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Re: Gosh, this IS big one!
Originally posted by Mega View PostAnybody remember Sam Zell's Christmas Card from 2006, about the time he sold Equity Office..."...Almost two years ago, the Macklowes sought to double the size of their holdings in Midtown by buying seven towers from Equity Office Buildings for $7 billion. But as the subprime mortgage crisis buffeted Wall Street, they found themselves unable to obtain permanent financing and crushed by $7 billion in short-term, high-interest loans from Deutsche Bank and Fortress Investment Group.
Earlier this year, the Macklowe’s were forced to relinquish those seven towers to Deutsche Bank..."
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To the tune of “Raindrops Keep Falling on My Head”
Capital is raining on my head
everything is liquid, we’re awash with cash to spend
the flood has drowned returns
because assets keep liquefying, monetizing, raining…
So I just did me some Econ 101
seems like we’ve gotten out of equilibrium
liquidity abounds
but relative yields keep falling as more capital keeps raining
What lies ahead: we’re old
the western world is aging, we’ll need income
from our pension funds
where’s it coming from?
the yields we see won’t fuel no party
Tho’ capital is raining on my head
interest and inflation rates are narrowing their spread
to half what textbooks said.
the ratios that we’re used to
have been squeezed by so much cash flow
The world is monetizing faster every day
illiquid assets alchemized
to currency in play
competing for return
black gold prices rising, still more money chasing assets…
And there’s one thing I know
to get things back to normal
it’s a long haul
that’s global
yields won’t improve ’til growth soaks up this liquid freefall
Capital keeps raining on my head
so much is out there that the world is out of whack
when will we see balance back?
it’s gonna be a long time ’til returns meet expectations
We need to be
prepared for slim annuities….
For a concise, readable summary of iTulip concepts developed over the past 16 years and a vision of a challenging next decade and how to navigate it, read Eric Janszen's book "Post Catastrophe Economy".
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