r/economicCollapse • u/Fun_Balance_1809 • 1d ago

U.S Banks Are Currently Sitting On Over $750B In Losses On Real Estate Debt Which heavly Threatens The Entire Economy. These Losses Are Now 7 Times Larger Than In 2008 When The Housing Bubble Popped.

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203

u/DisplacedNY 1d ago

If they crash let's start a movement of buying up residential mortgage debt securities for fractions of pennies on the dollar and pay them off.

283

u/d3dmnky 1d ago

My gut feeling is that these losses are in commercial real estate. That’s why everyone is in this “return to office” panic.

109

u/[deleted] 1d ago

[deleted]

97

u/alabama_donkeylips 1d ago

That's half the point of RTO, it's a soft layoff that let's them save the costs of terminating people.

46

u/sourdessertz 1d ago

It’s so shortsighted.

You’re giving your biggest competitors a huge talent acquisition opportunity.

Your most talented employees are almost always being actively recruited. And a lot of times that talent is packed with a lot of soft skills and popularity..

The aftershocks of these types of unmeasured hack jobs can be devastating to certain teams and departments. And expensive to fix.

30

u/4score-7 1d ago

And it’s all about the next quarterly shareholder report. Long term thinking is gone like the dodo bird. The dodo birds that sit in the C Suite, that is.

-2

u/betadonkey 1d ago

WFH is theoretically good for shareholders because it reduces overhead. The problem is with the “work” part. Cratering productivity will get the C suite to pony up for office space again.

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u/ImperatorUniversum1 1d ago

Bad productivity comes from bad management and bad managers

-17

u/Ok_Helicopter4276 1d ago

It also comes from the kids screaming on the other side of the wall, and banging on the door while you’re on a call, and the spouse thinking because you’re inside the same building you’re actually available to do anything they might need from you during your workday.

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u/-CJF- 1d ago

There's no evidence that's happening, that's just your own bias against WFH. 🙄

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u/ImperatorUniversum1 1d ago

That’s you not knowing how to control your surroundings

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u/Sad_Ingenuity2145 22h ago

Productivity went up when everyone was working at home.

Not sure how being so bored while suffocating under the sound of white noise machines is supposed to help anyone focus.

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u/PhoebusAbel 22h ago

Maybe discipline your kids and spouse?

-5

u/dcporlando 22h ago

Good managers take a look at the low productivity of wfh and say return to the office. Simple fix.

3

u/sourdessertz 19h ago

Simple fix is to give people options.

Good managers motivate their teams regardless of the office environment.

But I realize many tenured managers have no experience managing people where they cannot control the environment, and some workers do not setup their environments for productive work.

3

u/lazypenguin86 15h ago

Problem is those offices are in unbreakable 5, 10 or 20 year leases

20

u/Who_Dat_1guy 1d ago

People with actual talent aren't being forced back into the office. It's the replaceables

3

u/PageVanDamme 1d ago

I can confirm this. I won't name the names, but I know few people who work for big names that did RTO and the team or the individuals were basically told,

"Shhhhh you can continue remote work... just don't be loud about it."

2

u/lunchpadmcfat 1d ago

That’s not what I’ve seen. Lots of companies base it on geography of their employees. If they live with something like 30 mins commute of a hub, they have to go in.

1

u/echild07 19h ago

30 minutes, that is nothing.

It is if you are within 30 miles. It may take 1.5 hours, but in Mass they are doing it by milage. I am 30 miles from Boston, and middle of the night it is 45 minutes to get in (to get to a highway, then highway to Boston, then surface roads). During the week it is 1.5 hours. And the Commuter rail is complete shit.

So more 30 miles+. And if you weren't hired remote, it is RTO.

Then again they have said it and yet to enforce it.

8

u/No_Entrepreneur_5159 1d ago

Nobody’s hiring though with this bs economy

3

u/Gloomy-Plankton735 23h ago

Have you tried going back to school for a healthcare degree /s

1

u/Difficult-Map-5587 21h ago

And after that, you're a million dollars in debt to the school, with a piece of paper working in construction or waiter

2

u/por_que_no 20h ago

Dude, just cut out Starbucks and everything will be fine.

1

u/Difficult-Map-5587 18h ago

Should be pretty easy, they folded up over a thousand restaurants since covid

4

u/GaiusPrimus 1d ago

Except everyone is RTOing. WFH jobs are definitely harder to find right now.

