[Mouton]

There is little onus on the G to bail out these transactions because the various financing schemes do not include the words home and mortgage on them. IMO, the FED will either have to come to some accommodation as these properties are liquidated or refied. These commercial properties mostly include retail and office space, the former under water due to a lack of consumer spending and the use of the internet for purchasing and the latter due to huge reductions in white collar jobs which has driven the productivity numbers skyward in the past few years as companies try to pump up their bottom lines.

The CEO of Kroger the other day in an interview I believe was very insightful said she did not believe employment would be “coming back” anytime soon and would not till some kind of industry grows up to absorb those out of work. Her theory is firms have no intention of adding to payrolls even if business picks up because most of the workforce has been replaced by technological improvements allowing fewer individuals to do more. She added there is little new manufacturing, which is labor intensive, on the horizon domestically either.

So, where does that leave the banks, mostly the regional banks that are heavily burdened by this coming nightmare? My guess is they will be made insolvent and be made wards of the huge banking enterprises. The empty office structures will wither as monuments to stupidity on a grand scale while retail space will lag till employment picks up or the internet is made less attractive say by forcing sales taxes upon on line purchases. Again IMO.

Vince

[Leisler]

The Keynesians believed you could pay people to dig ditches and fill them up again to stimulate the economy.

Well, people now a days don’t like ditch digging jobs. But, they do like paperwork. So you can have the government create all sorts of filling requirements, complex legal and tax codes, and have people fill them out. Another group can read them. Yet a third group can find errors in the forms and prosecute the first group. A forth group can defend the first group. There will need to be a sixth group for judges to get between the first group and the...um...let me...wait, ah yes, the forth group. Yet a seventh group will needed to be an appeals panel in case the first group is found guilty by the sixth group. We’ll probably need an eight group to recruit people for the first group because of the prosecution of the fifth group.

See, full employment!