I like to read the headlines of major newspapers. Sometimes I read the comments of gurus, economists, governmental officials and bank presidents when they talk about the economy.

I love to listen (and not talk too much) to people I presume know more than I do. Perhaps I can learn something new, or educate myself a little more when someone of substance and credibility says something to me. I don’t demonize anyone.
 
At times what these so-called experts may say may be esoteric, but I will listen to them and perhaps follow their advice.
 
I come from a place in time that when you shook the hand of a man, it’s a binding deal.  “You said so; it’s good enough for me.” No need for a written contract or written agreement. What can I do?  I’m a sucker for believing in people. 
But, I’m not a fool. I know there is the principal concept of perception and reality. I’m not one of those who may seek the advice of Dr. Marcus Welby. He was a well-known TV character. Hundreds of people would send “Dr.” Welby letters, seeking his advice, rather than searching for advice from their own real doctor.
 
There are those who say that the Canadian economy has not been affected that much by the devastation of the U.S. economy and that the mortgage debacle, and that the stock market dive in the U.S. has little effect on us. What I tell these gurus is, bunk! The economy is out of control buddy, can you not see it?
 
There was a culture of complacency in the financial work of the USA. Of course we are affected. We are tied to the U.S. economy in every way possible. Eighty per cent of our trade if not more is with the U.S. and NAFTA makes it more so. And the economy of the U.S. is in a free-fall mode.
 
Never mind short-term stimulus – it is not going to work.
 
Every action has a consequence and free money for mortgages has caused the economy to show signs of wreckage with consequences that very much resemble The Depression years of 1932 – 1936, and the real estate downfall of 1987-1993. 
 
Recently, we heard the worse possible news about General Motors and the possibility of a bankruptcy. For GM, it should not be a matter of a negotiated solution, but an imposition or a directive. Hey, listen, all of you high-end executives at GM with millions in salaries and bonuses. We are going to tell you how it’s going to be. Of course there will be an outcry and an enormous pressure by labour, and there is a toxic relationship between management and labour, but there is no other way.
 
Public disclosure has become caustic and moral equilibrium was absent. We were all whistling past a graveyard. Where is common sense?  How did we allow dogma to overcome common sense?  Did we not realize the ripple effect of actions and consequences? 
   
Can you imagine thousands of families out of work in Oshawa?  Who is going to buy homes or cars? There is a clear present and future danger. A nightmare scenario to say the least.
All of these factors and the fear of what will happen affects our industry.
 
Recently a well-known real estate lawyer was at our offices. He says he has many clients who simply refuse to close their transactions on the basis that the property that they bought three or four months ago is not of the same value in today’s market. These clients may lose their deposits – if they are lucky. It could be much more if the seller decides to sue for what we used to call specific performance.
 
I did some research through the university on the causes of economic downturns – both in 1929 and during the insanity of 1987, and the connectivity to real estate. There was no voice of sanity or moderation in either of these periods, either.
 
I found a very strong parallel to the real estate industry and the stock market in my research; there were some astonishing facts that I’m going to share with you in future articles.
 
Avi Rosen is a manager at Century 21 Your Number One Real Estate in Toronto. He has more than 40 years of experience in the real estate industry and is a real estate trainer, author and teacher. He has published many books and has written on industry related subjects both in Canada and the U.S. Email [email protected].