The Great Recession Coming

Implications: It appears that we have been doing nothing economically during the current administration except gorging in a huge consumption and speculative binge and conducting war in the Middle East.  The subject article proposes that we will pay for this during the next administration and beyond as we rebuild the financial system of the United States.

Analysis: The impact here whether to the homebuilding arena or the commercial real estate sector is that transactions will come with more restrictive terms in a much quieter market.  The point taken in the reference material is that the government has already taken its best shots and we’re just in the opening minutes of the 1st quarter.  Certainly the band-aids supplied by the 13 or so sovereign wealth funds will limit their further exposure.  My take is that those that have already spent their money have done so at a price point that will prove to be considerably above the bottom yet to arrive.  The equation I see is more restrictive terms plus quieter activity will equal price declines way off this market level.  
An argument to be raised against this position is that consumer confidence will recover, foreign investment will jet-drive our investments and off-shore capital will revitalize our financial capacity.  Consider, though, that the U.S. represents 25% of the world’s GDP directly and influences the balance.  Every other economy and government system whether capitalistic or socialistic gains its impetus and leadership here.  The conclusion I come to is that U.S. activity will be way off and pricing levels will fall a ton in the near and mid-term as a result.  Can’t say I like it but that’s the way I’m thinking it will be.