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There’s A Mass Scramble … It’s Like A Race To The End

A report from Bloomberg. “Tom Barrack, who a week ago warned that commercial real estate financing was on the brink of collapse because of the coronavirus pandemic, is now calling for a moratorium on margin calls and intervention by the Federal Reserve to keep values of mortgage debt from plummeting further. The threat of widespread defaults has caused waves of selling in the market for commercial mortgage-backed securities. Banks in turn are demanding cash and seizing collateral from vehicles that borrowed to invest in CMBS and other forms of asset-backed debt, a practice that drives down prices even further. One index of mortgage REITs, or real estate investment trusts, has collapsed by more than 50%, in part because of those margin calls.”

The Richmond Times-Dispatch in Virginia. “In the early days of the coronavirus, the market enabled some developers to take advantage of lower rates. But that has changed in the past few weeks, wiping any benefits away. Now, for many trying to access the capital markets, there is a dramatic pause. For instance, lenders of commercial mortgage-backed securities have completely stopped quoting deals. Three weeks ago, a full leverage CMBS loan might price at 3.5% to 3.75%, but there is no bid now.”

“Hotel owners and landlords with retail tenants have been impacted the most severely. Apartment and office owners also are expected to be hurt. In Virginia, one of the largest construction lenders for multifamily transactions is the Virginia Housing and Development Authority. The VHDA offered a 30-year fixed rate construction permanent rate in the low to mid 3% range in late February. That same pricing now is closer to 5%, putting deals on pause.”

The Real Deal on California. “Thomas Bannon has spent the past 30 years as the leading advocate for California’s multifamily landlords, and he has never dealt with any problem bigger than the coronavirus. In an interview with The Real Deal Tuesday, Bannon expressed deep concern about the present and future of California’s residential landlords. TRD: Los Angeles Mayor Eric Garcetti and other local government leaders have ordered a moratorium on evictions, which your organization supports. Is it frustrating, though, that there hasn’t been accompanying foreclosure relief for property owners?”

“Bannon: Absolutely. There has to be foreclosure relief for property owners. The industry will not sustain otherwise, and it will deter future investment in housing. It’s a three-layer problem. The tenant can’t afford to pay the rent, and then the owner can’t afford to pay the mortgage, and if the owner can’t pay the mortgage, that ruins the banks.”

The Long Island Business News in New York. “While the spring housing market is usually one of his busiest times, Huntington-based attorney Paul Greenstein, a 30-year legal veteran who mostly handles real estate transactions, isn’t optimistic about business this season. ‘Over the last couple of weekends, people that would have bought houses didn’t,’ he said. ‘I haven’t had a new deal in the last three weeks and it’s going to be completely shut off. I’m anticipating zero business. If I get one deal between now and April 30 I’ll be shocked beyond belief.'”

From BNN Bloomberg on Canada. “Canada’s largest real estate market ‘hit the brakes’ in the last full week of March as sales plunged and sellers pulled listings in the face of the COVID-19 crisis, according to a Toronto-based realtor. What had been a gradual softening in Greater Toronto Area sales after a strong February turned decidedly negative last week, with sales down 37 per cent compared to the same period last year, John Pasalis, president of Realosophy Realty, told BNN Bloomberg.”

“There was also a 27 per cent increase in cancelled listings as the economy absorbs record job losses as entire industries come to a near standstill in an attempt to slow the spread of the virus. ‘The market has definitely hit the brakes,’ said Pasalis. He added some of those cancelled listings may end up getting relisted at a different price.”

The Financial Post on Canada. “For the thousands of people who made or received firm offers before the coronavirus outbreak changed everything — and who are now left wondering whether their deals will close in the weeks or months to follow — the anxiety level is even greater. Some have wondered whether a pandemic is considered force majeure (unforeseeable circumstances or ‘acts of God’), which could free them of their obligations in case housing prices were to plummet in the next few weeks. Others may be facing other liquidity issues.”

“Another concern is the trillions of dollars lost in investments since the onset of the pandemic. Some buyers had planned to cash in on investments to make their down payments. As portfolios bleed across the board, real estate transactions contingent on healthy investment returns could be in jeopardy. Mark Weisleder, a partner with the law firm Real Estate LLP, told clients in a note that the ‘only way a deal cannot close is if the government registration system closes down or lenders cannot fund loans, which is not the case right now.'”

“While buyers’ remorse is real, it is no ground to back out of the deal, warned Weisleder.”

