Fred Hickey on troubles in commercial real estate

As we all know by now, March brought a new banking crisis, as many banks have huge losses lurking on their balance sheets...  Silicon Valley Bank, Signature Bank and Credit Suisse all collapsed, and depositors were rescued using various means in order to forestall panic...  These regional banks also have huge exposure to the reeling commercial real estate (CRE) market, where vacancies are already nearing 2009 recession levels thanks to overbuilding and the remote work trend - even before a recession hits.  An estimated $1.5 trillion in CRE debt comes due over the next three years.  It's not just banks that are in trouble.  Insurance companies and pension funds have experienced large portfolio losses and some will have trouble meeting obligations.

~ Fred Hickey, The High-Tech Strategist, April 3, 2023

Torsten Sløk on the unfolding banking crisis

I started my career at the IMF.  The first thing you learn is that banking crises normally happen in a bad economy because the banks start losing money on loans to consumers, corporates, and commercial real estate.  What is unusual today is that with the collapse of the 14th-largest and 16th-largest banks [First Republic Bank and Silicon Valley Bank], we have what I describe as a banking crisis in a good economy - and we are about to enter a bad economy.

~ Torsten Sløk, "A Recession Is Brewing. It Will Be Lengthy.," Barron's, May 29, 2023

(Actual interview took place on May 10.)