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There’s A Lot Of People In The Property Industry Who Are Burying Their Heads In The Sand

It’s Friday desk clearing time for this blogger. “Almost one-third of households, 32%, owed money for missed rent or mortgage payments from previous months at the beginning of August, according to Apartment List. It is best to give your landlord at least a partial payment if you can. ‘Remember that your landlord needs income too, so approach this with empathy for what you’re asking,’ says Kelley Long, financial planner and member of the American Institute of CPAs.”

“Landlords can hold on to their properties for only so long without rental income, said Deb Carlton, executive vice president with the California Apartment Assn. ‘If reporters want to say there’s a wave of evictions coming, they should also say there’s a wave of foreclosures coming,’ Carlton said.”

“San Francisco’s largest landlord, Veritas, will forgive 50% of missed rent from April through July, the company announced. While Veritas’ rent forgiveness may seem generous, Alexander Quinn from JLL said the company has less leverage in these negotiations due to San Francisco’s eviction moratorium. ‘It may take time to recoup revenue,’ Quinn said, since Veritas cannot simply evict its tenants and find new ones. Asking tenants to agree to rental plans may, therefore, be one of its only options. ‘If their revenue isn’t realized, they can’t pay their mortgage,’ Quinn said.”

“Port Charlotte homeowner Susan McLean and her husband were grappling with a foreclosure case before COVID-19, when the moratorium drove all eviction and foreclosure proceedings to a halt. Now their case is moving forward once more. McLean’s attorney, Ryan Torrens hopes the governor and other stakeholders will soon land on a more long-term solution for Florida’s current housing crisis. ‘You can’t have lenders not getting paid any money forever, you can’t have landlords never collecting rent when they have their own mortgage obligations,’ Torrens said. ‘You can’t have homeowners getting kicked out of their house when they’re losing their jobs.'”

“Among Equiem’s clients, building occupancy in May remained extremely low; 72 percent of office buildings had less than 10 percent occupancy, while 17 percent reported occupancy between 10 to 20 percent. ‘Manhattan is once again ground zero in terms of residents fleeing the city and leaving those who remain in fear,’ said Adelaide Polsinelli, an investment sales broker with Compass, who blames the exodus on ‘poor leadership.”

“New York’s mom-and-pop property owners are in a state of crisis. ‘We’re being eaten alive,’ said Lincoln Eccles, a small property owner and second-generation Jamaican immigrant in Crown Heights.”

“Tenants in Scarborough accused Doug Ford of betraying them during the pandemic and called on the Ontario premier to stop a coming wave of ‘COVID evictions.’ Landlords, however, had a demonstration of their own. Arjumand Shafique, said his tenant in Clarington hasn’t paid rent since last June, and he’s about to lose his house as a result. ‘I have never felt this helpless in my entire life’ he said. Another, Linda Shao, said a tenant refused, starting in February, to pay rent on Shao’s Markham condo, and won’t leave. For a while, Shao said, she became homeless because she had no other home or income source in Canada.”

“Housing experts say the coronavirus crisis has led to a slump in the number of expats arriving in the Netherlands, forcing landlords to adjust their strategies. The ranks of rental properties have also been swollen by the collapse of the Airbnb market during the coronavirus lockdown. ‘Expats rent predominantly in the top segment,’ said Jasper de Groot, director of rental housing platform Pararius. ‘If the expats stay away, the properties are unoccupied. Expat properties are then advertised for a lower rent to prevent them standing empty.’”

“We’re seeing an excess amount of vacant properties. Tenants have either: been evicted, had to move out due to affordability, or, in the case of Airbnbs, are vacant due to a lack of tourism. This is particularly evident in Cape Town, our major tourism hub.”

“New Zealand rent prices recently dropped for the first time in a decade, leading some property experts to blame Airbnb owners for the drop. House prices could also be pushed down should investors view an influx of new rentals on to the market as lessening their returns from buying new properties.”

“Mark Bainey, chief executive of Sydney-based developer Capio Property Group, says the market as a whole is weaker than the numbers show and things could get worse for the sector. ‘There’s currently a lot of support from the governments and the banks, so the weakness in the market is being hidden or masked by all these stimuli,’ Mr Bainey said. ‘There’s a lot of people in the property industry who are burying their heads in the sand. They’re not up to speed with the true reality of how seriously the mortgage repayment holidays are going to impact the marketplace. Without a doubt, the worst is yet to come.'”

