Small silhouette of Doug Wolkon WELCOME TO PLURANOMICS, THE ECONOMICS OF MANY.

Pluranomics University Lecture

Doug Wolkon, author of “The New Game: A Strategy to Reinvent the Economy” presents his unique economic perspective to University of Michigan students. Wolkon walks us through practical strategies and explains his Economic theory to re-balance our economy. Enjoy a visual¬†interpretation of Doug Wolkon’s¬†vision and learn how Mini-Stock Markets, Renewable Energy, Stable Rents, & Local Trade emerge in a timeless economic system where Pluralism transcends Capitalism.

*TO VIEW LECTURE SEE TOP RIGHT COLUMN OF HOME PAGE


Related Posts

comment_status) && ('open' == $post->ping_status)) : // Comments and trackbacks open ?> comment_status) && ('open' == $post->ping_status)) : // Only trackbacks open ?> comment_status) && !('open' == $post->ping_status)) : // Only comments open ?> comment_status) && !('open' == $post->ping_status)) : // Comments and trackbacks closed ?> ", ""); ?>

3 Comments so far      Post a Comment

  1. One question I had about the example you described in Ann Arbor was
    why the rents wouldn’t rise as all the businesses flock to the
    previously depressed area. That’s the thing I’m having a hard time
    understanding — how to get the market rent to stay stable. I
    understand how ownership by local businesses would alleviate the cycle
    you described. But, as the area thrives, won’t other businesses want
    to move in and offer the owners high prices for their land?

  2. Hi Jon,
    There is an illustration of the Landlord literally swallowing the tenant in the video. The idea is that the game we play is not symbiotic and does not benefit landlords or tenants in the long run. Investors have finally learned that increased prices/rents also mean increased risk and volatility; and after this financial crisis they are begging for rent stability and can not take the depressing volatility any longer.

    You are right, other businesses will surely want to move in as the area thrives, but investors/landlords will trade up for increased credit and stability of cash flow as opposed to increased rent.

    The way an investor/landlord realizes the appreciation in credit value (i.e. CCC to AAA) of their real estate is through a lower corresponding yield (bond characteristics). But instead of selling the physical real estate, the investor/landlord either holds it for the long-term and realizes the appreciation on paper, or securitizes it (i.e. mini-stockmarket), which also allows the value to increase on paper, as well as provide liquidity for the investor. But in either case, the rents stay stable and the investor is paid its profit for increasing the investments long-term stability instead of inflating the rent for the short-term.

    A good example is a long-term ground lease (i.e. 80 years) in NYC, which can trade for a yield below Treasuries. The reason for this is that the investor knows that their tenant, which owns an 80-story office building, would never default on the lease. As the ground lease gets further along in years, it typically looks well-below market in the rent that it charges for its ground as the land rents around it inflate. The investor/lessor holds long-term for the cash flow stability and is able to sleep very well at night. The Goldman’s are an old-school real estate family that is one of the largest ground lessors in the City. Sal Goldman bought raw land and leased it to developers that built hi-rise buildings 40-60 years ago. Some of their ground leases would probably trade for a 2% yield at this point even though their rent is well below the market.

    Lastly, it is critical that the investor be local. The local investor learns that they have both an investment profit incentive as well as an equal incentive to stabilize their own cost of living. For what is a financial return without a stable cost of living. Here is where the paradigm shift occurs in real time. Local investors, like Calpers and other residents through their IRAs and 401Ks, awaken to the fact that controlling cost of living for their future is equally as important as any financial return strategy.

  3. This is probably the most overlooked tenant in real estate. That an improvement in the credit quality of the cash flow from a lease is more valuable than simply increasing the cash flow of the lease.

Post a Comment

Your email is never published nor shared.
All comments are held for approval and will not appear immediately.
Links and paragraphs are formatted automatically.
Some HTML is allowed… <a>, <strong>

(will not be published)
(optional)

Subscribe to Comments

Subscribe without commenting