There's Plenty of Money - Too Few Just Have too Much of It

By
Services for Real Estate Pros with Real Estate Pipeline
http://actvra.in/BpP

money, United States, excess, rich, wealthy, realtors, homes

DOES ANYONE ELSE hear that sucking sound?

As I listened to pundits debate on the Sunday morning TV talk shows about how to jump start the stumbling economy, I kept hearing the sound of something valuable being sucked out of the system: money.  

Both Republicans and Democrats appear to be ignoring this background sound, instead preferring to argue about where to cut and how best to tighten our belts.

I don't know about you, but my belt already feels tight enough. And it seems like every time I read the news, I am reminded that there appears to be plenty of money to go around. A few recent examples about money in America:

 

  • Someone recently paid more than $90 million for a Manhattan penthouse at the still under construction building on West 57th Street. The two-story penthouse offers stunning views of Central Park and the New York skyline, high ceilings and Italian marble. In all, the building will house 94 luxury condos, ranging in prices from $6.75 million to possibly more than $100 million.
  • Down the street at 740 Park Avenue, a co-op sold for $52.5 million. This co-op has eight bedrooms, 10 bathrooms and 10,000 square feet of living space. 
  • On Lake Tahoe, an estate that recently sold for $50 million comes with an underground garage with room for 30 cars.

All of the wealth isn't just shown off in real estate. We'd all be in great political shape if our politicians were worrth the money we spent on them. Here's two statistics from a recent article in The Daily Ticker:

  • Just like week, actor George Clooney threw a fundraiser for Obama's campaign and enticed 150 people to each pay $40,000 for the privilege of spending an evening dining with the president. In all, nearly $15 million was raised for the campaign. By the time it is over, it is expected Obama will spend more than $1 billion getting re-elected.
  • It is estimated that more than $8 billion will be spent on national elections this year.

Eight billion dollars? So, there is plenty of money. The problem is the circle it goes around in keeps getting smaller and more and more of us find ourselves outside the loop. The result is that too many of us struggle to pay our bills. For too many of us, coming up with the down payment for a house or catching up on a mortgage is just out of the question.

I wonder, which would better serve the real estate market: One billionaire spending nearly $100 million on one penthouse apartment in New York City or for 1,000 Americans to put down $100,000 on 1,000 new homes? Are we all doing better with one realtor making a massive commission or for 1,000 agents to each receive a more traditional commission? How better would things trickle down?

Yes, it is the American way to have a great idea, work hard and become rich. The recent Facebook IPO is a great example of America at its best. There, more than 1,000 of its employees became millionaires overnight because a company succeeded. That is how America's wealth should flow and I suspect real estate professionals in Menlo Park, California will soon feel it trickle down in a big way.

But Facebook is the exception these days. For the most part, the wealthy just become wealthier because the system has become wired, skewed in the favor of a few. Now, real wealth is made by leveraging and manipulation of the markets, great sums of money are taken out of the system by those who really don't produce or provide anything.

Like sucking the air out of a balloon, a few are deflating available wealth for everyone else. Just how skewed is wealth distribution in the United States? Well, according to a graph published by theunderstatement, last year, 43 percent of the total financial wealth in America was owned by the richest 1 percent of Americans and the richest 5 percent of us owned 72 percent of the wealth. The bottom 80 percent of Americans, or eight out of every 10 people, controlled only 7 percent of the money.  

As that percentage available to most of us continues to get smaller, it becomes harder to save for a future investment or to meet current obligations - which goes a long ways to explaining why so many realtors complain these days about buyers not having a decent down payment or the number of foreclosures still lingering in their communities.   

The only way to fix Main Street and the neighborhoods surrounding it is to return more of the money to those who live there and get up each day and go to a real job that provides real services or makes real things.

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 Grant Sasek works for Real Estate Pipeline, an on-line lead generation service.

   

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Rainmaker
222,129
Doug Dawes
Coldwell Banker Residential Brokerage - Georgetown, MA
Your Personal Realtor

I here what you are saying, Grant but I do not agree with the premise that somehow wealth should be redistributed by penalizing successful people.

May 21, 2012 05:59 AM #1
Rainmaker
406,336
Peter den Boer
Keller Williams Realty Partners - Woodstock, GA
MBA,GRI,ABR,SRES, Associate Broker, Realtor

Grant - This sounds like you might be promoting a socialist idea of redistributing the wealth. It always sounds good at first, but history has consistently shown that this never works. Give me old fashion hard work and I will show you that even in a bad economy people can get ahead. There is not a finite supply of money being sucked up by a few. There is money available to all who are prepared to work for it. This of course, is just my humble opinion. Thanks for a great thought provoking post.

May 21, 2012 06:01 AM #2
Rainer
43,022
Grant Sasek
Real Estate Pipeline - Missoula, MT

Doug, Peter, Thanks for the comments you guys. I agree with the both of you. The redistribution of wealth is an idea that has never served people well. And I agree, those who work hard and have a good idea should enjoy the rewards. I'm all for keeping Main Street just as it is. But Wall Street is rigged and there are some making too much, not by making something or providing a service, but just through the manipulation of the system. That needs to change. 

May 21, 2012 06:07 AM #3
Rainmaker
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Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

If you have wealth distribution like the communist regime we find ourselves in, we will become just like the old Soviet Union and/or a banana republic. I believe we have been on this path since 1913 when the FED took over the money system. Is there anyway out, the answer is no. We are living in the last days my friend both financially and morally, just look around.

May 21, 2012 06:12 AM #4
Rainer
43,022
Grant Sasek
Real Estate Pipeline - Missoula, MT

Winston, I think everyone always has felt as if they are in the last days. I'm not arguing for communism, just a little common sense in market regulation.

May 21, 2012 06:21 AM #5
Ambassador
1,118,005
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Grant - I agree with your concern - the game is rigged in favor of the few, and changing the rules to be more equitable doesn't have to involve socialism - it just has to become more fair. If we don't address this, then this is how the American dream will fade away.

 

May 21, 2012 08:17 AM #6
Rainer
43,022
Grant Sasek
Real Estate Pipeline - Missoula, MT

Dick, I couldn't agree more. Like you, I'm not arguing for socialism, just fairness. And right now, the markets are anything but. Thanks for the comment

May 21, 2012 08:20 AM #7
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Grant Sasek

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