Voltron's economics blog. Started in Iraq in 2007 as the "Gamblers Anonymous Support Group" email list.
Wednesday, November 12, 2008
Cracks forming in commercial real estate
Voltron says: General Growth Properties (GGP) may be bankrupt and is removed from the S&P 500 index. ProLogis (PLD) cuts it's dividend, CEO resigns. Both stocks are included in SRS. When the subprime lenders went down, they went one by one because Wall Street refused to acknowledge that THEY WERE ALL THE SAME. Same thing is happening here. GGP and PLD go down in isolation, is if they are messed up oddballs, when in fact they are representative of the industry and the only reason they are going down first is that they are in the wrong place at the wrong time.
Note: Does not include Medicare, Medicaid or Social Security.
This is not an offer to buy or sell securities in any jurisdiction. This blog is for informational purposes only. I do not give legal, tax or accounting advice of any kind. I am not a licensed financial advisor. I make no representations as to the suitability of any transaction at any time. In fact, you should ignore everything I say.
Voltron's Current Forecast
Wall Street and the government are about to engage in battle and recriminations in the face of a massive wave of foreclosures. Wall Street will start yanking the leash, causing stock market crashes whenever the status quo is threatened.
The Fed's announcement that they are going to print a Trillion dollars and use it to buy debt is the proverbial "crossing of the Rubicon" The US Dollar is toast. I think the trigger will be some of the smaller holders of Treasurys (Singapore, for example) trying to dump their holdings before China does. This will cause a panic stampede out of Treasurys which will destroy the dollar.
Wells Fargo are liars. They have over 150 Billion in worthless home equity loans and a Trillion dollars in off-balance sheet liabilities.
Do not abuse leverage. The Fed is going to spend limitless amounts of money to pound interest rates and Gold prices into appearing "normal" when in fact they are on the verge of exploding. The tremendous volatility will shake out leveraged players.