sequester which is the exact same thing- a law- we get to change that because we are superior. This is one of those-you can't make this stuff up- moments. I have been around a long time, and I have seen lots of these Washington battles, but this one is unlike any other I have ever seen. In the past, the President understood that he was not a dictator and the constitution was designed to force everyone to negotiate and compromise. Taking his I will not negotiate stance made him look as ridiculous as Cruz. Now rejecting a bipartisan proposal from senior and adult senators makes him look like he is not only not a leader, but a clearly inexperienced amateur. Which is what Bill Clinton called him in 2008.

So where does this leave real estate. Not in a good place. While the capital markets will react, and then settle down, they will be uncertain for a long time. Even if they agree a 6 month deal now, who in his right mind thinks that they will do anything productive in the next 6 months. That is how we got sequester. They could not agree to cut entitlements nor reform taxes. They dismissed Simpson Bowles as so much useless verbiage, when it was the basis for a very good solution. Patty Murray is a gym teacher and day care counselor by schooling and work experience. She is in charge of budgeting for the country in the Senate. Just let that sink in. Cruz and company still think they can stop Obamacare. Obamacare is a mess and will disrupt hiring. The rest of the world is not in good shape. Maybe Europe is no longer crashing, but that is like saying we saved the patient, but he will never walk normally again. Then we can toss in Iran and the mess in the Mideast. QE is not getting reduced for who knows how long with all of this happening. So why will the capital markets just go on as normal? Why will corporations begin investing in new plant and equipment for a long time? With all of the shift in the move to smart phones and online shopping why will retailers expand as they had been doing prior to 2008. With no confidence that anyone in Washington is over ten years old, consumer confidence has crashed. And here come the holidays. And while all of this is going on it is possible rates will rise after the smoke clears.

In case you had not noticed, the stock market is only a bit higher-on October 11, than it was in May. In fact 86% of the increase in the S&P occurred by mid May. It was the unrealistic puffed forecasts of economic growth that drove the market early in the year, and since May it has essentially puttered along. On May 21 the S&P was 1669. It is only at 1703 as of Oct 11-higher by only 2%. On August 2 it was 1709. Green St and others have suggested that in some top cites, real estate values also flattened around May. The big banks that control about 80% of home mortgage lending have just laid off thousands of mortgage staff. If that is not a leading indicator you have your head in the wrong place. And now we have this circus of fools in Washington. Part time hiring has materially exceeded full time since around July and that would be materially worse if they had not exempted large corporations. And you think values are going to go where over the next several months??