From Estate Agent Today on the UK. “One of London’s most experienced estate agents says there has been a very significant surge in foreclosure sales in part of the capital’s housing market – even before the Coronavirus outbreak began. Marc Schneiderma director of Arlington Residential, says that clearly during the lockdown period that will be almost no new business, although he notes that predatory buyers are already on the prowl for casualties of the crisis – forced to sell at significant discounts.”

“However, Schneiderman believes there have been significant weaknesses in the market even before the Covid-19 calamity. ‘Notwithstanding this current crisis, never before in my 35 years as an agent can I recall so many sales on behalf of banks and mortgagees in possession’ he says. ‘It is no longer unusual for us to be contacted by a bank who are foreclosing on a £10m, £20m or even £30m property. Sadly it is just indicative of the wider depressed economic environment in which we find ourselves as a country.'”

From Bloomberg on China. “The early indicators from China aren’t pretty. Overdue credit-card debt swelled last month by about 50% from a year earlier, according to executives at two banks who asked not to be named discussing internal figures. Qudian Inc., a Beijing-based online lender, said its delinquency ratio jumped to 20% in February from 13% at the end of last year. China Merchants Bank Co., one of the country’s biggest providers of consumer credit, said this month that it ‘pressed the pause button’ on its credit-card business after a ‘significant’ increase in past-due loans. An estimated 8 million people in China lost their jobs in February.”

“‘These issues in China are a preview of what we should expect throughout the world,’ said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.”

The Vietnam Express. “With increased travel and visa restrictions slashing bookings, the Covid-19 pandemic has hurt homestay operators all over Vietnam. Minh Tu’s Airbnb apartment in District 1, HCMC has received no guest so far this month. Last month, Tu’s revenue from the Airbnb listed homestay fell 60 percent from January. He has offered significant discounts, but these have had no impact. Tu now plans to rent the apartment long-term to get through the pandemic crisis. ‘If the disease is not contained by the second quarter, I will lose money this year.'”

“Other homestay operators in Vietnam have similar tales of woe to share as tourist destinations close, and Vietnam stops issuing new visas to foreigners starting March 18.”

From Domain News in Australia. “Airbnb hosts and owners of other short-term rental accomodation are scrambling to get properties leased out longer term, as bookings from international and local visitors dry up due to the coronavirus. Properties previously pulled from rental markets for more lucrative short-term stays are being put back up for lease, agents report, as investors seek more secure rental income amid the drop-off in tourists and increasing economic uncertainty.”

“‘The honeymoon is over,’ said Michelle Williams, director of @home Property Management Solutions in Launceston, who has been contacted by more than a dozen hosts – some with multiple properties – in recent days. ‘There’s a scrabble out there now, a mass scramble to try get stock out … it’s like a race to the end,’ said Rachel Beadman, head of property management at Phillips Pantzer Donnelley in Sydney’s east.”

“In Launceston, Ms Williams said she was only taking on properties if owners were willing to meet current market prices and offer longer term leases, noting some had unrealistic expectations of being able to charge the same rates at a time when inquiries were falling. ‘It’s going to be tough renting anything, let alone something furnished for the short-term,’ she said. ‘They have to compete with hundreds of others in the same space, and it’s clear to me [we’ll] end up with a saturated market.'”

The New York Times on Australia. “The line for unemployment benefits curled around the block in an upscale neighborhood of Australia’s largest city, with officially prescribed wide distances between everyone in need. There were restaurant workers in masks who had spent decades jumping from one hip hangout to another. An immigrant whose paychecks had risen as reliably as the sun. And a manager of event venues wearing $500 boots who hadn’t worried about work since the 1990s.”

“In a country where the last recession predates the birth of the web browser nearly three decades ago, the coronavirus is ripping away any pretense of economic exceptionalism and shouting to the nation that its days of exuberance are over. ‘It always felt like if you work hard and put in the hours, you can get whatever you want,’ said Milena Molina, 45, the manager of a law firm who was laid off last week for the first time in her career. ‘Now it’s just uncertainty. It gets worse every day.'”

“Many Australians, at every level of the economy, are flummoxed and struggling to even put into words what’s happening. ‘It’s quite a surreal experience that we’re faced with,’ said Danny Ruhlmann, a cinematographer who was abruptly cut from an Apple TV production in Ireland this month, sending him back to Sydney. ‘It’s something that none of us would have predicted, and it’s going to take time to reset what our new norm is.'”

