by mark000
Will there be a European banking crisis which will spread to the US and North America? Will commercial property woes in the US sink regional and big banks?
via pensionpulse:
Nobody really knows what is going on, it feels to me like they’re trying to mask the size of the problem but if rates keep going up — a real possibility — then prepare for something to crack in the commercial real estate market.
We are already seeing cracks appear with news that Barry Sternlicht’s Starwood Capital Group is in default on a $212.5 million mortgage backed by an Atlanta office tower, another sign of mounting distress in US commercial real estate. By the time it’s all over, there will be plenty of more defaults on commercial real estate mortgages, and not just on those taken out to acquire office towers.
And how will this impact North America’s pension funds? Very negatively, some a lot worse than others. You can only fudge the values for so long, at one point, you need to take big writedowns on these assets.
Anyway, prepare for a rough last quarter of the year and rough year ahead, I think this party in risk assets is coming to an abrupt end and contagion risks will clobber risk assets.