Vultures, Doomer Rumors and Doomer Humor

The venture vultures are squawking about the crash in commercial real-estate that has been accumulating with increasing speed as these hunched birds gather around the carcasses of dying corporations to pull scraps of meat off the bones, and they have a lot of time left to feed before the carnage finally ends:

“Compared with the Savings & Loans crisis and 2008, we’re still in the first or second innings” when it comes to troubled assets, said Rebel Cole, a finance professor at Florida Atlantic University who also advises Oaktree Capital Management. “There’s a tsunami coming and the waters are pulling out from the beach….”

John Brady, global head of real estate at Oaktree, is similarly blunt about what’s ahead: “We could be on the precipice of one of the most significant real estate distressed investment cycles of the last 40 years,” he wrote in a recent note on the US. “Few asset classes are as unloved as commercial real estate and thus we believe there are few better places to find exceptional bargains.”

One vulture’s bargains are another species’ deaths, and there is a lot of meat to pick at right now:

“When you start to get into the cycle, the big market is where people find the opportunities,” John Graham, chief executive officer at Canada Pension Plan Investment Board, said in an interview. For everything from private equity to private credit and commercial real estate “the US is the biggest and the deepest market.”

Biggest and deepest market of piled corporate corpses, and it will be getting deeper for another couple of years, unless and until the Fed turns interest rates back down enough to make refinancing much easier (which will likely send inflation much higher).

According to S&P Global Ratings, both US and European commercial real estate are enduring “historic stress.”

But the trouble spreads WAY beyond the actual losses taken by owners of real-estate. It spreads to all the financiers, too:

Some parts of the market are facing declines in value that exceed those during the financial crisis, it said in a report Tuesday, raising the risk for commercial mortgage-backed securities. More than a quarter of CMBS tranches outstanding in 2020 have since been downgraded, the company said.

That’s about as many as have had to roll over for refinancing! About a third of CRE bonds roll over this year, another quarter to a third next year and then the number starts to diminish. But the scale of the problem is already quite severe:

Based on Oaktree analysis, the number of US banks at risk would exceed levels seen in the 2008 financial crisis levels if CRE values fell by only 20% from their peak. Office values there [the US] fell 23% last year, according to the IMF.

And there are more years of declining values to come as people have moved away from office buildings and retail buildings, especially malls, and even away from big cities.

There’s a huge wave of defaults and soured asset sales to come through on balance sheets, though the structure of the debt means it could take years for the full scale of the trouble to appear….

“This is a trend that’s not going to be short term.”

So, it is hardly a stretch here to use the term “apocalypse.” But sometimes, elsewhere it is hype.

Doom Porn

While I could be accused of “doom porn,” and occasionally have been, because I write about the bad things that are happening that others, especially in the mainstream press, try to avoid writing about, such as Biden’s many stumbles and mumbles, here is where I differ: Eventually, they start to write about the things I’m writing about and start wondering, as we just saw with the Biden situation, why no one told them about it. (People in the alternative press did all the time, but those in the mainstream intentionally tuned it out as the stuff of cranks.)

Likewise, I wrote about the clear (to me anyway) likelihood of the return of inflation back in the summer of 2023 when virtually no one (even in the alternative press) had such concerns. Many would have seen that as “doom porn” (fear made to order for the adrenaline junkies) or just worrying about things that didn’t merit attention (Chicken Little).

Likewise, which I wrote about the unlikelihood of a Fed rate cut in March or June … or July … and probably September, or about the faultiness of labor metrics, which eventually even Fed Chair Powell said had to be off. With all those things I’m just writing about the news others don’t want to cover before they do. If it eventually becomes the news you read about everywhere, it was never doom porn; it was latent reality that was growing and needed attention, just not a reality other people were willing to look into.

That’s really what my focus is here … pointing out the newsworthy trends that people don’t want to see because not seeing them doesn’t make them go away. In fact, it virtually assures we’ll be facing them in worse ways down the road. I don’t write about any of it to make people worry, so I want to call attention to a few stories that may indicate the doom porn problem. I’m not saying for sure they are that kind of thing, but I’m going to use them as examples of what to look for … or, at least, some of what I look for when I decide what bad news to publish and what to avoid.

The first one is just a humorous lead-in:

“Moscow Orders Arrest of Navalny's Widow”

I merely wanted to observe in passing that the real news is that it’s surprising she hasn’t fallen out a high window yet! Strong Putin critics suffer an extraordinarily high rate of vertigo when approaching high open windows. On boats, their Putin Derangement Syndrome causes them to jump overboard, even though they cannot swim.

The next story is one that sounds very serious, and it is not that the story is doom porn but that I think the CDC is running doom porn on this one: The doom is not in the title of the story or the subject matter, which is a small breakout of Dengue fever in New Jersey (about 41 people), but in the embedded video about a measles outbreak.

Does anyone remember when a measles outbreak was just a right of passage for all children? Not fun, but rarely a major concern, whereas today, measles are talked about like the plague, which is also in the news ; so, speaking of which, here we get to the likely doom porn:

Another story says the “CDC Warns of ‘Imminent’ Plague Pandemic.” Ah, but did it you. You read through the entire article and find that they CDC did report a single case of plague in the US and issued warnings of how you can avoid bubonic plague by staying away from dead animals and keeping your pets flea-free. However, nowhere in their list of things to do to avoid plague did they use the word “pandemic.” I noted that the word “pandemic” was only in the author’s own headline and one of his subheadings. So, was the CDC warning us about the next possible pandemic (I think not) or the author adding words to put out higher clickbait in his headlines and raise alarms that the CDC is not raising in order to feed his own need for doom porn or the need of his cultivated audience?