“Old assumptions — property prices will rise; a good education guarantees prosperity — suddenly seem to have question marks appended.”

This Post Has 110 Comments
  1. ‘While buyers’ remorse is real, it is no ground to back out of the deal’

    But, you guys were the winners?

    1. any pretense of economic exceptionalism

      you paid too much with money you didn’t have. You have “exceptionally” screwed yourselves.

  2. ‘he notes that predatory buyers are already on the prowl for casualties of the crisis – forced to sell at significant discounts’

    ‘However, Schneiderman believes there have been significant weaknesses in the market even before the Covid-19 calamity. ‘Notwithstanding this current crisis, never before in my 35 years as an agent can I recall so many sales on behalf of banks and mortgagees in possession’

    Behold, the REIC lies are exposed again. London shacks went into the sh$tter in 2014 and never climbed out. How’s that money laundering working for ya London?

    1. predatory buyers

      Yeah, sure. The real predators are still watching. And the vultures haven’t even bothered to look yet.

  3. ‘There has to be foreclosure relief for property owners. The industry will not sustain otherwise, and it will deter future investment in housing. It’s a three-layer problem. The tenant can’t afford to pay the rent, and then the owner can’t afford to pay the mortgage, and if the owner can’t pay the mortgage, that ruins the banks’

    Oh how the wind bags have fallen. The mighty California landlord, king of the shortage.

    Get on yer knees and beg you a$$hat!

    1. Sounds like real estate bailouts will needed all around to keep this systematically risky market segment from coronavirus collapse!

    2. “There has to be foreclosure relief for property owners.”

      Where were the relief payments for renters when these sharks were sticking it to them with higher and higher rents year-in, year-out?

      1. There has to be foreclosure relief for property owners.

        There is relief already. Just put it up for auction and let me buy it for something close to a normal price. There’s your relief.

  4. ‘Now it’s just uncertainty. It gets worse every day’…Many Australians, at every level of the economy, are flummoxed and struggling to even put into words what’s happening. ‘It’s quite a surreal experience that we’re faced with…It’s something that none of us would have predicted, and it’s going to take time to reset what our new norm is’

    Well you fell back on the real estate bubble enough times. Now it blew up in your faces. Crikey!

  5. Obviously the Wall Street bulls were responding to the contrarian signal of today’s dire coronavirus news. The stock market can only go up from here on out!

    Trauma physician treating coronavirus patients worries ”we are slowly descending into chaos’
    By Holly Yan, Madeline Holcombe and Steve Almasy, CNN
    Updated 7:52 PM ET, Mon March 30, 2020
    Inside a NYC hospital on the front lines of outbreak

    (CNN) Many people on the front lines of the national heath care crisis against Covid-19 are feeling frustrated — and ill — in the battle against the novel coronavirus.

    The number of cases hasn’t slowed down nationally. More than 159,000 people in the United States have been infected with coronavirus, and more than 2,900 have died.

    Each day sees more reports of deaths than the previous day. There were more than 500 reports of deaths from coronavirus on Monday, the most death reports in a single day in the United States.
    More than one out of every six US deaths reported during the coronavirus crisis was reported Monday.

    Hundreds of medical workers across the country have fallen sick and hospitals face dire shortages of protective gear.

    1. “and hospitals face dire shortages of protective gear.”

      Face masks in national stockpile have not been substantially replenished since 2009

      By Beth Reinhard and Emma Brown
      March 10, 2020 at 4:57 p.m. EDT

      The H1N1 influenza pandemic of 2009 triggered the largest deployment in U.S. history of the Strategic National Stockpile, the federal government’s last-resort cache of drugs and medical supplies. The stockpile distributed 85 million N95 respirators — fitted face masks that block most airborne particles — along with millions of other masks, gowns and gloves.

      The gear to protect medical personnel came from multibillion dollar emergency funding authorized by Congress in 2007 and 2009, leading to calls for the government to better prepare for the next outbreak.

      But the stockpile’s reserves were not significantly restored after the 2009 pandemic, in the view of industry and public health experts. With a limited budget of about $600 million annually, officials in charge of the stockpile focused on what they say was a more pressing priority:

    2. Our local Hospital had the cash to name-brand the Raider’s Stadium in Vegas ($14 million). But no money to properly stock up on masks, shields and gowns to provide proper protection for their healthcare professionals in relation to unexpected emergencies.

      All across the Country many healthcare worker’s who are on the frontline combating this virus are being told to violate many of the protective procedures that have been put into place, over the years, specifically to protect them.

