[IP-SFS] U.S. commercial real estate set to crash bigger than sub-prime; Australia should brace for the tsunami

[CEC Media Release]

Citizens Electoral Council of Australia

Media Release  23rd of November 2009

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 03 9354 0544 Fax: 03 9354 0166
Email: cec at cecaust.com.au
Website: http://www.cecaust.com.au
  

U.S. commercial real estate set to crash bigger than sub-prime; Australia 
should brace for the tsunami

There is increasing panic that America’s commercial real estate market is 
set to implode, which will hurl the world’s biggest economy even faster 
towards sovereign debt default, and a chain reaction global collapse that 
will swamp every national economy, especially Australia’s. 

Stuart M. Saft, a partner at the international law firm of Dewey & LeBoeuf 
LLP, in a column posted on Forbes.com on 19th November, reports that at 
least $1.3 trillion of commercial real estate financing comes due between 
now and 2013, but less than half of that can be refinanced. He notes 
that in Manhattan, office rents in prime areas are half of what they were 
in 2007. Saft is in a total panic about all this. “The commercial real 
estate market is on its last legs, and unless drastic actions are taken, 
the effects on the broader economy will be catastrophic,” he writes. But 
the measures that he demands to address the problem amount to 
reconstructing the bubble as it existed before the crash. 

Saft’s conclusion about the impending doom was echoed at the Reuters Global 
Finance Summit in New York this week. Reuters reports that office 
buildings and other commercial real estate financed during the credit 
bubble “will generate hurricane-scale losses for the banks”, according to 
financial services executives who addressed the conference. Howard Lutnick, 
chief executive of Cantor Fitzgerald, noted that all the equity 
invested in almost every transaction during the peak bubble years of 2005-
2007 has been wiped out. The problem is illustrated by a report, this 
week, by the real estate firm Grubb and Ellis, which shows some Washington, 
D.C. area business corridors experiencing commercial property vacancies
of 25-34%. 

In St. Louis, the St. Louis Federal Reserve Bank reported, this week, that 
19 of 78 banks headquartered in the region are running at a loss. 
Combined, the 78 banks have lost $239 million so far, this year, but most 
of that is accounted for by one bank, First Bank, which lost heavily in 
California real estate loans and on lending in Chicago. 

In Boston, the Boston Business Journal reports that the concentration of 
real estate loans at several Boston-area banks are such as to attract 
extra scrutiny from bank regulators. The Hingham Institution for Savings 
has exposure equal to 447% of total capital, as of 30th September, and 
the Central Cooperative Bank of Somerville had over 500% exposure. 

The United States bankrupted itself with its $23 trillion bailout of Wall 
Street and the City of London, so any more shocks—like a crash of its 
commercial real estate sector—could easily push it over the edge into 
sovereign default on its bonds, which will bankrupt its biggest creditor, 
China, and trigger a chain-reaction global financial tsunami. 

While there is still time, the world must go with the LaRouche Plan: 
(http://cecaust.com.au/main.asp?sub=articles&id=2009_10_07_LHL-plan.html)
bankruptcy reorganisation using the Homeowners and Bank Protection Bill; 
and a Four-Powers agreement between the U.S., Russia, China, and India, 
to replace the failed monetarist system of globalisation with a new 
international credit system, and a reconstruction program for the world’s 
physical economy. 


Visit this link https://www.cecaust.com.au/ssl/shop.asp?act=view&id=bk-000 
to find out what Australia must do to survive the depression, 
buy a copy of the CEC’s book.

Visit this link 
http://cecaust.com.au/main.asp?id=free_only_solution_dvd.html for a free 
copy of the feature-length DVD, the Homeowners & Bank 
Protection Bill—The Only Solution.

Visit this link 
https://www.cecaust.com.au/main.asp?sub=ssl&id=membership.html to join the 
CEC as a member. 

Visit this link http://cecaust.com.au/main.asp?id=refer.html to refer 
others to receive regular email updates from the 
Citizens Electoral Council of Australia.  



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