More headwinds for NYC RE?

Not to worry - Argentina defaults all the time, and people still lend it money.

Argentina was able to devalue its currency and therefore started to grow its economy within 3 years and gain acceptable credit ratings again. Greece no longer is in control of its own currency and can only do so if it exits the EU. If the EU doesn't hold, other countries like Portugal and Italy could leave. That would put even more pressure on European banks that hold as much of 30% of sovereign debt. Due to regulations, they are not properly capitalized to cover this amount of debt. It is not a good situation.

Not to worry - Bernie will let the Greeks be Greeks for at least 24 months even after they default.

Wow apt23, I had not read this analysis. Thanks for posting.

Another massive credit freeze while the economy is still not firing on all cylinders could have a very chilling effect. Businesses that couldn't get credit to cover their expenses would go belly up and lots of things would go crash.

I still don't understand why the entire country housing has crashed and continues to go down...yet, Manahattan real estate continues to rise..it's almost scary how strange it is.

It's typical. Same thing happened after the '80s bubble: Manhattan took 8 years to hit bottom, and stayed flat another two years to let inflation catch up. The rest of the country hit bottom more quickly and recovered more quickly.

Enough people *think* Manhattan should be different that it persists in being different for long periods of time. In the long run, the macroeconomic situation will probably catch up to Manhattan as everywhere else, but as Lord Keynes said, the market can stay irrational longer than you or I can stay solvent . . .

Julia: Manhattan RE did go down when the credit markets froze after the Lehman crash and it continued to go down right up until the Fed started the quantitative easing to pump up the financial markets. As Manhattan is the center of the financial market, it made sense that prices stabilized here. Since the massive money printing sank the dollar, the holders of other currencies like the Euro suddenly could buy Manhattan real estate at a steep discount -- it is a desirable city and a great investment when you get a 40 - 50% discount. Add in Asian buyers and you have a stable and rising market --- unless there is another shock in the credit system or inflation as a result of historical amounts of debt.

"I still don't understand why the entire country housing has crashed and continues to go down...yet, Manahattan real estate continues to rise..it's almost scary how strange it is"

After all these years, and Julia continuting to say nonsensical things like this, I'm now fully convinced she's a broker shill.

Nope! She's a Manhattan snob who's been waiting for 3 years for doorman studios to drop to $400K while she could have already bought a big 1Bd apt in Brooklyn Heights with that money!

To bring the discussion back to the Greek situation, here is a scary update from the German paper Spiegel (English language version):

http://www.spiegel.de/international/business/0,1518,764299,00.html

The gist of it is that there are a lot of assets on the ECB's books that have dropped so much in value as to be nearly worthless. Nobody knows the health of the ECB except, I guess, the ECB (if they know, which may be optimistic).

(note to sledgehammer: if values are unsustainable in manhattan, what do you think they are in Bklyn? Price drops are going to affect outer boroughs more than center-city)

Great post Graffiti. It is shocking at a lot of this financial misbehavior was happening as recently as 2010. No wonder Trichet is leaving. He wants to leave with his reputation in tact before TOO BIG TO FAIL PART DEUX; THE RAPTURE hits the theaters. It will take the Rapture to remove the ECB from this mess. Kelly, quoted at the end of the article is the professor who blew the whistle on the Irish Banks before anyone else. He was vilified -- but absolutely correct. His last quote is haunting:

But if the euro crisis rumbles on, the worst-case scenario isn't all that far away. To ensure its national survival, Ireland should reject the European rescue effort and, instead, accept the failure of its banks as a necessary evil, Morgan Kelly recently said. The renowned professor of economics at University College Dublin knows who would be especially hard-hit by such a step: the ECB.

"The ECB can then learn the basic economic truth that if you lend €160 billion to insolvent banks backed by an insolvent state, you are no longer a creditor: you are the owner" Kelly wrote in the Irish Times earlier this month.

Get out the popcorn. Looks like we are going to witness another sh*t storm.