The first third of the last century was the "age of big business" -- the age of capital, conglomerates, monopolies, and steel trusts.  In the US, many of the gigantic mansions, which we experience more often today as publicly owned museums, not privately-held personal residences, were built by industrialists who used the power of creative thinking and inventions to lead us out of the agrarian age, into the industrial age. 

The second third (+) of the century was the "age of big labor" -- all the way from the great depression, through WWII, through putting a man on the moon, on into the quagmire that resulted from the Carter-Reagan exercise in contrasting approaches to excesses in governance.  For over four decades, the middle class grew at an astoundingly fast pace, the US economy and the rise in GDP seemingly unstoppable.   Indeed, there was a massive shift of wealth away from the steel magnates and industrial monopolies into the hands and networth statements of the common man;  In the Clinton-era, it seemed nearly every citizen would be afforded the luxury of personal home-ownership, almost by right.    

Yet, this period led to a time of great extremes; shortages in the supply of all kinds of raw materials - petrochemicals, agri-chemicals and fertilizers, copper, gold, water -- shortages of nearly every kind; in 1998, we had moratoriums on new developments unless they were all electric because of shortages in natural gas.  This led to the Carter-Reagan era and to the deepest recession since the Great Depression.  The last third of a century, then, saw the pendulum swing dramatically back toward capitalism; back to "capital" dominating "labor"; back to tax cuts for the wealthiest, hoping the crumbs from the table would trickle-down to the masses. 

The debacle and excess of Carter-Reagan lead to the greatest losses of investment capital and tangible wealth since the great depression.  And following 25 years of this, we saw instututions which had prospered for decades upon decades -- Lehman Brothers, Goldman Sachs, Washington Mutual, Merrill Lynch, etc. -- declare bankruptcy or be quickly sold to a supposedly strong suitor.   

At the heart of it was the excessive greed of man.  Not the self-preservationist, innately attractive greed factor which is in our being and causes us to seek a healthy increase; no, that is not the greed I'm referring to.  This is the excessive greed that believes an $80,000 Hummer is a good little metro car, for mom to run to Starbucks and pick up a Latte. 

The greed evident in Enron, a company which nearly cornered the electrical supply in California, bilking governments, consumers and their employees out of millions, and millions.   

The end of that era came in 2006, with a shift of political sentiment back to a concern for the masses -- not so much for labor, and certainly not very much for capital.  No, what happened in 2006, and in 2008, was an abrupt stopping of the pendulum such that the age of the consumer has passionately been embraced.  

Some folks think of Governments as only bad.  Certainly, excesses in Governments can be bad, yet it is the great stabilizer, which seeks to balance the interests of capital and labor, yielding a balance which benefits the majority, we consumers. 

Now, with the recent 2008 election, we have ushered in the age of the consumer.  The Bernie Madoff's of the world are being carted off to jail, the board meetings, stakeholder meetings; cabinet meetings that seemingly had to be held in secret will be exposed to more light.   The complete exposure of how our Federal Government spends our money needs to become totally transparent.  As a result, we'll see a renewed focus that government exists to benefit the vast majority of its citizenry, not merely the wealthy and the well-connected. 

The question remains, however, how will Real Estate investors, be they owner-occupants or investors take advantage of this economic climate in a modern-day, TARP-centric world? 

I propose that we'll do it by getting back to the basics.  That 1st-time homebuyers will once again purchase ragged, old, fixer-uppers and REO's, planning to build sweat equity into this very first purchase; to engineer into their family's future a firm financial footing for their second home, their third, and ultimately for their retirement.  

Banks will revert to their tried and proven mantra; "If you really needed money, why did you come here?  We only loan money to people who don't really need the money".   Or, they will again require a clear business plan or an adequate financial footing (FICO - 650+) for any would be home-owners; offering evidence they understand markets go down just as easily as they go up.  Reserves for emergencies will once again be the norm.   

In the end, what will transpire is the greatest shift of personal wealth to those who are clear, purposeful, decisive thinkers, since the great depression.  Those who made loans on a whim, hoping to make exorbitant returns on the backs of the poor -- and taking risks that far exceeded the usual standards of any prudent business person -- will take their lumps, lick their wounds, and get back to the basics.    

Those who speculated on wishes and hopes will either quickly correct course or see their wishes and hopes turn into deeds-in-lieu, or outright foreclosures. 

If you live within a few hours of Des Moines, I invite you to a meeting of our Two Rivers REIA of Central Iowa, of which I am the founder.  If not, then I recommend you visit a local REIA chapter meeting near you.  The National REIA offers links to the 200+ chapters around the nation, here.

The seeds of success lie in the details of the "how-to" and in the "doing of a thing, in the certain way".  Those who use the power of thoughts to control their actions govern those who refuse to apply adequate discipline to prevent regret.