Here are some words for thought. . . . . .

This from Elizabeth Warren 


on the looming Commercial Real Estate Crash.    


3000 community banks have their necks 


on the cutting block over this one. 



A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington.

The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.

"There's been an enormous bubble in commercial real estate, and it has to come down," said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog created by Congress to monitor the financial bailout. "There will be significant bankruptcies among developers and significant failures among community banks."

Nearly 3,000 community banks -- 40 percent of the banking system -- have a high proportion of commercial real estate loans relative to their capital, said Warren, whose committee issued a report on commercial real estate last week. "Every dollar they lose in commercial real estate is a dollar they can't use for small businesses," she said. Individuals -- who saw their home values drop in the residential mortgage crisis -- would not feel that kind of loss, but, Warren said, a large-scale failure would "throw sand into the gears of economic recovery."

In Washington, the office vacancy rate stopped ballooning in the fourth quarter of last year for the first time since the first quarter of 2006, according to CoStar, although largely for an unfortunate reason: The space was being filled mainly by office workers hired to handle the plethora of bankruptcy filings and "workouts" of borrowers who need to renegotiate bad debt.

Do the math'

Nationwide, at least $1.4 trillion in commercial real estate debt is expected to roll over during the next three years. Warren said that half of commercial real estate mortgages will be underwater by the beginning of 2011. A fifth of residential mortgages are underwater now, she said.

Unlike residential mortgages, which often can be paid over 30 years, commercial real estate mortgages typically must be paid off or refinanced within five years. Commercial properties mortgaged in 2005, 2006 and 2007, at the height of the boom, are reaching their maturity date. "Do the math on this," Warren said. "This is a significant problem."

My take?  To bail or not to bail, that is the question that tries men's souls.   Or, maybe not.   Ben Bernanke is not likely to bail the little guys out because he is  protecting the big boys.  So all these little small town banks that are holding onto worthless paper on Commercial properties as well as the swell of residential foreclosures coming up,  are in for a disaster of biblical proportions. 

This is just the tip of the iceberg.  If you have been reading my blog for any time at all, you must see that this is not going to end well.  Those who will be hurt the worst this time around will be everyone except the top one percent of society.   The Banksters and the elite, wealthy beyond socio-economic boundaries such as the George Soros' of the world.

Hang onto your hats,  hope to see you on the other side.