MUST SEE: ROSS & ICAHN CALL FOR “HUGE COMMERCIAL REAL ESTATE CRASH”
30 October 2009 by Cullen Roche
3 Comments
Carl Icahn was on Bloomberg just moments ago confirming the thoughts of Wilbur Ross. Both believe commercial real estate is on the precipice of a “huge crash”.
Two comments: 1) it’s already crashed — down 40-50% would qualify as a crash, I’m guessing. A good friend of mine is a NYC CRE guy. He’s buying, financing is tricky. Most of what he’s buying is 50% off the peak. 2) Is it possible Ross and Icahn are talking down the market because they’re buying? I don’t disagree that it’s a bad time in the CRE business, but for old pros they have experienced this before.
Does anyone think a CRE “crash” could be disruptive for markets in 2010?
It seems so many REITs have high institutional ownership (pension funds) that can smooth their pension liabilities over many years. Loans are owned by banks which are backstopped by our taxpayer $$s. Securitized CRE loans are large, but relative to US net worth is absorbable … and some are again, backstopped by us. That leaves insurance companies (but aside from AIG, MBIA etc.) seems to be ok so far (please, no earthquakes!). Also, as blogged elsewhere, the gov will give a free pass to loan losses to banks with respect to regulatory capital (i.e. an “in-situ” Resolution Trust Corp), so no forced selling.
there will be no crash… this is all propaganda by the counter revolutionists-rethugs- to make obama look bad- like god could look bad… free healthcare that costs to much and will bankrupt small companies is all we need… tax everything and everybody 90%-except me- and we will finally have equality…we created 620,000 jobs that comes to a cool million jobs which is better than more bad and is worst than less bad… oh i got distracted… bring on the depression and equality!!!!-