      Using single use (N95) masks over and over again until they are “dirty” is just one example of Hospitals now allowing something that would have been unheard of a month ago when dealing with infectious patients.

      My wife is one of those front line workers. She is also involved in healthcare on the National level and is hearing similar stories from other professionals around the Country.

      1. I know of one person who has a single N95 mask and is putting it through the laundry in order to reuse it. In my imagination, this isn’t a good idea. Of course 95% protection isn’t a good idea to begin with, especially when 99.9% respirators are pretty common in some dust protection settings.

        Couldn’t one’s personal N95 mask be sterilized at something like 180 degF?

          1. I have some of those masks from last decade. I haven’t even gotten them out of the shed. I don’t know anybody who has this, do you? Just because everybody else is freaking out doesn’t mean I have to.

          2. Good point.

            I don’t know anyone who has it. I ask everyone nearly every day and they don’t know anyone either.

          3. You don’t know who has mild or asymptomatic cases, unless they’ve been tested. And then you may still not know.

            I agree that the hysteria exceeds the risk, unless you are in a hotspot.

          4. I don’t know anybody who has this, do you?

            My county has its first “positive”. No idea how many tests have been administered. Still, none of the talking heads mention the reliability of their tests. They have some idea no doubt. Is it 80%? Higher? Lower? If the number of cases is at or below the expected number of wrong test results, we’re in one big exercise of stupidity.

        1. One of the Peak Prosperity videos talks about sterilizing masks. Baking it at 200 for 30-45 minutes seems to do the trick.

      2. Then there is the Governor who has splashed onto the National stage letting everyone know how his state has been let down and what they need.

        Your View: In 2015, Cuomo invested in solar factory instead of 16,000 ventilators

        By Ken Spangler
        Mar 28, 2020

        Thanks, Gov. Andrew Cuomo. My mom is in a nursing home in New York, and in 2015 you refused to buy 16,000 ventilators. Instead you spent the money on solar panels. You could have purchased 16,000 ventilators for a total of $576 million, but instead you invested $750 million on a solar factory. Now you are putting the blame on President Trump. Give me a break and man up to the truth.

        Cuomo has wasted billions, and somehow he’s still here

        By Seth BarronJuly 21, 2018 | 11:19am

        By any standard or sane measure, Gov. Andrew Cuomo should be running scared. Joseph Percoco, one of his closest advisors and friends — “my father’s third son,” Cuomo once said — was convicted of sleazy, felonious self-dealing and is scheduled to be sentenced to federal prison next week, probably for a good long time.

        Meanwhile, Alain Kaloyeros, the nanotech Svengali, at one time New York state’s highest-paid public employee, has been found guilty alongside construction bigwig and generous Cuomo donor Lou Ciminelli, of rigging bids in the massive Buffalo Billion program.

        The project at the center of the Kaloyeros trial was the massive $750 million solar-panel factory that has since been taken over by Elon Musk’s Tesla. SolarCity RiverBend was supposed to become the largest manufacturing facility in North America, employing thousands of people and attracting billions of dollars in investment. But now, Tesla is closing solar-panel installation facilities around the country and scaling back its investment in residential solar, leaving the future of the Buffalo plant in doubt. With 600 workers on site, the state subsidy is running better than $1.2 million per job, hardly the kind of “transformative” investment that the governor promised.

  6. I wonder if/how many of those stressed-out NYC clinicians would agree to try one of the antimalarials just in case they turned out to prevent COVID-19?

    1. Meanwhile in AZ, we had 770 cases statewide this morning. Mid-80’s temps this week, always a flu knocker.

      As Moe said, spread out!

    2. There is a theory that the lower your initial intake of virus particles, the more mild of a case you will get. You can still get COVID from a contaminated surface, but it will be much milder than if someone sings at you or sneezes in your face. And stay away from ibuprofen.

      One doctor has gone so far as to suggest purposely innoculating people with a very small dose of coronavirus to intentially give someone a mild case and build up an immunity. Then they wouldn’t need protective gear. At this juncture, it’s risky because we aren’t 100% sure about immunity or re-infection.

