Authored by Charles Hugh Smith via OfTwoMinds blog,
What will it take to radically reduce the cost basis of our economy?
If we had to choose one "big picture" reason why the vast majority of households are losing ground, it would either be the stagnation of income or the spiraling out of control cost basis of our economy, that is, the essential foundational expenses of households, government and enterprise.
Back in April/May, Canada's biggest mortgage lender, Home Capital Group, crashed its way into the headlines, coming clean over its balance sheet-full of liar loans, suffered a bank run, and was forced to take emergency liquidty from taxpaying pensioners, and was eventually bailed out by good old Warren Buffett.
"Probably nothing..."
Well just when everyone though that crisis was over, a second cockroach in the Canadian mortgage bubble fiasco just emerged...
2014 and early 2015 was a great time for then 30-something Nehal Chopra, recently named an Institutional Investor Rising Star, the former Tiger Seed's hedge fund Tiger Ratan Capital Management had received a $25 million investment in 2011 from investing legend Julian Robertson himself (subsequently the amount grew to $100 million) and after a series of impressive annual returns, including three straight blockbuster years, gaining 26.3% in 2012, 46.8% in 2013 and 22.3% in 2014. By June 2015, aged only 35, she was running a whopping $1.4 billion.
We've frequently written about the growing supply problem in the major commercial real estate markets across the country (for example: NYC Commercial Real Estate Sales Plunge Over 50% As Owners Lever Up In The Absence Of Buyers). Now it seems that Moody's is also growing somewhat concerned that growing supply, combined with waning demand and bubbly valuations, is a toxic combination for commercial office real estate projects and could result in disastrous consequences for the CMBS market. Here are the highlights from Moody's:
A relatively stable day in energy markets as many other markets turmoiled, but as tonight's data hit, both WTI/RBOB kneejerked lower after API showed massive product inventory builds (despite a big crude draw).
API