Sometimes satirical news gets the point across better than traditional news. Back in July, a segment on The Daily Show With Jon Stewart featured lines from Fed Chairman Ben Bernanke's bad-news testimony to Congress, run call-and-response style against President Bush's considerably more upbeat and strategically simultaneous speech on the same subject.
‘One is, like, a glass-half-full kinda guy,’ Stewart remarked. ‘And the otherâ�¦ is an expert on the economy.’
Of course, creative splicing of both men's speeches enhanced the dichotomy. But the take-home point is clear: No matter your political persuasion or position of power, if you attempt to deny or minimize an obvious economic problem, you're going to look extremely uninformed and silly – not to mention, insensitive.
That was even several months ago, when glass-half-full was no longer a viable view, and glass-quarter-full was losing standing, too.
Now, that metaphorical glass that represents the economy is not only empty, but dropped to the floor, shattered into five billion pieces, and probably about to violently slash the heels of anyone who steps near it.
But you knew that. What you may have missed, on the other hand, is the numerous tiny glimmers of good news in recent weeks. These findings, opinions and announcements will not cancel out all the negative news, but they are genuinely positive headlines from the mortgage industry and the larger economy nonetheless.
To start, we can always take a look at many of the conditions in the commercial mortgage industry – where there are challenges, to be sure (conduit lending, anyone?) and every other news article seems to ponder whether this industry is the next to fall.
But loan delinquency is extremely low, we never really needed to call the Poison Control Center over the underlying contents of commercial mortgage-backed securities, and claiming strong property fundamentals is still not completely outlandish for many sectors and regions.
For instance, just last week, a surprisingly upbeat report arrived from CB Richard Ellis (CBRE) on the fundamentals of the industrial market in New Jersey – an undoubtedly core industrial market for the U.S.
‘Even with all the bad news in the credit, capital and stock markets, the sale activity in New Jersey's industrial market continues to perform, with limited sale availabilities, strong competition for the same product and the flight to quality stabilizing prices,’ William Waxman, senior vice president of CBRE, remarked in the report.
‘Despite the uncertain future of the economy, we expect local and foreign-owned user/occupiers to continue purchasing industrial property in this market,’ he added.
According to the company, New Jersey's industrial leasing activity was up – especially in northern New Jersey – and sales prices rose over last quarter's numbers. Moreover, net absorption experienced what CBRE called a ‘significant recovery’ from the previous quarter.
There's also a newsletter I recently received from Financial Compound, a Santa Monica, Calif.-based commercial mortgage brokerage firm. ‘Capital Markets Still Active,’ the newsletter's headline reads. ‘Despite Media Portraying Credit Freeze.’
Although the credit freeze, unfortunately, is a bit more than a mere media-created illusion, Financial Compound also notes in its news briefing that it has expanded recently – adding two new hires and opening a Philadelphia office.
The company is not alone in defying the current trend toward mortgage-firm shutdowns, bankruptcies and staff reductions. This week, Jones Lang LaSalle's capital markets group (yes, capital markets) announced it was expanding to provide dedicated coverage to the Philadelphia market. Commercial mortgage brokerage firm Aries Capital, meanwhile, just opened a new Denver office last week.
By the way, real estate investment trusts continue to ‘greatly exceed the performance in the broader market,’ says the National Association of Real Estate Investment Trusts in its latest report. A leading index is up 1.76% this year, in fact.
Finally, the expert on the economy himself – Bernanke – even has some non-bleak news, now that the Troubled Asset Relief Program (TARP) has been approved. Could we have reached a turning point?
At a recent speech delivered at the Economic Club of New York, Bernanke said he wanted to focus on why he believes we are ‘well-positioned to move forward. The problems now evident in the markets and in the economy are large and complex, but, in my judgment, our government now has the tools it needs to confront and solve them.’
He stressed that unlike during past financial crises, the federal government has stepped in early and emphatically, and the TARP just might save us. ‘Removing these assets from private balance sheets should increase liquidity and promote price discovery in the markets for these assets, thereby reducing investor uncertainty about the current value and prospects of financial institutions,’ he explained.
‘Unclogging the markets for mortgage-related assets should put banks and other institutions in a better position to raise capital from the private sector and increase the willingness of counterparties to engage,’ Bernanke continued.
Maybe that's not glass-half-full; it's picking up the pieces, discarding the dangerous ones and slowly gluing the rest back together.
– Jessica Lillian, Commercial Mortgage Insight
