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Interesting E-mail between National Real Estate Market Financiers/Investors (Gloomy)
Urban Land Institute Meeting | 11-22-09 | Goldman Sachs sourced

Posted on 11/26/2009 9:16:57 AM PST by wardaddy

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I got this today from a friend of mine who is a commercial mortgage broker who facilitates loans from pension funds and insurance companies for large developments like shopping centers, class A office and hospitals and warehousing. If this has been posted before or debunked as a contrived e-mail then I apologize in advance.

Happy Thanksgiving Day to all.

1 posted on 11/26/2009 9:17:00 AM PST by wardaddy
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To: wardaddy

WEll, accepting this on face value, the US, printing debt (”money”)thru Oct. 2010 will not get us satisfactorily to Nov. 2010.


2 posted on 11/26/2009 9:31:31 AM PST by givemELL (Does Taiwan Meet the Criteria to Qualify as an "Overseas Territory of the United States"? by Richar)
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To: wardaddy
3. Recovery will be slow. Unemployment will not drop back to more normal levels until 2014.

That is wishful thinking if health care passes and then GW legislation passes. If those two monstrosities pass, we are in for generations of European "Social Democracy" with structural 10% unemployment levels.

3 posted on 11/26/2009 9:32:04 AM PST by ProtectOurFreedom
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To: wardaddy

Bookmark


4 posted on 11/26/2009 9:32:23 AM PST by mikeandike
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To: wardaddy

This is exactly what this administration and its cronies want. Masses of people will continue on the Gov’t dole and will not want to relinquish its teat. The republicans are in this knee deep as well. This government is not of the people but rather over the people.


5 posted on 11/26/2009 9:33:34 AM PST by rj45mis
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To: wardaddy; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; Roy Tucker; GOPJ; ..

Ping!


6 posted on 11/26/2009 9:34:02 AM PST by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: wardaddy

http://www.opensecrets.org/orgs/list.php?order=A

http://www.salon.com/opinion/greenwald/2009/04/04/summers/

http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/

http://www.americanthinker.com/2009/07/will_dems_allow_goldman_to_man.html

Pays to pay off obama


7 posted on 11/26/2009 9:38:56 AM PST by FromLori (FromLori)
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To: wardaddy
This is worth highlighting:

Giant make believe.

The free market seeking an equilibrium price is no longer economic policy. In short, the working of the free market is suspended. She went on to say it was administration policy that they will create new employment and by doing so they will boost the economy, and so then real estate values will return to old levels. There were 50 of the most senior and smartest real estate people in the room. They ripped her to pieces. It looked like one of the town hall meetings of August, except everyone there was a very senior, polished professional. At one point everyone was calling out or moaning at her. It was clear to all she had been given a few talking points and she was told to stick to them no matter how foolish she looked.

The group told her in no uncertain terms this is terrible public policy. They said for jobs to be created you need to lower rents so the cost of occupancy was at a level to encourage more hiring. If the loan is kept at old levels and building values not reduced, then landlords can't reduce rents to where they need to be to make taking space by tenants economically viable. Retailers costs remain higher than they should be making it harder to lower prices to induce sales. So there is a massive make believe going on. When I pressed the issue of political interference she said -what do you want us to do, bankrupt all the banks?

8 posted on 11/26/2009 9:40:29 AM PST by Lancey Howard
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To: wardaddy
In other words, the policy statement from last week says, if you can make an analysis that says even if the current value is less than the loan, if you can do a spreadsheet that shows if you extend for 3-5 years, and if the economy gets better, and if the loan can be amortized down to where the loan is no longer more than the value, then the lender does not have to take an impairment -write down.

I have no doubt that this is true. The shell-game over the last 2 years or so has been to keep the bad assets the big banks are holding from seeing the light of day. As the purported admin official alludes to, it would be the end of them.

In essence, they're perpetrating a fraud by using fake accounting methods to pretend that bad assets are good assets until they can figure out what to do with them.

It seems the Northeastern bankster clans are waiting for substantial inflation in the near future so that at least the nominal value of these assets can come up to par.

IOW, they'll be able to say "see, these assets really are (finally) worth what we paid for them a few years ago - so we haven't lost anything and our books are now balanced." Sure, a gallon of milk might have tripled by that time and the dollar may full decline, but at least their bad assets will look good nominally speaking.

The bankster clans want inflation, it's part of their business plan. Of course inflation will will suck the rest of us dry, as will the hundreds of billions we've already given them - but they'll be okay.

9 posted on 11/26/2009 9:59:37 AM PST by AAABEST (And the light shineth in darkness: and the darkness did not comprehend it)
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To: WallStreetCapitalist; JasonC; AndyJackson; Toddsterpatriot; SAJ
Comments, gentlemen?

NO flame wars, please.

I know barely enough to know that I am ignorant.

But based on empirical evidence so far I lean towards mild Austrian school.

Cheers!

10 posted on 11/26/2009 10:06:16 AM PST by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: Lancey Howard

When I pressed the issue of political interference she said -what do you want us to do, bankrupt all the banks?”””

The first step in destroying all the banks was when Jimmah Carter started the CRA.

IMO, it all started there.


