Kafkaesque

Looking at $5 Trillion in Losses and Zombie Debt in Residential Mortgages

I'd like to see more data points to determine the baseline also. I keep reading great stuff like this piece that doesn"t seem to pull enough historical data in to bench where we really are in terms of the long term trend base; but great work and excellent article.

Markham's Mix Tape: February 12, 2009

As always Markam, you are so right about S&P, Fitch, Moody's, et al. They are the real culprit. We have always known and clearly understood that, like 16 year old boys with their first car, the Wall Streeter IB population (at all levels) will do everything and anything they can get away with making money; we know this to be a truth and reality.
What we foolishly relied on for a decade of extremely low regulatory investigation due to the unwritten rules and the hidden hand of the former administration was the rating agencies. Yes, those "unbiased, financially sophisticated experts" at the rating houses that marked the debt instruments to legitimize their tranche value(s) so that they could be moved out to the invetment market. How stupid were we? There should be serious and very real repercussions for the way these folks governed themselves for so long... why are we not drilling down on this as hard as we are drilling on the other fronts (investigation-wise)?

On Foxes Guarding the Banking Hen House

And go to jail, they will Investfarm. These DOJ, FBI investigations take eons to concisely construct winnable cases and the politiking involved is greater than that which we are watching on CNBC and CSPAN right now; lotsa back room deal-making for sure. My guess is that by the time we see any real indictments and resulting punishment being rendered, this horrible situation will have mostly faded into history.........4-5 years.

Another Round of Farcical Congressional Hearings

Another witch-hunt led by a Bay-Stater a few hundred years after the Salem thing. What an irresponsible way to use our taxpayer's time. G-d, I wish just one of the CEO's would literally stand up in the hearing and, in a barrelling voice, politely suggest to these ignorant so called economic expert congressmen/women that they are wasting valuable time, they are killing businesses with their pandering and cry-baby whining delays and that "they" are the reason that we are actually sitting in this sinking ship...........Jeeeeee...
Pull the press out of the room and watch how fast these hearings would (would've) take(n) place........ 4-5 hours max.
We have few statesmen left and the result is another half-baked "negotiated" plan to screw things up even more (i can hear "inflation" belching in the other room as he continues to gobble at the table that we have so finely appointed and set for him). I guess i'll just rationalize like everyone else and say, "well, its a start," eeejsch.

We're in big big trouble here folks. Between the rape of the economy that Wall Street & the big financials perpetrated on America and the idiocy of Congress in addressing the real issues and avoidance of admission of their hand in same, we are sinking.......... there aren't enough buckets and arms on this ship to bail fast enough. We're 5 years now from daylight.......... didnt have to happen this way either; sad.

What Will the Obama Policy Be Towards Mark-to-Market?

It just doesn't make sense to me why can't we temporarily "repeal FASB 157" and give the mark to market thing a break for awhile? Resulting recovery from erroneous asset value diminishment would abate and markets could recover. Heck, we operated successfully for generations without it. Granted, historically, Wall Street wasn't a majority criminally run and littered with dirty operators (Fuld, Thain, Madoff, Nadel, etc, etc, etc...) like it is now, but there could be huge (major major) penalties levied if honesty wasn't adhered to and companies were caught hiding materially diminished asset values that meritted public acknowledgment while operating with the law on repeal. We could then clean up the Rule, make it reasonably effective and re-install it in the future after we had caught our proverbial breath.

Circuit City: Closing Time

Wonder what the total Income to shopping center owners (capped at 8.%) would be in terms of net asset value lost to the commercial real estate industry by this liquidation. Most developers (& their project's lenders) underwrote CC deals at sub-7%. What a large hole this will create in many centers and the shopping center industry as a whole (no pun intended).
Those that truly watch the retailers and track their health have seen this coming for a long time; i think. Lets hope so.

Why Is Bill Ackman Siding with Borders Group?

5

The Logic Behind Bill Ackman's Purchase of General Growth Properties

Retail Property REITS are going to see their tenants (i.e. their property's Retailers) "absolutely hammer" their FFO (revenue) streams and there is little that they can do about it. Retailers of every type (Nationals, Regionals & Locals) are going to reduce their operating costs with renegotiations of base rent or close. This is happening in mass already. Couple this event with a complete drying up of percentage rent as a result of the tenant's severely reduced gross sales and one has a real problem. The BK's of the retail industry will allow many of these retailers to carte blanche renegotiate their economic occupancy cost line items or leave their spaces vacant. The GGP's, DDR's, CBL's of the world have very little leverage in this equation and little can be done at this stage to stop the train from running off of the cliff.
Office REITs and Industrial REITs have a very similar storm coming that they, too, will have to weather. Beware of the REIT game today; despite what you think the hidden value of the assets are because they were booked years ago........ be very cautious.