Real Estate Domino Chain Extends Abroad

I watched as Bear Stearns, Countrywide, & Lehman led off the entire financial/housing bust which hit home "owners'" pocketbooks (I use quotes since I would bet most underwater residents didn't even have 30% equity in their homes). As they got laid off and/or foreclosed & stopped buying, retailers started folding: Circuit City, Mervyn's, Linens 'n' Things, etc. That eventually led to a collapse in commercial real estate -- both multifamily housing such as the portfolio of Mortgages Ltd. & office buildings such as the Viad (formerly Dial) Tower.

But the pain didn't stop there. At the height of the housing boom in 2005, the Chicago Spire project was initiated w/ Anglo Irish Bank as the primary lender ($US70million). This was the culmination of a tricountry (US, UK, & Ireland) portfolio of loans at Anglo Irish built up by Sean Fitzpatrick, who had taken the bank's helm in 1986. Competition led Allied Irish Banks & Bank of Ireland to develop similar risky loan portfolios. Thus the American financial bust dragged the major Irish banks under. Since the Irish gov't just as stupidly as the American gov't subscribed to the "too big to fail" philosophy, now the entire Irish economy is collapsing in order to rescue those precious Irish idiot bankers. The Wall Street Journal C Section on Nov. 23 article on Ireland's banks detailed how the National Asset Management Agency (Ireland's version of TARP) plans to buy €73B ($US100B) in bad loans from the banks. Isn't it wonderful when big corporations who made huge, stupid mistakes can con the taxpayers into cleaning up their messes?

I haven't had the chance to research this hypothesis yet, but I wouldn't be surprised if major banks in Portugal, Spain, & Greece had also heavily invested in American real estate.