Tuesday, August 18, 2009

Remember about optimism and pessimism....

If you are too optimistic, you are probably wrong. I've been there.

If you are too pessimistic, you are also probably wrong. I've been there too.

And yet I have little to dispute with the facts presented on this Fox Business video featuring dirt lawyer Stephen Meister about mezz debt, loan write downs, equity problems, extend and pretend and TARP. You can see the video at Real Property Alpha and Traffic Court. Mr. Meister thinks the tsunami is coming and points out a lot of good evidence supporting his case.

It reminds me of a borrower-lender game of chicken. The process is being delayed, just as it was in the house market, by not writing down these loans.

Saying almost every loan written between 2005 and 2008 will not be able to be refinanced is a bold prediction. And it could happen. But while I do not have the empirical evidence to back it up, I think about the two axioms above and say to myself, let's hope for just a storm surge and that lenders and borrowers can find ways to meet in the middle. Otherwise no amount of government bailout will help. And that fact alone may be enough to prevent a disaster.


CountingSheep said...

I thought the below article was interesting in regard to lenders getting more aggressive in lending.

"Competition in commercial real estate lending is reemerging on the U.S. west coast, possibly marking an early sign that the financing drought that has wreaked havoc with the sector is easing, Citigroup Inc analysts said on Friday."


David Stejkowski said...

Yes, that was also a very good article. And sometimes as the west goes, then so goes the nation.