Real Estate is Cyclical but The American Dream is Not

In his latest "Chairman's Corner" essay, real estate billionaire Tom Barrack tells the story of his grandfather Joe Barak. In 1892 when he was just 8 years old, Joe immigrated to the United States from a village called Zahle in Lebanon. He didn't exactly arrive during one of America's best decades. In fact:

During the 1890s, over 15,000 companies and 500 banks collapsed nationwide. Unemployment skyrocketed in one year from one million in 1893 to three million in 1894. The population at the time was about 60 million. The huge spike in unemployment combined with the loss of people's savings by failed banks meant that mortgage obligations couldn't be met. In desperation, people walked away from newly built homes.

Barrack's entire essay is worth reading, but I want you to pay particular attention to how he ends the piece:

Joe's story is not just the story of my family. It is the story of America. It is the story of all of our fathers, grandfathers and great-grandfathers. It is the story of Irish, Italians, Jews, Muslims, Buddhists, Koreans, Vietnamese, Polish, Russians and Chinese. There was no social security, no medical insurance, no welfare and no public schools. No one would give you anything except an opportunity to make something for yourself and no one was "entitled." The US was a creditor nation, set the gold standard, and was the largest manufacturer and exporter in the world; however, Joe found opportunity at a moment in which the US was being threatened and flailing in distress. It was at this moment that Joe and the millions of immigrants found the greatest of opportunities and never stopped dreaming. The American hero was the entrepreneur, the business owner, the employee who bought a house for his family - the capitalist. The government and the economy in 1893 were in as bad shape as we are now! The answer then was to work twice as hard, expect nothing, ask for nothing, give 200% and dream the dream. Crisis was the norm for these men and women, and there was no expectation that anyone other than themselves was going to make things better for them.

Today, the dream has turned into a nightmare and our children and our children's children will inherit tens of trillions of dollars in debt. We are not concerned with dreaming the dream and working to get there -- we are concerned with "living the life" and making sure someone gives it to us. We are in the midst of a populist revolution, which is shifting incentive from opportunity to entitlement. We are having a hard time separating heroes from villains. Yet through it all, the underlying foundation stone of everyone's dream - be it opportunity or entitlement - revolves around the dream or hope of prosperity, self-fulfillment and ownership. Real estate has always been an inherent part of the American Dream - the dream to own a home, a house, a gas station, a bakery, an office, a store. Through good times or bad times, the pureness of the desire has remained steadfast. Only the belief and conviction in how to get it and preserve it has faltered.

There is no doubt that real estate is a cyclical industry and I promise in future Chairman's Corners we will deal with our specific points of view in this regard. However, the American Dream should not be cyclical. This is our real ability and power as individuals. The enormity of the economic and political woes across our country weigh heavily on our shoulders and the solutions vanish in the horizon. Residential foreclosures are an epidemic, household wealth has diminished, household debt is overwhelming, and meteoric unemployment, lack of availability of credit, and a confusing political situation have dampened our enthusiasm and dimmed our dream. The real solution is for us to embrace, embellish and replenish the dream.

One individual can make a difference, can defy the odds, can work harder, imagine more, and create more. There is no need for bailouts, subsidies, supports and more entitlement programs. Our children already owe $53 trillion for our own debts, social security and healthcare. We adults will limp along, having had the benefit of the good times. However, our children's dreams will be put to sunder unless we all embrace individual responsibility to "make it happen" ourselves.

We need to restore the American Dream before it becomes a Global Nightmare. That can only be done one dreamer at a time. Joe found opportunity in the midst of the worst financial panic of our country's history to that point. Why?? Because he and your fathers, grandfathers and great-grandfathers took absolute accountability and responsibility for their own actions and held on to the belief that in America, all things are possible if you make it happen. Don't rely and expect, just do! And do it now!!!!!