The Next Financial Crisis

We may not be in the clear yet: The Wall Street Journal reports that the commercial-real-estate sector threatens to deliver “a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.” In the same way that mortgage-backed securities created from home loans kicked off the last financial crisis, $700 billion in commercial-mortgage-backed securities are threatening the economy once again. Not only was the delinquency rate in July six times the rate at the same time last year, but property owners will have a hard time refinancing loans that have been bundled. By the end of 2012, $153 billion in loans bundled into CMBS will be due, and close to $100 billion will have difficulty refinancing.