In 2008... the mortgage market failed... and, banks MBS frauds took them down, too...
In 2020, Covid happened... and, it had some similar impacts... and caused a lot of concern.
From the dark days of March, 2020: Why the commercial mortgage bond market looks dire, right now
But, then, along came Congress, with a plan to print money... give it to their friends, and even throw a little bit at struggling people and businesses. They printed A LOT of money... And, it did what printing a lot of money will tend to do... when distributed by helicopter. "Free money" meant little reason to pay for the use of others money... and cost free borrowing meant... lots of irrational spending... leading to inflation. But, it also DID mean that the financial stressors of the moment were... postponed... at some cost. And, that cost would one day have to be paid.
And, here we are... money is no longer free, or cheap... expensive relative to recent days. But, also, the market has not been allowed to function... to correct for prior excesses... and it seems that is going to have to change, now, too. Landlords have been prohibited from collecting rents... and, that clearly can't continue...
But, there are other residual impacts of Covid, too. People have NOT returned to work in offices as they'd been used to before. There is a LOT of empty real estate down town. And, companies are simply walking away from leases for empty buildings... giving them back to the owners... and the owners, in turn, are giving them back to the lenders... and the lenders... NOPE... there's no where else to turn ?
The markets have largely ignored this... thinking the Fed would, once again... bail everyone out as soon as things started looking a bit dicey. But... as they've recently been seeing worrying signs, concern has mounted.
February, 2023: Commercial Property Market Freezes, Sending Bond Volume Plummeting
Still, it was not until this week... that people suddenly began to get the idea... that the Fed might not be nearly as accomodating as they expected... rates might go higher than expected... and stay higher longer ?
So, suddenly, a lot of the easy money fueled whistling past graveyards of the last three years... some, perhaps, induced only in the comparison as "at least we're not China" as similar issues have impacted there already... Whatever its driver... rising rates now mean that is starting to look like it is not sustainable ?
Icahn is shorting the commercial real estate market, which he says is going to 'blow up'
DRV... is a 3X inverse Real Estate gamble...
I'll poke again at bank risks to see who is "next"...
And see "what else" I can come up with that might benefit... if, as, or after... the "wheels come off" the banking system, again, as they did back in 2008... |
