> There’s Trouble Brewing
> The clock is ticking
> a reckoning
> full-blown financial crisis
I've been hearing about this since at-least 2021. How long will it take for this 'crisis' to come to fruition.
> The clock is ticking
> a reckoning
> full-blown financial crisis
I've been hearing about this since at-least 2021. How long will it take for this 'crisis' to come to fruition.
This crisis has been ongoing this year like a slow burn. Investors directly related to these assets know they are making heavy losses
But - this is a full blown crisis in a small segment of real estate of only large cities. As such, this is affecting only a small fraction of investor portfolios. Moreover, the bank lenders who engaged in CRE lending have the backing of a very active Federal Reserve - see SVB.
This is not going to have anywhere close to the kind of impact the US housing crisis had in 2008.
Crises foreseen and dealt with can be slowly deflated. If growth stays on track that seems plausible for CRE debt.
Not saying you're right or wrong but that's not a sound basis for judgment
As were the other 15 crashes that didn’t happen.
Though you may of course try to identify possible triggers early and try to defuse them in advance.
Watching it yesterday was a shocker though -- I had forgotten (having been so young) that the 2008 financial crisis had roots so much earlier.
But then I reminisced a little more: this was based on what I recall actually going on at the time. I was a kid at the time, who got his first minimum wage high school job working side by side with a lady who was there because her husband had his pension stolen at WorldCom.
A certain class of elites really got away with a lot then, and were never held to account. Instead, their elite grifting culture just spread wider and wider. We tried in 2011. If you were alive then, you know how big Occupy Wall Street was getting. You remember how big Bernie was.
But they figured out how to use social media to divide us and redirect our anger into right vs left politics instead of ultrarich crooks vs everybody else working hard. Even I had been starting to forget until Jim Carrey shook me out of my millenial reverie.
The youngest kids if they have any political consciousness now it's solely channeled safely into the left vs right pattern, unable to effect meaningful change to the robber baron economy. Smartphones and recommendation algorithms truly were a powerful technology that generated great value after all-- for just a very small elite that can use it to hold off any accountability for their monstrous crimes.
From that point on, it's a case of how well the banks can push the can down the road, absorbing small percentages of bad debt every year from profits, versus being forced into insolvency by the FDIC. There is a lot of leeway in this, as long as the bank still has revenue. During much of the eighties the entire US banking system was technically insolvent, but the Fed essentially just papered over it. The Italian and Japanese banking systems managed this for decades - its only an actual loss when the bank recognises it after all, so you get the zombie bank phenomenon.
There is a much better understanding since 2008 of how not to crash a banking system, so I suspect this will continue to be managed out. But if any other sector goes down, or Trump gets elected (since his policies would blow up the entire financial system if actually enacted), then all bets would of course be off.
For instance in commercial real estate, vacancies are (and for some classes have been) through the roof for a long time.
It’s unlikely this is entirely a nothing burger.