Invisible Counter Party Risk
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The Wall Street Journal finally reported on something that investors and lenders have known for more than nine months.\\xa0
\\nThe rapid rise in interest rates has created a structural problem for commercial real estate.\\xa0
\\nThe issue goes far beyond the headline that nearly $1.5T in commercial real estate debt is vulnerable to default in the next three years.\\xa0
\\nThe punch line of the article is that lenders are prone to foreclosing on these loans because the issues with office occupancy are not likely to be resolved anytime soon.\\xa0
\\nUnfortunately the simplified reporting completely neglects the fact that the lender is not some rich dude who can withstand the loss with no consequences to everyday citizens.\\xa0
\\nThe counter party risk that was present in 2008 is still present today.\\xa0
\\nWhy is that?
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