A Matter of Time

Attention spans have fallen sharply in the digital age. People are used to pushing buttons and getting answers, or seeing things happen at an accelerated pace. Patience is no longer a virtue, but a throwback to a bygone era. History refers to what happened last month, last week, or during the last 24 hours, not over some extended period of time.

It's an "out of sight, out of mind" world, where events that take too long to unfold are treated as though they'll never happen. Yet no matter how easy it might seem to ignore or forget the many imbalances and structural problems that still lurk in the shadows, nothing has really changed. In the end, as the following CNBC report, "'Tremendous' Distress in Commercial Real Estate: CEO" suggests, there's lots of ugliness that's yet to play out.

Commercial real estate was supposed to be the "other shoe that dropped," but so far, it hasn't. Is this a reprieve or is it just a matter of time before the market runs into problems?

"It's happening down the road," Scott Rechler, CEO of RXR Realty told CNBC today.

When you look at the commercial real estate market right now, "there is a tremendous amount of distress that is not really visible yet," Rechler said.

Today "the blood is really in the boardroom behind closed doors where people are negotiating to solve problems," he said.

In the early 90's when the financial downturn happened you had the RTC (Resolution Trust Corporation), which the FDIC (Federal Deposit Insurance Corporation) set up. The RTC was taking "all these bad banks and then throwing the paper at discounts, and people were buying them at cents on the dollar," the CEO said.

"This used to be the blood on the streets" in the commercial real estate market, Rechler said, adding, "this happened quickly," he said.

But today it's not just about the debt, "they actually have to inject equity," Rechler said.

If you look at the CMBS (commercial mortgage-backed securities) over the next five years, "about 65 percent of the debt" will be maturing. "You can't replace the same amount of debt in today's market with the amount of debt that is maturing—its going to need more equity," he concluded.

Comments

[Goatmug]

I saw this interview on CNBC, you can bet he'll never be allowed back on the show and am in total agreement. However, as much as I believe there will be a day of reckoning, Bernanke simply told us last week that he is still committed to extraordinary measures to ensure that the economy (errrr asset values) do not deflate.

Hence, we can fully expect some rendition of CREAP (COMMERCIAL REAL ESTATE ASSET PROGRAM) or other made up program that is designed to kick the can down the road another 3 to 5 years as we all hold hands and wish for better things to come.

His 2002 speech has outlined exactly everything he is commmitted to do and very strongly highlights that the FED and its chief believes that inflation must win at all costs which is not limited to every future devalued dollar made by future generations.

Good post.

Goatmug
www.goatmug.blogspot.com

[francismarion]

The Roman Empire had a recession. My favorite historian calls it The Fall. Lots of killing and burning and such. Thing is, every time something bad like that happened, the people in out of the way areas didn't get hurt. It was a continent, after all. All told it took something like 500 years for the Western Empire to get done falling (after about a 1200 year existence).

After that the Eastern Empire lasted another thousand years. Then the Renaissance brought that learning back to Italy and the rest of Europe.

I am here to tell you that America the inheritor of the spirit of Rome. Rome never disappeared. It evolved through highs and lows and sits on the banks of the Potomac today. Been there before? Remind you of any place in particular?

Is it different this time? The biggest mistake we can make is to get down in the weeds and try to make a precise comparison. It won't hold water for most people and who would care anyhow?

I know we've got problems. So what's new? Is it worse this time or have we all just become a bunch of overfed consumeristic narcissistic crybabies for whom nothing is ever enough or good enough, devoid of knowledge of past travails and the attendant understanding of our relative current situation.

For the record I am a prepper. That's what Americans do if they know their history and can read a newspaper. Otherwise they are gloom and doomer hysterical shrieking idiots with big eyes sitting around a campfire telling each other ghost stories. Disgusting.

Fear has power only to the extent that we do not TRY to prepare for the future, whatever it is, and we do not contritely reconcile ourselves with God through his son Jesus Christ.

America is not the Dow Jones or a balance of payments with China. Get real. Grow up. Get ready.

[NOTaREALmerican]

The good news is that Rome never fell. It turned into Italy.

Success in real life can be measured by how much duplicity you've got and by your ability to "see" (be conscious of) the sociopaths (and there are more sociopaths than the "nice people" can admit too themselves). The expression "keep your friends close and your enemies closer" was talking specifically about the sociopaths.

The trick to surviving is to run a good scam, or participate in one. The Federal Government is the last scam going right now. And, always remember, Rome wasn't destroyed in one day either.

[masoud]

earn money:

[roger]

the anointed one was simply a revolutionary,
sick and tired of the roman oppression, and like
all shit disturbers,was severely punished
by the oligarchy of the day.What else is new!

[Keating Willcox]

Goatmug

There are many countries where a brief period of hyperinflation has destroyed most savings. In Poland, their recent hyperinflation was an example. The currency is worthless, and many folks are dropped into extreme poverty.

For a millennium, much of Western Europe went from a commercials, social, and economic success story, to a backward, poor, and lawless dark ages. Parts of Rome didn't fall, but the Roman Empire fell hard.

Consider this, all it takes is a run on the Treasury to cause a new depression. And all it would take is a battle off of Iran to end our oil supply and throw the United States into a massive depression.