This is another of we told you so. The WSJ states that the banks will have problems with commercial real estate. The WSJ states:
"Banks in the U.S. "are slow" to take losses on their commercial real-estate loans being battered by slumping property values and rental payments, according to a Federal Reserve presentation to banking regulators last month... The remarks suggest that banking regulators are girding for a rerun of the housing-related losses now slamming thousands of banks that failed to set aside enough capital during the boom to cushion themselves when the bubble burst.... "Banks will be slow to recognize the severity of the loss -- just as they were in residential," according to the Fed presentation..."
But we stated last December in our white paper on the Debt Markets that there were seven crises in debt:
1. Residential Real Estate Crisis: This is the bubble and collapse of certain real estate properties focusing primarily on residential real estate.
2. Liquidity Crisis: This is the failure of financial institutions to transact between each other.
3. Money Market Crisis: This was the brief lack of faith in short term deposits collateralized by short term loans.
4. Credit Crisis: This is the general commercial and consumer credit crisis in the failure of the markets to extend credit at levels and with terms as had been done previously.
5. Hedge Fund Crisis: This is the dual crisis of Hedge fund having to cash out and secondly of Hedge funds dumping on the markets when such liquidity is demanded.
6. Commercial Real Estate Crisis: This is the commercial side of the real estate crisis which involves the inability to rent major commercial new builds as well as the inability to obtain continuing construction and project financing.
7. High Yield Debt Crisis: This is the crisis of hundreds of companies having billions of high yield debt, which is coming due, and the inability to roll that debt over....
The commercial Real estate market is also due for a major financial restructuring. In New York and other major markets there are two factors which will cause this collapse. First will be the drop in demand, despite what we have seen projected. Second will be the fact that many developers rely on bank loans which may just not be available.
We also said the debt crisis would not resolve until late 2010. So do not hold your breath. And by the way, the wizards of the economy in the White House seem clueless on these issues.
"Banks in the U.S. "are slow" to take losses on their commercial real-estate loans being battered by slumping property values and rental payments, according to a Federal Reserve presentation to banking regulators last month... The remarks suggest that banking regulators are girding for a rerun of the housing-related losses now slamming thousands of banks that failed to set aside enough capital during the boom to cushion themselves when the bubble burst.... "Banks will be slow to recognize the severity of the loss -- just as they were in residential," according to the Fed presentation..."
But we stated last December in our white paper on the Debt Markets that there were seven crises in debt:
1. Residential Real Estate Crisis: This is the bubble and collapse of certain real estate properties focusing primarily on residential real estate.
2. Liquidity Crisis: This is the failure of financial institutions to transact between each other.
3. Money Market Crisis: This was the brief lack of faith in short term deposits collateralized by short term loans.
4. Credit Crisis: This is the general commercial and consumer credit crisis in the failure of the markets to extend credit at levels and with terms as had been done previously.
5. Hedge Fund Crisis: This is the dual crisis of Hedge fund having to cash out and secondly of Hedge funds dumping on the markets when such liquidity is demanded.
6. Commercial Real Estate Crisis: This is the commercial side of the real estate crisis which involves the inability to rent major commercial new builds as well as the inability to obtain continuing construction and project financing.
7. High Yield Debt Crisis: This is the crisis of hundreds of companies having billions of high yield debt, which is coming due, and the inability to roll that debt over....
The commercial Real estate market is also due for a major financial restructuring. In New York and other major markets there are two factors which will cause this collapse. First will be the drop in demand, despite what we have seen projected. Second will be the fact that many developers rely on bank loans which may just not be available.
We also said the debt crisis would not resolve until late 2010. So do not hold your breath. And by the way, the wizards of the economy in the White House seem clueless on these issues.
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