Below is an article from my friend Brandon…..again.  He writes such great stuff….that….for obvious reason….I like to post it!  Enjoy…until next time….rob

The Führer Principle

In grade school, I remember asking myself how could the German people elect someone as evil as Adolf Hitler. How could they allow such a monster to become supreme chancellor? Understanding how it happened is very important, mainly so it does not happened again. The significance of this newsletter will only make sense by looking through the lens of today’s events. Many of the main ingredients that led to the Nazi take over are present today. Recognizing the circumstances is the solution to history not repeating itself.

The beginning of the end for the Weimar Republic began with the Treaty of Versailles in 1919. For the German people, the treaty was humiliating. The treaty placed heavy restrictions on Germany much of which were embarrassing for the once proud nation. The German army was reduced to one hundred thousand solders and arms for citizens became non-existent.  The initial German economic fatalities due to the treaty were shocking. Germany’s territories vanished overnight. Germany lost approximately 13.5% of its total land mass, 13% of its industrial productivity, and more than 10% of its population. Additionally, the loss of important mining regions such as the Saar and Upper Silesia resulted in a loss of some 74% of iron ore and approximately 25% of its coal reserves. Historians and economists have long deliberated the real effects of the treaty but one thing is for certain it lead to “deprivations that shattered their faith in the democratic process and left them cynical and alienated.” –G.A. Craig

Germany’s economic situation never improved. To keep up with the stringent demands of the treaty, the Weimar Republic faced hyperinflation never seen before in history. The German Mark ratio to the U.S. dollar was 4 to 1 near the end of the WWI. It was 8 to 1 in 1919, 250 to 1 in 1921, and 2000 to 1 in 1923. The Weimar government, at various times, faced food shortages, massive unemployment, and an unprecedented economic depression. By 1932, some 6 million Germans were unemployed. Millions of them were homeless living on the streets relying on soup kitchens and charity organizations. “Men standing hopelessly on street corners of every industrial town in Germany; houses without food or warmth; young people without the chance of a job. All these things explain the bitterness which burned in the minds of millions of ordinary Germans.”

The escalation of political violence in Weimar Germany must certainly be factored in as a contributory reason for the country’s political volatility. Beginning with the emergence of the Freikorps, which later became the brutal SS, formed units immediately after the declaration of the Republic. The tendency toward violence became entrenched in Weimar politics after the 1919 assassinations of Karl Liebknecht and Rosa Luxemburg. Large protests and riots became an all too familiar sight for the citizens of Germany.

Among the widespread disarray and frustration, the basic notion of a government was being questioned. What type of government could lead and govern the will of the people? This ongoing debate became known as the Führer Principle. The Führer Principle is established on the acknowledgment that the true will of the people cannot be revealed through plebiscites but that the will of the people in its natural and virtuous state can only be articulated through the Führer. Therefore, a difference must be drawn between the theoretical will of the people in a parliamentary democracy, which simply echoes the discord of diverse social perspectives, and the true will of the people in the Führer-state. Hitler took the Führer Principle and redefined it as himself…he was the Führer. Redefining the Führer was nothing short of audacious. It was captivating and alluring to many who were famished for change.

Many of the governing members in the Reichstag (congress) struggled to tame and communicate effectively to the youth of Germany. The Reichstag members continually doubted the youth’s ability to recognize a just government. Keep in mind most of Germany’s youth grew up in this chaotic state. Their view towards the government was distorted to say the least. The Weimar Republic only lasted 14 years but before that Germany spent the last 5 years in battle. A huge cohort of individuals only knew suffering and turmoil. Disconnect between the defenders of the former Kaiser rule and much more progressive governments were mounting daily. During the short lived Weimar Republic, Communism, Socialism, and a whirl of leaders/dictators were fighting for control.

Hitler knew very well that the youth’s mind were especially susceptible. This is exactly why he began with them. In the beginning, his messages were engineered for the youth. He knew the youth would be prone to messages of change and optimism. Joseph Goebbels (Hitler’s Minister of Propaganda) used propaganda methods to manipulate the masses. It was this desolate desire for change that gave Hitler his power.

The straw that broke the camels back for the Weimar Republic was the American Great Depression. The stock market crash of 1929 sent shock waves across Europe. The crash knocked Germany into the gallows. It was Hitler’s time to move. On September 14th, 1930, the Reichstag elections were held. The results were shocking. The Nazis had entered the register as the ninth and smallest of Germany’s political parties. The German people voted. The Nazis controlled 107 seats after that election. In November 1932, Hitler was defeated in the presidential election to WWI veteran Paul von Hindenburg. He received 42% of the votes. Hitler decided to enter a coalition government as chancellor in January 1933. Upon the death of Hindenburg in August 1934, Hitler become successor by popular vote.

