Commercial Real Estate Losses and the Risk to Financial Stability

[Rajiv]

In this video, Chair Elizabeth Warren of the TARP Congressional Oversight Panel introduces the COP February report, "Commercial Real Estate Losses and the Risk to Financial Stability." The full report is available online at http://cop.senate.gov/reports/librar...021110-cop.cfm

[phirang]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

In this video, Chair Elizabeth Warren of the TARP Congressional Oversight Panel introduces the COP February report, "Commercial Real Estate Losses and the Risk to Financial Stability." The full report is available online at http://cop.senate.gov/reports/librar...021110-cop.cfm

Translation: WAAAY, WAAAY too big to fail.

[dummass]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

Translation: WAAAY, WAAAY too big to fail.

This seems to be the overwhelming consensus of many, including EJ. Everybody gets a bailout, re-inflation complete. Assuming that one can accept such, as possible or even likely, what would result from said policy?

Can the world's fiat currencies survive such a large scale debasement? If so, what are the implications and outcomes?

[ThePythonicCow]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

Can the world's fiat currencies survive such a large scale debasement? If so, what are the implications and outcomes?

The essential and ultimate backing of a fiat currency is the people's trust in (or fear of :eek the government/banks issuing the currency.

When enough people are marching in the streets, out of work, savings lost, hungry, and their checks from unemployment, retirement and social security funds stopped or nearly worthless, then things change. That change can be an increase of tyrannical repression, the fall of a government or the collapse of societal order.

My guess would be that in the U.S. we'll see that societal order (outside of a few urban areas) and the ability of the government to retain power both remain strong. We'll see outbreaks of civil unrest that are used to justify increased domestic tyranny while continuing the facade of a constitutional democracy.

[jpatter666]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

This seems to be the overwhelming consensus of many, including EJ. Everybody gets a bailout, re-inflation complete. Assuming that one can accept such, as possible or even likely, what would result from said policy?

Can the world's fiat currencies survive such a large scale debasement? If so, what are the implications and outcomes?

1 ) May or may not survive, but they are certain to try. That is now written.
2 ) Worldwide debasement would keep the ratio between the currencies equal. In time, even the Eurozone will inflate. Race to the bottom.

[dummass]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

1 ) May or may not survive, but they are certain to try. That is now written.
2 ) Worldwide debasement would keep the ratio between the currencies equal. In time, even the Eurozone will inflate. Race to the bottom.

Race to the bottom of what?

I am now reading articles that say, Greece...sure... but not Spain. Why not Spain? Too big to fail or too big to bailout? I've seen some crazy things lately, and somehow they seem to be working.

It would appear to me that the whole mess gets printed away. If China doesn't print to buy US debt, someone else will.

[dummass]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

The essential and ultimate backing of a fiat currency is the people's trust in (or fear of :eek the government/banks issuing the currency.

When enough people are marching in the streets, out of work, savings lost, hungry, and their checks from unemployment, retirement and social security funds stopped or nearly worthless, then things change. That change can be an increase of tyrannical repression, the fall of a government or the collapse of societal order.

My guess would be that in the U.S. we'll see that societal order (outside of a few urban areas) and the ability of the government to retain power both remain strong. We'll see outbreaks of civil unrest that are used to justify increased domestic tyranny while continuing the facade of a constitutional democracy.

Printing puts a stop to all of this. No savings are lost, no debt are unpaid. Everyone gets a raise and Social security checks just keep getting bigger.

Banks don't go bust; they consolidate. There will be more money to push stocks even higher. Sure, the value of all fiat will deflate, but against what? Certainly not other fiat. Commodities won't go up, because they will buy them down with even more fiat (via futures and options).

Sorry cow, no civil unrest. The people will get poorer, but it will happen slow and they will not understand why. They will accept their fate.

Somebody please tell me I'm wrong.

[jpatter666]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

Race to the bottom of what?

I am now reading articles that say, Greece...sure... but not Spain. Why not Spain? Too big to fail or too big to bailout? I've seen some crazy things lately, and somehow they seem to be working.

It would appear to me that the whole mess gets printed away. If China doesn't print to buy US debt, someone else will.

Race to the devaluation bottom.

I personally think Greece will be hung to dry now. With the strikes and government intransigence, there is no backing for a bailout of Greece.

If Greece goes under, it's bad, but survivable. Spain or Italy? Much, much worse.

