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Posts Tagged ‘Bloomberg’

What About Commercial Real Estate

Posted by Larry Doyle on March 16th, 2009 12:31 PM |

On my radio show last evening, I touched on some of the pressing issues facing our economy and, in turn, our markets. These issues include residential housing, municipal finance, automotive, and commercial real estate. While the first three issues seem to get a wealth of very personal and humanistic coverage from the media, the world of commercial real estate seems much more opaque. The site of large office buildings, suburban shopping malls, upscale hotels, warehouses, and apartment complexes do not evoke the level of human emotion involved in a foreclosed home, municipal layoffs, or factory closings. That said, the problems in the commercial real estate industry should generate just as much concern if not more. Why?

These commercial properties are the glue in our entire world of global finance. While the development of the commercial mortgage-backed securities market brought a large amount of liquidity to this sector, the shutdown of that market has just as quickly sucked the oxygen right back out. What has happened as a result? The lack of a transparent market has caused an overwhelming lack of liquidity and as a result properties are not trading. Why? The disparity between perceived value from the buyers’ and sellers’ perspectives is so wide that we could drive that proverbial Mack truck through it. (more…)

Turn That Screw a Little Tighter

Posted by Larry Doyle on March 10th, 2009 6:30 PM |

The screwing that Americans have taken on the development and marketing of the scam known as Auction Rate Preferred Securities (ARPS) continues. I have written at length on how the regulatory body, FINRA, actually owned $650 million in these screwsecurities at calendar year end 2006. I have persistently questioned how a regulatory body could possibly own a security which was knowingly mismarketed. Was FINRA negligent, complicit, or both? Did FINRA liquidate its position prior to the market imploding on all other owners? While many institutional owners of ARPS have been made whole, many retail clients are still left holding the bag.

Well, the screw that is ARPS just got turned another notch tighter. It turns out that the issuers of ARPS (municipalities, hospitals, colleges and universities, et al) are contractually obligated to pay an ongoing underwriting fee to the Wall Street banks despite the fact that these regularly scheduled auctions no longer occur. (more…)

Loan Sharks Not Welcome Here

Posted by Larry Doyle on March 5th, 2009 3:49 PM |

In the midst of this economic turmoil in which many people are increasingly cash constrained, a cottage industry has developed which preys on the most vulnerable in our society. This industry facilitates short term loans in exchange for the borrower’s paycheck or tax refund. 

The companies that participate in this lending should not only be outed but they should also be prosecuted for this activity.

Bloomberg writes how More Americans Turn to Tax Refund Loans to Pay Monthly Bills. With implied rates of interest on these loans from 50% to 500%, this is loan sharking at its worst!!  Where are the Better Business Bureau and Attorney Generals when you really need them?  (more…)

Mo’ Money…

Posted by Larry Doyle on March 3rd, 2009 2:48 PM |

There are a string of events in the market today that all highlight the need for entities to refinance debt and raise capital.  Given the tightness of credit and the onerous terms being exacted within the bond market, many firms are massively capital constrained. These issues are global in nature. From our friends at Bloomberg, I offer the links to a number of these situations. In light of these types of situations, one does not need to be in a hurry to buy stocks.  Additionally, given the demands for capital, I still maintain that rates are headed higher.

I will share with you some of the current problem situations getting serious attention:

1. GE Falls Below $7 on Concern Finance Unit May Need More Capital

2. Corporate Bond Losses Drive Investors ‘to the Bunker’

3. Metlife, Lincoln Sink as U.S. Stock Rout Increases Capital Need

4. German Real Estate Firms Owe Billions, Face Deadlines


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