Welcome to Obamaville

Does this picture look familiar? It should, because the sight of an empty storefront is something most Americans now see every day, and those dark windows and locked doors represent the fruits of the Obama Administration.

In a very well-written piece that you can read here, Kevin Williamson of National Review explains why all of these vacant storefronts are not just a problem for their owners, but they're a problem for you as well.

From the edge of Red Wing, to Robert St. in West St. Paul, to downtown Minneapolis and every suburb, a scene like the one picture here has become commonplace, and the problems in commercial real estate - according to Williamson - are going to get worse in 2012.

The problem is that a commercial property mortgage - unlike the common 30-year residential mortgage - is normally only five years. After five years, the owners will normally face a balloon payment, which they normally re-finance. But these aren't normal times.

In 2007, there was a great deal of commercial real estate construction. Every pension fund and insurance company in America wanted a piece of the action, and they financed billions and billions of dollars in commercial buildings. In 2012, those five-year loans are coming due, and that means a lot of trouble on the short-term horizon.

In the stagnant Obama economy, there are fewer businesses needing space. Fewer tenants means lower cash flow for the strip mall owner, and higher vacancy rates means that those businesses that HAVE survived the Obama years can shop elsewhere for lower rent, putting an even greater squeeze on property owners.

You might think to yourself "So what? Why should I care if some rich fat cat strip mall owner goes broke?" The answer is that the banks, insurance companies and investment firms that financed these properties have done some of that with YOUR money. The success of your 401(k), your mutual funds and your pension are strongly tied to the ability of some company to invest that money and make it grow for you. For many years, commercial real estate has been a successful vehicle for those investments. Every dark storefront can represent a little dent in your retirement plan.

(A side issue to the discussion is this: Who would want to risk opening a business now, when every action of the Obama administration screams "If you're successful, we're going to demonize you, call you selfish and punish you with higher taxes"?)

Williamson writes very well about financial matters for National Review. Take a moment to enjoy the article.