The Next President's To-Do List
Tom Heath writes about greater Washington's local business community.
Pate said he was "cautiously optimistic" about the election, but I wanted to know what he thought the new president could and should to about the economy.
"Someone is going to have to do something aggressive to stop the erosion of the housing market," said Pate. "I don't know if it's a moratorium on foreclosure or a special underwriting program by the federal government to reduce your mortgage, But something radical is going to have to be done to arrest this downward spiral."
Pate, who lives in McLean, Va., one of the wealthiest communities in the country and the world, said amazingly, that a home in his neighborhood went into foreclosure because the owner lost his job. McLean is a neighborhood with million-dollar and multi-million dollar homes. Many of the Washington elite live there.
"Now everybody else in the neighborhood is concerned that their housing values will decline and people are worried they are going to have to put more equity into their homes," Pate said.
So if homes are going into foreclosure in McLean, home to senators, cabinet members, foreign dignitaries, wealthy businessmen et al., it's a decent bet that there will be pressure on the Congress and the new administration to take action.
Pate said the new president will also have to instill confidence back into the stock market.
"You have right now an entire generation who may have to put off their retirement because their 401k has gone down 40 or 50 percent. Action may take the form of an additional stimulus package to regain consumer confidence, but the president has to instill confidence back into the system."
I asked Pate what he was investing in, and he said stock prices are so low that he returned to the market just last Thursday after being out for two years.
"I'm a value player," he said. "I am only buying those stocks with a price-to-earnings ratios well below the 10-year or 15-year norm. Stocks with all-time low multiples but solid fundamentals."
He declined to name which companies, but he endorsed the idea that energy, namely oil and gas, was one of the sectors where stocks were inexpensive.
UPDATE: Later, I caught up with Janet Hill, a big Obama supporter and a Washington business consultant, who said she was bullish - long-term - on the economy.
"I have a theory that we are as low as we can go and that we will start to come back again," said Hill, whose son is basketball start Grant Hill. Her husband is former Dallas Cowboys running back Calvin Hill. "I think that the determination of a new presidency takes away uncertainty for the next four years. It allows, hopefully, some buoyancy in the stock market."
Assuming Obama win, she said, �that will have have a salutary effect on the market.�
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