http://money.cnn.com/2009/07/24/new...cial.fortune/index.htm?postversion=2009072416 Alright everybody -- fess up. How many of you thought this was another thread started by ByLoSelHi? LOL
This latest 40% bear market rally seems to be confusing the hell out of everyone, everyone once again bullish, believing the economy is headed for growth and jobs becoming plentiful in only a few short months, everything is fine, HAHAHA..... Commercial real estate is breaking apart in every direction at this very second, there is no way around this problem, OH WAIT, YES there is, the fed and government will step in again and fix everything with some fresh new money.
This is a very good article. I came home 20 minutes ago, and boy, did I get a dose of very negative facts from a former commercial mortgage broker for Flagstar Bank. I won't elaborate, but suffice it to say that you can buy residential, commercial/office/retail assets for literally 1/3 or less of the loan value of just 2 years ago. The severity of the bad assets the banks are holding onto, which was granted to them by the congressional permission to change they way they use accounting rules, is so unbelievable, unless you know someone in this industry who will tell you the truth, you wouldn't believe the particulars of what I heard tonight. There is absolutely no doubt in my mind that there is no stabilization, long term, of the banking system, and the massive write-downs that will have to be taken are so beyond the comprehension of anyone other than those who work in this industry that there is absolutely no hope of avoiding a deflationary depression in the U.S. My mind is absolutely made up. We're headed for a deflationary death spiral and unemployment levels that will shock people. In two years, almost everyone here, even the bearish among you, will absolutely not believe how bad things have gotten. The flood of bad assets keeps rising, it is unrelenting in its pace and aggressiveness, and there is absolutely no way that this inventory can even be remotely dented unless extreme discounting on a level not considered now is done. This discounting will help dent this inventory of the bad assets and non-performing loans with time, but even with extreme discounts, the demographic trends will act as a stop as to full inventory work downs, as more people approach retirement and refuse to speculate or invest in these assets, and go to annuities and fixed income for their retirement years, instead. Simply put, there are no where near enough buyers given the supply. We are now staring into the abyss, and there is absolutely no doubt that we are turning Japanese, but with the added nefarious bonuses of extremely high unemployment and record deficits as a % of our (shrinking) GNP for decades to come.
It's too late to edit my post above, but I forgot to add that this former commercial real estate mortgage broker I was out with tonight was making well over $600,000 take home a year back in the 2002-2006 time frame, and over a million in two of those years. He is now bust, getting kicked out of his home, and he has three kids and is married. I have done everything I could to help him, even offering to help him redeem his mortgage delinquency, but he doesn't want me to do this as he has told me it would only delay the inevitable. This guy is extremely intelligent and knows what's going on, even though he screwed up badly by spending way too much and saving way too little during the 'feast years.' He realizes this now, but hindsight is 20/20, even though he should have taken risk off the table when things were crazy, and socked away some money for stormy weather. What he told me tonight about particular properties and bank positions floored me. I thought nothing could at this point.
We're traders. Maybe we aren't too interested in how our grandfathers sold us out to the Super Wealthy. Maybe BuyLo has a burr up his ass and should go join Alex Jones with a bullhorn somewhere... I like Gerald Celente. He was talking about how the commercial RE bust would follow the weak Christmas sales and it would lead to the collapse of '09. Probably things are getting worse right now but there is light at the end of the tunnel and remember, sometimes that light at the end of the tunnel goes out and it's pitch black and you're left there cold and alone with no hope... :eek:
It's almost hard to believe because as you said and I agree, I don't think anyone, even the most bearish and downtrodden of them all, could rationally theorize what may be to come in the grand scheme of things. If it does hit, it's not so much as proclaiming people like you to be right. It's literally wtf do we do now to either profit off of some of this, or just stabilize the ship, period...
Yeah, he sounds pretty smart to me. I have done everything I could to help him, even offering to help him redeem his mortgage delinquency, but he doesn't want me to do this as he has told me it would only delay the inevitable. I see. What he told me tonight about particular properties and bank positions floored me. I thought nothing could at this point. But, you managed to pick yourself back up and type this story for us. Thanks.
You don't have to believe either him or I. I'm just being honest in relaying who this guy is, what he did and what he knows. As far as whether he's credible or not because of his own financial irresponsibility, I don't think it is relevant to what he discussed with me.