Commercial Real Estate: How This Bust Is Different 5 comments
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The long-coming commercial real estate bust has arrived in the U.S. and elsewhere, a result of sky-high prices met by a severe downturn. Prices could only work in a best-case economic scenario and large busts are now coming (see my posts on Stuyvesant Town and Capmark Financial).
This bust is certainly another major impediment to a sustained recovery – along with a host of other wild cards like unemployment, trade conflict, and oil prices. But, the most worrying aspect about the CRE market is the marks on the balance sheets of our capital-constrained banks, which do not reflect the level of distress evident in the marketplace. And since securitization plagues the CRE market, some analysts expect bankruptcy to be the only workout option for many troubled deals. You will recall, this problem with securitized assets is a dynamic which has also plagued residential real estate (see posts here and here).
The video that automatically accompanies a BusinessWeek article explains how this real estate bust is different and what it will mean for the U.S. economy and likely bank failures.
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On Nov 09 09:04 PM The Geoffster wrote:
> “I don't wanna talk to you no more, you empty headed animal food
> trough wiper! I fart in your general direction! You mother was a
> hamster and your father smelt of elderberries!”
Creative destruction means it's time to lay off the bank execs, at all levels. They are not worth their salt.
The alternative is a mired 20 years like the last 20 in Japan. I say it's time to pick a different set of idiots in 2010. Maybe a few economists instead of lawyers. After the PelosiCare vote, I think a troupe of wild monkeys would be more responsible.
See usdebtclock.org. YOU do the math.
What's up with that?
Where are Dorothy and Toto?
Where are the heros of yesteryear?
Bye - bye, Miss American Pie!
Drove my Chevy to the levy but the Chevy was owned by the taxpayer, and the levy was full of the bodies of the forgotten Men of the U.S.A.
"17% real unemployment..." Actually, if you use the model used during the Great Depression, we have anywhere from 22 to 24 percent right now. Some even consider that we are already much more severe than during the Great Depression is you factor in the number in the military at the time, etc.
I was reading an excellent item on SA the other day where an analysis was made on the necessary y job creation required to "clear the books" of those now unemployed (at the BLS fairy tail rate)... At a high rate of job creation (unrealistic) it would take something like until 2024... Not to positive...
Wine continues to flow behind palace walls - even as the guillotines are being hoisted above the cities squares...
If only....
I want to see burned out burbs in leafy Connecticut and New Jersey - I want to see weepy trophy wives sifting through the embers of their ill gotten gains as gangs move on to the next McMansion to be burned to the ground in Boca, the Hamptons, Sedona, Tahoe, and Malibu....
Hey - these are my fantasies... and I still have a Main St business! Just think what the unemployed are thinking!!