Billionaire investor Wilbur L. Ross Jr. (pictured left), said the U.S. is in the beginning of a "huge crash in commercial real estate." "All of the components of real estate value are going in the wrong direction simultaneously," said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. "Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up." U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody's/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody's Investors Service said Oct. 19. Billionaire George Soros, speaking today at a lecture organized by the Central European University in Budapest, said a "bloodletting" may be coming for leveraged buyouts and commercial real estate. "The American consumer will no longer be able to serve as the motor for the world economy," said Soros, 79. His comments came in the same week that Capmark Financial Group Inc. filed for Chapter 11 bankruptcy protection after originating $60 billion in commercial property loans in 2006 and 2007. - Bloomberg
Dominant Social Theme: Another shoe to drop.
Free-Market Analysis: The trouble with Western-style economies is that they are not totalitarian. (Former President George Bush supposedly once mourned it was too bad that he wasn't an emperor or a king, as ruling would have been a good deal easier.) In any event, the totalitarian model does not work very well, and the monetary elite knows it. That is why they avoid it. Or, as in the case of the above news item, bad news is trickled out on a per-piece basis to ensure that the news is reported, while maintaining the appropriate dominant social theme, which in this case is that an economic recovery is underway. Bloomberg and other players, of course, in no way wish to be accused of "talking down the economy."
There are likely only a few families, wealthy individuals and institutions manufacturing dominant social themes and helping control the world's central banks and larger monetary and political/military establishment. If these entities were perceived as directly in charge, they would be targets for a good deal of anger, especially in bad times. Even with their low profile, of course, they already are. So the chances are that those involved want NOTHING to do with a system that would put them directly in charge, or even one that smacks of "bossism." Ideally, the best system to use to control large groups of people is perhaps a democratic one - where people think they are in charge, in some sense, though they are not.
Democratic systems are exceptionally easy to manipulate by the wealthy because they operate on a winner take all basis. One of the reasons that the US federal-republican system has proven resistant to the most Draconian monetary-elite sponsored memes (the endless attempts at gun bans comes to mind) is because power is still diffused and America remains at heart a (fractured) republic rather than a full-fledged Democracy,
Really good propaganda works through "sounds of silence." It is relatively easy to prove a lie. It is much less easy to prove that one is lying if he or she remains silent. In the above excerpted article we can see how propaganda - from our point of view - is pursued in the West by subtraction not addition. We have written, for instance, about the twin dangers of a commercial banking crash and a derivatives debacle. We believe that both of these dangers are very real, and that they are interlinked. However, Western media, especially American media, has recently been filled with articles reporting on the supposed recovery. By simply avoiding any mention of inherent dangers in commercial real estate or derivatives - or trickling it out piece by piece - the pretense can be maintained that the wise men running central banks have actually succeeded in turning the ship of the global economy around.
It is truly breathtaking to watch, if one tends to believe that dominant social themes are manufactured and utilized every day by those who have the wherewithal to present them. Central bank monetary stimulation at this late date CANNOT create any kind of sustainable recovery. You would never know this of course. The entire mainstream media complex in America and Europe is deluged with commentary about central banking decisions and the degree to which (not whether) they are working.
For our part, we don't believe there is a real recovery because the Western economic system is still evidently bleeding jobs. If an economy loses jobs, then other economic areas bleed as well. Businesses tend not to do well, which is why those "in the know" now predict a commercial real estate crash, in America anyway. It is simply because the numbers are no good. If there were a recovery, there would also start to be a commercial real-estate recovery. We think most of the numbers proclaiming that America - and Europe - are beating the latest downturn are just massaged statistics.
Conclusion: We don't think this supposed economic recovery is any realer than global warming. There is much more unwinding to come. Much of it will not be covered by the mainstream media, which will instead focus on stock market averages, "inflation" numbers and productivity gains that can be managed from a statistical point of view. But the bottom line is jobs, and jobs are not going to return for a long time because it will take an equally long time for the world's economy to purge itself of inefficient businesses that continue to be propped up by bankers' tremendous monetary stimulation. Watch the prices of gold and silver. So long as they are rising, there is no real fiat-money recovery (reflatIon) to be had. We think prices will rise for at least three-to-five more years. This is a very tough economic slough and the Keynesian monetary practices that have been applied have made it infinitely worse. It is not over yet. Not at all.
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