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Trader who predicted 2008 financial crisis bets $1.6bn on stock market crash by end of 2023
(www.independent.co.uk)
this post was submitted on 20 Aug 2023
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Economy
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We do have the makings of "2008 redux". The mass exit from office buildings has been in the works for 3 years. It's taken a while for various reasons: It's been propped up financially in some cases. Some buildings have converted to mixed use or multifamily. But it seems the chips are finally starting to fall as commercial defaults are rising.
Seems obvious we are not headed for good times with this. My question is: will anything stop it from being a major economic disaster?
The fact that everyone has been aware of it for 3 years. The decline in corporate properties has been priced in already - many if not most commercial real estate property holders are trading below book value right now.
In 2008 by contrast the way derivatives were rated hid the underlying issues with the mortgages and this made the problem for banks less obvious.
It's also different in who is going to take the hit, and what happens to that hit. Many of the most impacted companies are going to be major global companies who have invested in sprawling campuses. Generally they're not just going to walk away from them, leaving the banks to deal with losses and unsellable properties. I realize there have been instances of this, like in san francisco with that hotel. But It's pretty substantially different. Google can take having their multi billion dollar campus drop in value by 50% without making it anyone else's problem, or really even caring themselves.