All Posts Tagged With: "commercial real estate"

Most of these are interest rate and credit derivatives. As we learned in the last two years, the big risk here is to institutions which owe and own these obligations amongst one another. In our view, the degree of interconnectedness among these obligations (they still aren’t unwound) still makes the entire global financial system vulnerable…

“For the North Atlantic economies,” Debelle concludes, “this was a big recession which, combined with large falls in both commercial and housing property prices, should result in large losses.” He goes on to point out that the government-guaranteed larger lenders might survive these larger losses. But smaller regional banks might not.

The commercial real estate crisis may be the most anticipated crisis in history. But just because it’s widely anticipated doesn’t mean that the crisis won’t be destructive for REIT shares.

Yesterday afternoon, at the Goldman Sachs US Financial Services Conference in New York City, Capital One’s Chairman and CEO, Richard D. Fairbank, wowed the crowd with a dizzying collection of grim assessments and forecasts.

Maybe this will sound like a bunch of whining by the end of the week. After all, three of the big four Aussie banks will report results this week. There will be billion dollar cash profit figures tossed around. But as we said last week, the earnings performance of financial firms in the last six months is a sham.

Standard & Poor’s is preparing to downgrade some $235.2 billion of commercial mortgage-backed securities (CMBS), according to our friend Dan Ferris. When these downgrades occur, the banks and insurance companies that own this paper are going to have a big problem,” Dan says. “Prices are already down around 25% in the past year.”

So what gives, why is there a huge difference between the seasonally adjusted figures and the original data series? If you look just at the original data series you’ll see that retail turnover has declined 32.1% in original terms from $24.7 billion in December of 2008 to $16.6 billion in February of 2009.That would be headline news!