Gee Ma, can I get another bailout?

I thought we fixed these “problems“.  They even a got a sweet deal.  “Talk to me Goose“.  However, it looks like the taxpayers around the world are going to be picking up the tab, again.  Time for another bailout.  And thanks for that.  If the taxpayers weren’t bailing out the mistakes of the 1%, then we would have to invest in “useless” things like education, health care, infrastructure, our children, and our future.

From ZH:

Seventy-nine percent of the loans packaged into commercial mortgage-backed securities rated by Moody’s that came due in the first quarter weren’t repaid on time, Frankfurt-based analyst Oliver Moldenhauer wrote in a report. The non-payment rate more than doubled from 35 percent in 2009 and reflects “the current weak state of the lending market,” Moldenhauer wrote.

Whoa!!!! And to think everyone is worried about soveriegn debt in Europen. Once all of that rapidly depreciated real estate collapses mortgages that have been leveraged 30x, you’ll really see the meaning of AUSTERITY! I’m trying to make it very clear to you people, you ain’t seen nothing yet!!!

The economic slowdown is hurting landlords of properties from office blocks to car parks and shopping malls across Europe. A total of 38 billion euros ($47 billion) of commercial real estate loans come due this year and next, Moody’s said.

The housing market may see another pounding and soon.  So I guess it’s time for commercial real estate.  I guess we didn’t shovel enough useless shite ideas, that not only didn’t work but had no chance of working, to “fix”/bailout the mistakes of our 1% sociopaths.  Wrong solution.  Who could have predicted this?  Hey can we call them irresponsible dead-beats too, just like was done during the first housing implosion?  What about the banks?  Or are they still the masters of the universe?  For so-called financial experts, they sure do bet on the wrong investments.  Even a bad bookie would know better than this.  But I guess knowing governments across the globe will bail out your mistakes does make you a master of some sort.  Master sociopath?

79%!!!  The non-payment rate more than doubled from 35 percent in 2009.  That’s bad right?  I’m not missing something am I?  And these are commercial properties that are significantly more than private home-owners.  So the cascade affects of 79% would be a little on the ouchie side, … for the 99% that is.

Real estate with mortgages that match or exceed the value of the property — a so-called loan-to-value ratio of 100 percent or higher — suffered defaults in “nearly all” cases in the first quarter, Moody’s said. About a third of borrowers with LTV ratios of up to 80 percent didn’t pay up on time, according to the report.

Keep in mind that the LTV of these properties are safe in the 50-60 LTV range. We’re now discussing 80 to 100+ LTVs. Think about it? Whose going to cough up the missing equity? Quick answer – bank equity investors! More thought out answer – Taxpayers the world over as their hardheaded ass government officials rush in once against to try to bailout banking systems that are too big to be bailed out, leaving what few decent sovereign nation economies left insolvent – once again!!!!

Most of the loans that were repaid were for less than 25 million euros, while just one of the 15 mortgages worth 75 million euros or more was paid on time, Moldenhauer wrote.

Just 1 in 15 mortgages worth 75 million or more were paid on time.  So the other 14?  Yup, that’s a shite-storm just waiting to happen.

So what will the taxpayers be bailing out this time?

As queried many times on this blog, “What do you think, pray tell, happens when the liquidity starved, capital deprived, over leveraged banks fail to roll over all of that underwater EU mortgage debt?” Excerpted from Watch As Near Free Money To Banks Fails To Prevent Nuclear Winter For European CRE:

So, what is the net effect on real estate as thousands of underwater mortgages come up for rollover on depreciating real property?

From: (Please see the pie chart at the site, can’t post it here.  An image is worth a thousand words).

The graphic is a pie chart titled: The Higher Rates Came Just in Time, Nearly 500 billion Euros in CRE debt maturing in the next 3 years alone.

2010-2012 = 49%

2013-2015 = 33.6%

2016-2019 = 17.4%

Oh boy, only 500 billion of European CRE debt maturing in the next three years.  And then even some more after that.  European tax payers, get ready for a surprise, ie. bend over again (which really shouldn’t come as too big a surprise considering they, and us, are still being buggered on a regular basis).  Hey, is this sodomy?  No it’s just the “free” market at work.

Thankfully our 1%ers have their act together, no?

My next post on CRE will show how this is not just a European phenomena. Yes, US REITS will come crashing back to reality as well. Subscribers should pay attention as I ladder puts and shorts into this REIT which we have calculated to fall roughtly 95% in value [my bold] if math comes to the forefront. To date, the price has not broken out of a relatively narrow range, which means the opportunity is still there. I am considering making the research public after it is clear all long terms subscribers have attained positions.


Please note that we independently value REIT portfolios – property by property – with independently sourced rents and expenses to ascertain a truly accurate valuation picture. This is how we called the short on General Growith Properties in 2007, a year before they were downgraded from investment grade status and still buys on them from all the major sell side houses that followed them. I rode GGP down from the $60s to about $8, the shares eventually fell to $1 and change or so. The General Growth Properties short generated returns deep into the three digits… Deep enough to come close to registering a four digit return.

So Reggie Middleton, who wrote this piece, made a lot of money from this very similar situation before, a year in advance of the investment being downgraded.  What really troubles me is that he may be correct in his analysis, as he was before.

[Note: There is more from the piece at ZH, and worth reading.]

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