Here is another interesting chart that the mainstream economists, CNBC and the media probably prefer to ignore so that they can tout the “recovery.” Does this look like things are [...]
Commercial Real Estate
Like so many other economic variables, commercial real estate has been unresponsive to the massive Keynesian stimulus. This chart and observations are from reader EBW:
Moodys/REAL commercial property price index remains troubling. At best, we may be bouncing along the historic bottom.
But we need to remember that this “bouncing” has occurred while the Fed has printed up $2 trillion and the US Government has added close to $5 trillion to its debt load.
Just what would this index have looked like without this tangential support?
And are we about to find out as stimulus fades in the year(s) ahead?
Aug 032010
To those still foolish enough (or delusionally optimistic) to believe that our economy has turned the corner and is headed back to pre-2008 days, turn off your TVs and cancel whatever newspapers you are reading. It just ain’t happening and it isn’t about to begin!
The post below describes the situation thusly (my emboldening):
we are now witnessing are the early stages of the complete and total breakdown of the U.S. economic system. The U.S. government, state governments, local
governments, businesses and American consumers have collectively piled up debt that is equivalent to approximately 360 percent of GDP. At no point during the Great Depression (or at any other time during our history) did we ever come close to such a figure. We have piled up the biggest mountain of debt that the world has ever seen, and now that gigantic debt bubble is beginning to pop. As this house of cards comes crashing down, the economic pain is going to become almost unimaginable.
Regular readers of this blog know I am in agreement with this assessment and have been for more than a year. For those who disagree, read the following article. It is scary, so read it at ground level, away from sharp objects.
There is more financial data that could have been included that would further buttress the conclusions below. However, there is likely enough there to make you a believer if you are not already. When you finish, you might consider what steps you can take to protect yourself and your family.
I am unfamiliar with the blogsite, but everything appears to be well-documented. (I have not checked each of the links.)
40 Bizarre Statistics That Reveal The Horrifying Truth About The Collapse Of The U.S. Economy
Most Americans still appear to be operating under the delusion that the “recession” will soon pass and that things will get back to “normal” very soon. Unfortunately, that is not anywhere close to the truth. What Continue reading »
May 082010
Welcome to the hotel business! You and I own the Red Roof Inn. Who knew?
Alan Grayson lays out how the US government protects its friends and dumps on taxpayers. Remember how you are being told how much money the government is making on your behalf? Watch this and get sick.
Apr 222010
Just as the major banks report super earnings, Richard Koo issues his report on their condition. If banks were required to keep honest books and mark their assets to market, there would be no earnings and both the finance and real estate industries would collapse.
As described by Zerohedge:
Richard Koo’s latest observations on the US economy are as always, a must read. The critical observation from the Nomura economist explains why the realists and the naive idealists are at greater odds than ever before: the government continues to perpetuate, endorse and legalize accounting fraud in the hope that covering everything up under the rug will rekindle animal spirits. The truth, as Koo points out, is that were the FASB to show the real sad state of affairs, the two core industries in the US – finance and real estate, would be bankrupt. “If US authorities were to require banks to mark their commercial real estate loans to market today, lending to this sector would be extinguished, triggering a chain of bankruptcies as borrowers became unable to roll over their debt.” In other news Citi, Bank of America, and Wells just reported fantastic earnings beats on the heels of reduced credit loss provisions. Nothing on the conference call mentioned the fact that all would be bankrupt if there was an ounce of integrity left in financial reporting, and that every firm is committing FASB-complicit 10(b)-5 fraud. One day, just like Goldman’s mortgage follies, all this will be the subject of epic lawsuits. But not yet. There is some more money to be stolen from the middle class first, by these very firms.
This is devastating news for those that believe the economy is in a recovery, but not news for those who understand what is going on. The government is desperate and complicit in fraud to prevent the collapse of the economy. Unfortunately, they are trapped and there is no escape.
The strategy with the banks cannot work because there is no way short of major inflation that real estate regains the value necessary to correct this problem. Even that is unlikely to work because wages are unlikely to keep pace with inflation, causing commercial real estate bankruptcies. The employment situation and overseas competition (labor arbitrage) is likely to make the inflation scenario a non-winner.
At this point, nothing short of some unknown miracle is likely to save the economy. I cannot even fathom what that miracle might be, never mind its probability of occurrence.
To read Zerohedge’s full commentary and the Richard Koo report, go to the website.
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