The Commercial Real Estate/Small Bank Boogie! CRE Crisis Could Cause Small Banks To Collapse (Bank Credit Growth Now Negative As 10Y-2Y Yield Curve Remains Inverted)

Confounded Interest ^ | 08/11/2023 | Anthony B. Sanders

[Kaiser8408a]

We are back in the USSR! And the economy taking commands from Washington DC!

Introduction During the COVID-19 pandemic the occurrence of remote work jumped, out of sheer necessity. The technology was already available, but the pandemic accelerated its adoption and bypassed the hesitation of employers to allow people working from home. In many cases, remote work has been successful and therefore seems to have become a permanent feature, often in hybrid form. For employers, it has become an employee benefit to attract people in a tight labor market and it saves on office space costs. The flipside of the latter is that demand for office space has seen a structural downward shift. It is estimated that the underlying value of office space in New York City has permanently declined by 39%. This suggests that at current prices, there is a bubble in commercial real estate. In this special we are particularly interested in the implications for financial stability and the economic outlook. First we take a look at the development of commercial real estate prices and commercial real estate lending. Then we discuss the Fed’s recent stress test on large banks that included a large decline in commercial real estate prices. In contrast to the Fed’s exercise, we show that distinguishing between large and small banks provides a sharper picture of the vulnerabilities in the US economy. In particular, the connection between commercial real estate and small banks, through commercial real estate lending, could pose a threat to financial stability and make a recession worse.

[Kaiser8408a]

Biden and Powell are jointly Cap'n Crunch!

[packagingguy]

“During the COVID-19 pandemic the occurrence of remote work jumped, out of sheer necessity.”

Absolute nonsense. Our company never shut down because we make medical devices.

We had to be at work every day.

Remote work was not necessary and it is impossible for many types of jobs.

[sauropod]

.

[SMARTY]

“...remote work has been successful and therefore seems to have become a permanent feature, often in hybrid form...”

Really?

When is the last time you had to conduct business (personal or professional) with a so called CSR??

These clowns are dumber and dumber AND less professional all the time. They could care less about getting things done expediently or properly! And that's IF they even answer their phone. America has got itself hooked on mediocrity, but good!!