by David Chapman
Staff Writer
The economic landscape has changed dramatically in the nearly two years since Brian Kalish last visited the Treasury Management Association of Northeast Florida. Kalish is director and finance practice leader for the Association for Financial Professionals based in Washington, D.C.
He told the group in January 2009 to be fearful of the future. He returned to meet with the local organization Thursday to recap the financial mess, what’s happened since his last visit and what executives in the financial field should expect.
“We definitely got ourselves in a mess,” said Kalish.
He said he realized the severity of the impending situation when he was sitting at a Little League game with other parents and began receiving real estate tips.
“I knew something was wrong,” he said.
The real estate bubble burst in 2007 with blame to go around, he said, although he doesn’t believe fraud was a major reason for the downfall.
Instead, he places more blame on the no-rules nature of the business during the time, with ratings agencies, banks and underwriters all more at fault than homeowners.
“It’s tough to say ‘no’ to things like that,” said Kalish, referring to the deals presented to homeowners at the time.
He sees the packaging of mortgage loans and selling them to investors as one of the key reasons for the industry crash, which combined with rising unemployment rates resulted in an economic meltdown.
“Everyone thought the world was going to end in March 2009,” said Kalish.
But since his last stop in Jacksonville, he said the downturn hit bottom and the real estate market has been slowly improving.
“We’re still dealing with the hangover,” he said.
Kalish said he isn’t excited about new home sales and that sales of existing homes need to improve.
Retail and auto sales are improving, which leaves him more optimistic about growth than do home sales.
While 2009 was a bad economic year, said Kalish, 2010 was an improvement. As for 2011, he believes growth will be relatively consistent but small, much like in 2010.
The second half of 2010 featured several countries, such as India, China and Brazil, tightening credit rates, he said.
Sweeping financial reform at home as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act has passed, which will affect the financial services industry.
He said economists are looking toward the debt crises throughout Europe with an eye on which country might be next to encounter trouble.
He said it could be Spain, the fourth largest economy in Europe, raising the question of how much more of a bailout countries in crisis could receive.
There were lessons from the crisis, he said. Among them: That liquidity is of paramount importance; the it’s too late to prepare for a crisis once it strikes; that investors need to “look through” data; that the market’s appetite for risk can change dramatically; and that people should not let the market determine his or her level of risk.
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