The S&P Real Estate Index is down 60%. This segment gives a good overview of how commercial real estate is doing and what to expect going forward.

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Recently, I was discussing the economy with a lawyer expert in both commercial real estate and taxation, workouts, and bankruptcy. He made a few statements that I felt relevant enough to pass on here.

Last year, the British economy was one of the hardest hit by the now evident commercial property (CRE) implosion. Prices fell 27.1% in 2008, including a record 5.8% in December alone, suggesting the trend is accelerating. I mentioned in my “Top Ten Predictions for the 2009 global economy” that I believed commercial property writedowns would be numerous because of securitzation. Ireland, the U.K. and the U.S. are tops on the list for a CRE correction. You should note that this trend is very much related to declines in the real economy as retail is where the greatest problems now reside.

As you know from reading my blog, I am expecting a lot of writedowns from regional banks as real estate loans sour.

In fact, I expect a number of bankruptcies because of defaults in commercial real estate where much exposure is hidden. Below is a clip of Bain Slack of Keefe Bruyette & Woods, who has a few words to say about the regionals, especially in the Southwest.

Take a look.

In my most recent post, I gave a fairly comprehensive retrospective of the year that was. Near the end of that post, I listed a number of posts I wrote in Octobr and November which point to how I see 2009 shaping up. Let me give you a more direct assessment here. I will finish it off with my top ten predictions for 2009.

The financial services sector has been the hardest hit sector in the credit crisis so far. Banks with large exposures to mortgage-backed securities like Citigroup, UBS and Merrill Lynch have suffered the most. This is largely because the crisis has been in asset prices — chiefly home prices. However, as credit has become severely restricted, the credit crisis has become a global recession and that means the real economy will be impacted. This spells trouble for JPMorgan Chase.

At this stage in the financial crisis, it is difficult to discern exactly where things are headed. However, let me give a general road map of how I see things shaping up.
The credit crisis started in August 2007 as a result of the dual realization amongst investors and global financial institutions alike that large [...]

This morning Chris Whalen made some comments on CNBC that hit the nail on the head regarding the U.S. banking crisis: there is a huge wave of old-fashioned loan losses coming down the pike. The writedowns we have seen to date are largely confined to tradeable securities that must be marked to market.
There [...]

I named my blog “Credit Writedowns” because I anticipated an historic wave of credit writedowns in the global banking system which would lead to a wave of deleveraging, systemic risk, and bank failures — in short, a massive financial and economic bust to rival the Great Depression.
Up until now I have masked this dire [...]

In case you missed it, the financial system in the U.S. is near collapse. This weekend was unbelievable. Lehman Brothers filed for bankruptcy. The world’s largest insurer AIG is looking for the Fed to help it avoid collapse and Merrill Lynch was forced to close a deal with Bank of America to save [...]