Here’s the Government Bailout we’ll need to restore economic order

Implications: It’s preposterous to think that our real estate, homebuilding and home lending industries could with government approval in the last ten years have created the losses which threaten to upset the entire financial system of this county in a manner which may eclipse the thirties. 

Analysis: But that appears to be exactly what we have done as the numbers become more transparent.  We each are complicit in this mania, and we will be among the contributors to the bailout which will restore order so that profitable enterprise may proceed.  It appears our government will create a system which will avoid the insolvency of our leading bank and non-bank financial institutions.  This restructuring will come out of the pockets of the citizenry both individual and corporate.   It appears that the securitization process we have been utilizing to fund our project and homeowner needs creates enormous leverage and apocalyptical, cataclysmic, catastrophic losses.  I was going to say that it was obvious that this was so, but in retrospect it was not obvious at all even to those most intimately involved.  We simply didn’t know what we were doing in designing this system even though the greatest brains of the real estate industry, finance, education and government were involved.  We flat out failed miserably.   The latest wisdom seems to be that it is implausible to consider that our $ 3 trillion GNP economy will collapse under this weight.  It seems to these analysts that a shrug of our mighty shoulders will toss off this loss as we move on to the next bubble.  But we don’t know this as we don’t know how much we have created in losses and won’t have a final reckoning for some time.  So we’re just in the position of crossing our fingers and keeping on keeping on as long as we’re solvent until we can calculate what’s left.  Keeping solvent in a period of questionable borrower quality may not be as quietly predictable as we’re used to in this time of unpredictable collections.  So our silk stocking industries and attitudes may change to a street fighter’s demeanor as we amp up the blood pressure to stay afloat.   So what does this mean in terms of real estate values and analysis as we look for opportunity in the coming market?  Just that you better be sure that you’re buying at the bottom for those properties that have a chance of being or remaining viable and not buying those that have no chance.  More and more you will see opportunities to acquire properties which can not be developed or operated successfully, so throw aside your pride and change your game when your gut tells you so.  Rethink every element of real estate finance as you review your assumptions of feasibility.