“The Johor market has always been plagued with unsold units and property overhang, but it remains a robust market with decent price appreciation over the years, Johor Bahru-based consulting firm, KGV International Property Consultants executive director Samuel Tan told Property Advisor. What effect will this glut have on the state and what can be done to resolve it? ‘To alleviate the problem, it would be best to reset the selling prices of the unsold properties to reflect the current market.'”

“The prices of pre-owned homes in Hong Kong have come off their 10-month peak in June, forcing some desperate sellers to unload their lived-in property at losses. The shift in focus among property buyers and investors in Hong Kong, the most expensive urban centre for 10 consecutive years, may offer some relief to the developers amid an increasing glut of who still have between 3,000 and 4,0000 apartments in the pipeline to launch this year in a market that is mired in its worst recession on record.”

“A flat measuring 508 sq ft at Harbour Pinnacle in Tsim Sha Tsui sold last week for HK$12.3 million, making a loss of HK$3.3 million after taxes and fees were added. Another flat measuring 737 sq ft flat at Parc Oasis in Kowloon Tong sold for HK$15.2 million, for a loss of HK$3.07 million inclusive of taxes and fees because the owner was in a rush to emigrate from Hong Kong. ‘As more owners offer more discounts, there will be … pressure on property prices,’ said Sammy Po, chief executive of residential division at Midland Realty.

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This Post Has 101 Comments

      1. Doorknob cameras in my neighborhood have captured a recent spate of realtors lying to people. I’m thinking about forming a neighborhood watch armed with Tasers, shock prods, and rotten fruit to encourage them to cease and desist.

    2. If you’re overwhelmed by crater and need to choose what to include, could you post more middle-class crater? Things like $400K houses dropping to $350K, or 2-bed condos in smaller cities. I think we got the hang of Mansion-Global-style Miami condos and party house crater. (although I admit I like seeing the crater of the rich and famous.)

      And yesterday you were talking about how bad everything was getting, I guess on the commercial construction loan side. How is this going to affect little people like me? Am I going to pay for housing the homeless in all this new luxury junk? Or all those people who want to “abolish rent?”

      1. “How is this going to affect little people like me?”

        Everybody pays for bailouts in ways that economists seldom acknowledge.

        1. “Everybody pays”

          Speak for yourself. Income can be earned that is not tied to a W-2 or 1099 that is sent to the IRS 8)

          P.S. Debt is slavery.

          1. I was mainly talking about the inflation tax. I suppose there are asset allocation strategies to mitigate that.

          2. Inflation mitigation: Houses (more accurately, the land it sits on), farmland, PMs. I suppose mineral and water rights too.

          3. That’s all fine if your timing is good. However, once there’s a whiff of inflation in the air, it may well be to late. If everyone expects inflation, and tries to buy a house or five to mitigate, you may soon have in place the seeds of an unsustainable asset price bubble with a future crash priced in.

          4. an unsustainable asset price bubble

            We just did that. Something entirely different is baked in the cake.

            Buckle up.

      2. Try following your local area – I have several Redfin searches setup that I check, unscientifically, every few days.

        I’d say that I’m seeing:
        — Growing inventory of lower priced houses/condos
        — Slowly lowering price/sq ft
        — Longer days on market (but many homes are still selling in 2-3 weeks)
        — Inventory is about the same (not exploding like SF)
        — Sales are up a bit from the previous months (shut down)

  2. ‘Among Equiem’s clients, building occupancy in May remained extremely low; 72 percent of office buildings had less than 10 percent occupancy, while 17 percent reported occupancy between 10 to 20 percent. ‘Manhattan is once again ground zero in terms of residents fleeing the city and leaving those who remain in fear’

    And Hong Kong, most expensive city on the planet, is falling apart too.

