Posts tagged state of the economy
NAI Chief Economist: European Debt Crisis
Nov 3rd
‘Europe’s sovereign debt crises are changing daily, yet are making little progress toward long-term solutions. The only questions are when, how and who will be left holding the bag?’ asks NAI chief economist Dr. Peter Linneman. In his new white paper, Dr. Linneman discusses the potential effects the debt crisis in Europe will have on the commercial real estate industry. The following is an excerpt:
Why is it that drops in asset values associated with impaired debt undermine economic activity far more than larger drops in equity values do? For example, during the tech bubble and the subsequent crash, $5 trillion in economic value disappeared over 30 months on the U.S. stock markets. This dwarfs the decline in asset values associated with impaired debt during the financial crisis, which are perhaps $1-2 trillion. Yet the real economy quickly regained its balance even after trillions of dollars were wiped out on the stock market, while far smaller losses via impaired debt have constipated economies across the globe. No clearer example exists than Japan over the past 21 years. And now Europe is following suit.
The reason is that when equity value disappears, it is the end of the story. People feel poorer, pick themselves up, dust themselves off, and focus on recreating value by new productive economic activities. In contrast, when value is destroyed via impaired debt, debt contracts allow participants (think: Europe) to argue endlessly about who will bear the burden, rather than spending their resources moving forward.
Read the entire article here.
If you like what you read, stay tuned to the NAI DESCO website for information on Dr. Linneman’s next webinar.
NAI Chief Economist: Beware of Inflation
May 12th
As inflation takes hold, generations that have never witnessed inflation will experience its destructive power, says NAI chief economist Dr. Peter Linneman. In his new white paper, Dr. Linneman discusses the potential effects inflation will have on the commercial real estate industry. The following is an excerpt:
No one deserves less forecasting credibility than the Fed. Over the last two decades, their macroeconomic forecasts have been among the poorest of any forecasters, despite the fact that they are the only forecasters who know macro policy decisions before they are announced. The Fed’s abysmal forecasting record makes our record look extraordinary, as at least we forecasted a 2009 recession in early 2006. Even as the recession was well under way, the Fed was saying there was no recession. Yet the Fed’s forecasts continue to gain respect.
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NAI Chief Economist: A Disastrous Decade
Dec 7th
Remember just 
10 years ago when we were worried about the Y2K bug, when a stamp cost $0.33 and when our budget had a surplus of $200+ billion? In his new whitepaper, NAI chief economist Dr. Peter Linneman discusses the factors that enabled a decade that began with a roaring start to come to a punishing conclusion. The following is an excerpt:
What a difference a decade makes. It was just 10 years ago that:
- panic was rampant about the Y2K bug;
- the Nasdaq closed at 5,048.62, its highest point before the dot-com bust;
- AOL bought Time Warner for $162 billion;
- Vladimir Putin took charge of Russia;
- Bill Gates stepped down as Microsoft’s CEO;
- Elian Gonzalez (who?) was on the front page of every newspaper;
- Vermont approved gay unions; and
- the Bush vs. Gore election was too close to call.