  7. We drove out Del Dios Hwy and through Ranch Santa Fe today to pick up mail in Solana Beach then up PCH to the Encinitas house to pump water out of the stream’s reservoir and have lunch. I can’t remember the last time PCH between Solana Beach and Cardiff was so free of traffic! I likewise can’t remember passing over the I-5 at Requeza Street and not seeing traffic in at least one direction. Much to my husband’s dismay, there’s a reason I almost always drive the back roads between Encinitas and Poway. STRs and the local economy have to be taking a big hit. I imagine the $1.5M major fixer-uppers in the neighborhood will as well. Two words: money pit. Thankfully, the property I have to sell is relatively turn-key. If only the house in Poway I want would come back on the market. I may have to attempt a second suck up letter, which might have better luck given our current pandemic.

    1. Specifics provided for those interested in virtual exploration. I’ve had fun seeing other people’s neck of the woods.

      1. I was in Clairemont/Kearney Mesa today to get some groceries and fill up my water bottles. Much to my surprise all the asian massage parlors over there have “open” signs lit up in the windows. So, while I have to wait in line to get into Vons to get my one loaf of bread and one package of toilet paper, these places are “serving” customers at will? How did these places end up as “essential” businesses?

        1. Much to my surprise all the asian massage parlors over there have “open” signs lit up in the windows.

          Out here even the dentists are closed, except for emergencies. You can’t get a haircut here. But massage parlors are open in America’s Finest City?

          1. It is very strange. I have to stand six feet from the other person line at the grocery store and can’t sit down in a restaurant and order lunch but Massage parlors are open? This is so bizarre.

          2. Out here even the dentists are closed, except for emergencies. You can’t get a haircut here.

            These are closed here too!

        2. How did these places end up as “essential” businesses?

          I doubt they did. Those are the kind of places that don’t close unless law enforcement closes them. And law enforcement probably has better things to do…or is already there getting what they need to go out and face the world again. What two consenting adults that have already been exposed in their respective lines of work choose to do with each other is their business?

          1. “law enforcement probably has better things to do”

            Like arresting me if I skip the line at Vons and insist on trying to buy an extra roll of toilet paper at the register? I’d be in cuffs faster than you can say “happy ending”.

          2. I read that Hobby Lobby is catching some flack for not closing their stores, but no one is forcing them to close.

    2. I’ve been on the freeways a couple of times since everyone started hiding under their beds. My drive times decreased from normal by 33% to 50%.

      I’m hoping traffic stays this way after the end of quarantine measures, due to employees and employers realizing that working from home works.

      However, my inner economist doubts this outcome will occur, due to the absence of road pricing.

      1. The resulting economic collapse will take care of the traffic for the foreseeable future, regardless of when quarantine ends.

      2. Bear: ive been saying this for 20 years we have way too many people working at 9am and not enough at 9 pm…… maybe this time it will change permanently.

    3. “I may have to attempt a second suck up letter, which might have better luck given our current pandemic.”

      Now is a better time to play the “balls in my court” role. If i composed a letter to them it would simply be a take it or leave it 30-50% less offer with a bonus of clean underwear and pants. Sellers are not in a negotiation / upper hand environment right now.

      1. Perhaps “suck up” was the wrong descriptive. “Please allow me to save you” “this will likely be the best offer you get anytime soon” letter.

  8. From the first sob story: “He wants the Federal Reserve to use part of the $2 trillion stimulus bill signed into law on Friday to establish special-purpose vehicles with the capacity to buy non-agency CMBS and repo collateral.”

    Why not issue 90-loans, or your schitt gets sold at auction for true market value?

    1. YEAAAH!!

      Rumour spreadin’ a-’round in that Texas town
      ’bout that shack outside La Grange
      and you know what I’m talkin’ about.

    1. Local
      So there’s been a ‘stay-at-home’ order. Here’s what that means for you.
      Maryland Gov. Larry Hogan (R) announces a stay-at-home directive Monday in Annapolis. The order was set to go into effect at 8 p.m.
      By Rebecca Tan
      March 30, 2020 at 7:22 p.m. PDT
      Please Note

      The Washington Post is providing this story for free so that all readers have access to this important information about the coronavirus. For more free stories, sign up for our daily Coronavirus Updates newsletter.

      Maryland, Virginia and the District issued “stay-at-home” orders on Monday, joining a growing list of states and cities mandating broad, enforceable restrictions on where residents can go in an effort to limit the spread of the novel coronavirus.

      1. Yesterday at 6 pm I went out for the last thing I thought I might need: gas. The radio reported no rush hour traffic or crashes on the highway. But the local roads were fairly busy. Lots of cars at the grocery store and CVS. But parking lots in front of other stores were empty.

