Into The Grey Zone The future is always a grey zone, never black and white.

Commercial real estate turned uglier this month, as expected. Many people have lost sight of the fact that October 15th was the end of the extension period filed by businesses for filing 2008's taxes. Many small businesses took this extension hoping that 2009 would provide the growth and the revenue necessary to pay 2008's tax burden. Alas, it was not to be and as these small shops close down, the commercial real estate they occupy now becomes vacant and non-paying resulting in further deterioration of the CRE market.

Capmark To File For Bankruptcy, More FDIC Headaches is just one of the stories floating around lately about the CRE decline. Capmark is the CRE lender spun off from GMAC and appears to be a several billion dollar black hole for the FDIC. CIT Sees $0.06-$0.37 Recovery On Unsecured Claims If It Files For Bankruptcy is another story that shows the weakness on Main Street. CIT, a major lender to small businesses is saying that recovery via bankruptcy will only be $0.06 to $0.37 on the dollar. This means that their loan base is a 63%-94% loss right now. Think about that for a moment.

The Wall Street Journal reports that Commercial Real Estate Lurks as Next Potential Mortgage Crisis. This is a tsunami that has been building for a while and will not go away. It will also bring a further spike in unemployment with it at the same time.

Finally, it appears either that some major financial institutions, like Citigroup, are either in total panic or that they are aware of some credit event that is very likely in the near future that will render most credit worthless. Citi is raising credit card rates on over 2 million Citi customers to 29.99%. Many are closing their Citi accounts. Mike Shedlock is writing about How The Citi-Grinch Stole Christmas (and Why It's a Good Thing). The most likely view is that Citi is soon to be toast. Regardless though, this is a mess and it may explode very shortly.