“I’ve learned more in my lifetime, than you’ll probably ever know, because, wait, what were we talking about?”–My Grandfather, 1964

There is a lot of interest in multi-housing for all of the sectors, but lately there have been some great questions on continuing care retirement communities and nursing facilities. The biggest difference, as the claim goes, between market-rate and seniors housing is that teenagers are easier to handle than seniors.

A friend of mine, an investor in businesses that serve the multi-housing industry, helped put a movie deal together not too long ago and now, if you happen to live in Florida or have family there, the movie is making its debut. Now you might think I’m suggesting this because they’re paying me. They are not. You might think this movie is being recommended because I get to star in the sequel, which is also not true. I did hope that if they do a sequel I’d get to play someone commensurate with my vast acting experience, for example, I’d be a good dead guy on the slab at the morgue. No lines, and all I have to do, is not breathe when the camera is on me. I’d also be good in a crowd scene, where I’m standing next to some supermodels. Since that won’t ever happen in real life, maybe it can be scripted.

But actually, I want you to tell your friends and grandparents and grapefruit league followers to see this movie because it will give you a good command of the thoughts and feelings of our seniors. If you’re building for this market niche and want to learn more about who they are and what they want, watch this film. The fact that it stars everyone’s favorite ‘Dad’, Andy Griffith, and wonder actor and Uber Mom Doris Roberts, who played Marie Barone on ‘Everyone Loves Raymond,’ is a real benefit.

As an added plus, if the movie does well, you’ll have played a part in helping launch it and best of all, the next generation of senior congregate care housing will be much improved.

Click here to watch the movie trailer or here to find a theater in Florida.

With any luck at all, you’ll see me in the remake in about 30 years!

(Jack Kern is the managing director of Kern Investment Research, a firm that has nothing to do with the movie industry. He asks: How come they can’t make popcorn that won’t stain your shirt when you drop it? I know, the obvious answer is don’t drop the popcorn, but then it’s harder to watch the movie. If you watch the film, please write and tell me how you liked it. JKern@KernIRC.com or call 301-601-900.)

“And now, of course this is another thing I didn’t count on, that now as the Governor of the state of California, I am selling California worldwide. You see that? Selling.” Governor Arnold Schwarzenegger, State of California

With little fanfare and a huge amount of criticism, the state of California is suffering in an unprecedented way. With budget shortfalls estimated as high as $42 billion dollars, the state announced recently that approximately 20,000 employees could be furloughed and countless other projects in process, including the construction of bridges and roads, will be stopped completely. The unavoidable conclusion from all of this is that Schwarzenegger’s comments about selling California may have become prophetic. Even with the prospect of a new budget bill under consideration by the state Senate, it is very probable that mass layoffs will take place, and future layoffs aren’t off the table. A budget bill intended to forestall this unprecedented personnel action may help avoid those measures now, but it is only a matter of time before the state succumbs to the financial pressures that cause it to wreak havoc on an already severely depressed economy. With economic power in California rivaling many small countries, demise of adequate state funding will have a ripple effect. It may mean additional privatization of state owned facilities, delays in paying income tax refunds and loss of massive amounts of future investor capital.

It’s also pushing apartment rents to low levels not seen in the past ten years in many primary markets. The complete evaporation of demand in both northern and southern California has begun to show up with properties offering reduced rents, higher levels of concessions and better terms overall. Property owners with major operations in the state can expect to see deteriorating fundamentals as the state collapses, and even with TARP II and other federal bailouts, there isn’t a $42 billion solution that will allow Arnold to balance the books.

Most pundits are fond of making fun of the governator, as he’s called, but his tagline now begs the question: “I’ll be back.”

I’m not so sure.

“It was impossible to get a conversation going; everybody was talking too much.”

Yogi Berra

I’m an average sports fan. I like some sports more than others and for the most part, find fun in just about everything. Even NASCAR ( continuous left turns for 500 miles at Beltway speeds) is a lot more interesting since I found a Chevy hat while recently walking my dog. At least I can sit on the sofa, wear my Chevy hat and call my dog Bo. That’s not her name, but if I’m eating something I’ll call her and she’ll come over to see what I’m doing.

The one sport I’m finding I’m not much of a fan of is politics. Recently, there have been a lot of baseball analogies about how the prez is coming up to bat, or the economy isn’t even in the 3rd inning yet and other references. From my vantage point, politics is alot like sitting at the ball park during a rain delay. You know that if you just wait long enough, something, anything has to happen. The outcome won’t always please you or your buddies, but there will be a result. I used to see famed columnist George Will at Baltimore Oriole baseball games. He was sitting there eating hot dogs (he really eats a lot of hot dogs) and entertaining some luminary from sports or television. I was just try to keep from getting mustard on my shirt. What George and I shared was a love of the possibility, that somehow the players could put together a win. We were frequently disappointed, not only by the team, but by the laundry bills.