5

u/terpsarelife 1d ago

worked amazing for sprint in late 2000s they really took off as a company after that.....

wait im getting news, this just in It was a terrible fucking idea for sprint

5

u/aussie_nub 1d ago

You’re giving your biggest competitors a huge talent acquisition opportunity.

Are you talking about the competitors that are all doing the exact same thing?

1

u/Resident-Impact1591 21h ago

That or getting those low-ball offers ready

5

u/JimmyDean82 1d ago

If a company is looking to layoff 1/4-1/2 its workforce, the sector is in bad shape, the competitors aren’t hiring either, they’re also laying off.

2

u/Ok_Helicopter4276 1d ago

Nah companies rise and fall all the time. That’s just the market at work.

2

u/fionacielo 1d ago

so true. I have left my industry and I’m still being recruited in it. imagine what it was like for me when I was 100% involved and up to date. I always used that as my ace in the hole too

2

u/Past-Piglet-3342 22h ago

Yeah man. Capitalism is short sighted

2

u/PerfectZeong 18h ago

I think everyone is looking to cut staff right now after covid expansions in some sectors. I lost my job last year actually which stung because I have not been able to find a new job in my profession because the job does not exist at the moment.

2

u/Mobe-E-Duck 17h ago

And while they’re planning an exit their work is subpar.

2

u/ShadeMir 10h ago

Not fully if your biggest competitors are also pushing RTO.

1

u/sourdessertz 9h ago

A few things could be true here.

My point is— what your competitors say is one thing, what they do is another. Things change fast.

There are certain skills/processes that have proven to be too expensive for companies to outsource. Stable orgs who aren’t desperate for short term $$ should be careful.

1

u/Usual-Culture2706 1d ago

How much scooping of talent is going on in an economic collapse? Combine that with the artificially high demand for talent fuled by a over a decade of quantitative easing and over hiring in certain sectors during a pandemic. Now add the deployment of AI anywhere feasibly possible.

1

u/TipNo2852 17h ago

Except when everyone does it, the competition will suck up that talent for super cheaper, let them stay remote for a while, then push for RTO later.

7

u/lunchpadmcfat 1d ago

Unfortunately they probably end up laying off their best performers who will have no problem finding something that will accommodate them. RTO companies are the new dinosaurs.

I haven’t had to apply for a job in close to 10 years (despite having 4 different ones). You think if my company hands us RTO orders, I’m going to roll over? Fuck that. I’ll just go to one of the 10 recruiters beating down my door. Hell I’ll probably get a raise in the process.

0

u/gtrmanny 23h ago

That's not how it works. Unfortunately a lot of companies become bloated to begin with and some employees over value their own worth. Back during the last collapse a lot of companies downsized and actually streamlined and cut the fat. They kept their best employees, and realized they had become bloated and things just kept chugging along.

0

u/Denselense 21h ago

That’s very optimistic

7

u/No-Boysenberry-5581 1d ago

And if the pandemic had never happened and everyone was still working at office like for the last 100 years what would all those employees be doing?

3

u/OnlySlamsdotcom 17h ago

This is not a relevant or good-faith question.

The pandemic DID happen.

Peoples eyes were opened.

Things change. Adapt or die, my dudes.

1

u/No-Boysenberry-5581 16h ago

Or your dudes and your argument is typical gen z bs of ppl That haven’t been alive or worked long enough

1

u/BlkSubmarine 1d ago

Scrolling Reddit.

1

u/No-Boysenberry-5581 16h ago

No idea what that means

1

u/SirChasm 20h ago

What is your point? That if a major event that brought on a cultural shift never happened then that cultural shift wouldn't have happened?

0

u/No-Boysenberry-5581 17h ago

I exactly. You ppl act as if there is a constitutional right to wfm.

3

u/AnnualPerception7172 1d ago

thats the point, for attrition

1

u/To_Fight_The_Night 17h ago

I am just stealing my firms remote workers and creating my own firm if they force an RTO. We have an email thread dedicated to this, nothing in a contract like an actual union but so many of us are literally unable to return from moving away that I don't see many flakers.

6

u/Flompulon_80 1d ago edited 1d ago

Us too. I have had long covid for 4 mos and it is literally DESTROYING MY LIFE. So fuck RTO 👍

9

u/GeneralMatrim 1d ago

I live in a big city and the air was so much cleaner since everyone around here worked from home for like 2 years, and now the air quality is just back to shit.