        Another business that closed down in the nick of time just before COVID: Dress Barn. They’ve been around for ages.

    2. The End Times have arrived.

      Police arrest Florida pastor for holding church services despite stay-at-home order
      By Daniel Burke, CNN Religion Editor
      Updated 8:54 PM ET, Mon March 30, 2020

      (CNN) Pastor Rodney Howard-Browne said he wouldn’t close the doors of his Tampa, Florida, megachurch until the End Times begin. The police weren’t willing to wait that long.

      On Monday, Florida sheriff’s deputies arrested the evangelical pastor, who has continued to host large church services despite public orders urging residents to stay home to help contain the spread of the novel coronavirus.
      Hillsborough County Sheriff Chad Chronister said Howard-Browne has been charged with two counts: unlawful assembly and a violation of health emergency rules.

    3. Oh dear…

      DC mayor threatens jail time for leaving home during coronavirus
      By Steven Nelson
      March 30, 2020 | 7:43pm
      District of Columbia Mayor Muriel Bowser
      District of Columbia Mayor Muriel Bowser AP Photo/Manuel Balce Ceneta

      WASHINGTON — Mayor Muriel Bowser is threatening residents of Washington, DC, with 90 days in jail and a $5,000 fine if they leave their homes during the coronavirus outbreak.

      The threat of jail is alarming residents and civil libertarians who point out that at least five inmates tested positive for COVID-19 in the city’s 1,700-inmate jail near Capitol Hill.

      “Our message remains the same: stay home,” Bowser, a Democrat, said in a statement Monday. The stay-home order has exceptions for grocery shopping and work deemed essential. Outdoor recreation such as running is allowed, but cannot involve people outside of a household.

      The order is similar to dictates in neighboring Maryland and Virginia, but shocked residents of Washington, where there are just 401 of the nation’s 160,000 confirmed cases.

    4. Our county sheriff was on the late local news saying if anyone was seen on a golf course he was going to get the golf course superintendent and he would be charged, along with anyone using the public boat ramps.

      In other words… The beatings will continue until morale improves.

      1. It’s getting very bad in San Diego as well. Closing down surf beaches is cruel and unusual punishment to surfers.

        Surfers are anything but up with most San Diego beaches closed
        OB Pt.Loma beaches closed
        A lone surfer left the beach at Ocean Beach on Tuesday morning. San Diego Police and lifeguards were warning surfers to get out of the water because the beaches are closed.
        (John Gibbins/The San Diego Union-Tribune)
        Oceanside is rarity in allowing beach use, but officials there warn it depends on social distancing rules being followed
        By Tom Krasovic
        March 29, 2020
        6:45 AM

        Surfers are deft at balancing, right?

        In these strange times, a unique test of steadying confronts the “hang-ten” set.

        How should they balance their surf habit — which some surfers deem essential to their overall health — with the coronavirus pandemic that has shut down San Diego city beaches and many county beaches for several days?

      2. The governor of Virginia specifically exempted golf from his stay at home order. Trump owns a golf course near Great Falls.

        1. The blackface guy?

          The AZ gov put out an order. I looked at the details and it’s meaningless. So why do that? Peer pressure?

  9. How soon before the TED spread blows up again?

    Any thoughts on how this plays out? High unemployment with inflation next year. With the years we’ve had of interest rates going lower and lower and really not being able to go up without causing problems, haven’t we been destined to eventually get ourselves into an inflationary debt trap, where the government prints money like crazy, inflation gets out of control, and then they’re forced to raise interest rates, which would just cause the fiat system to implode?

    1. A deflationary debt default spiral with an official 40% unemployment rate and a prolonged global depression is the future scenario to have nightmares about.

      1. The fundamental reason why everyone is sitting at home will end with the COVID-19 outbreak.

        However, the residual effects of the subprime debt collapse that was triggered by the coronacrisis may be with us for some time to come.

    2. The long term is some less bad version of Japan or Argentina, as I explained here.

      Not as bad as Japan because our demographics aren’t as bad, but say GDP growth of less than 1.0%, repressed interest, falling asset values.

      Not as bad as Argentina because ours is a reserve currency, but a 50 percent of more decrease in real debts and asset values, as in the 1970s, with imports less affordable and U.S. made stuff even crappier.

  10. I may need to ask Mr. Jones repost that tiny violin meme for the poor, poor Wall Street megabanks that can’t ever manage to kick their addiction to shitty subprime mortgage loans.