I just couldn’t find the word “pandemic” in anything that actually came from the CDC, so I think they were NOT warning of a pandemic but issuing guidelines for people who become alarmed when they hear there was a local case of bubonic plague about what to do to try to avoid the plagues unwanted company. A single case does not a pandemic make.

Are we hyperventilating about everything these days—measles, a single incident of bubonic plague which happens every year in low numbers inside the US? And to think I’m the editor of The Daily Doom, yet I cry fowl on all the hyperbole and clickbait just for fierce sounding headlines that sell. Notably the only word in quotes from the CDC was “imminent,” for which no context was given as to what the CDC was calling imminent.

Oh, the subtleties you have to beware of among internet doom publishers. Every day, I avoid stories that make more of the facts than merited or, like here, I point out the high probability that the title is just clickbait as an example of how to carefully read the internet and try to figure out the “doom porn” from the real stories of serious problems engulfing us. I’m sure I sometimes screen out stuff that should have gone in my aggregate of news headlines because it doesn’t pass my own red-flags test, and am sure I sometimes include stuff that should have been screened. (There is a lot more screed than one person can screen for.)

Finally, I come to a story that publish about the weather because if find weather interesting

EVERY story about extreme weather now includes a statement that the record “heat” or record winter storm is due to “human-caused climate change.” I am always interested in intense weather stories, but the effort to drive an agenda has become overt and brazen. It has become a mandatory “talking point” to put that line in every significant weather story.

I suspect it partially explains the universal switch from talking about “global warming” to talking about “climate change.” It’s hard to pitch the most severe winter storms on record as being due to global warming. So, now we talk about extreme changes in the weather from recent norms and blame them on human causes. The problem with this particular story is that, while the weather is a true calamity in this case, there is no way to establish that any particular weather event was human-caused, but here they just claim that as fact. And they do that all the time now.

A second story along those lines talks about how the Florida Keys just experienced their first extinction event due to sea level rise or due to increased hurricanes driving storm surge inland and killing off tree cacti. Does anyone really know if hurricanes are greater in number in the Keys than they were a thousand years ago? How?

The article notes that the only stand of Key Largo tree cacti in the US was just discovered in 1992. Maybe this is why. Maybe it has a really hard time growing in tha area due to the yearly hurricanes, so it has never become as firmly established as it is on some other Caribbean islands.

Salt water intrusion from rising seas, soil depletion from hurricanes and high tides, and herbivory by mammals had put significant pressure on the population.

Maybe all of those things have always put significant strains on tree cacti so they never get established for long, but they are also the things that manage to float pieces of cacti naturally into the center areas of islands where they sometimes take root in the sand they get partially buried in during the storm surge. Maybe they are a borderline species that finds rare pockets it can survive in. If we’ve only known of the existence of any stand in the US since 1992, how much do we know about whether global warming took them out or whether they’ve come and gone many times over the past thousands of years?

And, yet, here we go:

By 2021, what had been a thriving stand of about 150 stems was reduced to six ailing fragments, which researchers salvaged for off-site cultivation to ensure their survival. “Unfortunately, the Key Largo tree cactus may be a bellwether for how other low-lying coastal plants will respond to climate change,” said Jennifer Possley, director of regional conservation at Fairchild Tropical Botanic Garden.

Gotta get that “climate change” theme in every single article now. Once they’ve made the point, they practically go on to make mine:

Comparatively little is known about Florida’s rare cacti. Researchers initially stumbled upon the Key Largo tree cactus in an isolated mangrove forest, and for several years afterward, its identity remained uncertain. Most considered it to be a unique population of the similarly named Key tree cactus (Pilosocereus robinii), a federally endangered species that is present elsewhere in the Florida Keys.

Ya think? Sounds like you know practically nothing about them and never saw them before 2019 (and Key Largo is not a very big place to hide out in, though with great effort a few highly sought-after drug runners have managed to hide there from time to time). So, are you really in a position to state, as a foregone conclusion, that their decline was due to climate change? Maybe a single trunk floated in there on a massive hurricane sometime around 1914, and became a nurse log that started a small grove until the next hurricane hit the same spot with enough force to unplant them.

Likewise, another article about rescue helicopters not being able to fly in Texas’ extreme heat couldn’t wait to throw in the point that …

High temperatures, which are increasing due to human-caused climate change, are altering operations in broad swaths of the state. REACH Air Medical Services, which operates 30 helicopter bases across California, declined at least two rescue calls over the weekend because of excessive heat, said Vicky Spediacci, the company’s chief operating officer. “This is pretty rare. There can be pockets but this was more widespread,” she said.

When every article has to try this hard to blame climate change for the change in something that was only recently discovered and is claimed to be an extreme anomaly in its very existence in that location in the first place, then maybe you’re pushing the agenda a little hard. When you even have to throw it into a story about rescue helicopters struggling help out due to heat thinning out the air they need for lift, you might be pushing the agenda a little hard. Heat has been a challenge for helicopters for as long as there have been helicopters. Has there been any study to show it happens a lot more per helicopter in service than it did in the seventies or fifties? Yet, there it is, foregone conclusion.

So, just know when I publish stories about extreme weather or other odd events—like the extinction of a cactus that wasn’t supposed to be there in the first case, according to the article (if you think about the rest of what it says about these cacti)—it doesn’t mean I agree with everything in the article. I may find the weather quite interesting its extremes, and it can certainly be locally apocalyptic, so it fits the theme of this virtually unknown journal, but it’s almost impossible to publish a story about extreme weather events without them bringing “human-caused climate change” in as the definite cause, and you can be sure they are always emphasizing now that it is “human-caused.”

It could be that it is human caused. I think the jury is still out about that, but I have an open mind about the possibility. However, when every story inserts that line, it’s an agenda item. It’s practically a religious creed … or maybe I should say “screed.