    Well they tell me of a pie in the sky
    Waiting for me when I die
    But between the day you’re born and when you die
    They never seem to hear even your cry
    So as sure as the sun will shine
    I’m gonna get my share of what’s mine and then
    The bigger they come
    The harder they fall one and all
    Ooh, the bigger they come
    The harder they fall one and all

    Jimmy Cliff

  3. ‘San Francisco’s largest landlord, Veritas, will forgive 50% of missed rent from April through July, the company announced…‘If their revenue isn’t realized, they can’t pay their mortgage’

    Still no bubble California?

    1. What about the suckers who paid 100% for the last few months? they lose biggly.

      I think that this will turn into a political versio of the hunger games. some folks are already profiting

      1. If one only cares about personal finances, the question becomes whether it’s better to keep paying your rent, or just live rent free as long as the moratorium allows and figure out how to skip back payments and find another place to live when the moratorium ends.

        1. Will not paying the rent eventually bite everyone in the ass when they go to rent another place?

          I thought there was some sort of data clearinghouse on your rental history, much like ChexSystems where if you wrote bad checks in the past, you’ll likely be unable to open a new checking account.

          (does a quick google search) – actually it looks like there are several such databases out there- Landlord Credit Bureau , National Tenant Rating Bureau, The Tenant Registry, etc – though some are for other countries.

          Anyway, if I am landlord after all this clears, and an applicant shows up as having not paid a dime during the moratorium, I would find a way to not approve them and take someone who did manage to pay the rent instead, and I suspect every landlord that could, would also do the same.

          I figure that will happen, and immediately there will be outcry from the rejected to legislate that landlords have to take people with non-paying history.

      2. What about the suckers who paid 100% for the last few months? they lose biggly.

        As a renter who has been dutifully paying all along, I’m wondering the same thing. I don’t live in SF, but I imagine this idea will not stay confined there.

        1. Simon Winchester is an amazing author. I always come away learning a lot and his books are never dull.

        2. Good pull. Nice to have something to spend a little coin on. I burned through most of my reading list so you caught me at a good time.

      2. Universal plot of Jack London stories:

        Man v. Nature; Nature wins.

        The SF earthquake fits right in.

  4. Are stock market HODLers setting themselves up for ginormous losses when the Fed’s Everything Bubble eventually ends in a catastrophic collapse?

    2. The Financial Times
      Coronavirus business update 30 days complimentary
      Capital markets
      Investors say negative real yields are driving the ‘everything rally’
      Concerns start to grow among analysts over the longer-term inflation outlook
      Swaths of the Treasury market are expected to lose money, in real terms, over the next decade
      © FT montage
      Tommy Stubbington and Robin Wigglesworth yesterday

      A collapse in real yields — the return that bond investors can expect once inflation is taken into account — is rippling through global financial markets and driving record rallies in assets from gold to technology stocks, investors say.

      The yield on 10-year inflation-linked US government bonds, known as Tips, sank below minus 1 per cent last week to a historic low, as investors bet that a surge in coronavirus cases would prolong the damage to the world’s biggest economy — and that the Federal Reserve’s efforts to stimulate demand could stir inflationary pressures.

      The deeply negative Tips yield implies that large chunks of the Treasury market are expected to lose investors money, in real terms, over the next decade. Sub-zero real yields have long been a feature of the landscape in Japan, the eurozone, and the UK. But the shift in the US — the last bastion of positive real returns on safe assets — is showing up in all corners of the financial markets.
      …

      1. Real journalists don’t seem to understand how deflation could actually make buying negative yield sovereign debt look like the smart move through the lens of hostory a decade or more down the road.

    3. The consequences of a collapse of the everything bubble would be catastrophic.

      But the consequences of the continuation of the everything bubble already have been catastrophic, for inequality, housing costs, and future investment returns for later-born people saving for retirement.

      Most people don’t get that. This is from Johnny in the Bay Area a few months back.

      https://granolashotgun.com/2019/12/31/the-golden-horseshoe/

      “I had lunch with Sarah’s real estate agent who’s also a family friend. I told her I’ve got cash squirreled away and I’m waiting for the market to correct. This insanity can’t last forever. After the next market crash I’ll buy another modest property – most likely outside the immediate San Francisco zone. She’s heard people say the market will crash for twenty years and instead prices just keep doubling. Even the 2008 bubble pop didn’t affect the city much. The real devastation was out on the fringes in marginal suburbs.”