    The Financial Times
    Leveraged loans
    Big banks left hanging after ‘disaster’ in risky loan market
    Wobbles in collateralised loan obligations pose problems for lenders
    © AP
    Robert Smith and Joe Rennison in London
    2 hours ago

    Big banks that help asset managers package risky loans into investment products are sitting on billions of dollars of debt linked to companies most exposed to an economic downturn.

    Lenders on both sides of the Atlantic have upwards of 100 open credit lines to vehicles known as collateralised loan obligations, which are among the biggest sources of funds for businesses that do not have top-quality credit ratings, according to people familiar with the arrangements.

    Funds such as the debt-investing arms of private equity powerhouses Blackstone and Carlyle are the biggest managers of these CLOs, which have made great strides since the last financial crisis as traditional lenders retreated from making riskier loans.

    Investment banks still have exposure, however, as they provide so-called “warehouse lines” to CLO managers that help them build portfolios of loans. Such assets have plummeted in value this month, due to growing doubts over the ability of heavily indebted companies to withstand big hits to the economy.

    The effects in the CLO market have been “a disaster,” said Chris Acito, chief executive of Gapstow Capital Partners, which invests in these vehicles.

    Between March 1 and March 20, the credit ratings of about 140 issuers with loans held in US CLOs were either downgraded or put on notice for possible downgrades — a share representing about 10 per cent of total CLO assets under management.

    “It is quite remarkable to be seeing what is going on right now,” said Mr Acito.

  11. It’s a perfect storm!

    Coronavirus: Oil price collapses to lowest level for 18 years
    30 March 2020

    The price of oil has sunk to levels not seen since 2002 as demand for crude collapses amid the coronavirus pandemic.

    Brent crude fell to $22.58 (£18.19) a barrel at one point on Monday, its lowest level since November 2002.

    Meanwhile the price of US West Texas Intermediate (WTI) fell below $20 a barrel and close to an 18-year low.

    Oil prices have fallen by more than half during the past month as companies cut back or close production.

    In addition to the drop in demand, a price war broke out earlier this month between Saudi Arabia and Russia.

    This began when Saudi Arabia failed to convince Russia to back production cuts that had been agreed with the other members of the Opec oil producers’ group.

    The decision came as refineries around the world are processing less crude oil. Demand for transport has been hammered by grounded airlines and fewer cars on the roads as countries bring in tougher measures to fight the coronavirus outbreak.

  12. On Tuesday, Nationwide – one of the UK’s biggest lenders – effectively pulled out of new deals.

    Others are doing the same as the home mortgage market goes into lockdown amid the coronavirus which has brought the economy to a virtual standstill.

    Nationwide will now only offer home loans to those with 25% equity or more.

  13. As the full effects of the coronavirus are expected to manifest in the country in the next few weeks, auctioneers and real estate agents are desperately trying to dispose of properties worth billions of shillings.

    But there are no takers owing to an already depressed economy.

    This, coming on the back of an equally “bad” 2019, has led to a sharp dip in the property market that experts warn can only get worse.

    What a diffrence a few weeks made previously they trumpeted

    Bubble, what bubble? How Chinese firms are turning profit
    By Macharia Kamau

  14. Malaria medicine ‘Hydroxychloroquine’ being administered to 1,100 COVID19 patients in New York: US President Donald Trump

    PTI|Last Updated: Mar 30, 2020, 12.44 PM IST

    Malaria medicine ‘Hydroxychloroquine’ is being administered to 1,100 coronavirus patients in New York, President Donald Trump has said, exuding confidence that the drug, touted as a “game-changer” by him, might give some incredible results in the fight against the disease that has infected over 140,000 people in the country.

    Read more at:

    1. Just knowing it is ripping the heart out of real journalists having to report this makes me smile.

      “a few, small anecdotal studies showing a possible benefit”

      6 out of 6 and 79 out of 80 not to mention the interviews on our local news of a guy who begged for it after he said goodbye to his family and got a message from a friend about it. He didn’t die lst week and now he is home and doing interviews.

      FDA authorizes widespread use of unproven drugs to treat coronavirus, saying possible benefit outweighs risk

      By Christopher Rowland
      March 30, 2020 at 4:14 p.m. EDT

      The Food and Drug Administration has given emergency approval to a Trump administration plan to distribute millions of doses of anti-malarial drugs to hospitals across the country, saying it is worth the risk of trying unproven treatments to slow the progression of the disease caused by the novel coronavirus in seriously ill patients.

