Despite all of the begging, borrowing, spending, and printing, by governments and central banks the world over, the next step of this process will be a wave of insolvencies.
The Kapital News has been saying for over a year and well before the onset of COVID-19 that another real estate downfall was in the works. We noted that it would likely be in the form of a top-down, bottom-up squeeze. Well it appears that this scenario may well be under way. The top-down takes the form of commercial and high-end residential real estate. We don’t have to look much further than the tragic number(s) of retail stores that are closing their doors for good to grasp this concept. We can also look at college towns that may suffer as well if students do not go back during the fall semester. How many businesses and homes/apartments are dependent on these students for income? These establishments have loans and mortgages that do not go away simply because the students don’t show up. So how are these loans to be repaid? And what if there is a rush out of big cities to the suburbs – same story. Starting to get the picture?
Now take this in aggregate and it starts to paint a very bleak picture. And unfortunately, this is the necessary process that has to unfold. There are too many zombie companies in existence being propped up by easy money and fiscal spending. These businesses need to restructure or liquidate and allow for new and better management to take the helm. In the end, this process is better for the economy and why it’s called a “correction.” So, whether it’s retail, food service, hotels and travel, construction, manufacturing, and so much more, downsizing in one form or another is coming – the question is when and to what degree? Stay diversified, stay vigilant, and stay with The Kapital News. #BananaRepublic #EndTheFed #Bailouts #Depression #Recession #USA #Gold #Silver #Liberty