Free Falling, No Easy Way Out?
El-Arian of PIMCO thinks to prevent a housing price collapse, either overnment must intervene or the mortgage contracts have to be altered. “There is no better alternative”, he said in a CNBC interview (watch below). Boy, that’s frightening! But I was more frightened by how a capitalist at such high level ditches market-based solutions so easily.
The next shoe to drop: commercial real estate
According to Wall Street Journal, Goldman analyst expects 1st quarter write-downs of investment banks in their exposure to commercial real estate would reach $7.2 billion. They hold a total of $141 billion at the end of last year. The write-downs will be much bigger if incoming data confirms a deep recession.
![[Chart]](https://s.wsj.net/public/resources/images/MI-AP321_CMBS_20080302205614.gif)
spread is rising sharply…
