One of the last havens of small business - rental property - to be crushed by Wall St
01-30-2014, 09:46 AM
1) I doubt Wall St will tempt fate and drive into securitized assets again quite as quickly. Especially the rating agencies will be far more careful in rating everything triple AAA. In addition, buying up property would be good for the housing market. I can easily see how more rental properties and professional real estate investors could be an improvement over the previous situation where everyone was acting like mini PE investors. More rental properties is good for labor mobility, which we will be needing a lot of the coming decade given the need for economic readjustment.
2) How well capitalized is Wall St these days? In Europe banks are still desperately trying to get ready to meet Basel III requirements, which is costing a lot of money and almost certainly retarding any recovery.
That said, they still have a powerful incentive to create a train-wreck, since the politicians are telling banks to use rating agencies to determine their own capital requirements. This is clearly dangerous. It's like a schoolchild paying the school teacher to grade his home-work assignment, and the child knows with better grades he gets a higher allowance from his parents.
2) How well capitalized is Wall St these days? In Europe banks are still desperately trying to get ready to meet Basel III requirements, which is costing a lot of money and almost certainly retarding any recovery.
That said, they still have a powerful incentive to create a train-wreck, since the politicians are telling banks to use rating agencies to determine their own capital requirements. This is clearly dangerous. It's like a schoolchild paying the school teacher to grade his home-work assignment, and the child knows with better grades he gets a higher allowance from his parents.
A year from now you'll wish you started today