More doom and gloom!

An interesting article in the FT regarding The West’s debt mountain and the increasing risks of investing in bonds:

Bond investors have been on the rack in recent days and weeks. So much so that you have to ask why economists and professional investors continue to refer to government bonds as safe and risk-free investments, relative to supposedly riskier equities

Banks are carrying massive unrealized losses

Yet the US Federal Deposit Insurance Corporation estimates that unrealised losses on American banks’ securities amounted to $515.5bn at the end of March, equivalent to 23 per cent of the banks’ capital.

…and the worst is yet to come when the commercial real estate bubble explodes.

Central banks can always print their way out of trouble, or can they:

But only up to a point. As the Germans learned during the Weimar Republic, markets may conclude that the central bank emperor has no clothes.


The explosion is happening right now in slow motion.

People are going to get back to their desks on August 28. The vacations all over and the kids sent back to college the trading desks will begin to reckon. Adult time will see a crashing down. Sometime in September at least one major in the US or China will give up the ghost. The tide will have turned. In the US it will become a group of problems. EU as well. The family I know in London have been watching in absolute horror for months now. They are well into commercial property on both sides of my family.

Cities are already taking advantage of the problems of downtown commercial real estate. They buy buildings fairly inexpensively and convert it into residential high rises.

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The loans are still due in some cases.

The warehouses are also troubled.

The issue is not the buyout or bailout. The good times with high prices and borrowing have a flipside.

adding coming from CT I see our residential market just beginning to fall. The rest of the country much of it has been falling. The loans are still due.

This article says it is difficult and not much conversion is happening. Do you have some links on the efforts?


We need to (finally!) go for Japanese style micro bedroom privacy spaces with excellent shared communal areas attached. But no, USA still cannot do that because it would disrupt idiot building codes and late Victorian notions that should have died along with bloodletting as a.cure for everything.

david fb.

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You are describing most of Manhattan.

The Victorian stuff is in the burbs.