Posted on 04/16/2023 7:24:43 AM PDT by Kaiser8408a
From ZeroHedge, here is a tantalizing story … behind a pay wall. But here is the gist of what I think the article says. Or at least my spin on it.
Here is a chart of US office vacancies nationally (yellow), New York (white), San Franciso (green) and Los Angeles (orange). Note the rapid decline in office vacancies just prior to the financial crisis (often mislabeled as the subprime mortgage crisis). Then look at office vacancies after The Fed’s massive monetary experiment of setting rates to near zero and buying a ton of Treasuries, Agency MBS. etc. While San Francisco returned to pre-financial crisis levels of office vacancy, in general the office market never fully recovered.
The Fed responded to the financial crisis by lower rates to 25 basis points and printing a boat load of money. Unfortunately, office vacancies rose to a peak in October 2010 then began falling again. Only to start rising again after Trump took office in 2017. Alas, Covid struck in 2020, The Fed and Federal government panicked. States and local governments (not to mention teacher’s unions) shut down economies and schools. Office vacancies are now higher than at peak of the Covid shutdowns!!!
But never fear! Too low for too long (TLFTL) Fed Chair Janet Yellen is back as Biden’s Treasury Secretary. To royally screw things up even more.
(Excerpt) Read more at confoundedinterest.net ...
How do you fix the corruption of the system when you tell “banks” they are too big to fail? Our kids paid for the reckless behavior in 2008 housing crisis, they are paying for the idiocy now, and they are guaranteed to pay for the coming crash too.
“Bailouts” encourage reckless behavior. Period. They privatize profits and take the losses public when the bubble pops because the politicians panic. They even insult us and tell us they are bailing us out (mutual funds, IRA’s, pensions, etc)! Where is the incentive for the big 5 banks to be conservative and careful when they are essentially part of the Federal Reserve now?
Rinse and repeat.
“Office vacancies are now higher than at peak of the Covid shutdowns!!!”
Well, I can give a little perspective on this. During the shutdown, most landlords were willing to give the commercial tenants a little leeway. After all, many of them could not operate their businesses, through no fault of their own, and even though there was no commercial eviction moratorium, if they did evict the commercial tenants, they would not be able to re-rent the spaces to any other businesses.
So landlords were allowing commercial tenants to defer rents, or perhaps even forgiving some of their debt. But after the lockdown ended, most commercial tenants’ businesses still have not sufficiently recovered to pay off those rent deferments. Some of them still can’t pay their regular monthly rent amounts. So at this point, landlords really have no choice but to start kicking out the worst of the delinquents.
“Our kids paid for the reckless behavior in 2008 housing crisis...”
At this point, the main thrust of American innovation seems to be inventing innovative new ways to screw our children and grandchildren.
I thought zero hedge was banned. I think theyve yet to get a prediction right.
Kinda not very funny. Says rather little.
You don’t have to be a market guru to see that the commercial real estate market is in very bad shape. Occupancy is down and with banks restricting lending and much much higher rates it is unlikely that many management companies will be able to refinance their debt against properties worth less.
We are on the precipice of a major crash and unlike the 2008 one there are no bullets left in the gun for the Fed largely due to reckless government spending and the decade of free money they embarked upon with the residential housing crash (which was mostly a crash created by greedy bankers and inept politicians).
This is happening.
Yes. Sad.
Our kids have no say in this craziness.
WAY too much doom and gloom. It means BUY. All assets. RE, stocks, crypto, gold.
Downtown Atlanta is a ghost town. Nothing but empty office buildings. Very few people have gone back.
And gas prices are on the uptick again.
$3.04 last Monday, $3.36 today in my nw Arkansas city.
That is a significant jump in just 7 days.
True. So since we can figure it out ourselves we still don’t need any garbage from zero hedge.
Zero Hedge has thousands of articles—running the range from brilliant to stupid with everything in between.
It is a great site for intelligent readers—dangerous for those who either believe or disbelieve everything they read.
Banks were in very bad shape until the Fed opened the cash window for one and all.
They may have to do the same thing for other commercial paper holders—buy the paper at par.
The Fed makes up its own rules.
Good way to put it:
“They privatize profits and take the losses public”
But one caveat. Only for those folks that are too big to fail (i.e. politically connected).
Good post!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.