11 posted on 11/26/2009 10:10:53 AM PST by ridesthemiles
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To: AAABEST
I have no doubt that this is true. The shell-game over the last 2 years or so has been to keep the bad assets the big banks are holding from seeing the light of day. As the purported admin official alludes to, it would be the end of them.

In essence, they're perpetrating a fraud by using fake accounting methods to pretend that bad assets are good assets until they can figure out what to do with them.

To my mind, it appears that they are trying to figure out how to deflate a bubble without exploding it...gently.

VERY tricky to do.

Complicated by the rise of the East to challenge us for economic supremacy (while they refuse to transfer to true consumer-based societies (China) or to modernize infrastructure or give up cronyism (India).

Further complicated by the (relatively new) extent of derivatives in forms and amounts unconceived of during the Reagan years; "dark pools" outside of the erstwhile watchful eyes of US regulators; and the knowledge of the ever-present threat of a suicidal "rush to the exits" mere microseconds after a fatal mistake is made.

Add to that, the Marxist Obozo screwing up by nationalizing banks and industries *while* playing favorites to his cronies (Chinese "capitalism" there); and running the nation debt up to the point that the *interest alone* will be greater than Bush's TOTAL deficit.

Yikes.

NO Cheers, unfortunately.

12 posted on 11/26/2009 10:20:18 AM PST by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: wardaddy; NVDave
Happy Thanksgiving!

Interesting read.

13 posted on 11/26/2009 10:26:04 AM PST by Chgogal (American Mugabe, get your arse out of my bank, my car, my doctor's office & my elec. utility.)
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To: grey_whiskers
“They” are playing Musical Chairs with Trillions of Dollars of Toxic Derivatives begging the question which entities will be stuck holding the proverbial bag?
14 posted on 11/26/2009 10:30:30 AM PST by Chgogal (American Mugabe, get your arse out of my bank, my car, my doctor's office & my elec. utility.)
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To: grey_whiskers

The real question is now that you know this (given it is real) how does it change your investing profile?


15 posted on 11/26/2009 11:07:24 AM PST by 1010RD (First Do No Harm)
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To: grey_whiskers
Largely on the mark. What is needed is an enormous de-leveraging, but this is a tricky proposition to accomplish.

Dubious 'assets' have to be liquidated, but this of necessity must be a piecemeal process, else we risk a gigantic deflationary spiral.

The fact that this nation is wildly overbuilt is apodeictic. The realty analyses in the article seem spot on to me, perhaps even too generous as to the estimate of recovery time in that industry.

The simplest way to restart the economic engine -- which, of course, will not occur -- is to suspend, indefinitely, any and all regulations, taxes and fees which operate against the creation of new jobs by the private sector. Atop this, add an enormous tax on outsourcing jobs to other nations.

Point #6, particularly, has occurred in this nation previously. Its first cousin, appraisers being in bed with lenders (S&Ls in this case, not investment banks) was the fuel added to the fire that produced the S&L meltdown in the '80s. Appraisers and raters must be kept at a long arm's length away from lenders. This is twice; if we cannot learn this lesson, might as well not bother with the rest of it; the boom-bust NEXT time will be the end of the game.

16 posted on 11/26/2009 11:21:34 AM PST by SAJ
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To: wardaddy
19. The Fed is intentionally holding rates at zero to try to force investors to invest in longer term riskier assets instead of collecting nothing on money market or CD's.

All the easier to cut your investment in half in a month, my dear.

17 posted on 11/26/2009 11:23:53 AM PST by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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To: SAJ
suspend, indefinitely, any and all regulations, taxes and fees which operate against the creation of new jobs by the private sector

This is why I think your wish that we step back from the edge is just wishful hoping. I don't think we can do what has to be done in this regard until a genuine crisis forces us, de facto or de jure, to deregulate. Deregulate includes a legal system that is bloated, too quick to accept lawsuits, and too slow to resolve them, as well as a regulatory system that just makes it impossible to do much of anything without a nightmare of paper and oversight.

18 posted on 11/26/2009 11:29:14 AM PST by AndyJackson
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To: wardaddy

Thanks for the post. I tend to believe scuttlebutt that rings true, even when the outlook is this dark.


19 posted on 11/26/2009 11:32:11 AM PST by Petronski (Global warming is indeed man-made: it was created by man-made manipulation of the data.)
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To: FromLori; Lancey Howard; stephenjohnbanker; Yudan
There is a new book coming out about the deals to save Goldman, Morgan Stanley, Wachovia, AIG etc....they basically wanted JP Morgan to marry most of them.....Ross Sorkin, Too Big To Fail...fascinating read

I am ambivalent...not sure to be honest.

Should we have let all these financial institutions collapse and just dealt with it?

It's hard to say.

And since we “saved” them then why did we let Lehman collapse?

the damned problem is that so many small banks all over the nation and lines of credit to little Joes like me with just mid 8-10 figure commercial debt are dependent to varying degrees on Manhattan firm’s solvency.

What sucks now is that the bailout and TARP loans have just been used to create solvency at taxpayer expense and done zippo to increase credit.

Trust me on that one...it is very difficult to borrow today.

Like this letter says...cash is just sitting....folks are scared....of the economy and how the Federal government is screwing it up.

20 posted on 11/26/2009 11:33:47 AM PST by wardaddy (The movie Valkyrie was excellent...I was surprised. What a cast.)
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