Commercial Real Estate Crisis Threatens Global Economy
The only "bailout" will be emergency cuts to interest rates and expanded fiscal policy (Q.E.) Still…
Bailouts are a guarantee after the Great Recession - going forward, the large donor class will have…
It's not a question of "will there be bailouts," but instead "who will get the bailouts?" Will it be the building owners, or will it be the banks who made the loans?
I believe you could make a rational argument that the issues that caused the commercial real estate devaluation and credit shortage were both caused by the federal government to some extent. Buildings lost value when the government mandated remote work which emptied the buildings, which killed the retail and restaurant operators who depended on these workers. Private enterprise did not crash that model?
Likewise, the banks have had to deal with new liquidity requirements and a cost of funds increase they did not create.
Face it, just like the 2008 housing crisis, the federal government has its fingerprints all over this. The only solution going forward is to get as much government out of the real estate industry as possible. But as long as NIMBYs and environmentalists keep giving government to the power to corrupt the industry, it will only get worse.
Short term solution: Instead of a bailout, create federal insurance to backstop the DSCR shortage to rebalance the loans.
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