Jim Sinclair’s Commentary
Governments DO NOT default, they reschedule and declare that a solution. Problem solved.
Of course that is BS, but it takes awhile for the market to figure it out.
Morgan Stanley Says Government Defaults Inevitable
By Matthew Brown – Aug 25, 2010 12:10 PM MT
Investors face defaults on government bonds given the burden of aging populations and the difficulty of increasing tax revenue, according to a Morgan Stanley executive director.
“Governments will impose a loss on some of their stakeholders,” Arnaud Mares in the firm’s London office wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” he wrote.
Rather than miss principal and interest payments, governments may choose a “soft” default in which they pay back debts with devalued currencies resulting from faster inflation or force creditors to take lower returns, Mares said in an interview.
Borrowing costs for so-called peripheral euro-region nations from Greece to Ireland surged today, resuming their ascent on concern that governments won’t be able to cut their budget deficits. Standard & Poor’s lowered Ireland’s credit rating yesterday on the rising cost of supporting nationalized banks.
Population trends may be a better predictor of the ability to meet obligations rather than debt as a percentage of gross domestic product, which doesn’t reflect governments’ available revenue and is “backward-looking,” Mares wrote.
Jim Sinclair’s Commentary
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- Housing Market Stress Deepens Irrespective of Wild Reporting
- Durable Goods Orders Almost Flat Despite Aircraft Boost
- Census Payrolls Down 116,000 in August
"No. 318: July Home Sales, Durable Goods Orders "
http://www.shadowstats.com/article/598
Jim Sinclair’s Commentary
The big players always know the real estate loans were non-recourse loans.
You will see large walk-aways voluntarily entered into as this market is more professional than housing.
A few more of the big boys bite the dust and the wave has crested. Down she comes.
Commercial Property Owners Choose to Default
By KRIS HUDSON And A.D. PRUITT
Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans.
Companies such as Macerich Co., Vornado Realty Trust and Simon Property Group Inc. have recently stopped making mortgage payments to put pressure on lenders to restructure debts. In many cases they have walked away, sending keys to properties whose values had fallen far below the mortgage amounts, a process known as "jingle mail." These companies all have piles of cash to make the payments. They are simply opting to default because they believe it makes good business sense.
"We don’t do this lightly," said Robert Taubman, chief executive of Taubman Centers Inc. The luxury-mall owner, with upscale properties such as the Beverly Center in Los Angeles, decided earlier this year to stop covering interest payments on its $135 million mortgage on the Pier Shops at Caesars in Atlantic City, N.J.
Taubman, which estimates the mall is now worth only $52 million, gave it back to its mortgage holder.
