Wouldn't It Be Nice

Brian Williams and Tony Asher of the Beachboys wrote great lyrics, and these days the words, "wouldn't it be nice" often echo in my head. 

• Wouldn't it be nice if interest rates stay low,
• Wouldn't it be nice if the home-buyer tax credits were in place forever,
• Wouldn't it be nice if home values began to increase again,
• Wouldn't it be nice if high interest credit cards became illegal,
• Wouldn't it be nice if I got a raise.

Well, let's think about the trade-offs in these "wouldn't it" scenarios:

1. If interest rates stay low forever, then retired folks on fixed incomes will never have ample cashflow from their CDs, money markets and other interest bearing investments to spend they way we need them to spend.  That means there is less money in the economy, so joblessness may stay high.  Hmmmm
2. I would love MY daughter, who is going to graduate school in Portland, Oregon or Chicago next year, to get that $8,000 first-time home-buyer tax credit on a starter condo.  But if that tax credit creates inflated value, doesn't that actually hurt the real estate market in the long-term?  Hmmmm
3. It might be great for home values to start moving up again, but what helps some people hurts others.  Right now, with prices low, more people can afford that home.  If prices go up affordability goes down.  Hmmmm.  Who should be root for here?
4. I despise high interest credit cards: "Robber Barons!"  But let's say the government says to banks, "you can't charge more than 9.99% on a credit card."  Wouldn't that be great!  For many it would be, but there is no question that banks under this scenario would allow fewer, less credit-worthy people, to have credit cards at all.  Is that good or bad?  For some, "yes," for others, "no.  Hmmmm.  Who do we root for here?
5. Finally, I wish I would get a raise.  "Yes! Absolutely!!"  But if I get a raise when my company is not doing well, that raise comes out of someone else's pocket.  If we work hard, create great plans and implement effectively we all can get raises.  Hmmmm.  I am rooting for everyone here.

My point is that we all have a long list of "wouldn't it be nice" ideas, but before we go off half-cocked, let's all think about what drives value and reward.  Rewards need to be earned and attained -- not granted.  Short-term incentives can help boost economies, but the natural laws of the marketplace are what will create prosperity in the long run.

Won't it be nice when innovation and hard work drive us through the recession and reward those who make it happen?  Real estate is a near perfect model of risk and reward and independence.  Let's all analyze our options and make smarter decisions.