Trog (1970)

Commercial real estate is in BIIG trouble. Malls - already under threat before the plague - will be full of empty storefronts. Offices, oy. They'll lose tenants when their businesses collapse. Surviving tenants will take advantage of higher vacancies to negotiate lower rates. 1/

Those tenants won't need as much space anyway: between layoffs and mass, permanent work-from-home (which will let employers seek the cheapest labor, anywhere in the world), demand is gonna fall OFF A CLIFF. 2/

That's really really bad news, because commercial real-estate is super leveraged thanks to Real Estate Investment Trusts (REITs), the favored vehicle of overseas money-launderers seeking to clean their corrupt gains, as @CZEdwards  explained last year. 3/

The REITs borrowed titanic sums on grossly overinflated valuations based on absurdly optimistic occupancy projections. As @RandallHead1  explains in a post on @farber  's Interesting People list, this leaves their creditors - the banks - vastly exposed. 4/

Here's the bottom line: "A middling-sized bank which in Jan had twenty billion dollars of commercial loans, secured by liens against $25B of office towers and shopping malls now has twenty billion dollars of commercial loans secured by liens against $18B of real property." 5/

That $25b valuation was based on the assumption of 80% occupancy. After the Comet Covid's extinction-level event (exacerbated by gross mishandling, from epidemiological ineptitude to deficitphobic austerity), $18b is generous. 6/

Banks that loaned to plutes cleaning money for crooks? Dead. They'll need bailouts, nationalization, or wreaths. Head: "If you thought it was fun bailing out the FSLIC, you're gonna LOVE bailing out the FDIC, especially when every other economy is bailing out its banks." 7/

Image: Steve Jurveston (modified) FXki0oI3WU CC BY B930sKl9YF eof/

Built-in compartment, late 1950s.