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How we got here is no mystery. It can all be summed up with one term in the end . Un-sustainability. You could talk about the vicious cycle of credit allowing people to pay more labor hours for products then they normally could so they had to demand more for their labor hour. You could talk about manufacturing moving in to farm land and increasing the cost of living forcing farmers to lust after factory jobs. You could talk about a population boom devaluing labor. You could talk about people switching of a mentality of asking if they can afford a product, to "can I afford the monthly payment." But in the end, it all has to do with issues where invasive species to the economic system were introduced and eventually consumed the market. This truth can be applied to every level of the economic scale. From the family unit to the global economy.
Dwight from West Side
One of your guests gives way too much credit to consumers. Loan applicants typically know little more than what lenders (the experts) tell them. No average Joe can understand all of the paperwork and wording in loan contracts. Mortgage brokers took advantage of millions of people, there's no explaining that away.
I'd like to know where all of the finance experts were while we were in the midst of all of this? Everyone's hindsight seems near perfect, but we're still left with a mess.
Chris, Shaker Heights
The panelists have expressed a relative confidence in the commercial proprety market.
What about REITs? Many REITs, some with a local impact (eg DDR GGP) are facing serious near-term liquidity issues.
Do you think a government bailout or bridge financing is coming for these firms? If not, what are the implications for the these companies and the comercial property market at large (wholesale asset sales or bankruptcies)?
Aaron
Kevin Jacques Boynton D. Murch Chair in Finance, Baldwin-Wallace College
William Mahnic Professor for the Practice of Banking and Finance, Weatherhead School of Management, Case Western Reserve University