The circle is closing

Over the past 24 months I have been working to get informed about the many variables related to real estate, mortgages and controlling financial institutions.

I have also talked to a number of bankers and staff about the business and each has a unique and interesting story that rarely seem to be based on avialable facts, but which does dove tail nicely with business objectives and “we be fine mantra.”

The reality is banks are doing everything they are capable of to remain in business and maintain their balance sheet health.

We have observed over two years the tireless activity on the part of the financial industry holding the line by ballooning hidden shadow inventories and creating new balance sheet columns like holding companies and Sub-performing. These banks have worked so hard and now in 2009 in the final quarter they have run out of time, due to issues beyond their control. Today, there is a wave of new selling activity building and it coming from inside the regulators offices.

100 FDIC member banks have fallen to date (more if you count all banks) and depending on who you listen to there will be another 150 to 200 banks that fail next year. The assets of the fallen are bought by a suitor the regulator has on hand but what they do not tell you is the suitor gets only the assets and almost none of the liabilities. These "assets gone bad" are now the property of the US tax payer.

It is this pool of US assets gone bad that has grown to a size and depth that now exceeds the government ability manage and is expanding beyond the GSe's ability to contain any additional future growth.

The regulators need cash now and of course they can borrow from Uncle Sam and demand advance payments from the industry but simple math based on past performance clearly illustrates the available credit and fees in the industry will not meet the requirements of the government regulators when you factor in the Commercial Foreclosures and associated bank failures to follow.

Now the Banks are no longer in control of their future! Why do I say this, because I seen into this other universe of the Giga Shadow and it already beyond vast. The banks pushed the problems out more than 2 years and in that time enough of them have failed to create a wave of assets outside of their control that will impact their businesses regardless of the actions they have used to hold the line over the past 24 months. So the old tricks will not pay any more.


To raise money is easy all you have to do is lower prices to meet customer demand until market saturation inhibits sales, of course sales can be further made by continuing to lower prices. Banks have fought this tooth and nail but now they have created their own competition.

Uncle Sams regulators need cash, They need 100 billion and just maybe this number will grow to 500 billion. So now they are creating sales platforms that have a One billion buy in. These properties in these program are and will be sold off and the impact will be felt at the Banks as property on the market will be marked to match the resale of some of these properties.

Then the Foreclosed Commercial properties will hit the resale market further depressing prices and forcing Banks to take write downs on the books. What this all means is that bottom in the market is 18 to 24 months out at the earliest.