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  • Global Liquidity Crisis: What Now? [View article]
    The problem with your analysis as I see it, is that you have not factored in the major correction coming in commercial real estate, world wide. Regional and local Banks will be failing with 60% of their loans in commercial real estate.

    Capitalization rates were two low, based on expected appreciation and low interest rates. They will begin to rise with the interest rates and added risk premium due to rising vacancy. Prices of commercial real estate will be falling, as will industrial property with rising unemployment.

    This means, that while residential property values may bottom in 2010, there will be a longer delay before commercial real estate will show signs of recovery. New construction might be expected in a more normal recession sponsored by government, but with lower property taxes and failing state governments (CA and NY etc) there is no source of wealth to back up the economy. Then if you really want to get depressed, what will happen as social security tax revenues fall and the system breaks down sooner than expected?

    A long bitter road is ahead, better tread carefully.

    Might be a that WW III will be needed to end the mess. This could all happen much sooner than you expect. What happens if there is an Iran-Israel war between the time of the election and inaguration? Get right with GOD?
    Oct 04 23:32 pm |Rating: 0 0
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