When we think about Real Estate now, we think of the financial markets, their problems and what will happen next. The general wisdom seems to be that if the financial markerts recover and start lending money again, everyone will borrow a little and buy that chunk of Real Estate they have been eyeing.

An NPR article I read today gives a very nice description and historical perspective to the financial risk models the big banks use to "mange" their risk. The have some nice software that creates a virtual model of their business and then does a "what if" analysis against all sorts of worst case scenarios. It appears that the models were a less accurate rendition of reality than one might hope and they did not point out properly the probabilities of our current fiscal malaise. For more go here Link to NPR Article on Risk.

And on the way home, The same NPR, broadcasting on 89.7 aired a story about Citigroup selling $12,000,000 of their low grade debt. This is nice to see for three reasons. (1) to sell it they have to set a price, and once we have a basis for pricing this amount of debt, other similar transactions can take place more easily. Think of it as a good comparable. (2) They appear to have settled on a price for the debt of 90 cents on the dollar. The banks have been writing things down to 80 cents on the dollar, so this tells us that things are probably less bad than we might have thought. (3) Some action in the debt market is a very good thing as up till now all we hear about is the "Liquidity Crisis" and the "Credit Crunch"  and the "Frozen Markets". At present this transaction is a mere "rumor", albiet one that has been mentioned in the national news. Keep an eye on it.