Let those banks burn. I could not care less. Let the corporate real estate market burn with em.

We don’t need them.

You do know if that sector fails, so does your pension, and probably a whole load of the economy.

Didn’t you and I already debate this?

Your argument is no different than saying the stone chipping business will collapse because pesky bronze smelters are making swords.

A broad portfolio doesn’t have a particularly heavy real estate position. Maybe some state pension schemes are - I think you mentioned the Canadian one last one - but it’s not like the office buildings become worthless from one day to then other. Some will remain occupied offices, some will convert into residential accommodation. Others will get torn down and redeveloped. The economy will adapt.

A collapse of the commercial real estate market would spill over to the larger market and most certainly impact any investments you have. We don’t really want banks to go under in big ways, it always ends up hurting the poor and middle class the most.

It’s not really a ‘could’ spill over, it definitely would.

A very high proportion of institutional investment is tied up in CRE. If enough defaults happen it might even be worse than 2008.

Doesn’t mean we should tip the scales in favor of CRE or the banks, though. If it comes to pass, we should nationalize the assets and socialize retirement (more). If we didn’t have all our retirement accounts in private markets our exposure to this kind of error wouldn’t be so high.

Yea I was being as neutral as possible in my answer. I agree it absolutely would be worse than 2008. I don’t think nationalizing the assets are going to work in this environment. The best we can hope for is regulation, but in the specific situation no one really did anything wrong. A Global pandemic flipped norms on their head.

but in the specific situation no one really did anything wrong

Banks invested in over-leveraged positions and lost liquidity, loosing their client’s savings. If they want the benefit of privatized banking and reap the profits, they should be prepared to accept the losses. I don’t think that’s a controversial opinion.

There could be individual banks over-leveraged in commercial real estate, but those aren’t important. At this scale it’s large enough to cause a a major recession or crash. We’ve seen smaller banks fail recently.

No, I’m making a generalized statement about privatized banking. If we are constantly socializing the losses when private banking makes a critical error, then we should be socializing the profit, too.

If they end up causing a crash, I think it’s time we socialize the assets left over rather than ‘bailing them out’ for continued private operation. You suggested that nationalizing the assets would be too controversial in this environment, but I actually think intervening on behalf of private financial institutions and commercial real estate landlords would be more so.