Zaphod Beeblebrox schreef op 7 januari 2023 11:03:
Dit viel vanochtend in mijn inbox. Maar blijf gerust denken dat crypto het probleem is.
Warning Signs in the Property Market
People have invested $69 billion in just one of many real-estate investment funds. Unfortunately, some investors are discovering they can't get out. Here is what Bloomberg reported on December 1:
Blackstone's $69 Billion Real Estate Fund Hits Redemption Limit
Blackstone Inc.'s $69 billion real estate fund for wealthy individuals said it will limit redemption requests, one of the most dramatic signs of a pullback at a top profit driver for the firm and a chilling indicator for the property industry.
BREIT said requests have exceeded the 2% of the net asset value monthly limit and 5% of the quarterly threshold.
The managers are so bullish on property prices that they have put their own money into the fund:
Blackstone's top executives have bet big on the fund. Bloomberg reported last month that President Jon Gray had put $100 million more of his own money in BREIT since July, as had Chief Executive Officer Steve Schwarzman, a person familiar with the matter said at the time.
Do you know what the underlying problem in the property market is? It is that people have been investing in property. The very success of funds like this is the reason they are going to fail. Houses are ultimately consumption items, like food, although they perish at a slower rate. "Investing" in houses causes their prices to rise beyond normal consumption value. When the investing stops, the trend reverses. That's what happened this year. It is early in the downtrend, but if you can't get out, it may as well be later.
Real estate investment trusts have failed spectacularly several times in the past century. It is amazing to me that money managers would risk their own capital in such enterprises.
Warning Signs in Banking
In Conquer the Crash, I recommended an offshore bank with an exceptionally high liquidity ratio.Why did I do that? Here is a hint, from The Wall Street Journal (11/23), of coming problems for undercapitalized banks
Credit Suisse Warns of $1.6 Billion Loss After Clients Pull Money
Group AG warned it would lose around $1.6 billion in the fourth quarter after customers pulled their investments and deposits over concerns about the bank's financial health. Customer outflows come at a precarious time for the bank, which weeks ago launched a sweeping overhaul of its operation
Switzerland'sNo. 2 bank by assets said outflows were around 6% of its total $1.47 trillion assets, or aroun
$88. billion between Sept 3 an Nov. 11. [In six weeks!] Customers in its wealth-management arm--its main business serving the world's rich--removed $66.7 billion from the bank. Credit Suisse in late October said a social-media frenzy around its health was causing large outflows.
The fast pace of withdrawals meant the bank's liquidity fell below some local-level requirements, the bank said. It said it maintained its required group-level liquidity and funding ratios at all times. Banks must keep enough liquid assets on hand to meet expected cash outflows in a 30-day period, under post-financial-crisis-era rules.
Wealth management, the business of managing rich people's money, is Credit Suisse's largest and most important business.
The bank said it is still targeting a capital ratio of at least 13% between 2023 and 2025 as it restructures.
Where is all the pulled-out money going? I'll bet it's going to banks that have much higher liquidity ratios. I don't know about you, but I want my bank to have more than enough cash to handle just 30 days' worth of normal outflows and a capital ratio closer to 50% than 5%-13%.