April 2010


Realpoint’s data is out and it’s not pretty:

(Hat tip Casey Report)

That tick up in March of another 6.8% means there is over $51 Billion in unpaid balances for commercial mortgage backed securities (CMBS).

If a chart like this were presented by some of the global warming crowd, they would say it’s a “crisis.”  Especially if you backed the time scale back a couple of years, it would really look like a hockey stick.  We need to get the economy going so that jobs can be created so that office space can be rented so that stores can keep the lights on so that the CMBS can be repaid.  What we don’t need is more “reform” coming out of Washington!

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In a survey conducted among business owners by the Risk Insurance Managers Society, a troubling picture emerges:

(Click on image for full size; hat tip Paul Kedrosky)

The number one concern is “Political/regulatory environment.” Right behind that, and practically the same thing is “Regulatory Liability.”  Other items of a similar ilk include “Financial regulation,” “Climate change regulation” and “Interest rate/currency risk.”  Is it safe to say that Washington is scaring the hell out of the business world?

This past semester in my Real Estate Finance class at the Owen School of Vanderbilt, I was dissecting the housing crash in the United States.  One of the charts showed the run up in values in different markets around the country.  One of my Chinese students offered that they were experiencing the same thing in Beijing – his house, he said, had appreciated 50% in the last six months.  Here’s more evidence that a bubble is being inflated:

(From SF Gate) “An auction of land in Beijing was cancelled after bidding exceeded a price ceiling set for the lot as the Chinese government expands efforts to rein in the nation’s property market.”

There’s more: “Imagine a seller refuses your business because he thinks you are paying too much for his products?” Bank of America- Merrill Lynch analysts led by David Cui wrote in a report distributed today. “It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.”

According to Google Translate, the word for bubble in Chinese is 泡沫  or “paomo.”

This chart that measures average house prices in gold, shows a long and steady decline going back to 2001:

Obviously it reflects the increase in gold prices, but it shows a steady erosion of confidence in residential real estate as an asset class.