      “I conceded that it’s possible that things could continue along these lines forever, although it seems unlikely to me that a bubble this obvious and severe could persist. Then I asked her a different question. What if she’s right? What if things do double again? What if a decade from now the average $1.8M condo hits $3.6M? What if the economy performs as expected? What would the side effects be? She made a pained expression. It’s difficult to imagine how society would hold itself together.”

      “Right outside Sarah’s new home are people living in tents and sleeping in doorways. The general understanding is that these folks are wastrels who brought these conditions on to themselves. They’re all lazy alcoholic schizophrenic drug addicts. I’m more nuanced in my interpretation having experienced homelessness myself many years ago. The minimum wage here in San Francisco is $15.59 per hour. That’s before FICA taxes. Take home pay is closer to $10. How many hours a month does a person need to work to afford any kind of legitimate shelter at the prevailing rate? The numbers aren’t remotely compatible. This is a game they can’t win.”

      “These aren’t problems we’re going to solve. Instead we’re going to continue to absorb the consequences of not solving them. Some people will migrate away and find homes and better lives elsewhere. Some people will leverage themselves into some version of the life they want and hope nothing goes wrong. Others will live and die on the streets. The real problem we’re already facing is what happens when the broad middle of the population like my Canadian friend is pushed a bit too hard and decides the established systems no longer have legitimacy. That’s a recipe for revolution. And when Canadians get pissed off it’s game over for the rest of the world.”

      1. “This is a game they can’t win.”

        As Mr.Ben will remind you, the lotto $urvive$!

        Legal $ports betting 🏀🏈⚾ … 🎲🎰 getting bigger

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      3. “The consequences of a collapse of the everything bubble would be catastrophic.”

        Nonsense.

        As a noted economist said so eloquently, “Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.”

        He’s right.

        Helena, MT Housing Prices Crater 16% YOY As Retirement/Vacancy Property Market Takes A Severe Beating

        https://www.zillow.com/east-helena-mt-59635/home-values/

        *Select price from dropdown menu on first chart

      4. Seriously ?

        “And when Canadians get pissed off it’s game over for the rest of the world.”

    4. So far as I know, the FED has never pledged to destroy the currency to save the stock market. So, a “collapse” doesn’t seem all that likely if we’re talking about stock prices. A “currency collapse,” sure.

        1. And therein lies a great mystery. Our perpetual current account deficits should have caused the USD to fall, making exports more competitive and imports more expensive, until our trade got back in balance. Why didn’t it happen?

          One possibility is that the USD’s status as a reserve currency artificially inflates it, benefitting some but also making most of our economy uncompetitive and hollowing it out. It’s no surprise that the country with the other financial center, the UK, also has a perpetual trade imbalance and huge debts.

          The Economist once called this Dutch Disease, but has not identified it as the situation of the U.S. and U.K. But perhaps our status as a reserve currency is the equivalent of an outsized resource-based sector.

          https://www.economist.com/the-economist-explains/2014/11/05/what-dutch-disease-is-and-why-its-bad

  5. “…McLean’s attorney, Ryan Torrens…”

    ‘..You can’t have lenders not getting paid any money forever, you can’t have landlords never collecting rent when they have their own mortgage obligations. You can’t have homeowners getting kicked out of their house when they’re losing their jobs….’”

    That’s right Ryan Torrens, you can’t. It’s called a house of cards.

    Might as well as tell your clients to get comfortable and enjoy the show, because the corner they have painted themselves into is going to take a long, long time to dry.

  6. Lemmie guess your voting record.

    Stupid should hurt…fools will learn no other way.

    “New York’s mom-and-pop property owners are in a state of crisis. ‘We’re being eaten alive,’ said Lincoln Eccles, a small property owner and second-generation Jamaican immigrant in Crown Heights.”

  7. “Landlords, however, had a demonstration of their own. Arjumand Shafique, said his tenant in Clarington hasn’t paid rent since last June, and he’s about to lose his house as a result. ‘I have never felt this helpless in my entire life’ he said. Another, Linda Shao, said a tenant refused, starting in February, to pay rent on Shao’s Markham condo, and won’t leave. For a while, Shao said, she became homeless because she had no other home or income source in Canada.”

    What next? LLM protests* in the streets of Canadian cities?

