Daily Archives: April 16, 2009

Second Wave of Bad Economic News is Here

The New York Times is reporting that General Growth Properties, the largest retail mall operator in the country, is declaring bankruptcy, largely because of its inability to refinance its existing mortgage debt.

“Our operational model is sound,” Thomas H. Nolan Jr., the company’s president and chief operating officer, said on a conference call early Thursday morning, citing “the unprecedented disruption in the real estate financing markets and the need to extend maturing debt” as the reason the company filed.

“We made extensive efforts to modify existing maturing debt outside of bankruptcy,” he added.

More and more commercial properties, property owners, and the banks that provided highly aggressive financing based on questionable valuations, are going to find themselves going down this path in the coming months. In my opinion, that is one of the reasons the Obama administration is encouraging banks to keep TARP funds, and otherwise fortify their balance sheets. This is potentially a tsunami compared to what happened in the residential markets. On the other hand, there was not nearly the amount of re-leveraging and re-packaging of these loans into derivatives as there was on the residential side, so the effect may not be as widespread.

We have one more wave to come after this – of credit card defaults. The commercial real estate mortgage market collapse will be a bellwether of whether larger banks will survive. It is both a threat and an opportunity, because commercial real estate assets will be available at once in a lifetime bargain prices, and their owners and the banks that hold the notes will be more likely to bail on the current arrangements than individual homeowners ever could or would be. It’s going to look very strange, but large banks are going to be playing both sides of this market simultaneously. If the private banking industry pulls through this in the coming months, it will easily survive its credit card problems.

Bike Thieves, Pirates and Tea-Baggers

It’s impossible to resist the temptation of getting something for nothing.

New York Times “Spokes” blogger, J. David Goodman, is fatalistic:

Having one’s bike stolen is a part of our collective experience as urban riders.

Commenters to the Spokes blog wonder where the stolen bikes and parts get “fenced.” But I’m relatively convinced that many of them — at least those that don’t end up as part of your local take-out’s fleet — end up lying discarded in gutters and garages, unused, wasted. The rip-off itself is the reward. Someone got something for nothing. Sure, it might be a filthy old bike seat or a cheap rim that needs re-truing. But the price was right. Bring it home and for a day it will take pride of place in your heap of stuff.

 The BBC’s Robyn Hunter reports that our latest media stars, the Somali pirates, don’t think of themselves as thieves, but rather, as heroes and protectors of Somalia’s coastlines:

They don’t call themselves pirates. They call themselves coastguards.

 The lavish lifestyles this new Somali bourgeoisie enjoys is not the point of their activties, supposedly, it is a fringe benefit. There’s something for nothing to be had in the waters of the Strait of Aden and the Indian Ocean. It would be criminal not to exploit it.

Which brings us to our dear friends and neighbors, the Tea-Baggers.

Mike Smart, a 51-year-old oil field worker from West Texas, held up a white handwritten sign that said, “I’ll keep my freedom, my $ and my guns. You keep the change.”

“I just want the government to stay out of my way. I won’t get in their way if they don’t get in mine,” said Smart, who described himself as conservative but not a Republican.

And of course, what do you suppose Mr. Smart has in mind when he says government is “in his way.” Why, that they impose taxes on him.

The late Senator Russell Long had a saying that summarized Americans’ typical attitude towards taxes and tax reform. “Don’t tax me; don’t tax thee;” they’ll say, “tax that fellow behind the tree.” You know that police department that came when my house was robbed? The fire department that kept my place from burning down last year? The public hospital where my wife had the cancer surgery? The public school, the courthouse, the downtown parking garage, the sewer system, the electrical lines, the Interstate Highway System that brought me my latest assault weapon? That’s all just free stuff. Stuff I’m entitled to as an American, like the disability payments I get for that slipped disc. I ain’t payin’ for that. Get out of my way!

Gearing up for tea-bagging, Salt Lake City

Gearing up for tea-bagging, Salt Lake City

With all the maturity and insight of bicycle thieves and pirates, our tea-baggers are sailing out to meet their moment of infamy, secure in their belief that they are not what they seem to be — a bunch of angry white people with a questionable collective grasp of history, politics or economics – but rather, like their pirate brethren, the very guardians of our coasts of freedom. That sidewalk we’re marching on, the park where we’re congregating? God put that there for good, white Americans to use. Just like J*sus, in his Queen’s English, promised us. No gub-mint did that. It’s the American miracle, and we’re here to protect it.

You know, they used to say that all the nuts in America had come loose and rolled off to California. This tea-bagging movement just proves that we’ve still got plenty of nuts to spare, in communities all across the country. And while they remain a distinct minority, they are a sizable minority, and the combination of Second Amendment absolutism, racial animus and inflammatory anti-government rhetoric is a fearful brew which, like the khat that stokes the imaginations and assuages the fears of the young Somali pirates, has great potential for fueling violence and tragedy.

Isn’t it time to go home, cash your tax refund checks, and play with your guns? The grown-ups amongst us are too busy trying to manage a financial crisis to take to the streets to protest that we’re not getting enough for nothing.

Children at St. Louis tea-bag party.

Children at St. Louis tea-bag party.

In the Hamptons, by Dan Rattiner

In the (East) end, mostly gossip.