Simple Idea:
When the economy is doing poorly and in a recession, people start saving money rather than spending money. Businesses, therefore, don’t make as much money as they predicted based on ideal economic scenarios and don’t have money for budgeted expenses. The companies can’t pay certain bills and some eventually default on loans and either has to raise new capital or close their doors. Commercial real estate hasn’t gotten near enough attention on the dire situation it’s in. When commercial real estate is slowly realized to be in more trouble than originally thought, institutions with exposure to commercial real estate will feel the effects.
MetLife has billions of dollars in commercial real estate and will be in a terrible position when the next bubble bursts.
$31.0 (07/20/09)
