In the old city centers across the country, in principle, any building private property was, most often by the operator of the business – and often, the family lived in the soil, it is well known that Don Casto of Columbus, Ohio , the first “mall” true built in 1928. – Several shops, “strip” fashion, in single ownership, with their own parking. These days, the financing is largely from local banks, which have been achieved primarily rely on the personal signature of the borrower.

started later, such as shopping centers and has grown in size to a traditional business as an anchor tenant feature that began a few life insurance companies see the potential offered by this stable source of income. The field increases when the big stores, which historically aggressive competitors were given in the same shopping center agreed. Now we have the culmination of the genre, the mega-mall, the Mall of America near Minneapolis, hundreds more stores, small shops and an entertainment complex, which represented several acres of land covers.

Many life insurers and pension funds invested heavily in mortgage shopping center for many decades. Some of these loans were, and are self-depreciation over the term of the loan, but some data from, say, ten years, leaving a large “balloon” amount. The expectation was that the outstanding amount to be refinanced (“switch”) to a new loan on that date.

The plan works well when credit is loose. It is not as good, if the credit is tight work.

This is what happened to General Growth Properties, which has just been made bankrupt. We understand that the problem was particularly acute GG, because he relied heavily on short-term financing, probably more than most companies Business Development Center when it bought the Rouse Company, leaving large parts of the undeveloped land. GG was in a deadlock, since short-term loans it continues without much problem has not gone longer available to all.

This is not to cast a shadow on the goods themselves. To a large extent they are “Marquee” shopping centers that are well maintained and the best locations and competitiveness in their communities. The problem is not ownership; .. We read that they generate sufficient cash to meet their needs Problem is the inability to GG capital loans

mature So, refinance insurance companies and other lenders that are now not willing or able, through loans GG , notice that rolling, it may be extra time “, as it is or not. Will undoubtedly continue to operate the centers. The investment company that 25% of the shares GG agreed to provide significant resources for the Basic Law, “debtor in possession” in the bankruptcy proceedings.

Some are worrying that the “delay” can affect some of the same life insurance companies which have emerged as a petitioner on the lifeline. It is not quite the same situation as the banks with which an applicant or borrower has a financial relationship, and that’s it. A life insurance policy is in the nature of a trust relationship. It is hardly a trusting relationship as that between a policyholder and insurance company whose outcome is certain, and he trusts that necessarily the policy will pay off when he died and that his wife and his children will be protected.

Life insurance companies are regulated is by country, not by the government. But given the news that some life insurers (including the principal) in Washington said they could rescue aid must, it is probably no way that the federal government is missing from the solution, many countries that help themselves not in a position to him. and finally there is only one entity that has the power to create money from nothing.

It is unthinkable that a life insurance would be allowed to the extent that it is not about the politics of life and death of the insured person again, it will descend the spectrum here. General Growth bankruptcy is the largest bankruptcy of real estate, ever, and many companies are life insurance and pension funds have a lot of money on the table.

I generally have a good feeling about the possible emergence of General Growth of the insolvency proceedings. The properties are good. This is not a case of abandoned skeletons of skyscrapers built, half. It was too much for short-term loans and not enough confidence amortization loans. GG was caught in a credit crunch is not his own creation.

Beyond the question of repatriation of capital, it may “discount” and even some “open” to be given to the lender in the coming days. It remains to be seen how this will be a negative impact on certain life insurance and pension funds. It should look like.

William Kurtz 17th April 2009 http://www.candlesticksonsteroids.com

Insurance company assets