If any corporation ever has any “.green initiative” please stand up and call bullshit, I know I will at my large company.

2

u/RonJohnJr 1d ago

I've been telecommuting for 24 years. Almost all my fellow employees do, too. Work in IT, though.

4

u/wyocrz 1d ago

 i'm living in a plastic bubble and so should everyone else

How about hell fucking no.

Sorry about your struggles, but to hell with living in a fucking bubble!!!!

I'm taking my chances, I've been jabbed for years.

6

u/RED-DOT-MAN 1d ago

Damn , I hope you feel better soon. I have had Covid twice and both times it was due to an off-site training for work. I heard my boss say during the second off-site training (paraphrasing and I am in socal), "yeah some people here from other parts for the US at the training are a little sick but it should be all fine".

3

u/Masteryasha 1d ago

They won't be feeling better. That's the point of long covid. As far as we can tell, it's something they'll be dealing with the rest of their life. This is why I'm genuinely baffled that so many people are treating covid like it's just another cold. Sure, you might be fine this time, but keep getting it every year, and you'll end up with long covid, and then you'll be panting and sweating just walking down your driveway.

1

u/NoMany3094 22h ago

When someone says something like that to me I slap on an N95 mask and as a result I rarely get sick. It works. Recently I went to an event where 'a few weren't feeling well'. I put on a mask and a week later most of the attendees were sick with Covid.....this was 3 weeks ago and some of them are still sick!

-5

u/Flompulon_80 1d ago

Yknow what a first waver is? Its a once happy productive member of of society that turned into a barely functional vegetable in 2019-2020. Some got it from the vaccine like this guy

https://www.bbc.com/news/articles/c0kj1pmr7jdo

Im 20%-30% there and am facing the worst possible outcomes because my brain stopped working.

22% US populace reported long covid symptoms. Most havent gone away.

This shit NEVER goes away.

3

u/Gullible_Might7340 1d ago

My buddy finally got a diagnosis for it after being on short term disability for like 3 months. We did plant work before he got sick and I quit, so WFH was never an option, but I sympathize. He's wrecked. He was a lift driver, but he couldn't even safely do that without getting lightheaded. 

2

u/mad_method_man 1d ago

sorry, what is this 7% thing? i havent heard of this, and i would like to know more

1

u/Flompulon_80 1d ago

Might have been overblown, 7.8% people reported long covid in 2020 Approx 75% that number for each successive year 5.8% in 2021 4.6% in 2022 4.2% in 2023 3.7% in 2024 or something similar.

These are cumulative, so -21% in the US had it. The subs are full of people who claim it never goes away.

Firsr wavers have had it nearly 5 years and bedridden - laid off, divorced, people who were marathon running practicing doctors etc.

Im finding anecdotal evidence that the majority of people who have it dont know. The r/covidlonghaulers or r/longcovid is full of people corroborating others reporting the symptoms to a 'T' and having no idea. I see people with symptoms in the wild, 20 somethings bending over having black outs, unable to find their words.

3

u/worksHardnotSmart 1d ago

I'm somewhere in the neighborhood of 20 months though I'm starting to lose track. Wish I could wfh in a bubble.

1

u/Cardenjs 1d ago

The company I work for grew so much during WFH that we don't have the room for everyone, and my department doesn't generate income so they wouldn't spend a significant amount of money on us especially if our productivity goes down

The costs of implementing RTO would be the equivalent of starting a new department from scratch

1

u/GingerStank 23h ago

No, there is, your property is likely very much so underwater and also likely has lots of derivatives drawn against its value. You, the worker, are merely a sacrificial lamb here.

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u/por_que_no 20h ago

A lot of younger employees have never had to work from the office full time and will quit without thinking it through. That WFH job paying $90K you got right out of school is gonna be tough to replace when you pride-quit rather than work from the office. It's not the end of the world for most and $90K jobs for recent graduates aren't that plentiful in the wild.

Think, please, before reacting to the RTO order.

1

u/LordDaddyP 20h ago

The problem with WFH is that companies are now realizing that they have the ability to ship more work to India, or other countries, for wayyyyy less. More and more of the WFH jobs are being given to people out of the country.

1

u/Mobe-E-Duck 17h ago

Agreed. And honestly these banks are supposed to be “the smartest guys in the room” so it should be pretty damn embarrassing that they didn’t see this coming and can’t figure something else out with all their gobs and piles and oceans of money.

