The IMF, the world’s “central bank,” is fond of instituting “austerity measures” in countries that owe it money. The US Fed is an IMF “writ small.”
From FT Alpha:
The US Fed has taken the concept and implementation of quantitative easing well beyond that utilized by the bank of Japan earlier this decade. … during just the first four months (16 weeks), the US monetary base has soared by 97.2% … That astronomical increase in the US monetary base aside, the qualitative difference between the US’s … US is snapping up a variety of assets including commercial paper, MBS, etc. … By taking on these non-Government assets onto their balance sheet the Fed is helping to distribute credit availability into the broader economy … .
Taking on crap for assets, while also acquiring control and/or direct future ownership of the “means of production” when the suckers can’t pay. Remember, the Fed is not government. It is privately owned by banksters.
And from http://www.tickerforum.org/cgi-ticker/akcs-www?post=76109 :
By LINGLING WEI and JON HILSENRATH
A recent letter sent to Treasury Secretary Henry Paulson, and signed by a dozen real-estate trade groups, painted a bleak scenario: “Right now, we believe there is insufficient systemic capacity to refinance expiring, performing commercial real-estate loans,” said the letter. “For many borrowers, [credit] simply is not available,” the letter noted.
To head off some of the impending pain, the industry is asking to be included in a new $200 billion loan program initially created by the government to salvage the market for car loans, student loans and credit-card debt. This money is intended to go directly to help investors finance purchases of securities backed by these assets. …
The real-estate executives are warning that the approaching surge in commercial mortgages coming due poses another major threat to the global financial system, which already is on life support. With rent prices falling and vacancies rising due to the weakening economy, delinquencies on commercial mortgages already have begun to rise sharply.
Up until now, delinquencies on commercial real-estate loans have stayed below historical levels thanks in part to the limited amount of speculative construction in recent years. But now they’re rising at a time when a huge volume of loans are coming due and some of the few institutions that were still making loans are retreating from the market.
“The credit crisis has got so bad that refinancing of even good loans may be drying up,” says Richard Parkus, head of commercial-mortgage-backed securities research at Deutsche Bank. …
Treasury and Fed officials have said they would consider including commercial real-estate in the new $200 billion loan initiative. But such a step won’t happen soon. The program is not likely to be operational until February. Even then, expanding it to include the immense commercial real estate market would likely require additional financial support from the Treasury.
For now, the Treasury has agreed to backstop the Federal Reserve on as much as $20 billion of losses on the program. That means Treasury will take the first $20 billion of any losses using funds approved by Congress for the $700 billion Troubled Asset Relief Program. …
According to Foresight Analytics, the $530 billion of commercial mortgages that will be maturing between now and 2011 includes loans held by banks, thrifts and insurance companies as well as loans packaged and sold as commercial-mortgage-backed securities — or CMBS.
At the heart of the financing scarcity is the virtual shutdown of the market for CMBS, where Wall Street firms sliced and diced commercial mortgages into bonds. …
While commercial real-estate developers restrained themselves during the boom years when it came to speculative development, property investors bid up the prices of office buildings, malls and other projects to record levels assuming rents and occupancies would keep rising. With cash flows now falling, a growing number of developers are having a tough time repaying their debt. In cases where owners need to sell buildings to satisfy loans, the current environment makes that difficult. …
What’s not clear is how soon the crunch will come. The Real Estate Roundtable, a major industry trade group, predicts that more than $400 billion of commercial mortgages will come due through the end of 2009. Foresight Analytics estimates that $160 billion of commercial mortgages will mature next year. …
This year, some $141 billion worth of commercial real-estate debt owed by property owners and developers to lenders came due, according to Foresight Analytics. … The lion’s share of those loans was made between five and 10 years ago. Despite the recent decline in property values, the underlying buildings were still worth well more than their mortgages and were generating sufficient cash to pay debt service.
But the delinquency rate on payments to mortgage lenders is rising, particularly for properties that were financed at the top of the market. Delinquencies on commercial mortgages jumped to 0.96% in November, up from 0.62% in September.
Some analysts predict the delinquency rate will leap to 2% by the end of next year. During the real-estate collapse of the early 1990s, the worst-performing commercial mortgages — those that were made in 1986 — sustained losses of about 10%.
Icliks Incoming 