Monthly Letter for November 2016

Monthly Letter
Monthly Letter for November 2016

Monthly Letter for November 2016


Benjamin Franklin campaigned to have the turkey named as the United States’ national bird, but it eventually lost out to the Bald Eagle (how embarrassing would it have been if he’d won his campaign?).

I know that I usually have my story at the end (and I still do this month) but with us fast approaching the end of the political season and with the political state being what it is, I thought I would inject a little more humor…

It was getting a little crowded in Heaven, so God decided to change the admittance policy. The new law was that in order to get into Heaven, you had to have a really bad day on the day that you died. The policy would go into effect at noon the next day.

So, the next day at 12:01 the first person came to the gates of Heaven. The Angel at the gate, remembering the new policy, promptly asked the man, “Before I let you in, I need you to tell me how your day was going when you died.”

“No problem,” the man said. “I came home to my 25th-floor apartment on my lunch hour and caught my wife having an affair. My wife was naked, but her lover was nowhere in sight.”

“So, I started to search the entire apartment. Just as I was about to give up, I happened to glance out onto the balcony and noticed that there was a man hanging off the edge by his fingertips! The nerve of that guy! Well, I ran out onto the balcony and stomped on his fingers until he fell to the ground. But wouldn’t you know it, he landed in some trees and bushes that broke his fall and he didn’t die.”

“This ticked me off even more. In a rage, I went back inside to get the first heavy thing I could get my hands on to throw at him. Oddly enough, the first thing I thought of was the refrigerator. I unplugged it, pushed it out onto the balcony, and tipped it over the side. It dropped 25 stories and crushed him! The excitement of the moment was so great that I had a heart attack and died instantly.”

The Angel sat back and thought a moment. Technically, the guy did have a bad day. It was a crime of passion. So, the Angel announced, “OK, sir. Welcome to the Kingdom of Heaven,” and let him in.

A few seconds later the next guy came up. To the Angel’s surprise, it was Donald Trump.

“Mr. Trump, before I can let you in, I need to hear about what your day was like when you died.”

Trump said, “No problem. But you’re not going to believe this. I was on the balcony of my 26th floor apartment doing my daily exercises. I had been under a lot of pressure so I was really pushing hard to relieve my stress. I guess I got a little carried away, slipped, and accidentally fell over the side! “Luckily, I was able to catch myself by the fingertips on the balcony below mine.”

“But all of a sudden this crazy man comes running out of his apartment, starts cussing, and stomps on my fingers. Well, of course I fell. I hit some trees and bushes at the bottom, which broke my fall, so I didn’t die right away.”

“As I’m laying there face up on the ground, unable to move and in excruciating pain, I see this guy push his refrigerator of all things off the balcony. It falls the 25 floors and lands on me, killing me.”

The Angel is quietly laughing to himself as Trump finishes his story. “I could get used to this new policy,” he thinks to himself.

“Very well,”the Angel announces. “Welcome to the Kingdom of Heaven,” and he lets Trump enter.

A few seconds later, Bill Clinton comes up to the gate. The Angel is almost too shocked to speak.

Thoughts of assassination and war pour through the Angel’s head.

“Finally”, he says, “Mr. President, please tell me what it was like the day you died.”

Clinton says, “OK, picture this. I’m naked, inside a refrigerator……”

Joking aside, it is not a laughing matter that the only policy being addressed today is monetary policy (what the fed is doing with interest rates). We need our politicians on both sides of the aisle to come out after the election and address fiscal policy – taxes and loop holes, entitlement programs and spending.

When the ship is taking on water you really don’t care who the captain slept with or who they sent their last email to. Economists, with the clarity of hindsight, have finally concurred that the financial crisis of 2008-2009 was caused by a housing bubble. But who is seeking out that next bubble? Is it artificially low rates and financial engineering? Is it the collapse of the healthcare industry under the burden of Obamacare? Is it the over leveraged millennials from the college loan debacle? Is it the banking crisis as they pay all the fines imposed in 2008-2009? Is it the exposure of the press missing a story or the truth of stories that finally bursts a balloon?

American’s are about as wealthy as they’ve ever been (though it may not seem so). Unfortunately, the latest expansion of wealth has been driven more by rising asset prices (yes that includes residential and commercial real estate) than by improved economic fundamentals. The problem with big business is that they have continued to hold back on capital expenditures (including real estate), hiring and infrastructure. Instead they are borrowing at incredibly low rates, buying back their stock and thereby increasing its value (and their executive teams bonuses). Eventually rates rise and the debt strangles these companies because they have not invested in people and capital so have no way to grow themselves out of the problem (sounds eerily like our government). Ultimately this kind of “financial engineering” leads to insolvency. The stages of insolvency go like this; (1) sell assets, (2) sell stock, (3) convert debt to equity, and (4) government or lender bail out (if you haven’t watched the movie, The Big Short, if is a must see).

On the positive side San Diego’s unemployment rate improved again in September dipping to 4.7%. Strength seemed to come from educational and health services (we would echo that based on deals we have seen and are doing). Retail, construction and manufacturing were all down – not a good sign!

Assembly Bill 2093 is now in effect (but looks like it won’t be enforced until after January 1, 2017). The new bill requires even more disclosure with regards to ADA accessibility. The amended civil code requires landlords to provide prospective tenants with any report (CASp) and/or disability access inspection certificate issued by a Certified Access Specialist (CASp). We are reviewing legal, leases and procedures now – more to follow.

Lastly during the summer, I merged my office direct dial and my cell phone. So the only number you need to call or text me is (858) 486-9999.

I hope that Democracy and the American Eagle soar at the polls on the 8th and may you be filled with turkey and not hot dogs at Thanksgiving. Hope you enjoy the story…




The Hot Dog Stand

A man lived by the side of the road…and sold hot dogs.
He was hard of hearing, so he had no radio.
He had trouble with his eyes, so he had no newspaper, but he sold great hot dogs.
He put up a sign on the highway, telling how good they were.
He stood by the side of the road and cried, “Buy a hot dog, mister!”
And people bought.
He increased his meat and bun order, and bought a bigger stove to take care of his trade.
He got his son home from college to help him. But then something happened.
His son said, “Father, haven’t you been listening to the radio? There’s a big depression coming on. The international situation is terrible, and the domestic situation is even worse.”
Whereupon his father thought, “Well, my son has gone to college. He listens to the radio and reads the newspaper, so he ought to know.”
So, the father cut down on his bun orders, took down his advertising signs, and no longer bothered to stand on the highway to sell hot dogs.
His hot dog sales fell almost overnight!
“You were right son,” the father said to the boy.
“We are in the middle of a great depression.”

CDC Commercial Inc
About the Author – Don Zech, President at CDC Commercial, Inc.
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