    * Landlords’ Lives Matter

    2. Arjumand Shafique, said his tenant in Clarington hasn’t paid rent since last June, and he’s about to lose his house as a result. ‘I have never felt this helpless in my entire life’ he said.

      Gosh, I’m starting to think being a real estate speculator/landlord as a path to effortless riches isn’t all it’s cracked up to be.

      1. Gosh, I’m starting to think being a real estate speculator/landlord as a path to effortless riches isn’t all it’s cracked up to be.”

        years ago I was a landlord during the housing crash of the early 1990’s. NEVER AGAIN

  8. The craziness of these “tough” tenant “protection” laws.

    The tenants live rent free.

    The landlord is homeless.

    Why is there no affordable rental property available…?

    “Linda Shao, said a tenant refused, starting in February, to pay rent on Shao’s Markham condo, and won’t leave. For a while, Shao said, she became homeless because she had no other home or income source in Canada.”

    1. If i were a landlord in that position, I’d get someone to “persuade” them to leave. Laws aren’t everything.

  9. ‘If reporters want to say there’s a wave of evictions coming, they should also say there’s a wave of foreclosures coming,’ Carlton said.”

    You expect Real Journalists and globalist propaganda outlets to suddenly start telling the truth, Carlton? That’s adorable.

    1. Did somebody say “Real Journalists?”

      New York Times lead editorial:

      “things could get much worse. In fact, they probably will get much worse unless Republicans get serious about another economic relief package, and do it very soon.

      Democrats offered a plan months ago to maintain benefits, but Republicans can’t even agree among themselves on a counteroffer. Even if an agreement is hammered out — and there’s no sign that this is imminent — it will be weeks before the money is flowing again.”

      Archive dot is link because we don’t give them clicks or revenue:

      http://archive.is/NAecq

      The state of Illinois can go bankrupt, NO GIBS FOR YOU!

      Note also these same Real Journalists report an article published today titled “Leaving New York: How to Choose the Right Suburb” that blames the Bat Soup Flu but conspicuously does not mention crime in New York City.

    2. So between telling people buy now or be priced out forever, we can’t evict people, someone interjects the underpants gnome:

      ‘Following the episode’s release, the underpants gnomes and particularly the business plan lacking a second stage between “Collect underpants” and “Profit”, became widely used by many journalists and business critics as a metaphor for failed, internet bubble-era business plans and ill-planned political goals’

      https://en.wikipedia.org/wiki/Gnomes_(South_Park)

    3. Remember that your landlord needs income too, so approach this with empathy for what you’re asking

      Sob story from WaPo: people are getting COVID-evicted, and “all hedge funds see are dollar signs.” I didn’t bother to read it. But the main idea is that ALL rental housing is owned by a fat-cat nameless corporations. The corporation makes enough profit that they can afford to not collect rent — especially now that they’re getting trillions of Powell-bux. That’s why they feel justified in wanting to abolish rent.

      They don’t seem to be aware of the million of private LLs. Or the millions more who are paying an honest mortgage on a house.

  10. ‘If their revenue isn’t realized, they can’t pay their mortgage,’ Quinn said.”

    Gosh, I sure hope no commercial or residential landlords made over-optimistic assumptions about their projected cash flow when they signed on Mr. Banker’s dotted line for insanely overpriced real estate.

  11. “There’s A Lot Of People In The Property Industry Who Are Burying Their Heads In The Sand”

    – I would further propose that there are also many in CRE with their heads buried in another dark place. 🙂

    – CRE is so screwed, and for so many reasons as documented over the past few years on the HBB: Non-viable/fantasy cap. rates, way overbuilt, riots, CCP virus, bad/corrupt government, “defund” the police, with the last three leading to ppl. fleeing cities. CRE=Cratering Real Estate. There be unintended consequences of cheap credit and easy money from the Fed. A centrally-planned, command-and-control economy doesn’t work, says a history of Socialism. They’re just making the final collapse worse.

