IF YOU THOUGHT THE HOUSING MELTDOWN WAS BAD….
9 November 2009 by Cullen Roche
6 Comments
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Comments
People should just look at mike mayo’s analysis from last year of whatever about how banks would face a rolling crash in various asset classes.
care to provide a link?
Is it just the commercial real estate or the whole real estate market that is driving the train? Real estate loans are declining but are still at a very high level. Total Real Estate Loans at all commercial banks are 3776.7 billions of dollars. I guess this also means that prices are still declining. House-aid will probably be extended to this market anytime soon.
Kind of strange but here in Scandinavia prices are actually rising and they are now higher than they were in 2006-2008. People here have started to worrying that it might become a bubble.
I don’t mean to be the class skeptic, but we have to believe the bail out every industry administration will certainly rescue the CRE industry. In fact, if I had to spell out an investment thesis that I can implement in this lunatic market it would be always buy the thing that looks like it’s crashing or likely to crash because it’s where the next giant taxpayer funded bailout will be and it will be the area where equities and bonds will ramp the fastest. This isn’t a novel trade but it’s certainly the only one that works.
That’s a fine strategy, for a while. But remember, Bernanke’s strategy is to persuade dumb money to buy up drek from the big boys. Once the big boys sell enough drek to repair their balance sheets, Bernanke is happy to let the price of drek fall to the clearing price, and shift the losses from the big boys to dumb money and the taxpayer.
You don’t want to be Bernanke’s bag holder, so be careful how long you play Bernanke’s little game.
I understand your cynicism Edna. That’s the massive moral hazard our slimy cowardly leaders have created for us. But it makes great money for their crony friends.