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 @CharismaticSpecialInterestLibertarian from Michigan commented…4mos4MO

Lemme guess... all off sudden Commercial Real Estate is vital to the US economy and cannot be left to be decided by market forces...

I'm also going to go out on a limb and bet that a lot of CNBC personalities are soon going to be getting increasingly angry over nothing being done to address this.

 @BubblyS0cialJustic3Libertarianfrom Ohio agreed…4mos4MO

No bailouts! This is capitalism at work. Inefficient and weak companies fail. Low rates stifled innovation and allowed people with cash to continual purchase and inflate prices.

 @F0reignP0licyTommyRepublican from Idaho disagreed…4mos4MO

The only "bailout" will be emergency cuts to interest rates and expanded fiscal policy (Q.E.) Still a bailout, in all but name.

If one of the big five banks teeters, then there will be a real bailout.

 @SomberKoalaSocialistfrom Pennsylvania disagreed…4mos4MO

Bailouts are a guarantee after the Great Recession - going forward, the large donor class will have their gains privatized, and their losses nationalized. Just look at the ludicrous bail out of Silicon Valley Bank as a recent example.

Why do you think large banks and the private equity ghouls would take such outrageous risks for such low coupons? It is risk free.

 @SolidPolentaRepublican from New York disagreed…4mos4MO

It's not a question of "will there be bailouts," but instead "who will get the bailouts?" Will it be the building owners, or will it be the banks who made the loans?

I believe you could make a rational argument that the issues that caused the commercial real estate devaluation and credit shortage were both caused by the federal government to some extent. Buildings lost value when the government mandated remote work which emptied the buildings, which killed the retail and restaurant operators who depended on these workers. Private enterprise did not crash that model?…  Read more

Likewise, the banks have had to deal with new liquidity requirements and a cost of funds increase they did not create.

 @LovesickCraneSocialist from Iowa agreed…4mos4MO

The only thing that is allowed to fail today are mom and pop businesses. Everything else is bailout eligible, especially if you can check a certain box that makes you extra special.

 @CowHarperUnity from Pennsylvania commented…4mos4MO

The major problem here is the assumption that big office buildings are worth a lot. Since the pandemic, folks simply do not want to commute. Commuting is expensive, a waste of time, and generally sucks big time. A total life draining drag. Now, those who have for more than a century, feasted on dense human concentration now find the humans no longer want to be densely concentrated. Technology has disrupted that scenario. Owners of these concentration facilities have not yet figured that out. Look out below for office property values (and the holders of those loans).

 @DirectSophieLibertarian from Iowa agreed…4mos4MO

I'm sure owners of hitching posts felt their improvement to the land was valuable, look at all those places to tie up horses!! Unfortunately, the world had moved on, and all the improvement costs they spent, if anything, reduced the value of the property for it's new highest/best use, as a parking lot for automobiles.

 @FreedomRobPatriotfrom PR commented…4mos4MO

Step 1. Bill Ackman: "HELL IS COMING"

Step 2. Fed Creates new acronym and bails out all institutional holders of CRE debt

Step 3. Janet Yellen to Americans: Our nation will collapse unless Taxpayers = bagholders

I say let the folks at the top lose like they were supposed to in 2008. And then every year since. The can has been kicked too many times.

 @JollyB1llOfRightsConstitution from Missouri commented…4mos4MO

It’s no coincidence that all ten of the top ten American cities with the worst ‘doom loops’ are cities where the population have elected a specific form of governance, with resultant massive spikes in every crime statistic, unreported crimes by merchants, pillaging of retail by unpunished criminals, the active destruction of law enforcement, the resultant inability to staff adequate levels of police & fire & other first responders, the creation of laws that defy federal immigration enforcement laws, and social welfare policies & programs that foment drug addiction, homelessness, and the worst public schools in the nation.

Doom loop, indeed. Folks get what they vote for.

 @C0al1tionBoaRepublican from Pennsylvania agreed…4mos4MO

They keep saying over and over we need more police, no we need prosecutors and judges that will put the criminals away and get them off the streets. We need people to wake up and realize social justice is all about power in the few and people be damned. Keep feeding kool aid to people and control the message from the msm and you have ignorant voters.

 @Independ3ntUnicornConstitutionfrom Pennsylvania commented…4mos4MO

The problem isn't that interest rates are high, by historical standards they are rather normal, the problem is that for two decades the Fed printed money like drunken sailors -- manifested as ultra-low interest rates -- and we are now, finally, beginning to pay the price!

 @YearningP0liticRepublicanfrom Ohio agreed…4mos4MO

Amen. While my kids benefited from sub 3% mortgages, no mortgage should ever be that low. Today should be "normal" rates and high rates north from here. Unlimited free money is a disaster.

 @SincerePloverSocialistfrom New York disagreed…4mos4MO

Then housing prices need to come down, or salaries need to go up... Thats the issue.

 @LeftLeaningJohnRepublicanfrom Illinois commented…4mos4MO

The loans coming due are at low interest rates - 3% - they must be taken out by loans at 7%-8% - this negative arbitrage is bad in 2024 and worse in 2025.

2. Commercial property prices have dropped due to comparable worry free investments like bonds becoming more appealing

3. Banks can only restructure/write down a certain % of loans before the FDIC takes action and they have restrictions put on them or are shut down. You are looking at almost all commercial loans being refinance every 5 years. So about 40% of all commercial real estate loan...

 @XfactorQuailDemocrat from Wisconsin agreed…4mos4MO

Agreed, also there is a major impact on municipalities due to revenue losses (from devaluation of property as well as cascading losses from dormant assets, not to mention loss of current and future revenue from lost new construction) followed by the impact on municipal bonds.

 @LeftLeaningJohnRepublicanfrom Illinois agreed…4mos4MO

How and when the pain hits is not clear. Bank's can avoid disclosure: Extending evergreen loans despite good cash flow, failing to recognize the collateral as insufficient to cover the loan, hiding the extent of the problem in their financial statements; regulators hesitating on requiring management to confront their problems; accounting firms allowing management to explain away problem loans; FDIC changing rules to account for pandemic and interest rate challenges; the FED providing liquidity to banks at an unprecedented level. It was a surprise that SVB and Signature bank imploded quickly, primarily from liquidity issues, but the challenges in the banking industry are extensive and I believe, not well recognized. Many of the points above are being used so that this year or next year may morph to some future date.

 @ZealousOryxRepublican from California commented…4mos4MO

This inevitable problem was foreseeable 3 years ago and companies should have been making moves then to mitigate the downside. I spotted it and I'm no where close to being in the business but the shift away from commercial real estate needs and record low interest rates made it very obvious what was probably going to happen in a few years.


How would you react if you found out the savings you plan to use for your future home might lose value due to a commercial real estate crisis?


If your local community faced a real estate crisis, how would you feel about potentially bailing out major banks with taxpayer money, and why?


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