Built It, But They Didn't Come.

[Neubarth]

The collapse of the economic venture in Dubai is well known. They built the islands and the homes and the tall buildings and some foolishly rich people bought. Sadly, most of the properties did not sell and the homes and building are sitting vacant. Dubai is in technical default on some fifty Billion in debt. The investors in the United States will see that sad reality today. Oh Boy What A Mess!

Ditto the commercial property in the United States. We built it and they did not come. When I am at home, I live in an eight bedroom monstrosity in San Diego close to Sorrento Valley (Our Southern California version of Silicon Valley). For miles to the left of me and miles to the right of me there are vacant buildings that are for sale and/or rent. They are being repossessed by the banks left and right, but the banks now realize that the empty buildings are worth thirty to forty cents on the dollar. Just like residential real estate, all of the medium to smaller banks that do commercial real estate business in southern California are technically bankrupt, but they are carrying these non performing assets on their ledgers at supposedly full value.

Soon the FDIC will have to foreclose on these banks and tell them the jig is up. Time to start over. Might as well get used to it as we will be in this Depression for many a year.

 

[The Rabbi]

Empty commercial buildings have negative worth. Their value is based on cash flow. Since cash flow is negative (maintenance, taxes and insurance don't go away), value is negative as well.
I suspect Dubai will be the trigger for a big downturn in the market.

 

[editec]

They took on grandiose long term projects based on the windfall profits they were enjoying thanks to the high price of oil.

What they apparently didn't count on, was their windfall profits were at least in part responsible for the economic collapse of the US economy, which in turn brought down economic activity all over the world

Thus their grand scheme to create the haven for the world's billionaires no longer makes much sense since those billionaires are worried about becoming (gasp!) mere millionaires.

Poor them, huh?

Of course, their defaulting debts have rattled the confidence of markets around the world, so poor us, too.

 

[California Girl]

Can anybody say 'double dip'?

 

[Neubarth]

Can anybody say 'double dip'?

In actuality, the economy never improved. We are just continuing our slide, faster some days and slower on others.

All Bernanke and Geitner managed to do with all that federal money was create an illusion that the economy was improving. They were all minor fish flops on the dock.

The reality is that this Service Sector economy is continuing to slowly fall apart, just like the house of cards I constantly make an analogy of.

 

[xotoxi]

Newbirth...your sig pic is monstrously big.

Shrink its height, por favor.

 

[California Girl]

Can anybody say 'double dip'?

In actuality, the economy never improved. We are just continuing our slide, faster some days and slower on others.

All Bernanke and Geitner managed to do with all that federal money was create an illusion that the economy was improving. They were all minor fish flops on the dock.

The reality is that this Service Sector economy is continuing to slowly fall apart, just like the house of cards I constantly make an analogy of.

Yeap, you're right. It's a smoke and mirrors game at the moment.