What I find fascinating is how the game is played these days. The dynamic is really kind of funny. Picture this, you have an election and the democrats win by a landslide. They eventually win control in the Congress and have a democratic prez and now the fun starts. The democrats pitch the ball, and the prez gets called out on strikes. The prez bunts and gets thrown out at first. Remember, these are his own players. The prez finally bulks up a bit on pork (which is every politician’s steroid) and the thing next you know, he’s running the bases like an olympic sprinter.

In an economy where the recession is causing the most pronounced softness in rents and occupancies we’ve seen in many years, and every facet of the business world that contributes to GDP is suffering, we still have this political game in Washington, where someone has to win. The republicans are proudly standing their ground while their states are mired in disaster and the democrats are still playing the tax and spend symphony. It’s hard, to paraphrase Yogi, to get something going where the sides will listen to each other. I’m hopeful that this year will bring increased consumer confidence and employment, but until then, we may just witness the democratic party destroying itself in the name of doing what’s right.

I’d buy a ticket to that.

(Jack Kern used to play baseball as a kid and then decided working in the apartment industry was a better calling. He is the managing director of Kern Investment Research and can reached at JKern@KernIRC.com or 301-601-1900.)

Governor Le Petomane: ” …We’ve got to protect our phony baloney jobs, gentlemen. We must do something about this, immediately, immediately, immediately!”

Blazing Saddles, nominated for an Oscar in 1975
(c) Mel Brooks, Warner Bros. Pictures 1974

The World According to TARP, as it’s now known, has been fraught with an overwhelming sense of failure. One of the key distinctions between how economic stimulus is supposed to work and the reality of its effect is becoming more evident every day. Remembering our earlier example, in the far reaching poppy fields of OZ, Dorothy and her cohorts (ever notice how much the Lion looks like Dick Cheney?) are just waking up from the roadside to discover new subdivisions built all over the place, the Yellow Brick Road is now a 4 lane divided highway, (TARP funds no doubt) but an eerily quiet pervades the landscape. Few of the houses are now occupied, the OZ Medical Center is mostly empty and lots of munchkins have been layed off from their jobs. (OZ was a major exporter of flowers and children’s clothes). Even the witches castle is now a converted Denny’s but business is slow. Crime is up, and now the town council is hoping that TARP II, return of the Phantom Finance is coming soon.

The Treasury Department, under Henry, “What me worry?” Paulson has squandered what could have been a major opportunity to make a difference and now about half of the funds Congress voted for TARP are mis-spent to such an extend that the Inspector General is reporting the deals made were terribly unfair to taxpayers. President Obama is now planning to unleash the next phase of TARP, probably followed up by additional spending in the future. By some estimates, if you add up all of the funds spent on stimulus so far, from all Federal sources, the real number, based on every initiative apparently exceeds $7 trillion.

So why isn’t it working?.

There is little doubt that this economic recession is severe enough to warrant taking some action, but there are concerns here that seem to be missed by the economic reporters in the press, save for Steve Liesman, of CNBC who gets it, but doesn’t get enough time on camera.

This is a global recession, one that won’t simply respond to a U.S. based stimulus package. There isn’t enough finance in our capitalistic system to make the major nations change their ways or recover any faster. China is a risk, because their own stimulus packages are failing and that nation may become destabilized to such an extent that a rising rural populace, upset about the few in coastal areas with adequate housing and food may revolt. A revolution is China, despite our ideological differences is not a good thing right now, but it is a real possibility. Riots have already broken out over closed factories and food shortages.

The European Union is suffering under not only the crushing weight of some freak snowstorms, but also under the cold reality of an economy that has slowed dramatically across almost all nations, and even little Norway, Sweden and Finland find their banking systems at risk.

TARP may help somewhat, but it isn’t the solution, and don’t count on our trading partners to be in any better shape, to buy our goods or invest here. Levels of foreign direct investment and trade finance will continue to decline over the foreseeable future.

The economic stimulus programs offered up by the new economic counselors to the Prez have many elements that are long on traditional solutions, monetary re-balancing, deleveraging of asset classes, reinforcing confidence in banks, but short on what is sorely needed; direct benefits to taxpayers. While restoring some 3 million jobs is the plan, and the ancillary benefits and the multiplier effect on other sectors is unquestionably sound, individuals need to  have confidence restored and a willingness to start spending again. One current proposal, which I support, is to allow for Federally insured 4% mortgages, which would help alleviate the housing crisis and move the inventory of foreclosed and real estate owned houses off the balance sheets of banks. That might be a funny thing to approve of for a die-hard apartment guy, but we have to face the reality of how this housing market is impacting rentals and support the absorption of these unsold units or we’ll face even more rental competition.

Like Governor Petomane, in Blazing Saddles, the phony baloney jobs that Treasury officials hold need to be turned into effective stewards of our tax dollars, or the next GDP report will show even larger losses and job cuts will start to approach 4 million, instead of settling down over the 3 million mark so far. As TARP II makes it way through the Congress, the likely benefit of the diversity of spending in the bill should have the immediate impact of starting spending again. Issues with pork style projects abound, but at least something will finally begin in earnest.

(Jack Kern is the Managing Director of Kern Investment Research and can be reached at 301-601-1900 or JKern@KernIRC.com.)