Summary
Banks are still not performing.
Capital needs to flow more freely
Markets will continue to depress
Analysis
Until banks are required to lend, they will continue to hoard dollars to protect their balance sheets. Unfortunately, the Fed, while bailing them out, did not foresee that the flow of credit issue did not resolve itself with the TARP loans. So far, there seems to be no step 2 being taken, so we are in a bit of a stalemate.
There is the beginning of downward pressure on rents, and house/condo prices continue to decline. I believe that we will not see a bottom until 2011, and I question the data being used to suggest anything but this. The market correction is required in order to return to a market where things such as cap rate and cash flow make sense.
Kenneth Egan consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