So Greece needs to be sacrificed to ensure Spain and Italy enact changes.

And because of the strikes, the EU can point to them and say "hey, we tried to help but Greece brought this upon itself and refused to change"

[ThePythonicCow]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

Sorry cow, no civil unrest. The people will get poorer, but it will happen slow and they will not understand why. They will accept their fate.

Our fine government (I'm speaking of the United States, but I hear tell some other nations have similar "blessings") has a history of provoking unrest, violence, false flag attacks and terrorist attacks in order to justify new rounds of domestic tyranny and foreign wars.

I agree that most areas will not erupt in civil unrest. But I expect some headlines of rioting and looting, as I have seen before in my lifetime, from within the United States. I expect such to be followed by increased domestic tyranny, "for our own good, to keep the peace."

The people will get poorer and more enslaved, but it will happen slow and they will not understand why.

Somebody please tell me I'm wrong.

[D-Mack]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

Our fine government (I'm speaking of the United States, but I hear tell some other nations have similar "blessings") has a history of provoking unrest, violence, false flag attacks and terrorist attacks in order to justify new rounds of domestic tyranny and foreign wars.

I agree that most areas will not erupt in civil unrest. But I expect some headlines of rioting and looting, as I have seen before in my lifetime, from within the United States. I expect such to be followed by increased domestic tyranny, "for our own good, to keep the peace."

The people will get poorer and more enslaved, but it will happen slow and they will not understand why.

Somebody please tell me I'm wrong.

Yesterday I was watching All Power To The People (1996) on German TV, I was surprised to hear that the FBI let the local police do the dirty work of assassinations. I wonder if they would do the same thing today

[swgprop]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

Our fine government (I'm speaking of the United States, but I hear tell some other nations have similar "blessings") has a history of provoking unrest, violence, false flag attacks and terrorist attacks in order to justify new rounds of domestic tyranny and foreign wars.

I agree that most areas will not erupt in civil unrest. But I expect some headlines of rioting and looting, as I have seen before in my lifetime, from within the United States. I expect such to be followed by increased domestic tyranny, "for our own good, to keep the peace."

The people will get poorer and more enslaved, but it will happen slow and they will not understand why.

Somebody please tell me I'm wrong.

I'd like to tell you you're wrong but sadly I share this pessimistic view. So tell me cow, what will you do about it? Take care of you and yours to your best ability and watch things crumble around you? Become self sufficient? Leave the country?

These are all thoughts that rattle around in my head on a daily basis; always interested in what others are pondering.

[GRG55]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

Race to the devaluation bottom.

I personally think Greece will be hung to dry now. With the strikes and government intransigence, there is no backing for a bailout of Greece.

If Greece goes under, it's bad, but survivable. Spain or Italy? Much, much worse.

So Greece needs to be sacrificed to ensure Spain and Italy enact changes.

And because of the strikes, the EU can point to them and say "hey, we tried to help but Greece brought this upon itself and refused to change"

If the ECB doesn't debase the Euro at a rate sufficient to reflate the weaker economies [and it probably won't, especially if the Germans take the ECB Presidency next year] then it would seem Europe is headed for a resumption of a deflationary recession...and it won't be restricted to the PIIGS. Seems the Germans fear [hyper]inflation more than deflation and, based on what we've seen in the German economy much of this decade, are quite prepared to tolerate some deflation.

That is what they are imposing on Greece, and the rest of the Eurozone.

I would imagine that some lovely coastal properties on the Greek islands are going to get pretty cheap in the years to come. If the Germans really put on the squeeze who knows, maybe a hotel room for a week in Saint Jean Cap Ferrat [pic below] on the Côte d'Azur won't require taking out a second mortgage...as long as one isn't paying in Dollars.

[ThePythonicCow]

Re: Commercial Real Estate Losses and the Risk to Financial Stability

I'd like to tell you you're wrong but sadly I share this pessimistic view. So tell me cow, what will you do about it? Take care of you and yours to your best ability and watch things crumble around you? Become self sufficient?

Presently I'm focused on figuring out what's going on and helping others figure things out. In the last two years, I've radically downsized my economic footprint and lowered my cash flow needs by about 90%.

I don't see many openings (at least within my awareness and talents) to change things in the large right now. My present focus is on increased awareness and lowering my dependencies on the decaying but still dominant institutions in power.