    – RRE is doing fine, since the Fed is still pumping, with record low mortgage rates. This is essentially continuing to inflate housing bubble 2.0. A slight problem is again, affordability, but like stawks, must keep house prices inflated. Asset prices are all that matter. /s

    1)
    https://www.marketcrumbs.com/post/homebuyers-step-back-amid-low-mortgage-rates
    Market Crumbs
    16 hours ago [ Aug. 06, 2020]
    Homebuyers Step Back Amid Low Mortgage Rates

    “Mortgage rates in the U.S. continue to fall to record lows. The average contract interest rate for a 30-year fixed-rate mortgage fell to a record low 3.14% last week compared to 3.20% the previous week.”

    “Despite record low rates, potential homebuyers are becoming less active as total mortgage application volume fell 5.1% from the previous week according to the Mortgage Bankers Association’s seasonally adjusted index.”

    “With the average purchase loan amount rising, fears are growing that some first-time homebuyers are getting priced out of the market.”

    “Purchase loan balances continued to climb, which is perhaps a sign that the still-weak job market and tighter credit for government loans are constraining some first-time homebuyers,” MBA forecaster Joel Kan said.

    “Another sign that first-time homebuyers may be stepping back is the average rate for a FHA-backed 30-year fixed-rate mortgage has started to increase. These types of mortgages accounted for 35% of closed sales in June, according to the National Association of Realtors.”

    “It will be interesting to see where the housing market goes from here as a mixture of low rates and inventory, high prices and an uncertain economy all work against each other.”

    2)
    https://www.cnbc.com/2020/08/06/mortgage-rates-hit-another-record-low-but-homes-still-less-affordable.html?__source=twitter%7Cmain
    Real Estate
    Mortgage rates hit another record low, but homes are still less affordable
    Published Thu, Aug 6 2020 1:00 PM EDT | Updated Thu, Aug 6 2020 4:45 PM EDT
    Diana Olick

    “Mortgage rates fell to another record low this week, the eighth record set this year. But home affordability is weakening as the housing shortage, high demand from buyers and rising home prices negate the benefits of lower rates.

    Only 59.6% of new and existing homes sold in the second quarter of this year were considered affordable to families earning an adjust median income of $72,900, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.”

    “The index based its calculations on the national median home price jumping to a record $300,000 from $280,000 and average mortgage rates falling 27 basis points.”

    “While lower mortgage rates certainly give buyers more spending power, they also support higher home prices, and price gains reaccelerated in June after slowing in May, according to CoreLogic.”

    “Even with attractive rates and rising demand, banks have continued to tighten lending standards in July, further restricting available credit. At this pace, tighter lending standards and low inventory will squeeze housing activity and we will see a substantial slowdown in sales in the second half of this year,”

    – Another temporary boost to house prices. Again hitting the affordability ceiling. And yet the Fed must intervene in the markets because it’s good for the economy. /s

    1. ‘RRE is doing fine’

      ‘Almost one-third of households, 32%, owed money for missed rent or mortgage payments from previous months at the beginning of August’

        1. “…32% is that a lot?…”

          And of those remaining what percentage of those folks are just barely scraping by, possibly borrowing money (ie raiding a 401(k)) just to make payments?

          The actual percentage of those standing on the abyss (but cannot be counted with current statistical methods) is certainly much higher than 32%.

      2. ‘RRE is doing fine’

        – Sorry, you’re correct here. RRE is only doing better relative to CRE, but RRE still has it’s own issues.

        – My view: CRE is toast now. Stick a fork in it. RRE is toast longer-term, but is riding a wave of low rates and forbearance for now. RRE is now relying on the conventional, shelter-buyer with a mortgage, since speculation is way down (correct me if I’m wrong here). Low rates are pushing prices up. This is self-limiting. Affordability now declining. Forbearance and fiscal (stimulus) cliff looming. I’ll give it until after the Nov. 3rd elections, and maybe until after the holidays. 2021 should be interesting times for RRE, and willing to wait, since not in the market currently.

        – Bubbles always pop. After 12 years of inflating, it can go on still further, but that only makes the inevitable deflating and crash worse.

        1. everywhere$ eye goe$ … Eye see🔦: 👻 of Mega.malinve$tment$ 👣 👣👤 … (clo$ing.me.eye$.i$.knot.an.option, thee.”this.is.a.gem”.cave is dark, dank & filled with mine$haft$!)