Today, we are suffering the ongoing effects of the worst recession since the Great Depression. We are facing a global economic contraction. Greece is on the verge of insolvency and the US is limping along. Worldwide riots and protests have plagued the streets invoking for revolution. Frustration levels are swelling. This is the formula for calamity. However, it begins with the youth. Vladimir Lenin famously referred to youth uprisings as “useful idiots”. With the exception of the American Revolution, most revolutions in history conclude with a radical party seizing opportunity out of the political madness. People such as Hitler, Mao, and Lenin took advantage of a chaotic situation. I do not foresee a Weimar revolution of this magnitude anytime in the near future. Nevertheless, if we are not careful and mindful of the situation it becomes an unquestionable possibility. Education and knowledge of the truth is the only thing that will prevent history from repeating itself.

Have a great weekend my friends!

Brandon Saylor
-Associate

If you are watching the news, you are aware that the “year in review” news segment is almost in rerun mode.  Well, I thought I would show you a few videos from the blog-o-sphere of what the prognosticators are saying about the near future.  And….of course commercial real estate news. One thing is for sure….if there was a time to buy….it is in the very very near future. Will you find a cave or figure out how to take advantage of the commercial real estate bust?

Video’s from prognosticators (credible and not-so-credible):

Ron Paul on the Economic Collapse!

Peter Schiff on Impending Economic Collapse

Economic Collapse of 2009 – Greater than Great Depression of 1929

Baby Boomers Will Drive Real Estate Growth : Smarter Finances …
- The size of the group gives it vast influence over American politics, popular cultural, and of course, real estate. To evaluate the influence of the baby boomers on the future of real estate, the National Association of Realtors (NAR) …

Your 2009 Real Estate Outlook
- The residential real estate business started slowing in 2006, and then really fell out of bed in 2007. But commercial real estate continued chugging along for a while. That’s all changing — and 2009 will likely be even worse for landlords and investors in warehouse, office, … It will make it so you can invest in rental property, or strip malls, or an office building and generate attractive returns again, without relying on pie-in-the-sky projections about future growth. …

The Coming Commercial Real Estate Implosion | The BizJournal at …
- Anyone concerned about the short term future of commercial real estate would do well to read the full report, but I’ll go ahead a spoil the punchline:. In short, tougher times appear to lie ahead. Worsening macroeconomic conditions …

Real Estate Investmenting …
- It is not a secret that today real estate is in a rather bad shape. One of the main reasons behind this is the problem of foreclosure. Let’s remind that.

Will 2009 be “it” — the year when things finally start turning …
- Investors are going to focus once again on the wounded real estate market. And millions of homeowners and commercial property owners are going to ask that all-important question: Will 2009 be “it” — the year when things finally start turning around? … It will make it so you can invest in rental property, or strip malls, or an office building and generate attractive returns again, without relying on pie-in-the-sky projections about future growth. …

Buchanan Street’s Brunswick Looks Back at ’08, Eyes Future
- Brunswick: It’s not particularly troubling, as I believe those monies can be better utilized within our economy than within the commercial real estate sector. The distress in commercial real estate is not currently …

Until next time…..rob

Greetings from Cedar Crest, NM….still cold but no snow….what a shame.

Roubini: Worst yet to come

CNN Your Money: Talks of Great Depression Coming

Until next time…..rob

Other Post from around the web:

Mish’s Global Economic Trend Analysis: Prepare For Depression … – Deflation has already set in and it’s now realistic to start talking about another “D” word, this one being depression. Before we can use a word, we must define it. For the sake of argument, let’s define depression as unemployment of …

CNN on post-Great Depression recessions suffered by US (Thomas … – CNN on post-Great Depression recessions suffered by US. Interesting bit: Average US recession (11 since 1930s) lasts less than a year (or 6-12 months) except for two (early 1970s and early 1980s) that were global ones, in addition. …

America’s Second Great Depression Has Started :: The Market Oracle … – America’s Second Great Depression Has Started :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website.

TruthNews.us » Blog Archive » Corporate Debt Protection Costs … – The cost of protecting corporate debt from default jumped to a record in Europe and neared a high in the U.S. amid concern that the global recession will sink into a depression. Credit-default swaps on a benchmark index tied to below- …

Cramer: Depression Comparisons are ‘Scare Tactics’ | NewsBusters.org – Recent contractions in gross domestic product are also far from the huge drops seen during the Great Depression. And current stock market volatility doesn’t compare to the 90 percent decline during the Depression. …

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I am back from Durango, CO where I spent the week with my youth group. We joined a thousand other young adults at Fort Lewis College @ the CIY MOVE conference. It was amazing.

Anyway while I was at the conference, I decided to play Ultimate Frisbee with the young adults. The result? A ruptured achillies tendon. At first I just though someone kicked me in the calf…and kicked me hard. Well…it did not take long for my lower leg to swell up and bruise up. Funny thing is I looked up on the web, there was a medical site that said “Ruptured achillies tendon is common with middle age weekend warriors.” Wow….comment kinda hurt….because it is true.

Anyway…..

