What most don’t yet understand is the true scale of, for example, losses in the insurance or pension sectors, government intervention to prop up the financial sector but not the real economy, diminished global GDP from the slow-down in the velocity of money from a lack of structured finance and how all of these and other factors will likely lead to a diminished standard of living, etc.

Green shoots? Not to be a nay-sayer, but amongst the talking heads I still only see withered weeds…

The fact of the matter is that this is tied to the residential real estate sector as well. How? Because more people are underwater than one might think with their homes. Add in credit cards and other debt and more people are falling behind. I sometimes tell people that if everyone walked out of the homes and stood in their driveways with a little meter that had Green-Yellow-Red to represent their financial condition, people would be shocked at what they would see. People don’t talk about the extent that they may be in financial trouble but it is there in my opinion.

Tying this back to the commercial sector is that as a result, people are pulling back on spending like never before. Need a new car? They will buy a cheaper or more efficient one next time. They are slowing down purchases as well as the rate of maintenance expenses where they can. This means that less is being spent on restaurants, retail, and other commercial venues. Small businesses are impacted and as a result, close. This leaves lease space empty which puts pressure on the property owner. Eventually, the property owner is faced with pressure from the overbuilt situation and the loss of tenants and has to consider reducing rates. Depending how far this goes, the property owner may be faced with bankruptcy as well, especially if they can’t afford to be competitive with their lease-space.

This is a climate that has evoked a judgment on new business ventures like no other recessions we have seen – ‘why would someone possibly start a small business or other business venture right now?’ That’s not to say that a new venture can’t be successful, but this climate will be punishing for most that try.

Despite stock market upticks recently and suggestions by the Federal Reserve that there is light at the end of the year, this is a market whereby substantive corrections are occurring. These corrections aren’t six months in length but much greater. I would argue that we are only halfway there with questions as to whether fundamentals have changed enough.