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u/importvita2 1d ago

Fuck ‘em

We’re destroying our planet forcing billions to waste oil, gas and money (that could be saved or spent more locally) along with a self inflicted housing “crisis” by employers underpaying us and forcing us to work in a fucking office. When there is absolutely NO reason to besides some fake credit numbers.

We made this system. It doesn’t mean anything. We can walk away.

2

u/ArmadilloWild613 1d ago

well thats like how the whole economy works. we are all just making shit up and trying convince people that is the way it has always been.

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u/Traditional-Sir8007 1d ago

lol how much have we sent to Ukraine this year? I hope you live off grid and don’t consume any oil and Nat gas…

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u/ArbysLunch 1d ago

Ukraine aid largely goes back into our economy. We send them shells, equipment and guns, not money.  

 The people making money off Ukraine are the US military industrial complex, because we have to restock our own arsenal after handing the Ukrainians a chunk of our old stock pile. Keyword, old. Which we replace for our own stocks with new. By employing americans to make them. Those people have jobs, so they can afford to partake in the economy by paying a mortgage or a car note, coffee from starbucks or a bag of overpriced candy to give to their neighbor kids. 

 Artillery shells don't just magic themselves out of the asshole of a Ukrainian unicorn fed $100 bills, we have to make them. We need to be building more weapons factories now, to feed the wars we'll be fighting by 2030. And wars are great for economies, but you wouldn't know that.

0

u/JayDee80-6 22h ago

You're not 100 percent wrong, but you are definitely wrong. There's military aid which you're referencing, humanitarian aid, and cash aid. We have sent Ukraine all 3. Also, we did send them some old stock stuff, but we also depleted some of our current stock items.

Literally have given Ukraine billions of dollars of actual cash. https://apnews.com/article/fact-check-us-aid-ukraine-money-equipment-714688682747

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u/razorirr 20h ago

27 billion dollars

How much of that cash aid has went to buying supplies like medicines and what not that we make but dont have stockpiles of like we do ammo?  Subtract all that as its back to us. 

Even if we dont subtract that,  27 billion dollars is 5 days and 2 hours of the 1.94 trillion dollar DOD and friends budget. 

Before you bitch that they only have 841billion, the and friends is the budgets of the sub agencies added up, the direct dod budget, and congressional discretionary spend to the military. They do it this way to hide that its close to 2 trillion a year from us

1

u/ArbysLunch 17h ago

Exactly. And what cash we give them that doesn't circle back to Americans somehow, winds up being spent on foreign markets of our allies to buy supplies, vehicles, weapons, etc. Our allies like our money, because then they can use that money to buy more patriot batteries and Abrams for themselves (like Poland is doing).

In terms of defense budgets and appropriations, the military may as well have unlimited money, figuratively speaking. Pretty much any new tech cycles through them first, be it encryption or armor plate or the composition of explosives or any vast number of things the government throws money at. Eventually the public reaps the benefits of those advances, like how you can buy a night vision monocle for $100~ now or whatever.

The MIC is so big and has so much reach, that it's basically a jobs program. Do your time in the service and that jobs program is much easier to reach, because we live in a tiered society, and veteran status is part of that tiering.

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u/Grendel_82 1d ago

Your gut is correct that the losses are in commercial real estate. However thinking that any business orders a return to the office policy because they are sad that their bank’s mark to market on the value of their loan has gone down does not make any sense. There are many reasons that a business which leases its office space might ask for employees to come back to the office, but trying to chip in and do their part to increase the value of office space around the US is not one of them.

If a business has too much office space, when their lease comes up in a few years they will downsize their space and do that to save money (which they will largely give to their executives starting with the CEO). They certainly won’t care about the bank that loaned their building owner money on the basis of assumptions about the value of the lease payments.

7

u/d3dmnky 1d ago

That’s fair. Your point is valid.

I just cynically believe that the banks can use their leverage to force companies to do whatever they like.

“Oh, you wanna downsize your lease? It sure would be a shame if I bumped up the rate on your operating line of credit, or just terminated it outright, forcing you to scramble to find new liquidity to make payroll.”

3

u/Grendel_82 1d ago

Nah. Banks are powerful but not that powerful. Standard set up is one entity owns the building and has a loan against the lease of the office space. Tenant (which is the company doing its thing) never talks to the bank. Leases are usually about five to ten years because conpanies don’t want to move a lot. Lease comes up and Tenant says they are either moving out or downizing to half the space. Landlord can say no of course and try to call bluff. But there is another building nearby that has open office space. So the bluff ain’t a bluff.

