CREs in Trouble

If we are to believe the people smoking and inhaling green shoots, then things are improving and even less bad is now good.
Hhm, then riddle me this.

A post on Big Picture points  us to a story, which originally ran on the NYT, displaying some nice charts on the state of bank loans.

Banks Loans

Banks Loans charts on NYT

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Green shoots not so green anymore

Now, as we have feared, after the market has been pushed up artificially to allow the big banks to acquire some capital by issuing shares – and in some cases senior bonds – the bad news are doled out by the same group of people who have been hyping about the green shoots.

According to the telegraph, it seems that the IMF thinks that UK banks will need more public money and that the budget needs to be tighened. In other words, give more cash to the fat-cats and let the little-people drown. This is precisely the opposite of what needs to be done. Banks don’t need to ‘get credit flowing’ again, there is already too much debt in the system.
So, we say abolish the IMF!

Then there is the CRE market. As both Zero Hedge and Barry Ritholz write today, it is the commercial real estate market that now seems to be in trouble.  This will probably necessitate another round of write-downs on bank’s balance sheets, as they have to write-down, or write-off, the loans, CMBSs, etc. This could also trigger another round of CDS payments (from whom, AIG?). We were afraid that this could be a possibility some time ago and wrote about that here.

And it begins to dawn on some people that the economy is not going to recover as long as people (aka as da konzumeh) do not have money the can spend as is evidenced by this article:

The Standard & Poor’s 500 Index may fall beneath the 12-year low reached on March 9 because consumer spending hasn’t recovered from the longest recession since the 1930s, economist David Rosenberg said.

“We have to get confirmation the March lows are going to hold,” Rosenberg, the chief economist and strategist at Gluskin Sheff & Associates Inc. in Toronto, said in an interview with Bloomberg Television. “The conventional view was the November lows were going to hold. As we found out in the opening weeks of March, no, those lows didn’t hold.”,

Spending will not pick up unless and until people hav jobs that actually pay a living wage, or, as this seems to be a more and more remote possibility in view of the worse-than-expected job losses, are given money for free, which is not as weird an idea as it may appear. We provided an idea some time ago on this blog.

Now, it hasn’t been long from people claiming the market had bottomed out and suddenly we are talking about re-testing the lows – so we aren’t that sure about having the worst behind us, eh?