      There have been only a few, small anecdotal studies showing a possible benefit of the drugs, hydroxychloroquine and chloroquine, to relieve the acute respiratory symptoms of covid-19 and clear the virus from infected patients.

      1. Coronavirus patient says hydroxychloroquine saved his life

        Giardinieri, 52, says the reason he is still alive is because of the drug hydroxychloroquine, an old anti-malaria medicine.

        The south Florida businessman says he nearly passed out walking into Memorial Regional Hospital and was eventually diagnosed with coronavirus and pneumonia.

        Doctors put him on oxygen in the intensive care unit but he says he was still unable to breathe. After more than a week in isolation with it getting harder to breathe, he said his goodbyes to his wife and three children.

        “There’s certain people in the world you can’t check out of without saying goodbye to, and no matter who you are, you are never prepared,” Giardinieri says.

        Then a friend sent him a recent article about hydroxychloroquine.

        After some back and forth with an infectious disease doctor, he was authorized to take the drug.

        “Woke up at exactly 4:45 in the morning with no symptoms, pretty crazy, I woke up looked directly at the clock and it dawned on me, wait a second,I can breathe. I called my wife and my wife said, ‘What is wrong with you?’ and I said, ‘What do you mean?’ and she said, ‘You sound normal. That was a sure sign that something had gone right,” Giardinieri says.

      1. The side effects can be unpleasant.
        Every drug can have the side effect of “death” in some fraction of its patients, e.g. aspirin. IIRC millions of patients have taken these drugs for much longer periods of time than will be the COVID-19 patients. These drugs have been used for decades. Side effect incidence will probably turn out better for COVID-19 patients than most other drugs now being used. YMMV.

        1. These designer medications being advertised during the evening news come with a list of possible side effects that is longer than a fancy condo’s covenants, conditions and restrictions.

          1. a list of possible side effects that is longer I don’t know of any drug that doesn’t have a very long list of possible side effects. However, some drugs like aspirin have been taken by so many people for so many decades, that the vast majority of the population feels confident that the next dose of aspiring they take will more likely help than hurt. Hydroxychloroquine & chloroquin have been taken by vast numbers of people for decades for prevention & treatment of malaria. The vast majority survived & did well. That can’t be said for the really new drugs, yet.

    1. Published today 9:00am EDT:

      “Home prices were seeing even bigger gains in January than all of last year, but that was before the coronavirus hit the U.S., shutting down much of the economy and the housing market. Now there are forecasts that home values will weaken significantly.”

      This article predicts a “peak-to-trough fall in prices of around 4% by early 2021” LOLZ.

      Realtors are liars.

    1. I’ll be surprised if the tape isn’t painted green by daze end on the last day of a bad quarter.

      1. Its being painted as I type. Remember they have UNLIMITED ammo and are openly admitting to stawk market purchases.

        1. The day is young, and the indices are in the red again.

          That said, my unvested RSU’s are currently down 5% YTD. They were down about 25% not too long ago. The next batch vests late June. Who knows what they will be worth then.

    2. the Chinese factory rebound

      Which happened while they were still in lockdown. Those guys are amazing!

  15. “A group of Whole Foods workers is calling for employees of the Amazon-owned grocery chain to stage a “sickout” Tuesday to protest working conditions at stores amid the ongoing coronavirus pandemic.

    The group, Whole Worker, has asked that Whole Foods enact several changes to its employment policies in order to protect workers, including guaranteed paid leave for employees who want to self-isolate, hazard pay that doubles typical wages and health care benefits for part-time workers. Additionally, the activists want Whole Foods to immediately shutter any store where an employee has tested positive for COVID-19, the illness caused by coronavirus.”

    Jeff Bezos, the CEO of Amazon, also owns the Washington Post.

    The Washington Post is neo-liberal, globalist trash. After all of the corona caca goes away, the Post will resume its unwavering stance of #MuhRussia and sending your sons to die in Middle East wars.

    1. I thanked the checkout lady at my grocery store for coming to work for my benefit. She was appreciative and also said she was one of the lucky people who still had a job.

    1. It’s illegal for the 0.1% to loose money in USA.

      America isn’t a country, it’s a game.

    1. Re-election for Generation Greed politicians? Perhaps they want to at least pretend to leave a little behind.

      But free money tends to be wasted, especially here in New York City. NYC got a lot of infrastructure rebuilding money after 9/11, but it didn’t get a lot of infrastructure.

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