Get out of the market and join Bernanke at the beach?

This just might get me out of the market, put my money in a hole in the ground in the backyard and join Bernanke at the beach. Several weeks ago Bernanke and his band of interest rate deciders at the Federal Reserve said they were tired of trying to get the economy moving without help from Obama. So they put interest rates on autopilot for two years, called adjournment and headed to the beach.  Maybe after 2012 elections they hoped would get some help, maybe not, but why keep trying when you are getting nothing but additional policy that hurts business from the White House.

 

Well I might join him now after Obama's latest policy decision. This one is related to real estate, you know that booming construction and selling homes business that is doing so well under his leadership. Yesterday the SEC noted in a press release that they were going to revisit the 1940 rule that allowed real estate investment trusts to avoid taxes at the source and pay taxes at the investor end. Basically that means that is you invest in a REIT the operator pays no corporate taxes and all income gets taxed at the investor.  In return the investor gets no preferential treatment on taxes and pays the full rates, no capital gains no preferred dividend taxation. This rule put in by Franklin Roosevelt, you know the president Obama thinks is his mentor, was done to help real estate investment grow. This is because real estate, where 99% of all investment is get rich reeeeal sloooow, needed the help at the time. The other 1% is when a politician buys land, uses public funds to build an adjacent freeway, and says Shazaam I got profit!  Check out Harry Reid on this one. Anyway real estate ain't exactly booming right now and anything that hurts investment there policy wise is just stupid.

 

Enter the new look see on the 1940 rule by the SEC and you get immediate sell off in real estate investment trusts. Yes, the very ones which I have been saying are safe investments for two years going since the Federal Reserve said no rate increases, agency REITS . Add to that all the real estate REITS  that use the 1940 rule are now in jeopardy. Obama, who says he wants to add jobs and investment, yet just keeps screwing business interests and this one in a business which needs little push to just fall over and die. You would think on one of his trips out of DC to golf he would drop by the SEC and tell them to cease and desist, but I expect he likes this action since he has done nothing to stop it. Maybe it comes under his "is it fair" rule. I do not know. What I do know he is without a doubt one of the most clueless, ignorant, and arrogant individuals we have ever had as president. Jimmy Carter must go to bed happy now, knowing he will no longer be pointed out at the worst president of the 20th Century.

 

I can not say where this ruling will go or what it will be, but I do know it will dampen real estate investment going forward and continue to cause more sell offs in the REIT stocks.  It is just enough for make me say to heck with it, sell out of everything, and join Bernanke at the beach. Seems many other businesses and capital are doing the same thing already.