First, we should look at the trend in commercial real estate prices:
Source: MIT
The above chart is extremely helpful in showing how quickly bubbles can grow but also, how fast they can deflate. It took 7 years for prices to peak and only one year for prices to collapse. We have seen similar trends in the residential real estate market. The crash is rather obvious but why did it happen? The reason prices collapsed so fast was that it was a speculative boom. Lending became much too easy with the Federal Reserve flooding the system with easy capital trying to find a home. In more sober times, CRE deals were scrutinized with a due diligence and it was inspected to produce cash flow from day one with sizeable down payments and strong financial reports. But this is not the case and many of these giant deals ended up going the way of the little to nothing down world of residential real estate.
The market in CRE is enormous. This market is over $3.5 trillion and is likely to damage the regional banks much more deeply than larger banks that have a taxpayer safety net:
Source: T2 Partners
10 years ago at the height of the lending frenzy, money was so easy to obtain I was receiving 4 or 5 credit card applications per week. When I applied for a mortgage, the lender offered to loan me what I believed was an excessive amount of money for a home.
ReplyDeleteI knew at that time, if money was that cheap eventually a debt collapse was inevitable. So, I elected to hold 1 credit card, and only accepted an affordable mortgage rather than the amount our family qualified to receive.
It's 10 years later and look what our lack of common sense has delivered.
An economics professor once explained to me, "There is no free lunch." In the end someone always has to pay the bill. Someone will pay.
Someone is preparing to pay for the "free lunch" that lasted the previous 20 years.
It is going to hurt, it is going to keep hurting for a long time.
The bankers won't pay a nickel, big corporation won't pay a cent. The people will pay and its all by design. To control the population. Much easier when the masses are bankrupt and starving then they will listen to their government to save them. The sheeple are not prepared at all. If everyone was prepared, the government wouldn't have a foot to stand on.
ReplyDeleteEveryone talks about being prepared, but how prepared can most people really be if there was a total collapse? Alot of people live in crowded urban areas who dont have access to farmland. Sure in some parts of the country living off the grid is a possiblity, but most people can barely afford their bills and cant go out and buy freeze dried food and tons of ammo. This is why I think there really is no hunkering down and making it through the upcoming depression for a majority of the people, some will survive most will die Im afraid.
ReplyDeletePeople have a better chance of survival based on several actual factors that worked in history:
ReplyDeleteHigher chance of survival:
1) Larger and/or well bonded families. Not friends, friends are worthless unless they are lifelong companions.
2) Will to survive which often is accompanied by faith in a Higher Purpose (whether atheists like that or not).
3) Manners, reserve, discipline, respect, and being able to keep a cool head in social situations.
4) Less amount of needs; drugs, addictions, habits, television, entertainment, material, etc.
5) Good location: away from dense populations or violent cities.
6) Resources; food, water, guns, etc. (not as significant as the above believe it or not!)
Lower Survival Chances:
1) Panicking, being violent, agressive, hostile, too engaged or eager, naive, over trusting, etc.
2) Isolation from or absent of family, being stuck with "friends" or strangers without any blood relatives.
3) Addictions, obesity, health problems, needy behavior (materialism or cheap entertainment).
4) Bad environment or location; rioting crowds, cities, ghettos, drug infested neighborhoods, being stuck with morons who will do stupid things out of fear, etc.
5) Being unprepared with resources (food, water, guns.) Not so much a problem as the rest - you'll need people after a while to form up with.
The real goal is that one wants to be stuck with groups of people that have older people who are mature and cool headed, have some guns and ammo, and people there who figure out together how to get food supplies and water (hunting, gathering, growing, etc.)
We are starting the stone ages all over again, except it will be with guns, electronics, automobiles, and man's collective viewpoints all thrown into utter chaos as it is no longer confined to a central system.
well if you say the effective rate of unemployment (undercount such as the millions who cannot find a job but are not on the gubmint dole) is something in the 24.7 percent plus range they are dismantling the economy at the fastest pace in all US history…
ReplyDeleteHowever, many are still wandering around…. unaware they are going to be getting the axe sooner rather then later…
and the Mantra now is more Taxes? Wow, we should be focusing on Tax Free Zones that give American Businesses an advantage over Cheap Foreign Labor such as the Chineses, I would propose a TARIFF on ALL Foreign Goods til the US Manufacturing base is RESTORED...
The word 'politics' is derived from the word 'poly', meaning 'many', and the word 'ticks', meaning 'Blood Sucking Parasites'.
In the meantime, we can all daydream about what this country should have been as a Free Country...
Loan Sharks (known as Credit Card companies) pillage for every last dollar they can create with the stroke of a computer update, no real money needed!
75% Unemployed Mob In Detroit: Say it isnt so Joe...
Joe Biden: Its so, in fact I get calls all day long about when the HELL we are gonna create ANY jobs..
The government doesn't "create" jobs. Admittedly they hire people but only after they tax citizens to get the money to do it. The excessive taxes cause a greater job loss then hiring government employees can replace. Freedom and less government interference creates jobs. Cut taxes! And do it in a way that allows individuals and businesses to have confidence it will last. the tax cuts put into effect in 2001 will expire in 2011 putting all of us into higher tax brackets. In addition the federal government is making noises like they are intending to implement a national sales tax. Can you understand why these things prevent individuals and businesses from hiring? Our politicians are either intentionally or out of ignorance working against our interests. Vote Nov 2nd and vote out all incumbents.
ReplyDeleteI told you so.
ReplyDeletecomputer "voting" may mean that many will vote and some will be counted just as if they voted often!
ReplyDeleteNot even
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The market in CRE is enormous. This market is over $3.5 trillion and is likely to damage the regional banks much more deeply than larger banks that have a taxpayer safety net:
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