          Malinve$tment$:

          In Austrian business cycle theory, malinvestments are badly allocated business investments, due to artificially low cost of credit and an un$ustainable increa$e in money $upply. Central bank$ are often blamed for cau$ing malinvestments, such as the dot-com bubble and the United States housing bubble l & 2.0+. Austrian economists such as the Swedish central bank’s Nobel Memorial Prize in Economic Sciences laureate F. A. Hayek advocate the idea that malinvestment occurs due to the combination of fractional reserve banking and artificially low interest rates misleading relative price signals which eventually necessitate a corrective contraction—a boom followed by a bust.

          The concept dates back to at least 1867. In 1940, Ludwig von Mises wrote, “The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good busine$$, pro$perity, and up$wing. Its unavoidable aftermath, the readju$tment of condition$ to the real data of the market$, is called cri$i$, $lump, bad busine$$, great rece$$ion, depre$$ion. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overcon$umption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers’ $tone to make it last.”

          2. Always nice to see Mises Austrian biz cycle theory. I wonder what the world would be like if Mises’s writings had been part of the avergage college Econ curricula?

      4. “RRE is doing fine”

        Sure, but due to financial stress the mortgagor is going bald, can no longer get it up and the 180k-mile economy car needs new tires. Oh, and he hasn’t made a mortgage payment since April. It’s like the stars in the night sky…you can still see the light, but they’re already dead.

    2. CRE in a defund the police city . Watching the history channel there’s often a remnant of a major stone city that was stripped by the locals for personal needs.

  12. Stawks are a peculiar shade of green that looks a lot like red, but that would be un-possible as long as the Keynesian fraudsters at the Fed are expanding their balance sheet in banana republic fashion. Expect the PPT to ride to the rescue per normal in the last 30 minutes of the trading day. It simply won’t do to have economic fundamentals influencing market valuations.

    1. Turkey’s lenders should pay attention, they said, noting that the country’s banks and corporates have to roll over $100 billion in debt in the next 12 months, with net external liabilities amounting to around $76 billion and accompanied by “significant currency mismatches” among borrowers.

      As an example, they note that, according to data from the Bank for International Settlements, Turkish banks have $29 billion of dollar-denominated liabilities versus just $18 billion of dollar assets. They also have a shortfall of more than $4.6 billion between euro-denominated assets and liabilities. It’s worse for the nonbank sector, where borrowers have €19 billion in liabilities and just €3.6 billion in assets.

      What happens if Turkish borrowers are unable to keep rolling over their non-performing loans, and PIIGS lenders have to eat those losses (and report them on their balance sheets)?

      Oh dear….

  14. It did occur to me that while the tenants problems get better or worse a month at a time, the landlords are screwed regardless. The reason is that even when they can finally evict the non-paying tenants, who will they then rent to at current prices? Nobody.

    1. Right. But that also means that CMBS and RMBS holders are screwed, because if they foreclose, who will buy from them at the mortgage level and be willing to operate the building?

      That’s the way out — lower rents, lower prices, existing (older, richer, financial sector) asset holders take their losses but future asset holders (young retirement savers) have a chance for a decent return.

      https://larrylittlefield.wordpress.com/2020/07/16/the-coronavirus-and-commercial-real-estate-in-the-long-run-neither-is-the-real-threat-to-new-york/

      2. The young have little hope, so it’s hardly a surprise we have riots and socialist revolutionaries in the streets.

        The old will need to take a financial haircut, or potentially face a much worse outcome. The theory they can eat the young with zero consequences ignores history.

        1. The old will need to take a financial haircut, or potentially face a much worse outcome. The theory they can eat the young with zero consequences ignores history.

          That’s a good point…the old think rule of law makes them invincible no matter what they do. When the fact is their actions create pressures that endanger rule of law.

        2. they can eat the young

          The people consuming others care not your age.

          If the young now want to eat me out of spite, they will have to work for their dinner.

    2. “…who will they then rent to at current prices? Nobody….”

      A scary scenario would be to convert un-rentable units to Section 8.

      Then the Section 8 subsidies would prop up the market?

      1. Section 8 has always been underfunded compared with the large number of low-income renters theoretically eligible.

        What I’m looking for is the same net cost to the tenant, without Section 8.