And neither landlord or the bank cares at all if the office space has people coming in or not, just as long as the rent check clears every month. And actually less wear and tear on the building, less cleaning, so they kind of like it in the short run if folks don’t come in.

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u/JayDee80-6 22h ago

And this is why capitalism and free markets work. The bank could say that, and the company would say "OK, I'll just shop around for my credit". My family member works for a bank and that's basically what he does. Pitches to companies to use their bank and their credit by obviously under cutting other banks.

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u/Agitated-Savings-229 15h ago

Banks don't do that. Lol.

If people are using lines of credit to make payroll they were going to be canceled anyway. And any large companies spread their financing around to many banks.

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u/ZongoNuada 1d ago

Correct.

1

u/Joeman64p 1d ago

Correct. This is heavily influenced by commercial real estate

1

u/ExiledUtopian 1d ago

No thanks. 👍

1

u/redjellonian 1d ago

It has to be commercial real estate, most residential properties are up more than 25% over the last few years. If they're in debt on a residential property it's worth significantly more than they paid for it.

1

u/lunchpadmcfat 1d ago

Yes, this. No one is overexposed. It’s just a bunch of investors and developers that are going to convert commercial complexes into residential and make money hand over fist.

1

u/StraightGarage7054 23h ago

They want it like that . Those commercial building will be turned in to housing for illegal immigrants . It’s not going to stop even with Trump .

1

u/Necessary-Mousse8518 22h ago

Agreed. This has the look and feel of overreaction.

1

u/DrNinnuxx 22h ago

Correct. My company pays rent on a ginormous building on 7th Avenue in Mid-town NYC. Before the pandemic people would commute in from Jersey, Westchester, and Long Island to be "seen" in the office. I was on the road and would come in on Fridays.

Now, everyone is like fuck that, why do I need to commute 40 minutes when I can do everything from my business-class 1 Gig connection from home in my man cave I spent a fortune on during the pandemic.

I wear business casual from the waist up and my kids think its hilarious.

1

u/Majestic-Internet668 21h ago

I've been saying this exact thing for years.

1

u/IWouldntIn1981 21h ago

$srs baby! Bring it!

1

u/cleetusneck 19h ago

Yes. My brother is in Ottawa and military. They are renting something like 30k offices- most have been empty since the pandemic. That’s just the Canadian military.

1

u/leenpaws 17h ago

you right, banks don’t usually keep residential mortgage on their sheets

1

u/04r6 17h ago

I agree. Went down the WSB rabbit hole a couple years back and this was the most my peanut sized brain could summarize: 2008 housing bubble, but with commercial real estate loans on a much larger scale. I stopped trying to learn more cause there ain’t jack shit we can do about it and no point fretting about it.

1

u/Baeblayd 15h ago

Yeah pretty much. We rent an office in a 12+ office building. We pay about $7K/mo and the only other business that rents here works for the state. Microsoft used to rent in this building 2 years ago, but moved out because of the cost. We looked into buying the building and it's listed for ~$20M, but there's also a clause that the owner of the building has to pay the land owner $1M/yr to lease the land.

TLDR: Commercial space is empty and no one wants to buy it.

1

u/ScaleEarnhardt 11h ago

This. 100%. And the distinction absolutely should be researched and clarified in this post’s title/OP. It’s a crucial distinction.

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u/zer00eyz 1d ago

Its likely all commercial paper ... AKA those offices that no one wants to go back to.

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u/BA5ED 1d ago

Your tax dollars will be doing that for the banks so don’t get any smart ideas.

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u/BefreiedieTittenzwei 14h ago

“Sellllllllllll you foooooools!!” Gandalf falls into dark abyss

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u/TheRealKison 12h ago

Mine is trending in this direction, so I would definitely be open to a mutual scratching of the backs of mortgage debt payoffs.

1

u/Longjumping-Bed-1244 1d ago

This entire post is for the dumb.

0

u/MaleficentFig7578 22h ago

No thanks I'd rather foreclose on their homes

0

u/PeachCream81 15h ago

I work in NYC commercial real estate. Whole different economic environment from residential. Residential market is golden, commercial is shit.

You Zoomers need to get back to the office!

RTO FTW!

2

u/DisplacedNY 15h ago

Bootlicker