A lot…and I mean a lot is happening in the economy…but I do think the media is exaggerating the reality of what is really happening. For instance, there are a handful of cities that are bucking the trend and home values are steadily increasing. You really do not hear about cities like Mobile, Alabama, El Paso, TX, San Antonio, TX, or Raleigh, NC to name a few. In anycase…there is a lot of news….enjoy….

Commercial Real Estate Articles and News:
Commercial Loan Crisis: A Primer

Some of the points discussed:. What the FDIC considers a commercial loan; Commercial real estate exposure for banks; Which commercial loans will be most problematic; Not all commercial loands are performing badly.

Retail Commercial Real Estate Market Softening

Tags : bob, commercial, corporate, estate, industrial, information, investing, investment, investor, lease, marcus, market, millichap, network, networking, news, office, professional, real, retail, sale, sibdu, social, video, woods.

Sub-Prime Losses and Housing Bubble Could Cost $1 Trillion…

The list is long: Bank of America, Wachovia (nyse: WB – news – people ) and others whose loan portfolios are primarily home mortgages and commercial real estate. They say that every business cycle is different but this is as nonsensical …

CRE News – Indymac another casualty

Bad news in my world again today. IndyMac created a commercial division to become more diversified. However, it was too little, too late for them. It wasn’t entirely unexpected but the way it was handle certainly was. …

REITs Bruised by Credit Crisis

The Dow Jones Equity All REIT Total Return index, which tracks 118 equity real-estate investment trusts, declined 4.9% in the second quarter compared with a gain of 1.4% in the first quarter. REITs, which outperformed the Standard …

Changing the Real Estate Holding Mix

I have been a real estate investor for 24 years. I started with single family homes and remained focused there for most of that time. Sure, there was the occaisonal larger deal, but SFH was where I was comfortable. About five years ago, …

Ticking Time Bomb?: Fannie Mae Monthly Summary May 2008

It’sa real shame since these enterprises seemed to be doing so well recently, short of that stint in 2004 where Fannie Mae executives fleeced the company of over $100 million in fraudulent bonuses and the like… …

Economy looks in distress

Economic data this week were slim and predictable: Consumer confidence fell again, and rebate checks plumped May spending and income, but gave no durable, corner-turning boost. The “personal consumption expenditure deflator” in the …

Gas prices fuel interest in city living

Courtesy of the Living in Cleveland CenterThe cover of a new neighborhood guide released by the Living in Cleveland Center. High gas prices and a tough economy are leading some Northest Ohioans to think about living in Cleveland, …

Until next time……rob

We are now…what I call “The Dry Season.” No…I am not talking about the economy….and..No…I am not talking about the lack of rain in Northern New Mexico. I am talking about the worst part of the year….that is right…baseball season. After the Boston Celtics crushed the Lakers….my heart sunk…not because the Lakers lost (I am actually a Celtics fan) but because the only sports to watch on TV other than the non-sports (golf, NASCAR, etc) is baseball….and I cannot get into baseball. But in a few months…the dry season will be over and my favorite sport, college football, will be in full swing…until then…I will immerse myself in real estate news and articles…..(So…let the hate mail begin).

Commercial Real Estate Articles and News:

Commercial Real Estate Sales Down 69 Percent

The first quarter of 2008 saw commercial real estate sales of $39.2 billion in the US, a 69 percent drop from 2007, according to a report by Jones Lang LaSalle as reported by National Real Estate Investor. According to the same report, …

Guarantee Gamble: Developers Dread Return of Recourse

Yet commercial investors who can’t wait out the credit crisis may have little choice but take a deep breath and sign a recourse loan. “Oftentimes, it’s either sign personally or you don’t get the loan,” said Donald Isken, a real-estate …

What Real Estate Professionals need to know about Securitized TIC …

Slid5 -The first, a “TIC Referral Fee” would permit “all” real estate professionals (commercial or residential) a referral fee for their role in introducing a potential investor-client to a licensed securities representative engaged in …

Lending Market Update ? June 2008

Construction and real estate activity continue to weaken. New and existing home sales fell, but median prices remained flat. Inflation expectations have become the big economic concern, fueled by run-ups in gasoline and food prices. …

The Checkbook IRA Can Expand Your Investment Strategy

Following is an abridged list of some of what you can invest in with checkbook control: raw land, tax certifications, hard money loans, trust deeds, probate property, commercial real estate, foreign real estate, tax deeds – and much, …

Investing In Commercial Real Estate to Build Wealth Part 1

There are 2 common ways to make money in real estate: appreciation and rental income. This applies to residential investment properties and commercial properties. When a proper strategy is implemented correctly, the investor can pay …

Investing In Commercial Real Estate to Build Wealth Part 2

In addition current IRS tax laws for commercial and investment real estate allow investors to avoid paying any taxes at all on the sale of commercial or investment property while increasing their net worth thru a 1031 exchange or like …

Until next time…..rob