My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following.
Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.
Are Banks Avoiding Real Estate Losses?
The question is, are the banks not actualizing their losses on either residential or commercial real estate? This is a very serious question and has tremendous impacts on the potential of a recovery. Try to negotiate and do a short sale in the US… You will see what I mean.
Another glaring example is the Spanish banking system. Very clearly they are avoiding actualizing their losses on residential real estate. The fact is that the Spanish real estate market has cratered…sales are down 50% from the highs of 2006.
According to a Spanish real estate research firm ( RR de Acuna & Asociado) they state that the Spanish Banks bought about 110,000 homes to keep losses off their books as Spainג€™s property bubble burst. More so the Spanish Banks are giving 100 percent mortgages, low interest rates and free cars — to sell homes and get them off their books. It is too bad that the Spanish Banks did not learn anything from the subprime crisis.
Spanish Banks took back from defaulting builders approx $29 billion of real estate in just the past 18 months. There are approx 1.6 million empty homes in Spain. The banks instead of lowering the prices…and actualizing their losses they are trying to be magicians.Put this in another context…there is a approx a seven years supply overhang. In order for the economic system to recover these losses must be realized. The alternative is a bubble gum approach like the Japanese did and caused a lost generation for their population.
What do you think?
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Andrew Abraham
www.AJpartnersinc.com
Futures trading involves risk. People can and do lose
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