        Or perhaps they could cut the level of Section 8 subsidy and spread it among more tenants/landlords.

      2. Then the Section 8 subsidies would prop up the market?

        There we go. I was wondering how the Fed could prop it all up. That looks like a possibility…or something equivalent by another name, using borrowed dollars.

  15. Where do day traders and novice investors get their poker chips?

    BookWatch
    Opinion: What investors should do if they think the stock market is in a bubble, according to the folks who wrote the book on bubbles
    Published: Aug. 7, 2020 at 12:47 p.m. ET
    By William Quinn and
    John D. Turner
    Day traders and novice investors have often played an outsized role in inflating bubbles

    Referenced Symbols
    COMP -1.33%
    SHCOMP -0.95%
    AMZN -2.20%
    SPX -0.40%
    Philip Fong/Agence France-Presse/Getty Images

    The coronavirus shutdown has resulted in a resurgence of day trading, particularly on zero-commission apps. But could the entry of large numbers of speculative day traders create a bubble in stocks?

    In our book “Boom and Bust: A Global History of Financial Bubbles,” we document the role played by day traders and other novice investors in driving some of the largest bubbles in history.
    …

  16. Biden says he will not travel to Milwaukee to accept the nomination. He also added, he will not travel to the White House if elected.

    1. He also said, “What’s a White House?”, “Where am I?” and “Have I sniffed your hair before you horse faced pony soldier?”

    1. Seems like it started too fast to have legs…kind of like Wall Street share prices since March.

  18. Some good news to start the weekend, Kanye West will be on the ballot as a presidential candidate in Colorado. Here an excerpt from archive dot is paywall bypass of Forbes article published yesterday:

    “When it was pointed out that he actually can’t win in 2020—that he won’t be on enough ballots to yield 270 electoral votes, and that a write-in campaign isn’t feasible—and thus was serving as a spoiler, West replied: “I’m not going to argue with you. Jesus is King.”

    http://archive.is/0UHAF

    With enough black votes from Pennsylvania, Ohio, Florida, North Carolina, Michigan and Wisconsin, Gropey Joe loses and will hopefully be checked into a long term care facility where he can get the medical treatment that Real Journalists deny he needs.

    1. In 2016, over a million African Americans stayed home instead of voting for Hillary. There’s a reason they’re eyeing Kamala Harris for VP.

      2. There’s a reason they’re eyeing Kamala Harris for VP.

        I think the reason they’re taking so long to make a choice is because they know that many in the AA community dislike her much more than Hillary. It doesn’t help that Joe keeps stomping on his own body parts every time he opens his mouth. They seem determined to snatch defeat from the jaws of victory.

        1. snatch defeat from the jaws of victory

          It’s a good strategy heading into an economic collapse.

  21. Big banks have thrown their weight into the gold price runup, buying for their own accounts. One does wonder what things they whisper to each other. This is not your average guy waking up to the Federal Reserve.

    The price breakout may not be over. Time to be patient before doing a once in a decade or two reallocation.

    1. There’s rampant speculation everywhere. Gold and silver are just the latest to benefit from a price run-up as the speculators pour in.

      1. The Fed is determined to keep prices on the boil, a if fundamentals were priced into stocks, everyone might collectively wake up to the realization that GD2 has arrived. This Moment of Truth would be game over for the efficacy of stimulus.

    1. “This isn’t your world anymore.”

      For being anti-fascists they sure seem to have a lot of totalitarian ideas about who deserves to exist.

  24. Watch Christians Outsmart Dem Governor to Worship God at Walmart

    JOHN NOLTE7
    Aug 2020

    The video below was reportedly recorded by a woman named Nancy Halford, a Walmart employee in North Versailles, Pennsylvania, who stopped what she was doing to join the singing and record the event. The video was originally recorded on June 26, but is just now going viral. The 15 minute video has racked up 1.1 million views.

    https://www.breitbart.com/politics/2020/08/07/nolte-watch-christians-outsmart-dem-governor-to-worship-god-at-walmart/

    1. Reminds me of a story about how some Greek Orthodox priests smuggled bread and wine into Hagia Sophia, a once Orthodox cathedral in Istanbul that was converted into a mosque by Muslim conquerors and held a clandestine liturgy inside the building.

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